WASHINGTON -- The General Accounting Office advised Congress yesterday to reject the Bush administration's request for an immediate $55 billion to complete the savings and loan bailout, saying federal regulators were unable to keep track of the billions of dollars in assets they now oversee.
Shortly before Treasury Secretary Nicholas F. Brady conveyed the administration's request to the Senate Banking Committee, GAO officials recommended that Congress instead offer just enough to continue the bailout until spring of next year. They cautioned that granting the full amount would make the administration less accountable.
The recommendation by the accounting office, an investigative arm of Congress, came in response to questioning from members of the House Banking Committee's Subcommittee on Financial Institutions and is expected to carry considerable weight on Capitol Hill.
It provides another justification to vote against legislation that the administration contends could be enough to complete the bailout program.
Congress has struggled four times in little more than a year with the financing issue, in each case paring down or rejecting the administration's financing requests. Since the summer of 1989 it has provided $105 billion.
A number of lawmakers in the House and the Senate expressed serious doubts about the administration's latest request after the accounting agency said in a report that the Resolution Trust Corp. was unable to monitor thousands of contractors and subcontractors and keep track of billions of dollars in loans, real estate and other assets seized from failed institutions.
"I don't see any fundamental reform in the process," said Rep. Kweisi Mfume, D-Md.-7th.
In a separate report, the inspector general of the RTC said yesterday that its investigation had found significant violations in an accounting project commissioned by the agency to investigate the mysterious disappearance of $7 billion in assets from its Denver office.
The $20 million accounting project was supposed to figure out the reason for $7 billion in discrepancies between the books of failed institutions before and after they were seized in the spring of 1990.
The inspector general found that hundreds of auditors hired by the RTC never did any work, and that officials violated federal regulations by breaking the contract into 92 parts in an attempt to get around federal procurement rules.
As for the $7 billion discrepancy, investigators are still trying to determine whether there was fraud or merely ineptitude.
The case has quickly become the latest symbol of incompetence and waste by the trust corporation. Its operations have been in such disarray that the GAO says it has been unable to carry out its required annual audit of the agency.
Testifying on behalf of the GAO, Richard L. Fogel, an assistant comptroller general, did not give the House subcommittee a specific sum that could keep the RTC in business through next spring.
But Albert V. Casey, the new president and chief executive of the RTC, said Congress could get the agency through March 1993 by providing $25 billion more and changing a deadline in the current law.