WASHINGTON -- Lacking even the authority to pay out money it has on hand, the savings-and-loan bailout began grinding to a halt yesterday, a day after the House voted against continued federal spending on the industry cleanup.
The Resolution Trust Corp., the federal agency in charge of selling institutions taken over by the government, said it would stop arranging such sales, delay a streamlining of its staff and postpone some property management and appraisal contracts, steps that could cost taxpayers millions of dollars a day.
The Office of Thrift Supervision, which decides which institutions should be seized, said it might also hold off intervening in 28 less dire cases.
Federally insured deposits at financial institutions are not threatened by the bailout slowdown, and Congress is certain to approve further spending eventually.
Indeed, Democrats on the House Banking Committee met yesterday afternoon in a partly successful effort to come up with new legislation, and the committee's chairman, Rep. Henry B. Gonzalez, D-Texas, said a new bill could be introduced today for action next week.
Congress has authorized $105 billion for the rescue, and estimates of ultimate costs to the taxpayer range up to $500 billion, including interest.
Mr. Gonzalez said yesterday after the meeting of his Democratic colleagues on the Banking Committee that the new bill might include charging healthy savings and loans a special fee. Other possible features: a two-year extension of the statute of limitations for federal fraud and negligence cases against savings-and-loan directors, and federal disclosure of the terms when failed institutions are sold.
The administration has opposed those steps, saying that disclosure could discourage investors, that a fee could hurt healthy institutions and that extending the statute of limitations would lengthen the legal cloud over many directors who had little to do with improper loans.