Costly S&L Finale

November 27, 1993

Has Congress seen the last of the savings and loan crisis of the 1980s? That was the hope as reluctant lawmakers, after a costly delay, this week gave the Resolution Trust Corp. enough money to complete the S&L cleanup once and for all.

Congress' stubborn refusal to give the Reagan, Bush and Clinton administrations enough cash to do the job properly has greatly increased the cleanup cost to taxpayers. The final bill: $150 billion. The longer Congress dawdled, and the more demagogic lawmakers railed against a taxpayer bailout, the more expensive it became to shut bankrupt thrifts. Every day these defunct S&L are kept in business, taxpayers lose millions.

Yet the sniping from members of Congress never ceased. They refused to approve sufficient funds to let the three administrations conduct a full-scale cleanup, then bashed the White House for not waving a magic wand so this political hot-potato would go away. They criticized the administrations for moving too slowly to close S&Ls, then complained that the government was moving with too much haste (and waste). It was a nightmare for taxpayers that Congress refused to end; too many members were having a rhetorical field day playing to the emotions of angry constituents.

But this time there is enough money to finish its job. The nice part for lawmakers is that the $18.3 billion appropriated had already been approved by Congress in 1991 -- but solons never allowed the money to be spent. Now that pot, sitting in the Treasury, can be used to dispose of 65 S&Ls losing money for taxpayers. The RTC's work could be wrapped up in a few years.

And with some economic luck, only about half of the $18.3 billion will be needed to complete the cleanup. This is welcome news to taxpayers, since the unspent billions revert to the Treasury.

If there are lessons to be learned it is that lax regulatory oversight of financial institutions cannot be permitted. There are too many schemers and just plain greedy con artists eager to cut corners to make big bucks. But it is also imperative that Congress not repeat its costly mistake in refusing -- for years -- to confront this uncomfortable political issue head-on. Taxpayers need not have lost so much money in this scandal. Congress prolonged the agony and heightened the fiscal pain.

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