WASHINGTON — The head of the government fund that insures commercial bank deposits said Wednesday that it could cost "slightly under $50 billion" to restore the health of the rival savings and loan industry.
That appraisal, offered to the House Banking Committee by Federal Deposit Insurance Corp. Chairman L. William Seidman, falls short of private analysts' guesses, which range up to $100 billion, but it is nearly twice as high as other official government estimates.
The Federal Home Loan Bank Board, the regulator of the nation's 3,100 savings institutions, last month put the price tag at $31 billion, within the $26-billion to $36-billion-range offered by the General Accounting Office, Congress' auditing arm.
Some in Congress and the Reagan Administration dismiss the shifting estimates as a numbers game, but Seidman's estimate is likely to lend new urgency to the debate about whether taxpayers' money is needed to bail out the Federal Savings and Loan Insurance Corp.
Until now, official estimates have been low enough to support an argument that the FSLIC, which expects to have $42.5 billion in revenue over the next 10 years, can get by without taxpayer money.
However, if Seidman's $50-billion cost estimate is on target, there is little question that FSLIC needs more money. Seidman said the bank board's revenue projections also "are on the optimistic side."
He added, "We estimate (the problem) is getting worse at something like $1 billion a month."
Although Seidman's agency insures commercial banks--not savings and loan associations--it is studying FSLIC's problems because some have proposed merging the two insurance funds, a move Seidman and banks oppose.
Rep. Charles Schumer (D-N.Y.) said members of Congress regard bank board estimates as overly optimistic and were likely to give more credence to Seidman's number.
Seidman said his own agency, which last Friday announced potentially the largest bank rescue ever, will suffer its first loss this year since its founding in 1934.
FDIC is spending $4 billion to assist the takeover of First RepublicBank Corp. of Dallas by NCNB Corp. of Charlotte, N.C. Seidman had said he expected to recover part of that.
On Wednesday, he estimated for the first time a figure for the ultimate cost: $2 billion to $3 billion.
If that proves true, the First RepublicBank rescue would surpass the 1984 bailout of Continental Illinois Corp. of Chicago. FDIC initially spent $4.5 billion in that transaction, but expects to recover all but $1.7 billion.
Seidman slightly worsened the projections for the FDIC fund, which ended 1987 with $18.3 billion. Previously, he has said it could decline by as much as 10%.
On Wednesday, he said, "we'll go down 10, 12, 13%" to "$16 billion, $15.5 billion, something like that."
He also said that banks closed or requiring FDIC assistance to stay open will surpass last year's post-Depression record of 203. Ninety-eight banks have failed this year, and 17 others have received government assistance.
With the First RepublicBank transaction, eight of the 10 largest banks in Texas have been recapitalized, either by the government or privately. For one of the two remaining, "we may have to provide assistance. We don't know at this time," Seidman said.
He declined to identify the institution, but he was believed to be talking about MCorp., a Dallas bank that has been trying to raise private capital.