WASHINGTON — The $50 billion Congress earmarked two months ago to rescue failed savings institutions may not be enough, Federal Deposit Insurance Corp. Chairman L. William Seidman said today.
"It is possible that $50 billion will prove to be an insufficient amount to deal with potential failures," Seidman said in written testimony presented to the Senate Banking Committee.
"But it is really much too early to make a reliable new prediction of loss," he added at the first hearing on the savings and loan bailout since Congress passed the legislation Aug. 9.
Also testifying were Treasury Secretary Nicholas F. Brady, Federal Reserve Board Chairman Alan Greenspan and Housing and Urban Development Secretary Jack Kemp, who are members of the oversight board setting policy for the Resolution Trust Corp., created to close and sell failed thrifts.
Seidman, whose agency operates the RTC, said the government has taken control of 283 failed S&Ls with $112 billion in assets. Of the 283, it has closed 24 small institutions and expects to sell five large institutions by next week.
Through August, 1992, thrift regulators may turn over another 300 S&Ls to the RTC, bringing the total failures to nearly 600 with combined assets exceeding $300 billion, he said.
Those projections "raise questions about the adequacy of the $50 billion in RTC funding," Seidman said.
His written comments throw the strongest doubt yet on whether one installment on the S&L bailout will be enough.
However, in his oral presentation to the committee, Seidman changed his tone slightly, saying, "At this point we have no basis with which to make a different estimate from the ($50-billion) one you've heard."