As the nation's chief savings-and-loan regulator, T. Timothy Ryan Jr. has one of the least-wanted jobs in Washington. The growing S&L debacle can be lethal to political careers. Ryan's predecessor as director of the Office of Thrift Supervision, M. Danny Wall, resigned in early 1990, under pressure, because of his handling of the Lincoln Savings & Loan scandal.
Ryan, who turned 46 last month, was a novice as a regulator when nominated by President George Bush. The former Labor Department lawyer and pension specialist barely survived his Senate confirmation. He was lambasted publicly for his financial inexperience. In addition, a confidential FBI background report was leaked during the hearings, showing Ryan had admitted to smoking marijuana and trying cocaine as a college student.
But Ryan has earned high marks in the 14 months since he took office. American Banker, the industry's trade newspaper, described him as having moved "from flyweight to heavyweight." In press briefings soon after his appointment, Ryan proved testy in exchanges with reporters and often referred questions to aides for answers. Now, in conversation, he appears far more comfortable, answering questions with confidence.
Ryan earns the most praise for aggressively filing civil charges to hold accountable former senior executives and directors of failed thrifts. The list includes former Lincoln owner Charles H. Keating Jr., former Columbia Savings & Loan Chief Executive Thomas Spiegel and President Bush's son, Neil, a director of the failed Silverado Banking, Savings & Loan in Colorado.
Still, the bailout cost keeps soaring. Ryan sticks by a Treasury Department estimate that the eventual tab will be from $90 billion to $130 billion--although Treasury Secretary Nicholas F. Brady has admitted the amount could reach $160 billion.
That number represents what it would cost if the government could write a check today to clean up the mess. But since it doesn't have the money, and will have to borrow and pay interest to finance the bailout, the eventual cost, over 30 to 40 years, is expected to reach $600 billion.
Ryan grew up on Long Island. He is married to the former Judith Rush, a former State Department worker, and they have two children. Ryan seems unscathed by the shredding he underwent during his confirmation hearing and the battles he observes daily in the S&L wars. Appropriately, one of the things he likes to do most when he isn't working is watch the bruising sport of hockey.
Question: When all is said and done, how deep is the hole going to be for the savings-and-loan mess?
Answer: The estimate today, which is a Treasury Department estimate, is between $90 billion and $130 billion on a present-value basis (the cost if paid off today), and that's the number we're working on. The high-end estimate assumes a higher failure rate of our "Group Three" (marginal) institutions. The wild card in all this is there are a number of large institutions in Group Three.
Q: It's amazing there has not been as much public anger as one would think--given the size of the numbers. Does this surprise you?
A: I'm not sure that I would agree with your statement. As to anger, I think there is a lot of anger. But there is also a feeling among most taxpayers that the deposit insurance system is appropriate and that it is working. They all know that the dollars we're paying out are dollars that are fulfilling the insurance commitment.
Q: And depositors don't get emotional?
A: There are no deposit runs. The people who bank at an institution go to the bank on Friday and conduct their business. We close it Friday afternoon, we work all weekend to take over the institution and we reopen it on Monday, with new management and a new name. The same depositor comes back on Monday, and continues to do his or her business. The reason for that is deposit insurance, and deposit insurance has worked.
Q: What are your current estimates of how many S&Ls are going to fail? And how many are going to survive?
A: We have 2,300 institutions operating in the private sector. Of that number, a little in excess of 100 are what we call "Group Four"--institutions that will require government assistance. That means they'll go to the Resolution Trust Corp., or they'll be resolved with some type of government assistance. There's also a portion of our Group Three institutions that will probably require assistance. What I have said is that the eventual number of survivors we're probably looking at here is someplace between 1,500 and 2,000.
Q: Some people have suggested that you are presiding over the last days of the thrift industry as we know it.