The Federal Deposit Insurance Corp. says it will temporarily halt savings and loan rescues once it's finished taking control of 223 insolvent institutions under orders from President Bush.
In a statement Wednesday, the FDIC said it will deal only with cases that can be supported by revenues from the savings and loan insurance fund, the Federal Savings and Loan Insurance Corp.The FDIC typically insures deposits at commercial banks but was ordered Tuesday by the White House to oversee the ailing S&Ls until the government can decide whether to sell the institutions or close them and pay off depositors.
S&L regulators rescued or propped up 223 institutions last year, mostly by issuing promissory notes to investors buying failing thrifts and by pledging to cover future losses. The deals have been criticized as more expensive to taxpayers in the long run.
As a result of Wednesday's announcement, no notes or loss guarantees will be considered. All investors who had been negotiating to buy ailing savings and loans from the FSLIC will have to deal with the FDIC, the announcement said.
In another development, the president of a quasi-public agency created to sell loans and property from failed savings institutions announced his resignation.
Gerald P. Carmen, former head of the General Services Administration and a political ally of former President Ronald Reagan, resigned effective next month as head of the Federal Asset Disposition Association.
FADA, established in 1985, had been severely criticized for conflicts of interest and mismanagement. In a statement, Carmen said he had turned the agency around in his year at the helm.
The agency currently manages about 2,500 assets worth $3.8 billion, spokesman Dave Bunton said. He said John Wills, currently executive vice president, will serve as acting president.
FADA's fate under Bush's S&L reorganization plan is unclear, he said.