NCJ Number
118459
Date Published
1989
Length
14 pages
Annotation
Solutions to Texas thrift industry problems are outlined to the Committee on Banking, Finance, and Urban Affairs of the U.S. House of Representatives by Charles A. Bowsher, Comptroller General of the United States.
Abstract
Some of the highlighted concerns regarding the proposed legislation to solve the thrift crisis are the lack of independence of the FDIC Chairman, conflict of interest of thrift supervisors and examiners, underestimation of costs in the financial plan, and lack of assurance of Congressional oversight. Viability of new thrifts and lack of information on the real financial condition of the thrifts are among reservations regarding the design and implementation of the Bank Board's resolutions on Texas thrifts and Texas-assisted transactions. Other concerns include minimal capital contributions and the creation of thinly, capitalized institutions which may pose a risk to FSLIC in the future, weak incentives on the part of the new institutions to actively manage and generate recoveries of assets, and the cost advantage new institutions have over healthy Savings and Loan Associations (S&Ls). It is suggested that this may cost more than liquidation of S&Ls and will require a huge monitoring job because of its complexity. An evaluation of tax considerations and recommendations are also made.