Word: l
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Dates: during 1980-1989
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...most controversial provision is that thrifts would no longer be allowed to count as capital an intangible asset known as "goodwill." Typically, this comes into play when an acquirer buys an ailing S & L whose liabilities exceed its assets; the difference is called goodwill. So far, regulators have allowed S & L buyers to count goodwill as capital in exchange for taking the failed thrift out of the Government's hands. But having no capital of their own at stake enabled some thrift owners to make risky and often fraudulent loans without sufficient cash to back them up. Said New York...
...House vote was a sharp blow to S & L industry lobbyists, whose lavish courtship of Congressmen fostered in the mid-1980s permissive legislation that is blamed for aggravating the thrift crisis. The industry fought to weaken the capital requirements in the current bill by pushing an amendment, sponsored by Illinois Republican Henry Hyde, that would have allowed S & Ls a regulatory hearing before they could be forced to comply with the new standards. Hyde, the industry's most vociferous advocate, is a leading recipient of S & L PAC contributions. After Bush threatened to veto the bill if capital standards were...
...than Government bonds. That extra interest expense would increase the overall cost of the bailout plan by an estimated $5 billion. The House refused to go along with that sleight of hand and voted to include the $50 billion in the federal budget. But the House exempted the S & L spending from deficit limits set by the Gramm-Rudman-Holling s law. Bush hopes to keep the financing off-budget when the House and Senate bills are reconciled in a conference committee...
While the bailout plan may reassure S & L depositors, the tough capital requirements will spell trouble for many marginal thrifts. James Barth, chief economist of the Federal Home Loan Bank Board, which regulates S & Ls, estimates that 674 thrifts, or almost one-fourth of all federally insured U.S. savings institutions, would fail to meet the new capital standards. As a result, many thrifts would be forced to liquidate or combine with healthier institutions...
...thirds of the bill. The FHLBB reported last week that the 2,938 Government-insured thrifts in the U.S. posted losses of $3.4 billion during the first quarter of the year. Observes Alex Sheshunoff, an industry analyst: "There's a lot more bad news to come." In the S & L industry, unfortunately, the most pessimistic forecasts usually turn out to be the most accurate ones...