Word: thrifts
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Dates: during 1980-1989
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...will begin, here and now, to eliminate the ongoing losses of the insolvent firms . . . I'm proud to sign this monster." So said President Bush last week as he stamped into law his long-awaited and much debated savings-and-loan bailout bill. The legislation, / which will rescue ailing thrifts at a cost estimated at $300 billion over the next 30 years, promises to transform the S & L business into a far smaller -- and potentially stronger -- industry. The law will also impose a sweeping reorganization on the Government's thrift regulators: the Federal Home Loan Bank Board, now independent, will...
...billion off budget, however, will increase the eventual cost of this year's bailout expenditures by an estimated $3 billion over the next three decades. That is because the off-budget money will have to be borrowed by the Resolution Funding Corporation, the Government agency responsible for restructuring the thrift industry, which will have to pay investors higher interest rates than the Treasury pays for on-budget borrowing. As a result, the S & L rescue's first installment is a case of bail now, pay later...
...golf tournament, one of the gag trophies is the George Bush Dress Award, shaggy plaid trousers bestowed on the competitor sporting the worst attire. Its eponym still buys bargain threads at a factory outlet. Despite his recent affluence, he continues to describe himself as "all name and no money." Thrift is a virtue for someone trying to build his own business without capital. Bush became known as a shrewd dealmaker who could attract investors without incurring debt. As the energy business flourished in the late '70s, he built a small, solvent outfit of his own. He also married Laura Welch...
...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...