Word: thrifts
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...warned, he would veto it. By week's end Bush prevailed when the House approved a strong bailout bill by a vote of 320 to 97. In all, 46 Republicans voted against the measure. Since the Senate passed a similar version in April, Bush's plan to rescue the thrift industry is likely to go into effect next month...
...plan, which will cost some $157 billion over the next ten years, will allow the Government to close down or sell off more than 500 insolvent savings institutions. To reform the rest of the thrift industry, the bill tightens capital requirements so that S & L owners would have more of their own money on the line. Specifically, the bill calls for all thrifts immediately to post $1.50 in reserves for each $100 in deposits and reach a level of $3 in reserves...
...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...
...more and more thrift executives got into trouble in 1987 and 1988, S & L PACs simply stepped up their campaign giving; by the time Washington finally got around to addressing the S & L crisis this year, the cost of a bailout had swollen to an outrageous $158 billion or more over the next eleven years. Over the past three elections, according to the Wall Street Journal, the S & Ls gave $4.5 million to the members of Congress willing to protect them. House Banking Committee member Jim Leach, an Iowa Republican who refuses to take PAC money, believes this...