The Resolution Trust Corporation and Congress, 1989-1993, Part II: 1991-1993

Federal Deposit Insurance Corporation's Banking Review, Vol. 18, No. 3, 2006

31 Pages Posted: 13 Aug 2007

See all articles by Lee Davison

Lee Davison

FDIC, Division of Insurance and Research

Abstract

Part I of this article appeared in the previous issue of the Banking Review, and explored the period immediately following the opening of the Resolution Trust Corporation (RTC) in August 1989 through 1990. Part II completes the legislative history of the RTC.

Congress's inability to pass a funding bill in the previous session did not mean that the RTC's funding requirements had diminished in any way. Without additional loss funds and the attendant working capital, the agency would essentially cease operations before the end of the first quarter of 1991. But the political dynamic surrounding the RTC remained difficult. The administration's position was straightforward: the losses within insolvent institutions had already occurred, and delays in funding those losses would only increase costs. In the eyes of many in Congress, however, including even those of the president's own party, giving the RTC more taxpayer money was extremely unpalatable. Although a failure to do so would abrogate the promise to insured depositors, some members of Congress, particularly some House Democrats, adamantly opposed any new funding at all. Others wanted to tie further funding to changes in the organization or operations of the RTC, or to changes in unrelated government policy. Still others sought to weight the burden of paying for S&L losses to certain regions or taxpayers. Some of these suggestions had little chance of being enacted, but they encumbered an already contentious bill, making passage even more uncertain.

Suggested Citation

Davison, Lee, The Resolution Trust Corporation and Congress, 1989-1993, Part II: 1991-1993. Federal Deposit Insurance Corporation's Banking Review, Vol. 18, No. 3, 2006, Available at SSRN: https://ssrn.com/abstract=1005163

Lee Davison (Contact Author)

FDIC, Division of Insurance and Research ( email )

550 Seventeenth Street, NW
Washington, DC 20057
United States

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