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S&L BAILOUT STALLS -- AND MORE WILL FAIL
By Rick Tetzeli

(FORTUNE Magazine) – In the four months since Congress decided not to extend funding for the S&L bailout, disposing of insolvent thrifts has ground to a costly standstill. This means the U.S. can't pay off depositors and dispose of the institutions -- and so must continue to operate them at an estimated cost of $2.5 million a day. Expect more of the wounded to go under. How many? It depends on whom you ask. The Office of Thrift Supervision, which oversees S&Ls, anticipates only 57 additional casualties. The Congressional Budget Office puts the number at 600 -- not far shy of the 723 the Resolution Trust Corp. has already taken over. The RTC, formed in 1989 to dispose of the failed thrifts, has raised $258 billion so far from selling mortgages, other performing loans, and more unusual assets like the ones shown above. Among the buyers: magician David Copperfield, who paid about $2 million for a magic library once held by First Network Federal Savings Bank of Los Angeles. The state of Florida teamed with nonprofit Nature Conservancy to buy 18,400 acres of forests, wetlands, and beach, which was in the portfolio of Hill Financial Savings in Red Hill, Pennsylvania. Price: $20 million. Now safe from developers is the endangered Choctawhatchee beach mouse. Estimates of what it will cost to bail out the S&Ls rose steadily until Albert Casey, a former head of American Airlines who took over as RTC director last year, dropped the forecast from $160 billion to $130 billion. But he is worried about lack of funding and the ongoing cost of running the failed S&Ls. Another Bush appointee frustrated by insufficient bailout funds is Tim Ryan, director of the Office of Thrift Supervision. Says he: ''It's exasperating. We're so close to finishing this. To stop in the bottom of the eighth inning makes no sense whatsoever.''