In the wake of a humiliating defeat in the House, the Bush Administration has abandoned hope of winning new, no-strings-attached funding for the savings and loan bailout. On Mar. 12, a fragmented House rejected the Administration's request for $30 billion for the Resolution Trust Corp. The House also killed two Democratic versions of the bill, leaving the legislation dead in the water and the RTC, which is responsible for disposing of seized thrifts and their assets, virtually broke.
Treasury Secretary Nicholas F. Brady and congressional leaders quickly hammered out a compromise that they hoped would win majority backing in the House. But to get a deal, Brady had to make some major concessions. One is a preference for women and minorities in winning RTC contracts, a proposal dear to liberal Democrats. A second provision, a pet of House Banking Committee Chairman Henry B. Gonzalez (D-Tex.), would expand RTC's obligations to help provide low- and moderate-cost housing. But the Administration fought off restrictions on the sale of environmentally sensitive property. RTC officials will be grateful for any new money. But they fear that the strings being attached by Congress may strangle their ability to dispose of a vast inventory of property.
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