For Now, The S&L Cleanup Rests With The S&Ls

Your Washington Outlook ("The S&L mop-up will test Clinton's mettle on the Hill," Jan. 25) suggests that the Federal Deposit Insurance Corp. and the banking industry will be paying for much of the remaining cleanup of the savings and loan industry's problems. Under current law, this simply is not the case.

First, while it's true the FDIC maintains the Savings Association Insurance Fund (SAIF), the FDIC and that fund only assume responsibility for S&Ls that fail on or after Oct. 1. There's no mechanism under the law for funding costs prior to Oct. 1 with SAIF funds or the FDIC's $30 billion line of credit with the Treasury.Second, while it is also true that the SAIF may lack sufficient funds for the FDIC to carry out its duties starting Oct. 1, the responsibility for replenishing that fund rests with the S&L industry.

William R. Watson


FDIC Div. of Research & Statistics


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