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The RTC and the Escalating Costs of the Thrift Insurance Mess

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Almost daily, the news media report on the ever-growing cost of resolving the savings and loan (thrift) insurance crisis. A year ago, the administration estimated that the present-value cost of resolving the insolvency of the now defunct Federal Savings and Loan Insurance Corporation (FSLIC) fund was $130 billion. With the passage of time and the continued deterioration of the troubled portion of the thrift industry, current estimates of the final cost of the FSLIC bailout are half again as high. Taxpayers, who are paying a substantial portion of this bill, wonder why the cost continues to increase and why the Resolution Trust Corporation (RTC) appears to be slow in ending the thrift problem.

Almost daily, the news media report on the ever-growing cost of resolving the savings and loan (thrift) insurance crisis. A year ago, the administration estimated that the present-value cost of resolving the insolvency of the now defunct Federal Savings and Loan Insurance Corporation (FSLIC) fund was $130 billion. With the passage of time and the continued deterioration of the troubled portion of the thrift industry, current estimates of the final cost of the FSLIC bailout are half again as high. Taxpayers, who are paying a substantial portion of this bill, wonder why the cost continues to increase and why the Resolution Trust Corporation (RTC) appears to be slow in ending the thrift problem.


Suggested citation: Pike, Christopher J., and James B. Thomson, 1991. "The RTC and the Escalating Costs of the Thrift Insurance Mess," Federal Reserve Bank of Cleveland, Economic Commentary, 05.15.1991.

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