The RTC and the Escalating Costs of the Thrift Insurance Mess
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.
The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.