Cost of S&L Bailout May Reach $600 Billion
WASHINGTON — THE final cost to taxpayers of the savings-and-loan bailout could reach $600 billion, according to Federal Deposit Insurance Corporation chairman William Seidman. Mr. Seidman, who also is chairman of the Resolution Trust Corporation, said Saturday on the CNN television program ``Evans and Novak'' that costs would swell because of interest paid on money borrowed to finance the bailout.
Asked what the total price tag would be for taxpayers, Seidman said, ``We talk about up-front dollars - that is if we had all the money to pay today - I think the best estimate is between $175 and $200 billion.'' But he said that excludes interest paid on money the government will have to borrow.
``Probably if we borrowed for 30 years at 10 percent, why that could roughly triple the figure,'' Seidman said.
The head of the two major banking regulatory agencies also discounted the chances for an even bigger problem with the commercial banking industry despite recent problems of varying degrees at such major banks as Chase Manhattan, the Bank of New England, and others.
``There's very little possibility of that [a major bank crisis],'' Seidman said.
``Of course, if we have a major depression, recession over a long period of time, it will strike heavily against the banking system,'' he said. ``But at that point I don't think that will even be the most serious problem we have.''