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RTC budget gap could sink thrift

In the wee, wee hours of the morning last Sunday, Rep. Frank Annunzio, D-Ill., stood on the House floor and gave a swift kick to Florida Federal Savings Bank, a financial institution already on its knees. Once the state's largest thrift and one of the first chartered in the United States, Florida Federal needs government assistance to avoid being shut down. Florida Federal does not meet the necessary capital requirements, said Nancy Basham, spokeswoman for the thrift, which is based in St. Petersburg.

Annunzio blocked the $10-billion that was to be used by the Resolution Trust Corp. for the next 90 days. Annunzio said the money would only be wasted.

Florida Federal had hoped to be part of the RTC's accelerated resolution program, a sort of quick shuffle that allows ailing thrifts to be acquired by stronger institutions and that causes, said Basham, the least amount of disruption possible.

Now Florida Federal is back on hold. ""There will be few if any accelerated resolutions," said Peter Monroe, president of the RTC's Oversight Board.

As it turns out, it wasn't just Florida Federal that was kicked. Monroe estimates the delay in financing the RTC will add $100-million per month to the bailout cost, which is already estimated at about $500-billion.

Said Monroe, "If there is no money, we won't do deals."

Or as Basham said, "Congress wouldn't spend a

little to save a lot."

Hundreds of thrifts are in worse shape than Florida Federal. Its case alone gives an idea of how the bailout costs mount _ and of how Florida Federal seems a deserving candidate for some sort of help, said savings and loan analyst Sam Beebe of Williams Securities Inc. in Tampa.

For the three months ended Sept. 30, Florida Federal reported its smallest loss in three years, $6.7-million. Officials at the savings bank were proud of that performance. Florida Federal can't make certain kinds of loans because it is operating under a government consent agreement. New commercial real estate loans, for example, are verboten.

For Florida Federal, losing a relatively small amount of money seems like a success. Management there is like a baseball team without bats taking pride in keeping the score close.

Still, the savings bank is losing money and will do so in the next quarter, too, said Basham. The more money it loses, the more money the government (read: taxpayers) will have to chip in, said Beebe.

At the moment, Beebe estimates that it will take $90-million to $100-million of government funds to put Florida Federal in shape so that another financial institution might buy it. That amount _ in the S&L scheme of things _ "is peanuts, really peanuts," Beebe said.

Republic New York Corp. is the likely candidate to buy Florida Federal, and as Beebe noted, "it is one of the strongest banks in the United States.

"As a taxpayer, I hate to see the deal not go through," he said. "The management (at Florida Federal) has done an outstanding job. They just need capital."

Beebe explained that the management, led by CEO John Sapanski, has been in place for the last couple of years and has cleaned up the savings bank. "It's not like the government would reward some schmucks who ran it into the ground if Florida Federal got some help," said Beebe.

What Florida Federal officials hoped would be resolved by fall now marches into winter, and Florida Federal stands in line with such infamous stragglers as David Paul's CenTrust of Miami and Charles Keating's Lincoln Savings and Loan.

The delay will cause further fallout. Good employees tend to drift away when their financial institutions remain in limbo, said Monroe. Just the perception of the institution being government-run means a buyer will be less likely to want it.

Florida Federal managed to avoid a government takeover, and then saw its best hope fade amid rhetoric on the House floor.

Said Basham, "Naturally, we were watching."