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“resolvinG tHe Crisis; restorinG tHe ConfiDenCe”
goals. Thus, Congress had to act to create a new institution to deal with this economic disaster, to deal with failed S&Ls, to reimpose regulatory controls, and to aid in making the payments owed to insured depositors.
When an S&L became insolvent, the federal government would have to take control and either force a merger with another institution or liquidate the S&L’s assets to generate cash to help repay depositors. This process was known as the “resolution” of the institution. Thus, FIRREA was passed and signed into law—and the RTC was thereby born. Dry enough, class? Well, if not, try what follows (which actually does become a bit exciting, at least to me).
Baptism by FIRREA
Just a week into my new job in Washington, I was informed on a Mon- day that I had to fly to Chicago on the very next day for an RTC conference. Okay, I’m game. It will be useful to me, the new kid on the block, to mix and mingle with the leadership and others, and to learn more about the workings of the agency. And, hey, I’m now a seasoned flyer. Little did I know that some more flying would have to be under- taken by me—immediately. No more than an hour after I had unpacked in the Chicago hotel, I was interrupted by an urgent call, the gist of which was that, on that Friday, the RTC was going to ”take down” Home Federal Savings and Loan, then the second largest S&L in the country.
I was therefore to fly to San Diego on Wednesday with one of the attorneys in my group, Larry Wolk (who had been a partner of mine at Rosenman), and one very senior officer from the “sales” side of the RTC in Washington (the side that was responsible for the disposition of assets of failed institutions) for Thursday meetings with officers in the “reso- lution” side of the RTC in D.C.; executives from the Newport Beach, California, RTC regional office; representatives of Laventhol & Hor- wath, an accounting firm that specialized in real estate; partners in Grant Thornton, a firm that would specialize in financial “due dili- gence”; and people from Goldman Sachs and Lehman Brothers, two
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