“What we did, we took over the bank, nationalized it, fired the management, took out the bad assets and put a good bank back in the system,” he said, suggesting such an entity 105 should be a model for dealing with the failure of large financial firms. To create the RTC, the White House turned first to Taylor, asking him to be the first acting president of the RTC Oversight Board, a Cabinet-level panel that set policy for the 106 RTC. Taylor was heavily involved in its creation, forming an entity that he said would 107 handle “the world’s greatest liquidation.” He became more deeply involved with the RTC when the head of the oversight board, Daniel Kearney, resigned in a dispute with the Treasury Department and left the RTC without a leader.
“ Who did they borrow from the Fed to save the day? It was �ill �aylor. ” “Who did they borrow from the Fed to save the day? It was Bill Taylor,” Rep. Gonzales later recalled, adding that Taylor lived the rest of his life without ever receiving “proper 108 credit for what he did, but he saved the RTC.” Taylor filled the post on an interim basis for four months, taking leave from his 109 position at the Fed. 110 In an early 1990 interview, Taylor was asked about the causes of the thrift crisis. “The whole thing offers many lessons, most of which have been taught before,” Taylor said. “Fast growth, unstable funding sources, human frailty and a lack of controls can severely damage an institution – but the big gamble that causes the most fatalities is in the area of asset quality. Making loans (or equity investments) that do not generate sufficient cash flow to service the debt and cover the risks involved is the greatest danger facing financial institutions, including banks.” Taylor’s strong reputation only grew through the crisis. He played a key role in making sure that legislation to address the S&L crisis contained tough regulations to prevent 111 future losses by making thrift owners risk more of their own funds. Criticism of the RTC swelled as the cost of liquidating assets continued to spiral. Media accounts in the spring of 1990 indicated 105. Bloomberg, May 13, 2009. that the agency was prepping to spend nearly $1 106. Washington Post, May 4, 1990. 107. The Region, February 1990. billion a day over a two-month span as it worked 108. San Jose (Calif.) Mercury News, Aug. 21, 1992. 112 to resolve 141 failed institutions. The entire 109. Associated Press, published Aug. 21, 1992. 110. The Region, February 1990. 111. Washington Post, May 4, 1990. 112. New York Times, May 2, 1990.
Integrity, Fairness and Resolve •
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