Who here remembers the RTC?

Question

When I was 25, the resolution trust corporation (RTC) was auctioning off saving and loan debacle properties.  I believe the RTC was formed by the government trying to bail out the S&Ls in trouble.  I remember thinking at that time, "I wish I had money to buy something."

I've had RTC in the back of my mind since then.  In 2007 or so, when the nation faced another real estate collapse, I decided to jump in and buy.

I wish I had thought of some creative ways to buy back in the RTC days...  mck

Jon Holdman · Answer

FSLIC was equivalent of the FDIC for Saving & Loan associations.  RTC wasn't really formed to bail out the S&L's so much as to dump all the assets from the failed ones.

If you remember, though interest rates were brutal then.  Mid double digits for OO loans.  I do remember the "jingle mail" even back then and (living in Houston at the time) the see through office buildings.

Jerry K. · Answer

From a Comment I wrote on a Blog post on BiggerPockets:

I wish I had more business sense back in 1984. I had just graduated college with a degree in Finance and the job market was bad. Mortgage rates were well north of 12% for 30 year mortgages.

My first job was with the FDIC which was closing banks left and right. The S&L debacle was in full swing and the FSLIC had gone under so the FDIC was stepping in. I had so many real estate foreclosures in front of me it was ridiculous! I was on the inside seeing all the deals both good an bad. "Deals" is the wrong word. Because nobody was making a deal - nobody knew these properties were in trouble.

My title was "Liquidation Assistant". By that name alone you can surmise my job was to take the loans the FDIC acquired and I had to sort through them and liquidate them. Yup, I had access to all the REO's before they were even vetted to be listed for sale or sent off to the newly formed RTC.

But I didn't have the money or the knowledge to know that what I had was a goldmine. I made less than $14,000 a year in that job, but if I knew then what I know now, the information I dealt with daily was worth a fortune.

McKellar Newsom · Answer

Jon Holdman  We all understand. Hope to see you at the next one.  It was great to meet so many fellow investors. mck

Jon Holdman · Answer

Thank you, McKellar Newsom, I appreciate that.  I wish I could have been there, but family matters took precedence.

McKellar Newsom · Answer

Jerry, I am really interested in your answer.  I didn't grasp until now that the Volcker types actually had the economy bite the bullet short term.   I wonder what would have happened if the government had taken a similar action this go around.

I also didn't realize that FSLIC, the FDIC equivalent, went under during the S& L debacle.

What is my memory trying to tell me about Volcker and bricks?  Do you remember some incident where builders threw bricks to protest?

Volcker and Greenspan seem to have opposite approval ratings.  Am I correct in that Volcker had low approval in office but better later as history looks back.

By the way, I brought my typewriter to college and used my first computer my 4th  year.   Thanks. mck

Jerry K. · Answer

McKellar,
Paul Volcker was Fed Chairman from August 1979 through 1987.  Started in the Carter administration and ended late in the Reagan administration.  He's given credit for choking out stagflation by first raising the Fed rates and thus all rates followed higher killing off weak businesses. Then he eased rates to help the remaining businesses invest and build.

It helped the affordable computer revolution also came about at that time.  Faster, cheaper ways to do accounting, engineering, designing, investments, health care, etc.  Industries changed quickly and jobs expanded for people with computer skills.

Ironically, we did not have computers in the FDIC at that time.  I dealt with paper files, had a secretarial pool that typed all letters and memos, and there was no email.  All correspondence was by phone and regular mail.

FSLIC (Federal Savings & Loan Insurance Corporation) went bankrupt when all the energy and real estate loans from the 1970's went bad late in the decade.  S&L's weren't as strict with their lending rules as banks.  However many banks also ended up going under too.

Back then, the leaders felt the country should bite the bullet, let rates rise, let banks fail, foreclosed on houses and other collateral for the loans and created the RTC to dispose of assets fast.

The school of thought was to take the hit in the economy short term, but get the assets of the RTC back into investors hands that could make money with them and use them to generate revenue and build the economy up again.

Many people called for a similar action in 2008.  Wonder if we would have gotten out of this messy economy faster or driven it into a Depression...

McKellar Newsom · Answer

By the way, Jon, you were missed at BP Summit. mck

McKellar Newsom · Answer

Thanks Jon!  None of the houses in our first neighborhood had garages because of the high interest rates.  Was this Volker's (spelling) time?  Wasn't there an incident with bricks? mck

McKellar Newsom · Answer

Jerry and Bill, wouldn't it be great to be a "liquidation assistant" now?

What's the FSLIC?

I had family members that bought from RTC auctions then flipped them all.  If they had kept them...

I'm thrilled to be buying now.

So let's see, Jon... If the cycles stay the same my daughters will be nearly my age now when the next real estate bargain bust happens.

Bill Gulley · Answer

Now that is wierd Jon, I was looking at this thread on about page 3 or 4 and almost posted but thought it was not significant for me to do so, then came back to the lead page and thought I was on page 3 or 4, then saw one of my posts and realized I was on page one again...

Twilight zone experience....and then the subject the RTC now something is wierd!

Yes I remember, I worked with them! A guy I know is still with FDIC, as they consolidated regulators. Ahh, the good ole' days!

Hey Jerry, I posted right after you and didn't see ya. I worked with the bunch in Houston but I was on the road flipping them to you. I loved sealing doors....LOL Yes, if we had known then what we know now we would have quit the job and gone the RE path full time! LOL

Who here remembers the RTC?

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