Do Bad Guys Walk?

No one expected the Resolution Trust Corporation, the oddball agency cobbled together in 1989 to undertake the largest federal bailout ever, to liquidate more than 800 savings and loans without a hitch. And the dubious were right. From the beginning, the RTC, whose charter is to find and prosecute the crooked, the greedy and the inept among the nation's thrift managers, has been dogged by questions of efficiency, propriety and conflict of interest. Last week three RTC attorneys had more bad news; they testified on Capitol Hill that they had been blocked from prosecuting former S&L officials.

"The bad guys walk," said recently demoted RTC attorney Bruce Pedersen before the Senate Banking Committee. "They get off cheaply or they get off altogether because we're not allowed to do our jobs." Pedersen and his associates claimed that they were among two dozen lawyers who wanted to pursue criminal cases aggressively but were being harassed and driven out of the RTC. Another lawyer, Jacqueline Taylor, says she was forced to settle a $10 million case for $30,000 for political reasons.

The RTC also had some good news to report: it has sold off more than 600 thrifts and recovered more than $260 billion in assets.