Financial Audit:

Resolution Funding Corporation's 1989 Financial Statements

AFMD-91-49: Published: Apr 2, 1991. Publicly Released: Apr 2, 1991.

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GAO examined the Resolution Funding Corporation's financial statements for the fiscal year December 31, 1989.

GAO found that: (1) the Funding Corporation's $4 billion deficit represented the difference between the actual cost and ultimate maturity value of its investment in certain Department of the Treasury securities; (2) the deficit would be eliminated over time as the securities matured; (3) as of January 15, 1991, the Funding Corporation sold the $30 billion in bonds it was authorized to issue; (4) the Funding Corporation would be paying approximately $3 billion less in interest if it had sold the bonds at rates equal to the Treasury's; and (5) the statement of financial position presented fairly the Funding Corporation's financial position as of December 31, 1989, in conformity with generally accepted accounting principles.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Congress provided RTC with an additional $30 billion for resolution losses through a direct Treasury appropriation, thereby saving .3 percent or more than $2.5 billion in interest costs over the life of the loans.

    Matter: Congress should provide additional funds to the Resolution Trust Corporation (RTC) so that resolutions of troubled thrifts can continue without undue interruption. For those additional funds that will be raised through borrowings, Treasury should be authorized to issue the bonds directly in order to minimize interest costs.

 

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