Deposit Insurance Funds:
Compliance With Obligation and Repayment Requirements as of March 31, 1992
AFMD-93-31, Jan 21, 1993
Pursuant to a legislative requirement, GAO reported on the Federal Deposit Insurance Corporation's (FDIC) compliance with the maximum obligation limitation that applies to its insurance funds, focusing on: (1) the funds' ability to repay amounts borrowed from Treasury for insurance losses and factors affecting future borrowings; and (2) whether the Bank Insurance Fund's (BIF) management and disposition of failed bank assets will be sufficient to repay working capital borrowings.
GAO found that: (1) as of March 31, 1992, the funds had not exceeded their maximum obligation limit; (2) there was no evidence that FDIC did not accurately report the funds' remaining obligation authority; (3) FDIC had no formal policy for allocating Treasury borrowing authority between the two funds, and allocated the entire authority to BIF; (4) the Savings Association Insurance Fund (SAIF) needed part of the borrowing authority due to its impending thrift resolution responsibilities; (5) the FDIC allocation policy should consider each fund's cash flows and alternative funding sources while considering the constraints placed upon funding sources; (6) neither BIF or SAIF have borrowed funds from the Treasury to cover insurance losses; (7) factors that could affect future borrowings include the effect of future economic conditions on financial institution failures, the failures' costs to the insurance funds, and future revenues and funding alternatives; (8) FDIC does not anticipate borrowing for BIF until some time in 1993, but unforseen events could change the timing; and (9) BIF should be able to repay its outstanding working capital borrowings from the management and disposition of failed bank assets, although future uncertainties could change the fund's collections.