Deposit Insurance Funds:

Compliance With Obligation and Repayment Requirements as of 9/30/92 and 12/31/92

AIMD-93-75: Published: Sep 30, 1993. Publicly Released: Sep 30, 1993.

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GAO reviewed the Federal Deposit Insurance Corporation's (FDIC) compliance with obligation and repayment requirements, focusing on: (1) Bank Insurance Fund (BIF) and Savings Association Insurance Fund (SAIF) compliance with the statutory maximum obligation limitation specified in the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA); (2) BIF and SAIF borrowings from the U.S. Treasury for insurance losses; and (3) whether BIF will generate sufficient proceeds from the management and disposition of failed bank assets to repay working capital borrowings.

GAO found that: (1) as of December 31, 1992, BIF assets and other funding sources exceeded its obligations by $40 billion and $37 billion, respectively; (2) as of December 31, 1992, SAIF assets and other funding sources exceeded its obligations by $245 million and $280 million, respectively; (3) neither BIF or SAIF has borrowed funds for insurance losses from the U.S. Treasury; (4) the need for future borrowings for insurance losses, and each fund's ability to repay any such borrowings, depends on the impact of future economic conditions on bank failures, the cost of these failures to the insurance funds, future assessment revenues, and other funding alternatives; (5) FDIC has borrowed approximately $10.2 billion from the Federal Financing Bank (FFB) for BIF working capital needs which is to be repaid primarily with proceeds from the management and disposition of failed bank assets; (6) FDIC has estimated that net future collections from the BIF inventory of failed bank assets will be about $14.4 billion; and (7) on August 6, 1993, FDIC repaid the outstanding FFB balance of BIF working capital borrowings.

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