Deposit Insurance Funds:

Compliance with Obligation and Repayment Requirements as of September 30, 1993

AIMD-94-100: Published: May 9, 1994. Publicly Released: May 9, 1994.

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Pursuant to a legislative requirement, GAO reviewed: (1) the Federal Deposit Insurance Corporation's (FDIC) compliance with the maximum obligation limitation for the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF); (2) whether BIF and SAIF have borrowed funds from the Department of the Treasury to cover insurance losses and their ability to repay the loans; and (3) the factors that could affect future borrowings.

GAO found that: (1) as of September 30, 1993, FDIC calculated that BIF assets and other funding sources exceeded its obligations by $44 billion and SAIF assets and other funding sources exceeded its obligations by $1.2 billion; (2) there was no evidence that the FDIC calculations were unreasonable; (3) FDIC allocated all of its borrowing authority to BIF based on its potential funding needs but, as of September 30, 1993, neither fund had borrowed funds from Treasury; (4) the need for future BIF and SAIF borrowings and each fund's ability to repay such loans depends on the impact of future economic conditions on financial institutions' failures, the cost of these failures to the funds, the impact of recent legislation, future assessment revenues, and other funding alternatives; (5) FDIC expects that BIF will not need to borrow funds until after fiscal year (FY) 1999 and will reach its designated ratio of insured deposits to assets by 1996; (6) the extension of the Resolution Trust Corporation's authority to resolve troubled thrifts should reduce the need for SAIF to borrow funds to cover insurance losses until after FY 1999; and (7) in 1993, FDIC repaid the outstanding balance of BIF borrowings from the Federal Financing Bank because of favorable financial conditions and cash flows.

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