Deposit Insurance Funds:

Compliance with Obligation and Repayment Requirements as of December 31, 1993

AIMD-94-162: Published: Aug 17, 1994. Publicly Released: Aug 17, 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) BIF and SAIF ability to repay amounts borrowed from the Department of the Treasury to cover insurance losses; and (3) the factors that could affect future borrowings.

GAO found that: (1) as of December 31, 1993, 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) as of December 31, 1993, FDIC allocated all of its borrowing authority to BIF and neither fund had borrowed funds for insurance losses 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 and SAIF will not need to borrow funds to cover insurance losses until after fiscal year (FY) 1999; (6) BIF will reach its designated ratio of reserves to insured deposits by FY 1996, and SAIF will reach its designated ratio of reserves to insured deposits by FY 2004; (7) during the quarter ending December 31, 1993, FDIC did not borrow any funds from the Federal Financing Bank (FFB) for working capital needs; and (8) in 1993, FDIC repaid the outstanding balance of BIF borrowings from FFB.

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