Thrift Failures:

Actions Needed to Stabilize RTC's Professional Liability Program

GGD-93-105: Published: Jun 28, 1993. Publicly Released: Jul 19, 1993.

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Pursuant to a congressional request, GAO provided information on: (1) various management changes to the Resolution Trust Corporation's (RTC) Professional Liability Section (PLS) program; (2) PLS staffing and the filing and disposition of PLS cases; and (3) actions RTC needs to take to maintain the PLS program as its functions are transferred to the Federal Deposit Insurance Corporation (FDIC).

GAO found that: (1) RTC did not design PLS management staffing actions and reorganizations to undermine its professional liability responsibilities; (2) some RTC management actions were ill-conceived and poorly implemented, and resulted in misguided PLS attorney consolidation and reassignment decisions, staff demoralization, and PLS program disruptions; (3) uncertainties exist regarding the PLS program's ability to effectively manage future liability claims due to the large professional liability workload and high proportion of inexperienced staff; (4) the Secretary of the Treasury has required RTC to review PLS program staffing and organization; and (5) RTC and FDIC management need to work cooperatively to improve PLS program stability, increase PLS staff and experience, and to ensure a smooth transition when RTC is dissolved and the PLS program is transferred to FDIC.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To ensure a strong PLS program and to help smooth the transition of PLS work to FDIC, the President and Chief Executive Officer, RTC, should work with the Chairman, FDIC, to analyze and address the agencies' current and future operational and staffing needs of the PLS program. This analysis should consider various staffing options and organizational structures, taking into account both agencies' current and future professional liability requirements. A key goal of this analysis should be the stabilization of the RTC professional liability program both currently and in the future as it is merged with the FDIC PLS program. The Chief Executive Officer, RTC, should take these factors into consideration when reviewing and recommending improvements to PLS organization and staffing, as he was requested to by the Secretary of the Treasury.

    Agency Affected: Resolution Trust Corporation

    Status: Closed - Not Implemented

    Comments: RTC was closed on December 31, 1995.

    Recommendation: Regardless of what actions are taken, the Chief Executive Officer and President, RTC, should keep the PLS attorneys informed of the agencies' plans and decisions concerning PLS to help decrease the level of uncertainty surrounding the program.

    Agency Affected: Resolution Trust Corporation

    Status: Closed - Not Implemented

    Comments: RTC was closed on December 31, 1995.

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