Resolution Trust Corporation:

Data Limitations Impaired Analysis of Sales Methods

GGD-93-139: Published: Sep 27, 1993. Publicly Released: Sep 27, 1993.

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Pursuant to a congressional request, GAO reviewed the Resolution Trust Corporation's (RTC) portfolio sales, focusing on whether the methodology RTC used in its statistical analysis was adequate.

GAO found that: (1) although RTC has used appropriate analytical methods, it is unable to sufficiently analyze its Standard Asset Management and Disposition Agreement contractor sales, portfolio sales, and auction sales; (2) RTC cannot adequately analyze its hard-to-sell assets because of insufficient sales and other financial data needed to assess the effectiveness of its asset disposition strategies; (3) RTC needs to improve its methods for collecting and summarizing asset sales information; and (4) accurate and complete asset sales information would enable RTC to better manage its inventory, assess its asset disposition programs, and develop a comprehensive business plan and strategy to maximize recoveries.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: On August 15, 1994, RTC issued Circular 10300.39, entitled "Multi-Asset Sales Transaction Budgets," which requires RTC or any of its contractors to document estimated and actual sales expenses for each multi-asset sales transaction. This directive applies to all multi-asset sales transactions, including portfolio sales, auctions, structured transactions, securitizations, and other multi-asset disposition transactions developed by RTC or any of its contractors for the disposition of loans, real estate, or other assets. The documentation of estimated and actual sales expenses will enable RTC to determine appropriate delegation authority approval levels and the effectiveness of different sales methods, and to monitor sales related expenses.

    Recommendation: In implementing the Secretary of the Treasury's management reform to improve management information systems, the President and Chief Executive Officer of RTC should improve RTC methods for collecting and summarizing asset sales and financial data. These data are needed to help RTC better manage its asset inventory and to ensure that its asset disposition strategies maximize recoveries.

    Agency Affected: Resolution Trust Corporation

 

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