Failed Bank:

FDIC Sale of CrossLand Conservatorship Satisfied Least-Cost Test

GGD-94-109: Published: Apr 20, 1994. Publicly Released: Apr 20, 1994.

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Pursuant to a congressional request, GAO reviewed the Federal Deposit Insurance Corporation's (FDIC) resolution actions regarding the failed CrossLand Federal Savings Bank of Brooklyn, New York, focusing on whether FDIC: (1) complied with the least-cost calculation and documentation requirements; and (2) projected cost savings were realized when FDIC took interim ownership of CrossLand until a final resolution alternative could be determined.

GAO found that: (1) the FDIC decision to sell the conservatorship to institutional investors through a public offering complied with the least-cost calculation and documentation requirements of the Federal Deposit Insurance Corporation Act; (2) FDIC projects the resolution will cost the Bank Insurance Fund (BIF) $899 million; (3) FDIC determined that the public offering sale would be the least costly to BIF; (4) conservatorship costs less than other resolution alternatives; and (5) although there have been no significant problems with bank management during conservatorship operations, FDIC has been unable to achieve its projected savings and restore the bank to profitability.

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