Resolving Failed Savings and Loan Institutions:

Estimated Costs and Additional Funding Needs

T-AFMD-90-32: Published: Sep 19, 1990. Publicly Released: Sep 19, 1990.

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GAO discussed: (1) the Resolution Trust Corporation's (RTC) funding needs; and (2) RTC, its Oversight Board's, and the Congressional Budget Office's (CBO) cost estimates for resolving failed and troubled savings institutions. GAO noted that: (1) the Office of Thrift Supervision developed a rating system to measure the relative health of individual institution's financial conditions, compliance with laws and regulations, and overall operating soundness; (2) RTC, the Board, and CBO used similar methodologies to calculate their resolution cost estimates; (3) RTC will need at least another $50 billion in resolution funding to orderly and expeditiously close failed thrifts, but without additional funding, RTC will be unable to continue resolving institutions and the resolution cost will continue to increase; (4) it estimated the total resolution cost to range between $335 billion to $370 billion, excluding general Treasury financing costs; (5) due to legislative changes concerning RTC funding sources, the obligations-limit formula allowed RTC an additional $18.8 billion in borrowing authority; and (6) RTC needs Congress to raise the cap on the maximum obligations limit to at least $100 billion so that it can plan and budget for longer than the immediate future.

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