Failed Thrifts: Resolution Trust Corporation and 1988 Bank Board Resolution Actions

GAO discussed the Resolution Trust Corporation's (RTC) resolution of insolvent thrifts. GAO noted that: (1) RTC had either sold or liquidated 52 thrifts and placed 350 thrifts in its conservatorship program as of March 21, 1990; (2) RTC expected to become responsible for resolving 558 to 628 institutions; (3) the pace and structure of RTC resolutions and its marketing and selection process represent a significant improvement over those of the Federal Home Loan Bank Board (FHLBB); (4) RTC assigned the highest priority to disposing of thrifts with the most rapidly mounting losses; (5) RTC did not always act quickly enough to sell thrifts where high buyer interest was demonstrated; (6) proper implementation of RTC thrift-resolution policies should ensure avoidance of risk exposure, cost, and uncertainties that existed and continue to exist for FHLBB resolutions; (7) RTC experienced high turnover of conservatorship managing agents; (8) RTC acquired many of its conservatorship agents from the private sector, and they were not familiar with the Federal Deposit Insurance Corporation's culture, policies, and procedures; (9) there was not adequate guidance regarding managing and downsizing of thrifts under the conservatorship program; and (10) it was continuing its review of federal investigations of illegal and improper acts that could have contributed to thrift failures.