Financial Audit:

Federal Savings and Loan Insurance Corporation's 1988 and 1987 Financial Statements

AFMD-90-34: Published: Oct 31, 1989. Publicly Released: Oct 31, 1989.

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GAO reviewed the Federal Savings and Loan Insurance Corporation's (FSLIC): (1) 1987 and 1988 financial statements; and (2) internal accounting controls system and compliance with applicable laws and regulations.

GAO found that: (1) during 1988, FSLIC incurred a $66 billion net loss, increasing its total deficit to $75 billion; (2) FSLIC reported a $43.6-billion loss allowance for 578 troubled but operating institutions; (3) FSLIC estimated that the present-value cost for merged or sold institutions during 1988 was $33 billion; (4) because of various financial uncertainties, actual resolution costs may differ from FSLIC cost estimates; (5) the Financial Institutions Reform, Recovery, and Enforcement Act dissolved FSLIC, transferred its assets to the newly formed FSLIC Resolution Fund and created the Resolution Trust Corporation to resolve troubled thrifts; (6) $305.9 billion will be needed over the next 33 years for total FSLIC resolution costs and debts, although the administration estimated the cost at $257.2 billion; (7) except as noted, the financial statements presented fairly the FSLIC financial position for 1987 and 1988; and (8) FSLIC complied with laws and regulations that could have materially affected its financial position.

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