Resolution Trust Corporation's 1990 Financial Statements
AFMD-92-20: Published: Oct 25, 1991. Publicly Released: Oct 25, 1991.
- Full Report:
GAO reviewed the Resolution Trust Corporation's (RTC): (1) financial statements for the year ended December 31, 1990; and (2) internal accounting controls and compliance with applicable laws and regulations.
GAO found that: (1) significant uncertainties affecting RTC cost estimates for resolving institutions and internal control weaknesses precluded GAO from determining its estimated receivership recoveries for claims paid on behalf of depositors and its estimated liability for unresolved institutions; (2) due to continuing weakness in the economy and the overbuilt real estate market, present estimates of recovery value for RTC assets are problematic; (3) RTC addressed its internal control weaknesses by instituting new receivership policies and procedures, revising its valuation methodology, and planning to produce quarterly receivership recovery estimates; (4) RTC 1990 financial statements indicated that it could incur up to $158 billion in losses for probable and possible resolution actions; (5) RTC was provided $80 billion to resolve failing thrifts, and in September 1991, requested another $80 billion to cover anticipated losses associated with cleaning up the thrift industry; (6) RTC reported that it is nearly out of funds, and requested that its working capital borrowing authority be increased to $160 billion; (7) RTC expects to recover adequate funds from receivership asset sales to repay the Federal Financing Bank (FFB) for borrowed capital, but if receiverships fail to bring in adequate funds, RTC will have to request additional funding to repay FFB; (8) even though it is impossible to accurately determine eventual funding requirements, RTC will only be able to continue its resolution activities if it receives prompt funding; and (9) RTC complied, in all material respects, with those provisions of laws and regulations that could have a material effect on its financial statements.