Troubled Thrifts:

Bank Board Use of Enforcement Actions

GGD-89-68BR: Published: Apr 13, 1989. Publicly Released: May 5, 1989.

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In response to a congressional request, GAO provided preliminary information from its assessment of the Federal Home Loan Bank Board's (FHLBB) enforcement actions against near-failing thrift institutions.

GAO found that: (1) FHLBB took no formal enforcement action against over 50 percent of the 424 thrift institutions upon which it focused increased oversight; (2) FHLBB placed thrift institutions into receivership or conservatorship only after they became insolvent; (3) in one district, FHLBB carried a caseload of 29 near-failing thrifts for an average of about 2.2 years with no formal actions against most; (4) 23 of the 29 institutions became insolvent, of which 18 had no history of formal enforcement; (5) FHLBB delayed, for 22 months, issuing a formal cease-and-desist order against an institution with a history of regulatory violations and inadequate lending procedures; and (6) an informal FHLBB supervisory agreement with another institution was ineffective to prevent the institution from dissipating its assets because the institution paid about $2 million in dividends, and $650,000 in bonuses to its officers, prior to signing the agreement.

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