Failed Thrifts: Allegations at FirstSouth Receivership in Little Rock, Arkansas
GGD-89-98
Published: Jun 16, 1989. Publicly Released: Jun 21, 1989.
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Highlights
Pursuant to a congressional request, GAO investigated four allegations of wrongdoing concerning a Federal Savings and Loan Insurance Corporation (FSLIC) receivership.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Home Loan Bank Board | The Chairman, FHLBB, should instruct the Executive Director, FSLIC, to appoint as federal employees those receivership employees who carry out federal functions under direct federal supervision. |
Closed – Not Implemented
FHLBB and FSLIC were abolished in August 1989.
|
| Federal Home Loan Bank Board | The Chairman, FHLBB, should instruct the Executive Director, FSLIC, to make no further payments to the former FirstSouth Receivership property manager for any work billed absent additional information that the work was not substantially completed while he was employed by the receivership and absent clear evidence of a benefit to the receivership. |
Closed – Implemented
No further payment has been made nor do they have any intentions of making any future payments.
|
| Federal Home Loan Bank Board | The Chairman, FHLBB, should instruct the Executive Director, FSLIC, to take action to recover funds paid to the former FirstSouth Receivership property manager under the invalid contract for work he did or for which he was responsible as a receivership employee. |
Closed – Not Implemented
Prudent and cost efficient recovery of funds is not likely.
|
| Federal Home Loan Bank Board | The Chairman, FHLBB, should instruct the Executive Director, FSLIC, to take action to recover the property disposed of inappropriately at the employee auction. |
Closed – Not Implemented
Cost of recovery and resale of these items would probably exceed the amount recovered through subsequent sales. The agency was abolished.
|
| Federal Home Loan Bank Board | The Chairman, FHLBB, should instruct the Executive Director, FSLIC, to adopt a policy on the circumstances and conditions under which receiverships can and cannot do business with debtors in default. |
Closed – Not Implemented
Policy was being developed for sale of assets to debtors in default. Subsequently, the agency was abolished.
|
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Topics
Bank failuresBank holding companiesBank managementConflict of interestsEthical conductFair market valueFederal property managementInsured commercial banksIrregular procurementSavings and loan associations