Resolution Trust Corporation:
Evolving Oversight on Interim Servicing Arrangements
GGD-91-120: Published: Sep 18, 1991. Publicly Released: Sep 18, 1991.
- Full Report:
Pursuant to a congressional request, GAO reviewed the Resolution Trust Corporation's (RTC) efforts to manage assets during the interim period between the sale of a thrift institution and the award of a contract for asset management services for those assets remaining with RTC, focusing on: (1) whether the agreements covering the interim period included appropriate provisions to protect the government's interests; (2) whether RTC had sufficient bill verification procedures; and (3) the extent to which RTC monitored contractor performance under the interim agreements.
GAO found that: (1) only 2 months following its inception, RTC was responsible for managing and disposing of over $112 billion in assets, as well as staffing and structuring its organization; (2) because RTC was not yet authorized to handle thrift acquirer-bought assets, it entered into interim servicing agreements (ISA) with thrift acquirers to service remaining assets; (3) ISA were standard documents that provided for continued servicing of some, if not all, of the assets thrift acquirers had not bought; (4) during February 1990, RTC revised its interim servicing approach by discontinuing its use of separate ISA at resolution and incorporating ISA sections into the thrift sales agreement, requiring the acquirer to provide only accounting and payroll functions to service the receivership assets; (5) in one region, RTC was contracting for receivership management and servicing of remaining assets after resolution; (6) in an attempt to reduce assets needing to be serviced under interim asset servicing arrangements, RTC put such assets under management contracts while they were still in conservatorships; (7) factors common to all RTC methods to date include insufficient guidance to contract administration employees, insufficient contractor oversight, and insufficient ISA training; and (8) initiatives included in recent legislation to improve RTC contracting procedures included the development of a comprehensive contracting manual and implementation of a contracting training module.