Failing Banks:
Lessons Learned from Resolving First City Bancorporation of Texas
GGD-95-37: Published: Mar 15, 1995. Publicly Released: Mar 15, 1995.
Additional Materials:
- Full Report:
Contact:
Pursuant to a congressional request, GAO reviewed the Federal Deposit Insurance Corporation's (FDIC) resolution of the First City Bancorporation of Texas, focusing on: (1) why FDIC decided to resolve the corporation by providing financial assistance instead of using other available resolution alternatives; and (2) the additional cost to the Bank Insurance Fund (BIF) as a result of the resolution.
GAO found that: (1) in 1988, FDIC provided $970 million in financial assistance to recapitalize and restructure the banking organization; (2) FDIC chose this method of resolution because it was less costly than liquidating the banks in the event of insolvency; (3) FDIC estimated BIF costs to liquidate the banks to be about $1.74 billion, as opposed to the $970 million estimated for open bank assistance; (4) FDIC did not opt to sell the banks because it did not believe that it would be able to find acceptable buyers with sufficient capital to restore the banks to long-term viability; (5) FDIC placed the banks under its control for about 3 months and operated them as bridge banks to facilitate the orderly resolution of the banks; (6) FDIC relied on its best business judgment in estimating BIF costs at the time of the banks' failures; (7) FDIC considered loss estimates that ranged from $300 million to over $1 billion in making its least-cost resolution determination; (8) the Office of the Comptroller of the Currency could have better supported its decision to close the largest bank by ensuring that its examination reports and underlying workpapers were clear, well documented, and self-explanatory; and (9) FDIC resolution officials could have used OCC examination findings as a means of verifying its valuation of the banks' assets.
Sep 5, 2018
Community Banks:
Effect of Regulations on Small Business Lending and Institutions Appears Modest, but Lending Data Could Be ImprovedGAO-18-312: Published: Aug 6, 2018. Publicly Released: Sep 5, 2018.
Jul 19, 2018
-
Export-Import Bank:
The Bank Needs to Continue to Improve Fraud Risk ManagementGAO-18-492: Published: Jul 19, 2018. Publicly Released: Jul 19, 2018.
Jul 18, 2018
-
Securities Regulation:
SEC Inspections of Financial Industry Regulatory Authority's Governance Were Consistent with Internal GuidanceGAO-18-522: Published: Jul 18, 2018. Publicly Released: Jul 18, 2018.
Jun 26, 2018
-
Bank Secrecy Act:
Further Actions Needed to Address Domestic and International Derisking ConcernsGAO-18-642T: Published: Jun 26, 2018. Publicly Released: Jun 26, 2018.
Mar 22, 2018
-
Financial Technology:
Additional Steps by Regulators Could Better Protect Consumers and Aid Regulatory OversightGAO-18-254: Published: Mar 22, 2018. Publicly Released: Mar 22, 2018. -
Climate-Related Risks:
SEC Has Taken Steps to Clarify Disclosure RequirementsGAO-18-188: Published: Feb 20, 2018. Publicly Released: Mar 22, 2018.
Mar 16, 2018
-
Community Reinvestment Act:
Options for Treasury to Consider to Encourage Services and Small-Dollar Loans When Reviewing FrameworkGAO-18-244: Published: Feb 14, 2018. Publicly Released: Mar 16, 2018.
Mar 15, 2018
-
Commercial Real Estate Lending:
Banks Potentially Face Increased Risk; Regulators Generally Are Assessing Banks' Risk Management PracticesGAO-18-245: Published: Mar 15, 2018. Publicly Released: Mar 15, 2018.
Feb 27, 2018
-
Analyzing Regulatory Burden:
Policies and Analyses under the Regulatory Flexibility Act and Retrospective Reviews Could Be ImprovedGAO-18-404T: Published: Feb 27, 2018. Publicly Released: Feb 27, 2018. -
Community Banks and Credit Unions:
Regulators Could Take Additional Steps to Address Compliance BurdensGAO-18-213: Published: Feb 13, 2018. Publicly Released: Feb 27, 2018.
Looking for more? Browse all our products here
Explore our Key Issues on Financial Markets and Institutions
Explore our other Key Issues here
