GAO discussed the Resolution Trust Corporation's (RTC): (1) progress in resolving failed or problem thrifts; and (2) funding needs. GAO noted that: (1) Congress took several legislative actions to strengthen and improve RTC operations, including management reform initiatives and reporting requirements; (2) RTC continues to make good progress in resolving thrifts and selling certain assets, and by the end of 1991 had resolved 584 thrifts at a cost of $77 billion; (3) RTC also improved its speed in resolving thrifts; (4) in December 1991, Congress authorized an additional $25 billion for thrift resolution but stipulated that RTC must obligate the funds before April 1, 1992; (5) RTC cannot accurately predict the full cost of its resolution actions or the exact number or time of future bank failures; (6) RTC made progress in disposing of certain thrift assets, but needs a more aggressive disposition program for its increasing inventory of hard-to-sell financial and real estate assets; (7) RTC also improved its contracting system but has made little progress in implementing effective strategies for contractor oversight and contract administration; and (8) RTC still lacks adequate information systems to support asset management and disposition, and such problems as unclear or changing requirements, inaccurate or incomplete data, poor software, and poor response times have delayed system delivery and use.
Matter for Congressional Consideration
|Congress should eliminate the April 1, 1992, obligations deadline placed on the $25 billion authorized in December 1991.||On March 26, 1992, the Senate approved a bill to lift the cap on RTC funding (S. 2482). No action in the House. Since no action was taken, unexpended funds were returned to the Treasury.|
|Congress should ask RTC to estimate its loss fund needs through the spring of 1993 and provide RTC with sufficient funds on a timely basis to carry out its responsibilities during this period.||In March 1993, the Thrift Depositor Protection Oversight Board requested $45 billion to fund RTC. This amount is estimated to cover the completion of RTC resolution responsibilities and provide initial funds for the Savings Association Insurance Fund (SAIF). In December 1993, Congress passed the RTC Completion Act which, among other things, provided funds for the completion of RTC resolution responsibilities through December 1995 when the act terminates RTC authority to operate and initial funds for SAIF.|
Recommendations for Executive Action
|Resolution Trust Corporation||1. RTC should define strategies, match information needs to those strategies, and then develop systems to provide complete, accurate, and reliable information to those who need it to carry out their duties to manage asset disposal programs or oversee contractors hired to carry out asset management and other functions.|