Failed Bank: FDIC Documentation of CrossLand Savings, FSB, Decision Was Inadequate
GGD-92-92
Published: Jul 07, 1992. Publicly Released: Jul 07, 1992.
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Highlights
Pursuant to a legislative requirement, GAO reviewed the Federal Deposit Insurance Corporation's (FDIC) resolution actions regarding a failed bank, focusing on whether the FDIC decision to delay the resolution met the requirements of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA).
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Deposit Insurance Corporation | The Chairman, FDIC, should ensure prompt development and implementation of policies governing the complete and consistent documentation of the agency's resolution actions. As required by section 13(c)(4) of the Federal Deposit Insurance Act, the FDIC Board should document the alternatives considered and the evaluation of each alternative, including the cost that the Board attributes to each alternative and the assumptions on which its cost evaluations are based. The record should also include appropriate documentation to support the assumptions underlying the Board's cost estimates and evaluations. |
Closed – Implemented
The policy guidance has been completed and issued.
|
| Federal Deposit Insurance Corporation | The Chairman, FDIC, should assess and report on FDIC policies, practices, and historical experiences, as well as those of open banks, in disposing of troubled assets that are not readily marketable. The study should determine whether, and under what circumstances, FDIC operations create a cost difference in expected recoveries on such assets. If recoveries are found to be less under FDIC control or contract, FDIC should develop methods to minimize or avoid such added losses. |
Closed – Implemented
FDIC completed its study which showed current information available in the agency cannot be readily used to identify FDIC's actual experience in disposing of assets during or after a resolution transaction. IMTEC and FDIC's IG have identified problems with FDIC's asset information system. FDIC is evaluating information needs and how to collect data to improve data to be collected on asset sales results.
|
| Federal Deposit Insurance Corporation | The Chairman, FDIC, should develop policies for determining when and how uncertainty should be incorporated into the cost evaluations. |
Closed – Implemented
FDIC addressed the issue in its operations manual, according to FDIC.
|
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