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R E S O L U T I O N TRUST C O R P O R A T I O N
Resolving The Crisis
Restoring The Confidence




R E S O L U T I O N TRUST C O R P O R A T I O N

September 30, 1994

Resolving The Crisis
Restoring The Confidence

Resolution Trust Corporation
Washington, D.C.
Sirs:
In accordance with the provisions of section 501 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, the
Resolution Trust Corporation is pleased to submit its Annual Report
for 1993. Financial operating plans and forecasts have been
provided separately.
Very truly yours,

Deputy and Acting Chief Executive Officer

The President of the U.S. Senate
The Speaker of the U.S. House of Representatives

CHIEF

EXECUTIVE

O F F I C E R ’S

STATEMENT

he Resolution Trust C o rp oratio n

ity a n d w om en's pro g ra m s, th e D e p a r tm e n t o f

(R T C ) has now entered the last

M in o rity and W o m e n s Programs was elevated to a

phase of its operations. 1am pleased

division, and the Assistant Vice President became a

to report that, given the RTC's progress

Vice President.

in 1993, the C o rp oratio n is now poised

A far-reaching new program, the Small Investor

to com plete its jo b by the statutory sun­

Program, was also created to give investors in the

set date, no later than December 31,1995.

moderate capital range more opportunities to c o m ­

T h e days w h e n the R T C resolved

pete for and purchase assets. All of these changes

scores of thrifts in a single m o nth and disposed of

were designed to make the RT C more efficient and

tens of billions of dollars in assets in one quarter are

its programs more equitable as it works to complete

thankfully behind us. T he most serious damage of

its mandate.

the savings and loan crisis has been addressed, and

By far the most pivotal event o f the year was

today depositors continue to retain faith in the promise

C o n g re s s ' a p p ro v a l in N o v e m b e r 1993 o f th e

of deposit insurance and to benefit from the improved

Resolution Trust Corporation C o m p le tio n Act, leg­

stability of savings institutions.

islation w hich provided the final installment of RT C

At the end of 1993, there remained only 63 thrifts

funding and set an agenda for creating more o p p o r­

to be resolved and $63 billion in assets of w hich to

tunities for minorities and wom en. W ith funding in

dispose. At that point, 680 thrifts had been resolved,

hand, the R T C has resumed resolving thrifts, and

protecting 22.9 m illion depositors, $353 b illion (net

plans to com plete the sale of all rem aining conser­

of putbacks) in assets sold, and $680 m illion in recov­

vatorships by the end of the third quarter of 1994.

eries c o lle c te d from professional lia b ility claim s

The RT C has also im plem ented the legislation's pro­

against individuals and profession­

visions relating to m inority and women's programs,

als w ho had participated in b rin g ­

including bidder preferences for m inority investors

ing about the crisis.

seeking to purchase thrifts or branches located in

The pace o f resolutions during

m inority neighborhoods.

1993 was slow as a result of Congres­

T he C o m p le tio n A ct also changed the RTC's

sional deliberations on pro v id in g

sunset to no later than D ecem ber 31, 1995, at least

th e last in s ta llm e n t o f fu n d in g .

one year earlier than was originally established in

Twenty-seven thrifts were resolved

the 1989 legislation creating the C o rp o ra tio n . In

during the year and $49 billion (net

light of this earlier sunset date, we are w orking close­

of putbacks) was recovered for tax­

ly w ith the Federal D eposit Insurance C orporation

payers through asset sales and co l­

on the transfer of RT C assets, personnel, and oper­

lections. T he R T C also recovered

ations to the F D IC .

$351 m illio n in funds from profes­
sional liability claims.
In a d d itio n to c o n d u c tin g its
Jo h n E. Ryan

In m y six months w ith the RTC, I have seen first­
hand the dedication of the RTC's employees, w ho
have helped bring the resolution of the savings and

essential business in 1993, the RT C

D e p u ty a n d A ctin g C h ie f
Executive O ffic er

loan crisis to its final chapter. Never before has such

also paused to take stock of opera­

an organization been created and charged w ith c o n ­

t io n s a n d m a k e s o m e e s s e n tia l

fronting such a massive task. W ith o u t the dedica­

improvements. A wide range of management reforms

tion demonstrated daily by the R T C employees, the

was enacted to ensure the integrity and cost-effec-

anticipated prom pt and successful conclusion of this

tiveness of operations. A new C h ie f Financial Officer

mission w o uld not be possible.

was appointed to manage financial and accounting
activities, and all such activities were consolidated
under one division. As part of the expansion of m inor­

2




CEO S tatement

June 22, 1994

R e s oluti on Trust Co r p o r a t i o n

TABLE

OF

CONTENTS

Transmittal Letter ............................................................................................................................ 1
Chief Executive Officer's Statement ............................................................................................. 2
Introduction

......................................................................................................................................4

Division of Legal Services ..............................................................................................................7
Department of Asset Disposition ........................................................................................................................... 8
Department of Conservatorships and Receiverships

.............................................................................................8

Department of Corporate Affairs ........................................................................................................................... 9
Department of Litigation

......................................................................................................................................10

Division of Administration and Corporate R e la tio n s .............................................................. 13
Department of Administration ..............................................................................................................................14
Department of Contracts, Oversight, and Evaluation

.........................................................................................15

Office of the Secretary .......................................................................................................................................... 17
Office of Governmental Relations ....................................................................................................................... 17
Office of E t h ic s .......................................................................................................................................................17
O ffice of Corporate Communications ................................................................................................................. 18

Division of Institution Operations and S a le s .............................................................................19
Department of O p e ra tio n s .................................................................................................................................... 20
Department of R eso lu tio n s.................................................................................................................................... 26
Department of Planning and Analysis

................................................................................................................. 29

Department of Information Resources Management ...........................................................................................30

Division of M inority and Women's Program s.............................................................................3 3
Department of Minority- and W om en-O wned Business .....................................................................................34
Department of Legal P ro g ra m s.............................................................................................................................. 34
Department of Equal Em ployment Opportunity and Affirmative Action
Department of Policy, Evaluation, and Field Management

Division of Asset Management and Sales

..........................................................35

................................................................................ 36

................................................................................. 37

Department of Field Activities .............................................................................................................................. 38
Department of Capital Markets ............................................................................................................................ 39
Department of Asset M a r k e tin g ............................................................................................................................ 40
Department of Affordable Housing ......................................................................................................................41
Department of the Small Investor Program

......................................................................................................... 42

Division of the Chief Financial O f f ic e r ...................................................................................... 45
Office of Accounting Services

.............................................................................................................................. 46

Office of Budget and Planning .............................................................................................................................. 46
O ffice of Field Accounting and Asset Operations
O ffice of Management Control

............................................................................................... 47

............................................................................................................................ 47

R e g u la tio n s.......................................................................................................................................49
Financial Statements and Internal C o n tr o ls ............................................................................... 53
S ta tistic s............................................................................................................................................95
Index

.............................................................................................................................................. 100




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INTRODUCTION

E

stablished on August 9, 1989, with

thrifts, and maximizes the availability and afford­

th e pa s s a g e o f th e F in a n c ia l

ability of residential real property for low- and mod-

In stitu tio n s Reform , Recovery,

erate-income individuals.

a n d E n fo rc e m e n t A c t o f 1989

To ensure that as m any S&L violators as possi­

(FIRREA ), the R esolution Trust

ble are punished, and to recover money from w rong­

C orporation (RTC) is tasked with

doers, the R T C is authorized to investigate, initiate

resolving the savings and loan cri­

civil litigation, and make criminal referrals in cases

sis created during the 1980s. Risky

involving former officers, directors, and other pro­

fessionals w ho
investments, fraud, and mismanagement at hundreds contributed to the thrifts' downfall.
o f thrifts across the co un try c o n trib u te dThe their
to Resolution Trust C orporation Refinancing,

demise— a financial crisis this nation had not seen

Restructuring, and Im provem ent Act of 1991 ( H R .

since the Great Depression. T he RTC's jo b is to ful­

3435), enacted on Decem ber 12,1991, provided the

fill the governm ent's prom ise to pro te ct insured

R T C w ith $25 b illio n in fund ing through April 1,

deposits at these failed institutions.

1992; extended the RTC's ability to accept ap p o in t­

T he R T C manages and sells failed savings insti­

ment as conservator or receiver from August 9, 1992,

tutions, and recovers funds by m anaging and selling

set forth in FIRREA, to September 30, 1993,- redes­

the institutions' assets. These thrifts are ones that had

ig n ate d the R T C O v e rs ig h t Board as the T h rift

bee n in sure d b y the Federal S av in g s an d L o an

D epositor Protection Oversight Board and restruc­

Insurance C o rporatio n (FSLIC) for w hich a conser­

tured its membership,- abolished the RT C Board of

vator or receiver was app ointe d d uring the period

Directors and removed the F D IC as exclusive m a n ­

January 1, 1989, through a date between January 1,

ager of the RTC,- and created the office o f C h ie f

1995, and Ju ly 1, 1995, to be d eterm ined by the

Executive Officer of the RTC, requiring appointm ent

C h a irp e rs o n o f the T h r ift D e p o s ito r P ro te c tio n

to that office by the President w ith the advice and

O versight Board.

consent of the Senate.

U p o n its creation in 1989, the R T C inherited

From A p ril 1, 1992, th ro u g h D e c e m b e r 17,

262 failed thrifts from the Federal D eposit Insurance

1993— w hen President C lin to n signed into law the

C orporation (F D IC ), w hich had led an interagency

RT C C o m p le tio n A ct— the RT C was w itho ut fu n d ­

effort to evaluate and oversee the operations of the

ing to resolve failed savings and loan institutions.

nation's insolvent thrifts. By yearend 1993, the RT C

W ith enactment of this legislation, the April 1, 1992,

had resolved 680 insolvent thrifts, and achieved asset

lim itation on funds previously established under the

sales and collections totaling $353 billion (net of put­

R T C Refinancing, Restructuring, and Im provem ent

backs) for the nation's taxpayers. In 1993, the RT C

Act of 1991 was removed. The RTC was given author­

resolved 27 failed thrifts,- asset sales and collections

ity to use up to $18.3 billio n— w hich remained from

totaled $49 billion (net of putbacks). A t yearend, the

the $25 billio n authorized under the 1991 act— to

R T C was supervising 63 thrifts in its conservatorship

resolve failed savings institutions.

program that the O ffice of T hrift Supervision had
determined to be insolvent.
As part of its mandate under FIRREA, the RT C

A m o n g other provisions of the RT C C om pletion
Act were the extension of the deadline for a p p o in t­
m ent of the RT C as conservator or receiver for sav­

must conduct its operations in a m anner w hich m ax­

ings associations from September 30, 1993, to a date

imizes the net present value return from the sale or

between January 1, 1995, and July 1, 1995, to be

o ther d isposition o f failed thrifts and their assets,

determined by the Chairperson of the Thrift Depositor

m inim izes the im pact of such transactions on local

Protection O versight Board,- establishment of a new

real estate and financial markets, minimizes the amount

t e r m in a tio n d a te fo r th e R T C — n o la te r th a n

of any loss realized in the resolution of the insolvent

D ecem ber 31, 1995, at least one year earlier than




Resolution Trust Corporation Organizational Structure
D ecem ber

31,

1993

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INTRODUCTION

previously established,- expansion of the RTC's m inor­

Roelle, Senior Vice President, D ivision of Institution

ity and women's programs and affordable housing

Operations and Sales (who served as committee chair­

responsibilities,- im plem entation of numerous m a n ­

man), Lamar C. Kelly, Senior Vice President, Division

agement reforms, outlined in March 1993 by Secretary

o f A s s e t M a n a g e m e n t a n d S a le s , D o n n a FT

o f the Treasury Lloyd Bentsen, reduction of the m ax­

C un n in g h a m e , C h ie f Financial Officer, Jo h n n ie B.

im u m a u th o r iz a tio n o f fun d s for S A IF (S avin gs

Booker, Vice President, D iv isio n of M in o r ity and

Association Insurance Fund), controlled by the FD IC ,

Women's Programs,- Barry S. Kolatch, Vice President,

to $8 b illio n th ro ug h fiscal year 1998, or until its

D e p a rtm e n t o f P la n n ing and Analysis,- T hom as P.

reserve ratio equals 1.25 percent, whichever occurs

Horton, Vice President, Department of Field Activities,

first, and creation o f an F D IC -R T C transition task

and E. G lio n Curtis, Acting General Counsel, Division

force to facilitate the transfer of R T C operations and

of Legal Services.

personnel to the F D IC in a coordinated manner.

T h e T h r ift D e p o s ito r P ro te c tio n O v e rs ig h t

T h e R T C operates from its h e a d q u a rte rs in

Board reviews the RTC's overall strategies, p o li­

W ashin gton , D C ., field offices and sales centers in

cies, and goals, in c lu d in g those deem ed likely to

six c itie s — A tla n ta , Georgia,- N e w p o r t B each,

im pact significantly on the RTC's financial c o n d i­

California,- Dallas, Texas, Denver, C olorado, Kansas

tio n , its o perations or its cash flows,- or those it

C ity, Missouri, and Valley Forge, Pennsylvania,- and

deems to involve substantial public p o lic y issues.

the N ational Sales C enter in W ashin gton D .C .

T he Board's m embers include the Secretary o f the

O n M arch 15, 1993, D ep uty Treasury Secretary

Treasury, w h o chairs the Board; the C hairperson

Roger C . A ltm a n becam e interim C h ie f Executive

o f the F D IC Board o f Directors,- the R T C C E O ;

Officer of the RTC, taking over the helm from resign­

the D ire c to r o f the O ffic e of T h rift Supervision,-

ing President and C E O Albert V. Casey. A t yearend

the C hairperson o f the Board o f G overnors o f the

1993, the Executive C o m m itte e — w h ic h served as

Federal Reserve System, and two independent m e m ­

the policy-setting entity of the R T C and addressed

bers a p p o in te d by the President, w ith the advice

m ajor operational matters— consisted of W illia m FI.

an d consent o f the Senate.

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LEGAL

SERVICES

he D ivision of Legal Services pro-

(JD C ) initiative, a partnership arrangement designed

vides comprehensive legal services

to sell approximately $7 billion (book value) of ju d g ­

to the RTC. The division advises

ments, deficiencies, and chargeoffs.

the W ashin gton and field staffs on such
issues as resolutions, conservatorship and
receivership operations, asset disposition,
contracting, litigation, claims against directors and officers of failed institutions, and
special issues, including the RTC's statutory author­
ity and responsibilities, legislation, and tax and envi­
ronmental matters.
The General Counsel heads the division, w hich
consists o f four departm ents: Asset D is p o s itio n ,
C o n se rva to rships an d Receiverships, C o rp o ra te
Affairs, and Litigation.

Department of Asset Disposition
T he D ep artm e nt of Asset D isposition reviews the

Office of Securities and Finance
In 1993, the Office of Securities and Finance assist­
ed w ith the securitization o f loans, resulting in the
sale of $3.8 billion (book value) of single-family, m ul­
tifam ily, com m ercial, m anufactured housing, and
hom e equity loans.
In addition, the office assisted in disposing of a
variety o f high-yield and other securities. In 1993,
the R T C sold over $182 m illion (face value) in junk
bonds and equity securities, and $193 m illion (face
value) in additional shares of com m on preferred stock
and warrants. T he office also assisted in disposing of
$139 m illio n (face value) in high ly leveraged trans­
action loans during the year.

legal aspects of R T C asset sales, in clud ing the dis­
position of real estate, high-yield and other securi­
ties, a n d p e r fo r m in g a n d n o n - p e rfo rm in g loans
through securitized transactions. T he departm ent is
comprised of the Office of Real Estate, and the Office
o f Securities and Finance.

Department of Conservatorships
and Receiverships
T h e D e p a r t m e n t o f C o n s e r v a t o r s h ip s a n d
Receiverships provides legal advice and support to
conservatorship and receivership operations, legal

Office of Real Estate
In 1993, th e O ffic e o f Real Estate assisted th e
C o rporatio n in closing more than $34 b illio n (book
value) in sales of real estate and loans secured by real
estate through sealed-bid offerings, portfolio sales,
and open-cry auctions.
The office also provided legal support on major
real estate transactions, in c lu d in g Land Fund I, in
w h ich nearly $0.8 b illio n (book value) in land and
loans secured by land were sold through a lim ited
partnership arrangem ent, and Landm ark I, w h ic h

counsel and docum entation for sales of subsidiaries,
and legal support in resolving failed savings assocations in clud ing providing docum entation required
when the R T C takes over and resolves failed thrifts.
T he departm ent also provides legal advice for c o n ­
tracting activities. The departm ent consists o f the
O ffic e o f C o n se rv a to rsh ip s, R eceiverships, an d
Resolutions, and the O ffice of Contracting.

Office of Conservatorships,
Receiverships, and Resolutions

offered g o lf course and other developm ent proper­

In 1993, the Office of Conservatorships, Receiverships,

ties from the L andm ark subsidiaries o f O a k Tree

and Resolutions provided legal support for six major

Federal Savings Bank, N e w Orleans, Louisiana, in

thrift resolutions (resolutions o f thrifts w ith lia b ili­

accordance w ith an approved b ank rup tcy plan of

ties exceeding $500 m illio n at conservatorship) and

reorganization.

21 field thrift resolutions (resolutions o f thrifts w ith

T h e o f f ic e a s s is te d in th e p r e p a r a t io n o f

liabilities totaling less than $500 m illio n at conser­

E nvironm ental II, sealed-bid sales of e n v iro n m e n ­

vatorship), w hich represented an aggregate of $8.2

tally impaired assets and loans secured by such assets,

b illio n in deposits and resulted in savings of $300

and in the Judgm ents, Deficiencies, and Chargeoffs

m illio n over the cost of a payoff.

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In addition, the office assisted in the term ina­

the revised Statement of Policies Concerning Outside

tion o f 16 receiverships, and in the processing of 52

Counsel Conflicts o f Interest was approved, setting

receiverships a pp ro ve d for te rm in a tio n in 1993.

fo r th th e p r in c ip le s a p p lie d b y th e C o n f lic ts

Terminations are accom plished through the RTCs

C o m m itte e in resolving outside counsel conflicts

purchase of the rem aining receivership assets and its

o f interest.

paym ent of final dividends to creditors o f the for­

The office also assisted the RTC's Office of Ethics
w ith its program to inform contractors of the c o n ­

mer institutions.
D u rin g the year, the office also provided legal

sequences of violating R T C regulations.

support for the sale of two healthy thrifts that were
subsidiaries of failed institutions.

Department of Corporate Affairs

Office of Contracting

T he D ep artm e nt of Corporate Affairs oversees all
legal matters pertaining to the R T C ’s internal cor­

T he O ffice of C o n tractin g provides legal advice on
contracting issues. In Decem ber 1993, after the RTC
C o m p le tio n A ct became law, the office began assist­
ing in the im plem entation of provisions in the act
w h ich require strengthened controls over contract­
ing and increased participation of women and m inori­
ties in contracting activities. T he office coordinated
w ith the O ffic e o f C o n tra c t O p e ra tio n s a n d the
Division of M inority and Women's Programs to revise
co ntractin g procedures, regulations, and standard

porate structure, governance, and procedure, as well
as legislative and policy matters, and provides legal
support in such areas as tax and environm ental law.
T he departm ent also is reponsible for all legal m at­
ters involving the R T C as a federal employer, includin g p e r s o n n e l, la b o r - r e la tio n s , a n d g e n e r a l
em plo ym ent matters.
The departm ent is comprised of the Offices of
Corporate Issues, Special Projects, and Labor and
Em ploym ent.

contracts in accordance w ith the act's provisions.
T he office's O utside Counsel M anagem ent U n it
( O C M U ) continued in 1993 to oversee policies and

Office of Corporate Issues

procedures for retaining outside counsel. T he R T C

In 1993, the O ffic e o f C o rp orate Issues provided

C o m p le tio n Act provides that only a warranted c o n ­

legal support an d analysis on RTC-related legisla­

tracting officer appointed by the R T C or a m anag­

tion, including the R T C C o m p le tion Act. The office

in g a g e n t o f a s a v in g s a s s o c ia t io n in R T C

prepared several analyses of the R T C C o m p le tio n

conservatorship m ay execute a contract on behalf of

Act, including a mem orandum setting forth the h ig h ­

the R T C for the provision of goods or services. The

lights o f the conference report, a preliminary list of

RTC's General Counsel designated O C M U 's acting

action items arising from the act, and an analysis of

Senior Counsel as a warranted contracting officer,

the acts provisions.

w h o in turn redelegated levels o f authority at head­

The office also assisted in matters involving RTC

quarters and in the field to execute legal services

internal corporate governance, law, and procedure,
includ ing drafting C E O resolutions, delegations of

contracts.
O C M U also acte d as th e D iv is io n o f Legal

authority, and other documents. D u rin g 1993, pur­

Service's liaison w ith the Office of Inspector General

suant to requirem ents u n d e r the C h ie f Financial

in audits of outside counsel. O C M U prepared the

Officers Act of 1990, the office performed internal

division's responses to audit reports and negotiated

control reviews o f the D ivision of Legal Service's del­

fee bill adjustments w ith the audited firms.

egations of authority in each of the six field offices.

D u r in g the year, the O ffic e o f C o n tractin g's

In a d ditio n , the office was responsible for the

O u ts id e C ounsel C onflicts U n it assisted the jo in t

a d m in is tra tio n a n d o v e rs ig h t o f th e S e ttle m e n t

R T C /F D IC O utsid e Counsel C onflicts C o m m ittee

W o rk o u t Asset Teams (SW A T ) program at h e a d ­

in overseeing the handling of conflict-of-interest m at­

quarters and the field offices, in clud ing the devel­

ters relating to outside counsel. In D ecem ber 1993,

o pm e n t of SW A T policies and procedures.

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LEGAL

SERVICES

Office of Special Projects

Office of Labor and Employment

In 1993, the O ffice of Special Projects provided legal

T he O ffice of Labor and Em ploym ent is responsible

support to the R T C in several areas, including tax

for all legal matters involving the R T C as a federal

matters, pension and employee benefits, information

employer, including personnel, labor-relations, ethics,

disclosure, and environm ental law. T he office also

equal em ploym ent opportunity, and other em plo y­

administered the com puterized tracking system for

ment matters. In 1993, the office provided advice on

legal matters— the R T C Legal Inform ation System

these matters, including issues relating to the return

(RLIS). A t yearend, RLIS was m onitoring more than

of RTC-assigned employees to the F D IC and the

20,000 active legal matters, and contained records

ramifications of the RTC's dow nsizing and sunset.

o f n e a rly 1 0 0 ,0 0 0 n o n - a c tiv e e n trie s (m o s tly
closed cases).

From the RTC's inception through yearend 1993,
the office represented the R T C in 73 em ploym ent

The office is responsible for the RTC's Alternative

actions— 19 M erit System Protection Board cases,

Dispute Resolution Program, w hich helped to resolve

44 Equal E m p loy m e n t O p p o r tu n ity C o m m issio n

80 legal disputes in 1993, saving approximately $ 12.5

cases, and 10 Title V II and w histleblow er actions

million in legal fees budgeted for litigation. Resolution

brought in federal district court.

of these cases resulted in a $3 m illion reduction in

T he office also conducted legal reviews o f 139

claim s against the RT C , and produced recoveries

garnishm ent actions, including tax levies, bankrupt­

totaling $11 m illion. The unit oversees the resolu­

cy, child/spousal support, and commercial debts.

tion of disputes through negotiation, mediation, and

Department of Litigation

arbitration.
T he office, along w ith the division's O ffice of
R e al Estate, assisted in th e p r e p a ra tio n o f th e
Environm ental II sealed-bid sales of environm ental­
ly im paired properties and loans secured by such
properties.
The office's Tax G roup, together w ith attorneys
from the D e p a rtm e n t o f L itig a tio n and R T C tax
accountants, was part of an R T C team that met in
1993 with many state tax officials to discuss tax aspects
o f financial institutions in receivership. T he m eet­
ings resulted in the abatem ent o f m an y potential
problems w ith state taxation o f R T C thrifts.
A t the federal level, in December 1992, the RT C

The D epartm ent of Litigation oversees and co ordi­
nates all litigation involving the RTC, including trial
and appellate litigation in all federal and state courts,claims against directors, officers, accountants, and
attorneys of failed financial institutions,- and claims
and proceedings in bankruptcy. H ie department c o n ­
sists of the Offices of Litigation, Professional Liability,
and C om p le x Litigation.

Office of Litigation
T he O ffice of Litigation is responsible for all civil

entered in to an inter-agency agreem ent w ith the

litigation except bankruptcy, professional liability,

Internal Revenue Service (IRS). The agreement pro ­

and certain matters arising out o f ju n k bon d invest­

vides that w ith any insolvent thrift under R T C super­

ments by thrifts. T he office also coordinates w ith

vision, the IRS will determine the proper am ount of

other federal agencies, such as the F D IC an d the

tax liabilities o f the thrift, but will forego the c o l­

D epartm ent of Justice, on issues of mutual interest.

lection of assessed income tax liabilities when Treasury

A t yearend 1993, the office was handling approx­

funds are used to pay them . In im p le m e n tin g this

imately 20,000 trial court litigation matters. A t any

agreement, the IRS and the RT C in 1993 attem pt­

given time, the RT C is m anaging approximately 700

ed to settle or otherwise resolve all tax litigation cases

"significant issue cases," w h ic h involve issues that

between the tw o agencies that were pe nd ing in Tax

im pact R T C policy or on w hich it is im portant that

C o urt or in various other courts.

the R T C take a consistent position nationwide.

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400 RT C appellate matters, including cases pe n d ­
ing in the U nited States Supreme Court, in all 12 of
the U nited States C ircuit Courts of Appeals, and in
the appellate courts of m any states.
In 1993, Litigation Review Teams were estab­
lished in each of the field offices to review, evaluate,
and recommend strategies and proposed resolutions
for matters in litigation.

Office of Professional Liability

Office of Complex Litigation
The O ffice of C om plex Litigation oversees all bank­
ruptcy cases in w hich the R T C as a receiver or c o n ­
servator has a vested interest. At yearend 1993, the
office was handling approximately 3,500 active bank­
ruptcy matters with almost $ 10 billion of RTC claims.
The office obtained sizeable bankruptcy recover­
ies during the year, including approximately $400 m il­
lio n resulting from the plan o f reorganization of
Landmark Land Company,- $104 million in cash recov­
ered through the plan of reorganization of Craig Hall,

T he O ffice of Professional Liability investigates and

a real estate syndicator,- and $80 million in cash recov­

prosecutes RT C claims arising from im proper c o n ­

ered on junk bonds through the plan of reorganiza­

d u c t o f directors, officers, attorneys, appraisers,

tion of Gillett Holdings Inc., a conglomerate that issued

accountants, and other professionals w ho provided

junk bonds underwritten by Drexel Burnham Lambert.

services to failed thrifts. A t yearend, the office was

The office is also responsible for the prosecution

in the process of prosecuting 320 civil actions aris­

of claims arising from junk bond investments by finan­

ing out of 213 failed institutions.

cial institutions now under R T C or F D IC supervi­

From ince ptio n of the R T C th ro ug h yearend

sion. A t y e a re n d , the o ffic e h a d o b ta in e d cash

1993, the office executed settlement agreements of

recoveries totaling $800 m illion on behalf of RT C

professional liability cases that will result in the pay­

and F D IC conservatorships and receiverships that

m e n t o f a p p ro x im a te ly $7 43 m illio n , o f w h ic h

incurred losses resulting from investments in high-

a p p ro x im a te ly $ 6 7 5 m illio n in settlem ents and

risk, high-yield securities. The RTC's share o f these

approxim ately $5.1 m illio n in judgm ents had been

recoveries totaled $754 million, w hich includes $260

collected by yearend.

m illion from a securities litigation claims settlement

T h e office also p ro v id e d legal s u p p o rt on

reached in c o n n e c tio n w ith the Drexel Burnham

legislative issues relating to professional lia b ili­

Lambert bankruptcy, $389 m illion from a settlement

ty. O n N ovem ber 17, 1993, the Assistant General

w ith M ichael M ilken, the head of Drexel's high-yield

C o u n s e l o f the O ffic e of Professional Liability

b o n d departm ent, and his associates and affiliates,-

testified before the H ouse B anking C o m m itte e

and $105 m illion from other Drexel-related claims,

at a hearing on directors' and officers' insurance

including actions brought against issuers of securi­

an d liab ility issues.

ties underwritten by Drexel.

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ADMINISTRATION
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ADMINISTRATION

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D ivision of Administration and

CORPORATE

RELATIONS

System, providing a consolidated database of all insti­

C o r p o r a te R e la tio n s p ro v id e s

tutional records to track the R T C asset inventory,

administrative services to the RTC

and com pleted investigations and litigation. In ad di­

in a wide range of areas, in c lud ing per-

tion, storage and retrieval services were provided for

sonnel, contracting, governm ental rela-

1.4 m illion cubic feet of RT C records.

t io n s , c o r p o r a t e c o m m u n i c a t io n s ,

In 1993, the Personnel Security Program and the

org anization and m anagem ent analysis,

Suitability Program were transferred to the Office of

and facilities. T he division is comprised

Administrative Services from the O ffice of H um an

of two departments and four offices that report direct­

Resources M anagem ent. T he programs ensure that

ly to the division vice president.

every R T C em ployee, appointee, and applicant is
adequately investigated to determine suitability to
work at the RTC.

Department of Administration
T h e D e p a rtm e n t o f A d m in is tr a tio n is the m a in
provider of corporate services for the R T C , and is
the central point for analyzing and proposing changes

Office of Human Resources Management
The Office of Hum an Resources Management adm in­

to the Corporations organizational structure. Through

isters personnel and m anagem ent advisory services

N ove m b e r 1993, the departm ent consisted of the

in the areas of staffing, position classification, em ploy­

Offices of Administrative Services, H um an Resources

ee relations, training, personnel managem ent evalu­

M a n a g e m e n t, O r g a n iz a tio n an d Resource M a n ­

a tio n , a n d p e rso n n e l in fo r m a tio n system s an d

agement, and Corporate Inform ation. In D ecem ber

processing.

1993, the O ffice of Corporate Inform ation merged

D u rin g the year, the office assisted in the RTC's

w ith the Office of Systems D evelopm ent to form the

field reorganization and dow nsizing effort, in c lud ­

new D e p a rtm e n t o f In fo rm a tio n Resources M a n ­

in g the closing of field offices in Houston,- Baton

agement w ithin the Division of Institution Operations

Rouge,- Somerset, N ew Jersey,- Phoenix,- Tampa,- San

and Sales.

Antonio,- and C hicago . T he office also conducted
employee and manager briefings on personnel issues
and programs in the six rem aining field offices, and

Office of Administrative Services

coordinated the return of more than 600 permanent
T he O ffice of Adm inistrative Services develops and
manages the RTC's corporate services, maintains the
RTC's facilities, and develops policies, procedures,
and guidelines for a wide variety of functions, includ­
ing real property m anagem ent and adm inistrative
services. T he office provides direct operational sup­
port to all R T C headquarters activities and te chn i­
cal assistance to field offices in these areas.

employees to the F D IC .
In June 1993, the office reorganized operations,
grouping personnel specialists into teams to increase
efficiency, productivity, and accountability. The office
also launched an outreach program for employees
and managers, pro vid in g brochures, on-site visits,
m anagem ent inform ation, and training on person­
nel-related issues.

In 1993, the office developed and put into effect
a housing plan for headquarters to accommodate staff
increases re s u ltin g from the im p le m e n ta tio n o f
Treasury Secretary Lloyd Bentsen's RT C M anagem ent
Reform Agenda. The plan was executed w ithout dis­
rupting operations.

Office of Organization and Resource
Management
T he O ffice of O rg a n iza tio n and Resource M an age ­
ment provides organization- and management-analy-

D u rin g the year, the office expanded in-house

sis services to the C orporation. T he office is the focal

graphic design capabilities to ensure improved-qual-

point for all budget form ulation, analysis, reporting,

ity graphic support. The office also completed im ple­

and execution for the division.

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w h ic h was established to begin m anaging the tran­
sition of perm anent employees back to the F D IC .
In addition, the office drafted the RTC's Contracting
A c tio n Plan, designed to strengthen c o n tra ctin g
operations. T he office also conducted a study in the
O ffic e of C ontracts to establish appropriate tim e ­
frames for key steps in the contracting process and
to establish a reporting network that keeps e m p lo y ­
ees and contractors apprised o f the status o f c o n ­
tracts.

Office of Contract Policy and Major
Dispute Resolution
T he O ffice of C o ntract Policy and M a jo r D ispute
Resolution develops R T C contracting policies and
procedures, and addresses major disputes arising from
contract awards. T he office responds to questions
raised by audit organizations, including the General
Accounting O ffice and the RTC's Office of Inspector
G eneral, regarding contract awards and invoices,
a n d n e g o tia te s fo r th e reco very o f fu n d s from
contractors.

D u rin g the year, the office established an RTCw ide delegations com m ittee responsible for ensur­
ing uniform and appropriate delegations of authority
th ro ug ho ut the C orporation. T he office also acts as
th e c o n ta c t for R T C field em ployees requesting
clarifications and interpretations of delegations of
auth o rity

In 1993, the office enacted m ajor revisions to
standard contracting procedures, and developed a
new contractor oversight training course. T he office
also revised the C o n trac t Policies and Procedures
M an ual (C P P M ) to reflect new contracting policy
changes and to prom ote prom pt and com plete R T C
responses to contractor findings by auditors.

T he office formulated the division's 1993 Expense
O p e r a tin g Budget, a n d assisted d iv isio n b u d g e t
representatives in a d ju stin g th eir annual o p e ra t­
ing budgets.

T he office is responsible for adm inistering two
programs: the Warranted Contracting Officer Program
and the Byrd A m e n d m e n t Program. T he W arranted
C o n tr a c tin g O ffic e r Program requires th a t o n ly
W arranted R T C C ontracting Officers execute c o n ­
tracts. T he program established uniform procedures

Department of Contracts,
Oversight, and Evaluation

and m in im um standards for the certification, m ain ­

T h e D e p a r tm e n t o f C o n tra c ts , O v e r s ig h t, a n d

contracting officers. T he Byrd A m endm ent Program

Evaluation oversees all RT C contracts. In 1993, the

requires the R T C to obtain signed certifications from

tenance, and term ination o f warrants issued to the

d epartm ent significantly restructured and enhanced

R T C co ntra c to rs w h o have contracts exceeding

contracting operations. This included im plem enting

$100,000 or from buyers w h o have obtained RT C

an R T C contracting reform initiative during the first

seller fin a n c in g in excess o f $1 50 ,000 disclosing

quarter of 1993, and carrying out Treasury Secretary

w hether they have engaged in any lo bb y ing activi­

Bentsen's recommendations to improve controls over

ties w ith members of Congress. This inform ation is

contracting activities, revise contracting procedures,

reported to Congress bi-annually.

and expand contractor training and m onitoring.
As part o f this effort, in D ece m b e r 1993, the
departm ent's O ffice o f C ontracts was reorganized

Office of Contract Operations
The Office of Contract Operations awards and adm in­

in to tw o new offices: C o n tra c t P olicy and M a jo r

isters contracts at headquarters, and coordinates and

D ispute Resolution, and C ontract O perations. The

oversees contracting activities at R T C field offices,

purpose o f the reorganization was to separate c o n ­

conservatorships, and receiverships. T he office also

tracting functions and to place a stronger focus on

oversees the RTC's contracting inform ation system.

c o ntract awards an d activities, and on the p o licy

In 1993, the office restructured operations and
increased staff b y 48 positions to strengthen c o n ­

issues affecting contracting.
T he departm ent is also com prised of the O ffice

tracting oversight and improve the administration of

of C o n tracto r O versight and Surveillance, and the

contracting activities. Improvements were made in

A dm inistrative Evaluation Staff.

pre-award planning and post-award m onitoring, and

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RELATIONS

in contracting performance standards, w hich were

1993, 95 percent o f all suspension and exclusion

revised during the year.

actions executed by the R T C were based on the

The office established a field liaison unit at head­

office's investigative work.

quarters to oversee field c o n tra c tin g o perations.

In addition, the office administers the Competition

Invoice Processing Centers were established in each

Advocacy Program to provide an independent advo­

field office to standardize procedures for tracking,

cate for the fair and equitable treatment of firms seek­

approval, and verification of invoices, and to strength­

ing to do business w ith the RTC.

en internal controls. A n automated process for track­

In 1993, the office completed background inves­

in g an d pro ce ssin g in v o ice s was d e v e lo p e d for

tigations of more than 4,600 contractors and 14,000

this purpose.

contractor personnel, it also closed more than 400
contractor fitness and integrity investigations, result­
in g in 123 suspension and exclusion actions. T he

The following chart shows RTC contracting activity nationwide from
inception in August 1989 through 1993:

office issued 165 performance and financial review
reports of R T C contractors during the year, recom ­
m ending improvements in contractor operations and

1 RTC C O N TR A C TIN G A C T IV IT Y

id e n tify in g m ore th a n $12 m illio n in q u e s tio n ­
able costs.

1989 through 1993

The office developed procedures to assess major

Number of
Awards

Year

Fees Paid
to Contractors

1989

220*

1990

10,419*
47,449*

tracting officials w ith guidance in m aking contract
award determinations. Procedures for conducting fit­

470,508,905*

1991

contractor performance and to provide R T C c o n ­

1,618,069,026*

$

2,940,514*

ness and integrity background investigations o f law
firms were also developed during the year.
The office achieved its m inority outreach goals
for h irin g independent public accou ntin g firms to

1992

45,948*

1,235,491,313*

1993

24,311

510,089,879

conduct contractor reviews,- in 1993, more than 43
percent of the office's review contracts were award­
ed to minority- or women-owned ( M W O B ) firms or

TOTAL

128,347

$3,837,099,637

M W O B jo in t ventures.

*Certain figures published in the 1992 RTC Annual Report have been restated to reflect contract amendments,
extensions, and renegotiations made overtime.

Administrative Evaluation Staff
The O ffice of Administrative Evaluation was restruc­
tured in 1993 into the Office of Management Control,

Office of Contractor
Oversight and Surveillance

w hich reports to the C h ie f Financial Officer, and the
Administrative Evaluation Staff, w hich reports to the

T he O ffice of Contractor Oversight and Surveillance

Division of Adm inistration and Corporate Relations.

assists RT C program offices and the Office of Contract

T he A dm inistrative Evaluation Staff analyzes and

O perations in engaging, m onitoring, and evaluating

reviews the im plem entation of R T C contracting and

m ajor contractors. The office conducts background

adm inistration programs and their com pliance w ith

investigations o f contractors and contractor person­

corporate delegations o f authority.

nel, and financial and performance reviews o f c o n ­

In 1993, the staff completed Program Compliance

tr a c to r o p e r a tio n s , in v e s tig a te s a lle g a tio n s o f

Reviews o f contracting and administrative activities

co ntra ctin g irregularities, coordinates m ajor R T C

at headquarters, the six field offices, and six conser­

contract terminations,- and initiates suspension and

vatorships. In addition, reviews of two Receivership

exclusion actions o f contractors for fraud, non-per­

Assistance Agreement Contractors were completed.

formance, and violations o f fitness and integrity. In

Reports were prepared for each field office and insti-

1



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tution incorporating more than 1,000 findings. The

tains com m unications w ith the House and Senate,

reports included recom m endations on im prov in g

ensuring that members and their staffs are kept aware

problem areas, follow-up reviews to ensure correc­

o f RT C policy concerns, and that the RTC is apprised

tions are made were scheduled in 1993 and will be

of issues of importance to the legislative branch. The

com pleted in 1994.

office also responds to m em ber inquiries on behalf

Four offices in the Division of Administration and Corporate
Relations report directly to the division vice president: the Offices
of the Secretary, Governmental Relations, Ethics, and Corporate
Communications.

o f constituents.
In 1993, the office engaged in a persistent effort
to obtain the approval o f R T C funding legislation
by the 103rd Congress. Tracking numerous pieces
o f legislation that m igh t ultim ately prove to be the
final funding measure, the office worked in cooper­

Office of the Secretary

a tio n w ith the Treasury D e p a rtm e n t, the T h rift

T he O ffice of the Secretary manages the decision­

D e p o s ito r P ro te c tio n O v e rs ig h t Board, a n d the

m aking process for the RTC's senior executives, includ­

C o n g r e s s io n a l le a d e r s h ip to secure a p p r o v a l

ing record-keeping and information-dissemination,

of funding.

and administers nationw ide programs to provide the

After deliberating on more than 50 amendments

public w ith complaint-resolution services and access

w ithin various committees and subcommittees c o n ­

to R T C inform ation. In preparation for the RTC's

sidering R T C fund ing legislation, Congress in late

sunset in 1995, the office is also co m p ilin g a c o m ­

N o v e m b e r a p p ro v e d th e C o m p le tio n A c t, a n d
President C lin to n signed the legislation into law on

prehensive written history of R T C activities.
In 1993, the office processed more than 1,000

D ecem ber 17, 1993. Since passage o f FIRREA, the

decisions approved by the R T C President and C E O ,

o ffic e w o rk e d s u c c e s s fu lly w ith C o n g r e s s for

the Executive C om m ittee, the senior vice presidents

the appropriation o f a total of $55 b illio n in RT C

and headquarters vice presidents, and the Information

loss funds.

Resources M anagem ent Steering C om m ittee.

D u r in g the year, the office participated in 22

T he office responded to more than 1,321 requests

hearings and four legislative mark-ups relating to

for inform ation about actions taken by the former

R T C operations. From inception to yearend 1993,

R T C Board o f D irectors, the R T C President and

the office took part in nearly 1,000 meetings w ith

C E O , a n d o th e r senior officials. T h e office also

members o f Congress or their staffs, and responded

processed 2,773 litigation filings.

to over 30,000 telephone and written inquiries from

T he office handled more than 41,000 requests

Congressional offices.

th ro ug h the R T C C lie n t Responsiveness Program,
and responded to 204,647 requests for docum ents

Office of Ethics

a n d in fo r m a tio n . T h e office also received 1,055
Freedom o f In form ation and Privacy A ct requests
d urin g the year and com pleted responses to 1,151
s u c h req ue sts b y y e a re n d ( in c lu d in g req ue sts

T he O ffice o f Ethics administers regulations g o v ­
e rn in g the fitness a n d in te g rity o f in d e p e n d e n t
contractors that do business w ith the RT C , and sus­
p e n d s a n d e x c lu d e s c o n t r a c to r s t h a t v io la te

from 1992).
In 1993, th e o ffic e in itia t e d th e E m p lo y e e
O m b u d s m a n Program, p ro v id in g em ployees w ith
the o p po rtun ity to voice concerns and ideas to the

these regulations.
T he office adm inisters the RTC's co m pliance
w ith em ployee ethics and standards o f co nduct reg­
ulations, laws, and related directives and executive

RTC's C h ie f Executive Officer.

orders, and grants or denies waivers for conflicts of
interest under R T C contracts. A system o f internal

Office of Governmental Relations

controls is administered by the office to ensure that

T he O ffice o f G overnm ental Relations serves as the

em ployee and contractor ethics policies and proce­

RTC's liaison w ith Congressional officials. It m a in ­

dures are follow ed in the RTC's field offices.

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In 1993, the office im plem ented the U.S. Office

reporters and others throughout the U nited States

of G overnm ent Ethics standards of conduct, h o ld ­

and overseas, providing detailed inform ation about

ing 193 training sessions attended by 6,790 em ploy­

the RTC's latest actions.

ees. The office also established a program compliance

T he office headquarters staff issues b o th the

review and m onitoring program to reduce risks of

RTC's national and field press releases, and prepares

conflicts of interest. The office issued directives on

copy for various publications. The RTC's C E O and

the disclosure of employee indebtedness to the RTC,

other senior officials receive a full range of media

the renegotiation of indebtedness with the RTC, and

and public affairs support from the office, including

procedures for enforcem ent o f in d e pe n de n t c o n ­

briefings prior to interviews, and speeches and talk­
ing points prior to speaking engagements. The office

tractor regulations.
In 1993, 50 contractors were excluded from
doing business w ith the RT C for failure to meet RTC

also writes and edits o pin ion editorials and letters to
the editor for key personnel.
T he office produces publicatio ns such as the

ethics standards.

RTC's A n n u a l R e po rt an d Resolution Trust News, a
m o n th ly newsletter for employees. It also distributes

Office of Corporate Communications

a series of news updates, including a daily clipsheet

T he O ffice of Corporate C o m m unications provides

of print coverage, a weekly wrap-up of print cover­

the press and the public w ith information about RTC

age, and a daily sum m ary o f em e rg in g p rin t and

activities. T h e office responds to inquiries from

broadcast stories.

1 8



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I n s t it u t io n

The headquarters office develops policies and

Operations and Sales oversees the

procedures to ensure that all field operation activi­

m a n a g e m e n t an d o p e ra tio n o f

ties c o m ply w ith applicable laws and support the

he

D iv i s io n

of

insolvent thrifts while they are in the RTC's

RTC's goal of m in im izin g the costs and risks to the

conservatorship program, and the nego-

general public. The office provides day-to-day gu id ­

tiation and execution of the m ost cost-

ance in im plem enting these policies and procedures.

effective resolutions of these thrifts as well
as those in the Accelerated Resolutions
Program (ARP). Resolution activity was slowed in
1993 because fun d in g legislation was n ot enacted
until D ecem ber 17, 1993.
The division investigates fraud and other abus­
es at failed thrifts. It also provides research and ana­
lytical support of R T C activities to ensure the RTC's
effective o peration, and creates and manages the
RTC's national inform ation systems.
In D ecem ber 1993, the division consisted o f the
D epartm ents of O perations, Resolutions, Planning
and Analysis, and Information Resources Management.

Department of Operations

In

s t it u t io n s

an d

A

s s e ts

in

C

o n s e r v a t o r s h ip

From inception in August 1989 to yearend 1993, the
R T C m anaged a total of 706 institutions in the c o n ­
servatorship program . W h e n the R T C was estab­
lished, the office immediately assumed responsibility
for 262 conservatorships from the F D IC . From incep­
tion th ro ug h yearend 1993, 643 conservatorships
were resolved, leaving 63 in the program at yearend.
A t the beginning of 1993, the R T C was m anag­
ing 81 conservatorships. D urin g the year, eight ad di­
tio n a l th rifts entered the pro gra m , a n d 26 c o n ­
servatorships were resolved. O n e in stitutio n was
resolved through the Accelerated Resolutions Program,
bypassing a conservatorship action.

T he D epartm ent of O perations manages and over­
sees conservatorship and receivership operations, the
paym ent o f insured deposits, the adm inistration of
resolution agreements and the representations (reps)
and warranties provisions of asset sales agreements,
the processing of creditor and insurance claims, and
the te rm in a tio n o f receiverships. In a d d itio n , the
departm ent investigates fraud and o ther abuses at
conservatorships and receiverships. A t yearend, the
d e p a r t m e n t w as c o m p o s e d o f th e O f f ic e s o f
O perations and Investigations.

Office of Operations
T he O ffice of Operations, w hich has offices at head­

C

o n s e r v a t o r s h ip

O

p e r a t io n s

A

c t iv it ie s

Asset and Liability Management
T he R T C prepares a conservatorship for resolution
by dow nsizing it prim arily through asset sales. This
accelerates the paym ent o f liabilities of the failed
institution and reduces dependency on the Treasury
D epartm ent to fund future operations. Gross c o n ­
servatorship assets at D ecem ber 31, 1992, totaled
$40.2 b illio n , they were reduced to an estim ated
$23.2 billion by yearend 1993. D uring the year, eight
institutions w ith assets of approximately $6.1 billion
were added to the conservatorship program, 26 c o n ­
servatorships were resolved, rem oving $7.7 b illion

quarters and in the six field offices, m onitors and

in assets from the program. Book value sales and c o l­

operates conservatorships an d receiverships, c o n ­

lections during 1993 totaled $31.2 billion.

ducts closings of insolvent institutions and subse­

D u rin g 1993, the sale of perform ing assets from

qu e n t p ay m e n t o f d e p o sito r an d cre d itor claim s,

conservatorships was postponed, pending receipt of

administers post-resolution settlement activity w ith

resolution funding, in order to reduce operating loss­

acquirers, analyzes and pays claims resulting from

es in those institutions. After enactm ent of funding

the representations and warranties provisions of asset

legislation on D ecem ber 17, 1993, and subsequent

sales agreements, manages the termination of em ploy­

approval of a schedule of resolutions, the sale of per­

ee benefit programs, coordinates and directs opera­

form ing assets in conservatorships was authorized to

tions for term inations o f receiverships, and issues

begin in early 1994.

reports on program activities.

20



T he overall liability expenses of the institutions

being prepared for resolution are reduced by elim i­

vatorship depends on their skills and know ledge,

nating wholesale (high-cost) deposits, Federal H om e

and the needs o f the m anaging agent's team.

Loan Bank advances, and short-term collateralized

Salary schedules for senior management of c o n ­

borrowings. Funding is raised for this purpose pri­

servatorship institutions were established by RTC

marily through asset sales supplem ented w ith bor­

directive in 1990. W h e n the RT C intervenes in a

rowings from the RTC, as necessary.

thrift and establishes a conservatorship, salaries of
those asked to remain in managerial or executive

Executive Compensation

positions are adjusted to the levels established by

Section 3(A) of the RT C C o m p le tio n Act requires

the directive. For the 89 institutions operating in the

the R T C to report, as part of its annual report, the

R T C conservatorship program during 1993, a total

total compensation paid to directors and senior exec­

salary savings of $63.2 m illion was achieved, w ith a

utives of thrifts for w hich it was appointed conser­

corresponding reduction o f 924 officers from pre­

vator or receiver during the calendar year. W h e n an

conservatorship totals. Compensation paid to all offi­

institution is placed into conservatorship, its direc­

c ers ( i n c l u d i n g s e n io r e x e c u tiv e s ) in R T C

tors are removed on the day of intervention. As a

conservatorships in operation during 1993 is listed

result, no compensation is paid to any of these direc­

in the table Total Executive Com pensation for RTC

tors w h ile th e in s titu tio n is in co nse rvatorsh ip .

Conservatorships in 1993," page 22. Receiverships

W h e th e r senior executives are asked to remain in

do not have officers or directors,- therefore, there is

managerial or executive positions w ith the conser­

no schedule for their compensation.

1993 RTC C ON SERVATO R SH IP A N D RESO LUTIO N A C T IV IT Y

*This figure includes 1 association never placed into conservatorship.

1 9 9 i
 A n n u a l R


e p o r t

I n s t i t u t i o n

O

p e r a t i o n s

a n d

S a l e

s

21

TOTAL EXECUTIVE C O M P E N S A T IO N FOR RTC CONSERVATO RSHIPS IN 1993

INSTITUTION N M
AE

CITY

FIRST F&SLA Of RUSSELL CO, FA
BIRMINGHAM FSB
ALTUS FSB
GREAT AMERICAN FSA
GUARDIAN FSA
DELTA FSB
SAN CLEMENTE FSB
HOMEFEDBANK.FA
ADVANCED FSB
FIRST NEWPORT FSB
HOMESTEAD FSA
VISTA FSA
GOLDEN STATE FSB
WESTERN FSB
ENTERPRISE S&LA*
PAN AMERICAN FSB
WESTSIDE BANK FSB
COASTAL FSB
HOLLYWOOD FSB
GOLDOME FSB
CORAL COAST FSB
HANSEN FSB
CITIZENS FSA
SECURITY FSA
BAY FSB
JACKSONVILLE FSA
PALM BEACH FSA
LIFE FSB
THE GUARDIAN BANK, A FSB
COBB FSA
FIRST FSB OF GEORGIA, FA
SOUTHERN FSA OF GEORGIA
UNITED FSA OF IOWA
LEMONTFSA
IRVING FB FOR SAVINGS. FSB
THE OVERLAND PARK FS&LA
THE PIONEER FS&U
FRANKLIN FSA
DRYADES S&LA, FA
OAK TREE FSB
CARROLLTON HOMESTEAD ASSN.
LIFE FSB
PLYMOUTH FSA
NEW ENGLAND FSA
JOHN HANSON FSB
IRVINGTON FSB
POTOMAC FSB
STANDARD FSA
SECOND NATIONAL FSA
FIRST FSA
FIRST FS&LA
SECURITY FS&W
SURETY FS&LA, FA
FIRST AMERICAN FSB
HOMEBANK FSA
PROSPECT PARK FSB
HANSEN FSA
WHITE HORSE FS&LA
MARINE VIEW FSB
POUFLY FS&LA
SECURITY FSB
VOLUNTEER FSA
CARTERET FSB
COLUMBIA BANKING FSA
TRANSOHIO FSB
CRESTLINE FS&LA
CIMARRON FSA
FAR WEST FSB
HOME UNITY FS&LA
ABRAHAM LINCOLN FSA
CHASE FS&LA
HOMESTEAD FSA
FIRST HOME FSA
ALPHA INDIAN ROCK FS&LA
UKRAINIAN FS&LA
OLD STONE FSB
FIRST SOUTH FSB
CITADEL FS&LA
COOPER RIVER FSA
STANDARD FS&LA
CHEROKEE VALliY FSA
VISTA FSA
PIEDMONT FSA
COMMONWEALTH FSB
LIBERTY FSB
FEDERAL SA OF VIRGINIA
HOME FSB
EVERGREEN FS&LA
SHENANDOAH FSA

PHENIX CITY
BIRMINGHAM
MOBILE
SAN DIEGO
HUNTINGTON BEACH
WESTMINSTER
SAN CLEMENTE
SAN DIEGO
NORTHRIDGE
NEWPORT BEACH
SAN FRANCISCO
CANOGAPARK
IRVINE
MARINA DEL REY
COMPTON
SAN MATEO
LOS ANGELES
NEW LONDON
HOLLYWOOD
ST PETERSBURG
BOYNTON BEACH
PALM BEACH GARDENS
JACKSONVILLE
PANAMA CITY
WEST PALM BEACH
JACKSONVILLE
PALM BEACH GARDENS
CLEARWATER
BOCA RATON
MARIETTA
WINDER
ATLANTA
DES MOINES
LEMONT
CHICAGO
OVERLAND PARK
PRAIRIE VILLAGE
OTTAWA
NEW ORLEANS
NEW ORLEANS
NEW ORLEANS
BATON ROUGE
PLYMOUTH
WELLESLEY
BELTSVILLE
BALTIMORE
SILVER SPRING
GAITHERSBURG
SALISBURY
LEWISTON
PONTIAC
JACKSON
MORGANTON
GREENSBORO
GILFORD
WEST PATERSON
HAMMONTON
TRENTON
MIDDLETOWN
NEW MILFORD
VINELAND
LITTLE FERRY
NEWARK
ROCHESTER
CLEVELAND
CRESTLINE
MUSKOGEE
PORTLAND
LAFAYETTE HILL
DRESHER
PHILADELPHIA
MIDDLETOWN
PITTSBURGH
PHILADELPHIA
PHILADELPHIA
PROVIDENCE
COLUMBIA
CHARLESTON
NORTH CHARLESTON
COLUMBIA
CLEVELAND
RESTON
MANASSAS
MANASSAS
WARRENTON
FALLS CHURCH
NORFOLK
CHARLESTON
MARTINSBURG

ST

TOTAL CURREN
T
LIABILITIESTHO
USAN S$
D

AL
AL
AL
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CT
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
GA
GA
GA
IA
IL
IL
KS
KS
KS
LA
LA
IA
LA
MA
MA
MD
MD
MD
MD
MD
ME
Ml
MS
NC
NC
NH
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NJ
NY
OH
OH
OK
OR
PA
PA
PA
PA
PA
PA
PA
Rl
SC
SC
SC
SC
TN
VA
VA
VA
VA
VA
VA
WV
WV

$

65,785
56,083
500,076
2,518,405
268,214
18,475
118,863
4,990,285
25,130
10,153
807,125
89,295
45,249
3,098,201
8,375
140,733
74,389
143,875
587,685
441,140
26,005
17,956
29,439
39,504
18,135
79,822
50,764
34,731
51,065
42,015
82,347
68,604
301,727
115,575
183,045
100,417
128,043
1,519,193
82,034
2,846,111
21,459
12,386
85,587
51,893
243,371
28,489
48,281
1,882,901
1,035,073
47,611
326,479
213,073
68,935
394,360
82,734
218,321
256,101
42,004
88,143
282,913
754,111
27,889
3,031,453
749,204
1,515,695
23,945
486,885
767,739
442,880
62,826
19,280
86,769
97,104
6,135
43,593
1,521,018
25,901
18,830
75,388
167,961
79,041
71,550
309,925
34,500
59,742
15,376
120,825
16,927
44,440

TOTAL

$35,931,114

PRECO SER
N VATO SH
R IP
TOTAL N B
UM ER
TOTALAN UAL
N
O O
F FFICER
S
CO PEN
M SATIO W
N HOLE $
$

10
3
59
145
17
22
8
66
3
4
12
6
6
18
1
8
6
18
3
36
4
3
6
3
5
7
7
14
11
17
13
11
11
2
19
5
8
31
13
37
4
3
14
5
51
6
4
12
55
7
35
28
16
10
20
49
15
4
9
23
105
6
106
77
30
1
58
9
17
11
5
2
4
2
5
283
4
6
7
33
17
8
5
7
3
3
17
6
14

TOTAL N B
UM ER
OO
F FFICER 1
S /

415,515
169,837
3,080,000
11,306,932
996,105
961,000
754,474
9,138,738
191,732
314,135
1,550,349
389,637
458,966
3,219,003
30,000
500,000
458,693
789,000
392,000
1,449,000
218,258
139,599
201,824
271,150
194,000
369,238
277,089
586,000
612,706
934,000
531,477
814,000
513,322
291,880
810,371
203,427
369,025
3,515,000
756,000
2,103,649
195,010
112,638
527,842
240,000
2,909,000
227,700
290,000
1,797,000
3,865,436
264,670
1,283,775
1,072,487
853,807
915,000
784,000
2,693,000
1,211,000
271,000
493,000
1,176,982
4,590,935
181,000
7,266,329
4,992,000
2,611,000
24,752
2,383,595
688,478
1,159,000
888,000
193,000
695,154
236,000
230,000
215,795
11,827,515
324,000
254,800
461,000
1,512,000
521,125
451,000
382,712
397,000
185,000
160,000
624,000
206,000
1,386,153

$

975

A ER G
V AE
CO PEN
M SATIO W O $
N H LE

287,534
123,000
1,048,686
4,791,804
250,078
90,000
133,899
4,485,981
104,632
85,860
663,015
254,885
244,659
1,731,578
0
175,000
213,099
425,801
209,800
842,828
249,831
139,599
143,200
186,300
112,093
214,026
90,259
144,000
190,089
73,072
265,848
78,000
336,876
141,022
800,286
203,427
161,375
941,163
448,000
1,280,533
135,422
106,521
348,395
164,792
189,061
148,500
39,400
1,002,000
2,081,840
167,093
1,283,775
590,174
370,260
322,000
379,719
1,020,974
327,000
145,686
304,799
1,064,219
2,678,520
136,176
4,767,726
2,598,158
2,324,343
24,752
1,379,712
262,872
538,766
267,807
110,651
479,627
142,369
76,115
189,135
1,653,545
98,367
167,500
153,915
620,749
478,166
235,756
231,350
252,419
179,536
75,457
158,700
50,194
350,539

$41,076
41,000
37,453
68,454
41,680
45,000
66,950
104,325
52,316
42,930
73,668
50,977
48,932
115,439
0
58,333
53,275
38,709
69,933
40,135
41,639
46,533
35,800
62,100
37,364
71,342
45,129
42,000
63,363
36,536
37,978
39,000
48,125
47,007
42,120
40,685
32,275
72,397
44,800
49,251
33,856
35,507
29,033
82,396
63,020
37,125
39,400
125,250
59,481
41,773
36,679
36,886
41,140
64,400
37,972
44,390
46,714
48,562
43,543
39,416
40,584
45,392
70,114
56,482
92,974
24,752
35,377
87,624
53,877
53,561
36,884
39,969
47,456
38,058
37,827
75,161
32,789
41,875
51,305
41,383
28,127
58,939
77,117
42,070
59,845
75,457
52,900
16,731
38,949

$53,235,691

$54,601

7
3
28
70
6
2
2
43
2
2
9
5
5
15
0
3
4
11
3
21
6
3
4
3
3
3
2
3
3
2
7
2
7
3
19
5
5
13
10
26
4
3
12
2
3
4
1
8
35
4
35
16
9
5
10
23
7
3
7
27
66
3
68
46
25
1
39
3
10
5
3
12
3
2
5
22
3
4
3
15
17
4
3
6
3
1
3
3
9

$116,507,820

1,889

19
93
TOTAL A N A
NUL
CO PEN
M SATIO W O $
N H LE

NOTE: ‘ Enterprise S&LA was resolved during the first quarter of 1993. As all reporting is as of quarter-erd, there is no data for this institution.
1/ During 1993, the “Total Officers" definition was revised. The 1993 total officers population includes both the three highest paid employees, and any officer who is not one of the three highest paid employees.
The preconservatorship'Total Officers" definition includes any personnel designated as executive staff by their particular institution. Such definitions may be inconsistent among institutions.

2



2

I

n s t i t u t i o n

O

p e r a t i o n s

a n d

S

a l e s

R

e s o l li t i o n

T

r u s t

C o r p o r a t i o n

Employee Benefit Plans
D urin g 1993, the R T C worked to terminate em plo y­

The following chart summarizes RTC advance activity in conservator­
ships and receiverships during 1993:

ee benefit plans in conservatorships and receiverships
in order to make funds available to participants, and
created the Pension Tracking System to m o n itor the

1993 RTC CONSERVATORSHIP A N D
RECEIVERSHIP A D V A N C E A C T IV IT Y

progress o f the terminations. From inception o f the

Principal Amount Only
(dollars in billions)

R T C through D ecem ber 31, 1993, 371 plans were
terminated, 145 plans remained to be terminated at
yearend. R ecog nizing the potential liability of the
R T C in retaining defined benefit plans, the R T C pro­

Advances Outstanding at 12/31/92

$13.2

Total Advances Made in 1993

3.2

proper methods of terminating these plans. Employee

Total Advances Paid in 1993

-4 .5 *

benefit specialists in each field office are responsible

Advances Outstanding at 12/31/93

vided detailed guidance to field staff concerning the

$11.9*

for term inating the plans and dealing w ith plan par­
*The Advances Paid balance includes $3.6 billion in non-cash payments, but does not include $322 million in
interest collections during 1993.

ticipant issues.

C

S

l a im s a n d

*The Advances Outstanding balance at 12/31/93 includes $5.1 billion in advances to conservatorships that
have been resolved and will be repaid by the receiverships.
e t t l e m e n t a c t iv it ie s

Terminations of Receiverships
In 1992, the R T C began term inating receiverships

The following chart summarizes the termination of employee
benefit plans during 1993:

that were at least one year o ld and for w h ich there
were no legal or other com pelling reasons to be kept

EMPLOYEE BENEFIT P L A N S

open. In 1993, the R T C created the Receivership
Term inations U n it at headquarters and established
task forces in each field office to manage the term i­
nation process.

Open Plans at 12/31/92

287

Plans Added as a Result of
Interventions in 1993

6

D u rin g the year, the R T C focused on selling the
rem ain in g assets in receiverships that were c a n d i­
dates for te r m in a tio n . To fa c ilita te receivership
term in ation s an d final paym ents to creditors, the

Plans Terminated
During 1993

(148)

Open Plans at 12/31/93

145

RT C , in its corporate capacity, generally purchases
assets o f receiverships w ith $1 0 m illio n or less in
tration of the purchase and assumption agreements

residual assets.
In 1993, the R T C completed the approval process
for 52 receivership terminations, including case prepa­
rations show ing there were no environm ental pro b ­
lems or defensive litigation to prevent term ination,
leaving o nly the final certification of term ination to
be concluded for each institution. From inception of
the program in June 1992 through yearend 1993, the
approval of termination was completed for 92 receiver­
ships (77 receiverships have been term inated as of
D ecem ber 31, 1993).

between the R T C and the acquirers. T he process,
w h ich continues for approxim ately six m onths after
resolution, allows for the orderly transfer of business
associated w ith the failed thrifts from the R T C to
the acquirers.
D ue to the lack o f fund ing in 1993, resolution
activity fell short o f previous years, w ith o n ly 27
receiverships and one wholly owned subsidiary requir­
in g settlement activity added to the RTC's invento­
ry during the year. In 1993, settlement was concluded
for 43 institutions, leaving 31 settlements to be c o m ­

Settlements

pleted at yearend.

Receivership settlement w ith failed thrift acquirers

Because of the slower resolution pace, the office

under resolution agreements involves the adminis-

focused more resources on establishing national poli-



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>

A

n

,v u

a

l

R

e p o r t

I n s t i t u t i o n

O

p

e

r

a

t

i

o

n

s

a n

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S a l e s

23

INSTITUTION

OPERATIONS

AND

SALES

The following chart details asset sales, collections, and other conservatorship activities during 1993:

1993 CON SERVATO R SH IP AS SE T SALES A N D OTHER A C T IV IT IE S
(dollars in millions)

1/1/93
Balance

New
Institutions

81 Institutions

8 Institutions

Sales

Collections

12/31/93
Balance

Resolutions

Activities*
Adjustments^

26 Institutions 63 Institutions

$14,081

$1,263

$ 5,262

$10,175

$12,113

$4,179

$ 7,841

9,220

Cash and Securities

1,852

4,860

1,746

1,498

925

5,039

1,704

2,915

1,053

(52)

1-4 Family Mortgages

1,029

4,344

1,883

1,361

149

1,324

1,918

0

54

460

1,101

311

237

633

919

998

3,519

$6,060

$15,744

$15,490

$15,893

$7,740

$23,168

Other Mortgages

7,689

Other Loans

2,062

485

552

Owned Assets

2,980

445

Other Assets

4,157

$40,189

Total

includes activities from all institutions in conservatorship at any time during December 1993.
includes new asset purchases, valuation revisions, and other transactions affecting value.
Note.- “Securities" include investment-grade securities and mortgage-pool securities. “Other loans” include commercial, consumer, and student loans. “Owned assets" consist of repossessed resi­
dential and non-residential real estate, land, and other repossessed assets. “Other assets" include a wide array of assets, some types of mortgage servicing rights, office equipment, and subsidiary
companies of controlled institutions.

The following chart shows the number of thrifts placed in the RTC con­
servatorship program and the number of resolutions:

cies and procedures to protect the RTC's interests in
such matters as dispute resolution, standards on set­
tle m e n t c o m p le tio n , an d c la rific a tio n o f sales of

1 C O N SE R V ATO R SH IP IN S T IT U T IO N S 1989-1993

Conservatorships
Established

branch premises.

Conservatorships
Resolved

Total
Resolutions

56

37

37

207

309

315*

262

Pre-FIRREA
Post-FIRREA 1989
(8 /9 -1 2 /3 1 )

Liquidating Dividends
D urin g the year, the R T C expanded the Accelerated
D iv id e n d Program (A D P ), w h ic h began as a pilot
program in O c to b e r 1992. The program expedites
the return of funds to the C orporation and to cred­

1990
1991

123

211

232t

1992

50

60

69*

1993

8

26

27§

Total 1989-93

706

itors by a u th o rizin g field office vice presidents to
approve d ividend cases. In 1993, cash dividends to
the C orporation totaled $14.5 b illio n and non-cash

643

680

Includes six non-conservatorship institutions, four of which were resolved through the Accelerated Resolutions
Program (ARP).

dividends totaled $7.6 billion. From the inception
of the dividend process in September 1990 through
ye are n d 1993, the recovery to the C o rp o r a tio n
th ro ug h the program totaled $63.7 b illio n in cash
and $51.8 billion in non-cash dividends.
Insurance Payments

^Includes 21 non-conservatorship institutions resolved through ARP.

D uring 1993, approximately 866,000 insured deposit

^Includes nine non-conservatorship institutions resolved through ARP.

accounts, as of date o f resolution, at 27 failed thrifts

^Includes one non-conservatorship institution resolved through ARP.

were protected. A p p ro x im ate ly 304,000 o f these

24




I n s t i t u t i o n

O p e

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nn s

a x i>

S a i e

H E

SI) I U T I II X

T R II S T

(

I) a P I) R A T I I) N

deposit accounts were protected through the pur­

ty b o n d com panies, directors, officers, appraisers,

chase and assumption o f the failed thrift by one or

accountants, attorneys, securities and com m odities

more acquirers. T he rem aining 562,000 were paid

brokers, and borrowers.

off by R T C check in a payoff (P O ) transaction. O f

T he O ffic e o f Investigations assists the P ro ­

the $5.84 billio n in deposits that were involved in a

fessional L ia b ility S ection an d o ther units of the

P O transaction, only $ 10.5 m illion, or less than one

D ivision of Legal Services in bringing claims against

percent o f the total, were uninsured.

directors, officers, and professionals for causing loss­
es to R T C thrifts. T he office assists the D epartm ent

Creditor Claims

o f Justice in prosecuting criminal conduct and recov­

Essential goods and services provided to R T C c o n ­
servatorships are paid as adm inistrative expenses.
General trade creditor claims of former associations,
however, are considered to be unsecured claims. Pass­
th ro u g h rece iv e rsh ip d ata from R T C in c e p tio n
th ro ug h yearend 1993 show that $688 m illio n in
10,851 creditor claims were allowed, $22 billion in
claims from 6,994 creditors were disallowed, and $6
m illion in 2,105 claims were still pending at yearend.
In liq u id a tin g receiverships, $89 m illio n in 8,060
cre d itor claim s were allow ed, w h ile $5 b illio n in
claims from 8,194 creditors were disallowed,- $2 b il­
lion from 942 claims were still pe nd ing at yearend.
Asset Claims
From in c e p tio n th ro u g h yearend 1993, the R T C
processed approximately 27,000 claims seeking $ 1.6
b illio n under the terms of asset sales agreements. A t

ering misappropriated funds through crim inal and
civil forfeiture and restitution proceedings. Crim inal
referrals are filed w ith the D epartm ent of Justice on
any apparent criminal activity discovered during the
investigative process.
From the RTC's inception through yearend 1993,
the office assisted in the recovery of approximately
$695.6 m illion in cash from professional liability and
c o m m e rc ia l litig a tio n , a n d $ 7 5 4 .7 m illio n from
litig a tio n in v o lv in g the Drexel Burnham Lam bert
G ro up, Inc.

The following chart shows detection by the RTC, OTS, and others of
criminal activity by savings and loan directors, officers, and other pro­
fessionals, and legal action undertaken by the Department of Justice, as
of December 31, 1993.
RESTITUTION AND CRIMINAL ACTIVITY

yearend, the R T C had approved and paid $547 m il­
lion on these claims (includes repurchases and actu­

(from inception in August 1989 through 1993)

al losses).

Number of defendants charged
relating to RTC institutions

1,573

Number of convictions

1,383

the reserve a c c o u n t b alan ce was a p p ro x im a te ly

Number sentenced

1,289

$1.3 b illion.

Number awaiting sentencing

R T C conservatorships, receiverships, and sub­
sidiaries place funds in reserve to cover the cost of
future asset sales claims. As o f D ecem ber 31, 1993,

S ubstan tial e n h a n c e m e n ts were m ade to the
W arranties and Representations A ccount Processing

94

Total prison time sentenced

System (W R A P S ) d uring 1993, including im proved

Total number of restitution orders*

capabilities to m o n itor reserve account balances and

1,184 years, 4 months
963

Total restitution ordered*

$426,437,305

to manage, update, and report asset claims activities.

Total restitution paid§
Office of Investigations
The O ffice of Investigations examines all thrifts under
the Corporation's supervision to determine the nature

$15,035,609

*Based on information provided by the Department of Justice. Does not include state and local cases.
*This figure includes 569 federal orders and 394 state orders. Federally ordered.- $419,293,663; Collected:
$10,524,873. State ordered: $7,143,642; Collected: $4,510,710.

determine potential recovery sources. W h e n judged

*This figure includes orders both initiated and inherited by the RTC. Some orders may include multiple payees.
These statistics reflect only the RTC portion of such orders. Total amount also includes a $219.7 million resti­
tution order imposed on Charles Keating, Jr. and Charles Keating III by the Department of Justice.

to be cost-effective, claims are pursued against fideli­

§This figure is a cumulative statistic, reflecting all known RTC collections.

and am o un t of losses, identify possible claims, and

 4 ,V ,V I I A t R C


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INSTITUTION

OPERATIONS

AND

SALES

Interagency Coordination

program at yearend (including 8 institutions added

The D epartm ent of Justice is responsible for prose­

during 1993).

cuting criminal conduct com m itted by insiders and
parties associated w ith RTC-supervised thrifts.
RT C investigators work closely w ith the Federal

T he departm ent assisted the field offices in c o n ­
ducting in-house asset valuation reviews for 11 of
the conservatorships resolved in 1993.

Bureau of Investigation, U .S. Attorneys' offices, the

T he total cost o f the 27 resolutions was esti­

Internal Revenue Service, the Securities and Exchange

mated to be $1.6 billion. (The cost is estimated until

C om m ission, the O ffice of Thrift Supervision, and

all assets associated w ith the institutions are sold.)

the Secret Service to provide the necessary d o c u ­

The resolutions provided a $300 m illion savings over

ments, work papers, and in some cases expert testi­

the cost o f paying off insured deposits. The gross

m ony needed to prosecute individuals suspected of

R T C funding for these 27 institutions totaled $5.6

crim inal co n d u c t in failed savings and loans. T he

billion, including conservatorship advances of $138

O ffice of Investigations allocates substantial inves­

m illion, for a net R T C funding cost of $5.5 billion.

tigative resources to assist the D epartm ent of Justice

In 16 resolutions, all deposits were transferred to

in pursuing criminal cases.

acquirers, in 10 resolutions, insured deposits were

Department of Resolutions

payoff of the institution's insured deposits.

T he D ep artm e nt of Resolutions markets and exe­

Office of Major Resolutions

transferred to acquirers. O n e resolution involved the

cutes the m ost cost-effective resolutions for insol­
vent thrifts placed in the RTC's conservatorship
p r o g r a m b y th e O T S as w e ll as th o s e in th e
Accelerated Resolutions Program. T he departm ent
is com posed of the O ffice of M ajo r Resolutions, the
O ffic e o f Field Resolutions, an d the Accelerated

The O ffice of M ajo r Resolutions managed the dis­
position of larger conservatorships, generally insti­
tutions w ith more than $500 m illion in liabilities at
time of conservatorship. D uring 1993, the office co m ­
pleted six resolutions (com pared to 16 in 1992, 45
in 1991, and 39 in 1990). The six resolutions involved

Resolutions Program.
D urin g 1993, the R T C resolved 27 thrifts (com ­
pared to 69 in 1992, 232 in 1991, and 315 in 1990).
Despite a lack of Congressional funding during most
o f the year, significant recoveries on asset sales and
favorable econom ic conditions resulted in a release
of unallocated reserves, m aking $3 billio n available
for resolutions. Twenty-four thrifts were resolved
using these funds. The rem aining three were c o m ­
pleted w ith o u t cost to the RT C . T he acquirers of
these three institutions assumed all o f the liabilities
and purchased virtually all o f the assets for total pre­
mium s of $15.2 m illion, covering all expected loss­

$7 b illio n in deposits (com pared to $17 b illio n in
1992, $56 b illion in 1991, and $60 billio n in 1990).
T he $264 m illion in premiums paid to the R T C in
the six resolutions represented about 5 percent of
the $5 .4 b illio n in core deposits (n on- brokered
deposits w ith balances o f $80,000 or less) that were
sold. T he premiums ranged from 3 percent to almost
9 percent of core deposits— higher percentages than
in previous years. A ll b u t one o f the resolutions
involved multiple purchasers, w ith 23 financial insti­
tutions acquiring one or more branches or the deposits
thereof. N o n e of the six thrifts was resolved as a total
payoff, however, one resolution involved paying off

es in the institutions.
Congressional fu n d in g became available w ith
th e e n a c tm e n t o f th e R T C C o m p le t io n A c t on
D ecem ber 17, 1993. T he act released $18.3 billio n

deposits in tw o branches an d a n o th e r resolution
involved paying off the wholesale deposits, for a total
of $298.5 m illion.

of funds formerly allocated by the R T C Refinancing,
Restructuring, and Im provem ent A ct o f 1991, pro­

S

v id in g the R T C w ith the means to resolve the 63

T he largest conservatorship resolution in 1993 was

insolvent thrifts that remained in its conservatorship

H o m e F e d B a n k , FA (F J o m e F e d ), S an D ie g o ,

2



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1993 RTC CONSERVATO RSHIP A N D RESOLUTION A C T IV IT Y
(dollars in millions)

State

Conservatorships
Beginning

Deposits*

Added

Balance

3

$ 1,283

0

California

10

18,490

4

223

0

60

Deposits*

1

$ 1,122

10,371

8

11,009

0

1

223

1

0

Ending

6

2,890

1

Connecticut

$

161

0

Deposits*

Alabama

54

10

3,305

Deposits*

Resolved
2

0

$

Florida

10

3,299

1

Georgia

3

330

0

0

1

97

2

233

Illinois

2

432

0

0

0

0

2

432

Iowa

1

712

0

0

0

0

1

712

Kansas

2

4,751

1

127

1

95

2

4,784

Louisiana

3

2,546

1

16

0

0

4

2,563

Maine

1

76

0

0

0

0

1

76

Maryland

5

2,780

0

0

1

43

4

2,738

Massachusetts

2

255

0

0

0

0

2

255

Michigan

1

547

0

0

1

547

0

0

Mississippi

1

247

0

0

0

0

1

247

New Hampshire

1

192

0

0

0

0

1

192

New Jersey

8

4,955

0

0

1

107

7

4,848

New York

1

1,073

0

0

0

0

1

1,073

North Carolina

2

802

0

0

2

802

0

0

Ohio

2

2,419

0

0

1

27

1

2,392

Oklahoma

1

710

0

0

1

710

0

0

Oregon

1

1,273

0

0

0

0

1

1,273

Pennsylvania

7

1,226

0

0

4

811

3

415

Rhode Island

0

0

1

1,699

0

0

1

1,699

South Carolina

4

564

0

0

2

326

2

238

Tennessee

1

124

0

0

0

0

1

124

Virginia

6

852

0

0

0

0

6

852

West Virginia

2

103

0

0

2

103

0

0

81

$50,266

8

$4,793

$14,253

63

$40,806

Total (27)

261

*Deposits at quarter prior to date of conservatorship.
*Does not include 1 thrift resolved in 1993 through the Accelerated Resolutions Program.
Note: Detail may not add to totals due to rounding.

/\ \' ,V U A L

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I N S T I T (I T I ( I N

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27

INSTITUTION

OPERATIONS

SALES

branches, completed in Decem ber 1993, the insured

1 1993 RESOLUTION COST A N D SA V IN G S BY STATE

deposits in all branches, except the certificates o f

(dollars in millions)

State

AND

deposit in tw o branches, were transferred to four

Resolution
Cost*

Resolved
Institutions

$

Estimated
Savings*

10

$

5
183

acquirers. T he R T C sold 119 of the 136 branches to
G reat W estern Bank, FSB, Chatsw orth, California,

Alabama

2

California*

7

1,401

Florida

1

15

1

purchased the remaining 17 branches. T he combined

Georgia

7

6

premiums for the entire transaction totaled $164 m il­

Kansas

1
1

9

3

lion, or 4.7 percent of the $3.5 billion in core deposits.

Maryland

1

3

2

Michigan

1
1

36

17

6

5

64

39

New Jersey
North Carolina

for a prem ium of $151 m illion, or 5 percent o f the
$3 b illio n in core deposits. Three o ther acquirers

A n o th e r significant m ajor transaction in 1993
was the reso lu tion o f C im a rro n Federal Savings
A s s o c ia t io n ( C im a r r o n F e d e r a l), M u s k o g e e ,
O klah o m a , in M a y 1993. Cim arron Federal was sold
to four financial institutions in an estimated no-cost

Ohio
Oklahoma

1
1

5

1

0

0

$15.2 m illion, or 3.7 percent o f the $406 m illion in

Pennsylvania

4

51

22

core deposits. Acquirers purchased $421 m illio n in

South Carolina

2
2

16

12

assets, representing 74 percent o f the assets in the

8

4

27

$1,630

$300

West Virginia

Total (14)

transaction. T he R T C o btained total premiums of

institution at the tim e o f resolution.

Office of Field Resolutions

in c lu d e s 1 thrift resolved under the Accelerated Resolutions Program,

D uring 1993, the Office of Field Resolutions resolved

t Resolution cost estimated at time of resolution.

20 co nservatorships w ith a to tal o f $1 b illio n in

■t-This amount represents the difference between the estimated cost of the actual resolution method used by the
RTC, and the estimated cost that would have been incurred had the RTC paid off the insured deposits.

A s s o c ia t io n , C o m p t o n , C a lifo rn ia ,- a n d F irst

Note: Detail may not add to totals due to rounding.

F“
Iom e Federal S avings A s s o c ia tio n , P ittsb u rg h ,

C alifornia, w ith $10.2 b illio n in deposits, $13.9 b il­
lion in assets, and 201 offices w hen it was placed in
conservatorship in July 1992. W h ile H om eFed was
in conservatorship, the R T C aggressively marketed
the assets to dow nsize the institution and reduce its
operating losses.
T he asset sales generated sufficient cash inflows
to enable the O ffice o f M a jo r Resolutions to sell 56
northern C alifo rnia H o m e F e d branches w ith $1.6
billion in deposits and $1.1 billion in mortgage loans.
T he branch sale, com pleted in January 1993, effec­
tively reduced the ultim ate cost o f the resolution
because operating expenses were reduced and the
franchise value o f the rem aining 136 branches was
enhanced. T he R T C obtained total premiums o f $35

deposits. Two thrifts— Enterprise Savings and Loan

Pennsylvania— were resolved at an estimated no cost
to the R T C . Both were acquired b y thrifts in their
respective states.
D uring 1993, the Office of Field Resolutions co n­
ducted one insured deposit payoff of an institution
in C alifornia w ith $50.2 m illio n in insured deposits.
T he office also m anaged tw o resolutions involving
tw o or more acquirers.
T he 20 resolutions generated $44 m illion in pre­
miums, or approximately 6 percent of the total core
deposits at tim e of resolution, representing a per­
centage increase over 1992 field resolution prem i­
ums, w h ic h averaged 2 percent of core deposits.

Accelerated Resolutions Program

m illio n , o r 3 pe rce n t o f th e $1.2 b illio n in core

The Accelerated Resolutions Program is a jo in t effort

deposits. (N in e of the 201 offices were consolidat­

between the RT C and the Office of Thrift Supervision
(O T S ). It was created on the premise that early inter­

ed, leaving 136 offices fo llow in g the branch sale.)
In the resolution of HomeFed's rem aining 136

28




I n

s t

i t

u

r i o

n

O p e r a t i o n s

a n d

S a l e

s

vention in a failing thrift could create significant tax-

R e s o l u t i o n

T r u s t

C o r i> o r a t i o n

payer savings. Thrifts selected for A RP are those that

As provided for in the legislation, the acquirer was

the O T S D irector has determ ined are in danger of

given m inority preferences to purchase the thrift and

failing, and whose financial c o nd itio n w ould cause

was able to purchase loans from the R T C portfolio

them to be placed in conservatorship w ithin one year.

at market value up to the am ount of deposits assumed.

U n lik e o th e r th rifts resolved b y the R T C , those

U nite d Bank o f Philadelphia purchased $11 m illion

resolved th ro ug h A R P are not placed in conserva­

in loans.

torship prior to resolution.

Three branches (w ith a total of $101 m illion in

A n institution agreeing to participate in the pro­

deposits) of H o m e U n ity Federal Savings and Loan

gram is marketed by the R T C and the O T S , w ith

Association, FA, a m ajority thrift in Lafayette H ill,

assistance from the thrifts ow n m anagem ent. O n c e

Pennsylvania, were also sold to the same m inority

a buyer for an A R P thrift is identified, the O T S clos­

acquirer, U nited Bank of Philadelphia, when no accept­

es the thrift, places it in RT C receivership, and im m e­

able bids were received for those branches. The acquir­

diately transfers it to the w aiting buyer. This process

er received m inority preferences in this transaction

is designed to avoid the deterioration in franchise

as well and, as pro vid ed in the R T C R e financing,

value associated w ith the conservatorship process.

Restructuring, and Im provem ent A ct o f 1991, was

T he im proved health o f the thrift industry result­

able to purchase loans at market value up to the amount

ed in o nly one A R P resolution in 1993 (com pared to

o f deposits assumed. As part o f the transaction, U nited

9 in 1992,21 in 1991, and 4 in 1990). A m ador Valley

Bank o f Philadelphia purchased $96 m illio n in loans

Savings and Loan Association, Pleasanton, California,

from the R T C at market value.

w ith deposits to taling approxim ately $41.2 m illion,
was acquired b y C o m m u n ity First N atio n a l Bank,
Pleasanton, California, w hich paid a $ 1.8 m illion fran­
chise premium, representing 5 percent of core deposits.

Department of Planning
and Analysis
T he D epartm ent o f P lanning and Analysis provides

M in

o r it y

Pa

r t ic ip a t io n

T he N ational M arketing List includes more than 350
financial institutions, investor groups, and in d iv id u­
als that have indicated they are minority- or womenowned, or are a minority member or a woman. Included

research, planning, and analytical services to support
operations th ro ug ho ut the Corporation.

Office of Research and Statistics
T he O ffice o f Research and Statistics provides eco­

in the list are 86 Asian American, 121 Black American,

nom ic, financial, and statistical data and analysis to

79 F-|ispanic American, 46 N ative American groups

other offices and divisions w ithin the R T C as well as

or individuals, and 32 wom en.

to Congress and the public. Three sections comprise

In 1993, Enterprise Savings and Loan Association,

th e O ffic e o f Research a n d S tatistics: F in an c ial

C o m p to n , C alifornia, a m inority-owned thrift, w ith

M o d e lin g a n d S tatistics, F in a n c ial M a rk e ts an d

$8.8 m illion in deposits, was acquired by a like m inor­

Institutions, and C ost Analysis.

ity-owned thrift, black-owned Family Savings Bank,

T he Financial M o d e lin g and Statistics Section

FSB, Los Angeles, California, at no cost to the RTC.

regularly produces reports covering virtually all facets

U nd e r the R T C Refinancing, Restructuring, and

o f R T C o p e ra tio n s for senior R T C m an a g em en t,

Im provem ent A ct o f 1991, the R T C is m andated to

Congress, other agencies, and the public. M u c h of

give certain m in ority preferences w hen no accept­

this in fo rm a tio n is p ro v id e d in the R T C Review, a

able bids are received for an institution or its branch­

m o n th ly publication produced by the office. Internal

es. Chase Federal Savings and Loan Association, a

a n d external ad hoc reports, analyses, charts, and

m ajo rity thrift in P hiladelphia, Pennsylvania, w ith

tables are also prepared by the section. D u rin g 1993,

$1 1.9 m illio n in deposits, was sold to a m in o rity

the office participated in developing asset inventory

acquirer, U n ite d Bank of Philadelphia, Philadelphia,

and sales data, and projections for the R T C Business

Pennsylvania, after no acceptable bids were received.

Plan and the 1994 Sales Goals. In its role as a d m in ­



A iV S U A L

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29

INSTITUTION

OPERATIONS

AND

SALES

istrator of the Corporate Inform ation System, the

projects and the IR M strategic plan and IR M b ud ­

section continued to facilitate communication between

get. T he IR M Steering C om m ittee also reviews rec­

users and system developers, and to oversee the sys­

om m endations on actions requiring the attention of
the RTC Executive Committee, which examines more

tem's standard operations.
The Financial Markets and Institutions Section
provides policy- and economics-oriented support to

substantial IR M expenditures and establishes strate­
gic IR M policy.

the R T C . T h e section publishes the b i- m o n th ly
Regional Economic Review, w hich includes valuable indi­
cators of real estate market conditions, and partici­
pates in the estimated cash recovery process (ECR)
for the valuation of receivership assets. D u rin g the
year, the section wrote numerous congressional tes­
timonies, prepared the RT C Business Plan, and devel­
oped briefing materials for senior m anagem ent.
T he C o st Analysis Section supplies analytical
support and inform ation m anagem ent in the RTC's
resolutions and E C R processes. T he section conducts
the RTC's "cost test" for all m ajor resolutions, and it
provides technical assistance to field office person­
nel on field resolutions. T he section m aintains a res­
olutions database, and provides resolutions reports
to R T C senior m anagem ent, the T hrift D epositor
Protection Oversight Board, Congress, and the G A O .
W it h the assistance of the Financial M arkets and
Institutions Section, the section also conducts the
quarterly E C R process for the valuation of receiver­
ship assets.

Office of Systems Development
T he O ffic e o f Systems D e v e lo p m e n t creates and
manages the RTC's national info rm ation systems.
The office has two branches: Software M anagem ent
and Business Applications Analysis.
The Software M anagem ent Branch plans, devel­
ops, implements, and maintains national information
systems, and provides user training, docum entation,
and other support for these systems. In 1993, the
branch supported the following areas using the infor­
m ation systems below: finance, assets, resolutions,
legal services, m inority and women's programs, and
administration.
The Business Applications Analysis Branch focus­
es primarily on systems-related activities of the RTC's
most visible and mission-critical systems, and par­
ticularly on the interaction of the customers that
cross organizational lines and have differing or often
conflicting needs and perspectives.
In 1993, the office actively developed or enhanced
the RTC's corporate in fo rm a tio n systems, w h ic h

Department of Information
Resources Management

include the following:

T h e D e p a r tm e n t o f In fo r m a tio n R e so urces

F

in a n c ia l

S

y stem s

M anagem ent (D IR M ) develops and manages n ation­

Financial Management System-Accounts Payable (FMS-

al inform ation systems to support RT C operations.

AP)— FMS-AP processes approved R T C invoices and

D IR M also provides the RT C w ith technical support

is fully integrated w ith the RTC's G eneral Ledger
( F M S - G L ) . T h e s y s te m was im p le m e n t e d in

for its inform ation systems.
T he departm ent, w h ich consists of the Offices

M arch 1993.

of Systems D evelopm ent and Corporate Information,

Control Totals Module (CTM)— C T M is used to cap­

was formed in D ecem ber 1993 by consolidating the

ture summ ary asset-related financial activity, post it

tw o offices to integrate inform ation systems devel­

to the General Ledger, and assist in reconciling the

o p m e n t and operations activities, and better assist

G L and subsidiary records. In 1993, three system

management in the RTC's dow nsizing operations and

development projects increased CTM 's accuracy, and

the transition of inform ation systems to the F D IC .

im proved its data-sharing capabilities.

M ajo r activities of the departm ent are guided by

Invoice Processing System (IPS)— IPS is used to track

th e In fo r m a tio n Resources M a n a g e m e n t ( IR M )

the location and paym ent of invoices as they move

Steering C o m m ittee , w hich reviews selected system

th ro ug h the approval process. Initially developed




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and verification of M W O B contractors. The system

wide in 1993.

was im plem ented in 1993.

Asset Manager System (AM S)— A M S is a cash-management system that tracks incom e and expenses for
Asset M a n a g e m e n t an d D is p o s itio n A g re e m e n t
( A M D A ) contractors and provides autom atic trans­
fer o f funds to and from contractor accounts. System
enhancem ents to A M S in 1993 include im proved
r e p o r tin g a n d e d it in g , a n d a c o n t r a c t o r d a ta
upload facility.

A

d m in is t r a t iv e

Sy

stem s

Personnel Action Request System (PARS)— In 1993, the
Office of Systems D evelopm ent assisted the Office of
H u m a n Resources M anage m ent ( O H R M ) in c o n ­
ducting a major review of O H R M functions and data
processing needs. The study recommended RTC imple­
mentation of the F D IC PARS, w hich processes and
tracks requests for personnel actions. Implementation

A

s s e t

Sy

is expected to be completed by mid-1994.

stem s

Real Estate Oumed Management System (R E O M S )—
R E O M S is the corporate-wide repository for infor­
m ation on the RTC's real estate assets. D u rin g the
y e a r, R E O M S

w as m o v e d

fr o m

th e

R T C 's

Gaithersburg, M aryland, data center to its Virginia
Square data center in Arlington, Virginia, to increase
processing capacity and to reduce costs. In 1993, the
R E O M S Electronic Journal Interface (REJI) was imple­
m ented, providing an autom ated interface between
R E O M S and C T M .
Warranties and Representations Accounts Processing
System (W R A P S )— W R A P S is used to m o n itor R T C
activities on warranties and representations provid­

National Employee Ethics Tracking (NEET)— N EET
is used to capture, review, and report R T C e m p lo y ­
ee financial and ethical disclosure inform ation. The
system was im plem ented nationw ide in 1993.
Management Reporting System (M R S )— M R S tracks
material weaknesses and nonconform ities in R T C
internal controls, and recom m ended solutions. The
system was im plem ented nationw ide in 1993, and
w as e n h a n c e d to p r o v id e k e y - w o r d s e a rc h
capabilities.

Office of Corporate Information
T he O ffice of Corporate Information (O C I) provides

ed in asset sales. T he application of new data-man-

the technical infrastructure and other support for the

agem ent and data-sharing technology (S Q L Server)

use of corporate information resources by RT C head­

im proved the system's data q u a lity timeliness, and

quarters and field offices. T he office has two branch­

operational efficiencies. A new accounting function

es: I n f o r m a t i o n R e s o u rc e s M a n a g e m e n t a n d

was also incorporated into W R A P S , im proving per­

Inform ation Systems.

formance, customer interface, and data security.

The Information Resources M anagem ent Branch
adm inisters an d m anages In fo rm a tio n Resources

L

eg al

S

M anagem ent (IR M ) programs, including oversight

y stem

RTC Legal Information System (RLIS)— RLIS is used
to track R T C legal matters. The most recent version
of the system, RLIS III, was developed in 1993, pro­
viding enhanced reporting and a streamlined payment
review and approval process. D u rin g the year, RLIS
was moved from a contractor-managed data center in
Dallas, Texas, to the RT C Virginia Square data center.

o f systems quality, standards, security, and internal
controls. T he branch also oversees IR M p la n n in g
and policy form ulation.
T he Inform ation Systems Branch manages the
RTC's data centers, Local Area N etw ork (L A N ) and
W ide Area Network (W A N ) operations, and telecom­
m unication services (voice and data).
The office operates and maintains a corporatewide inform ation network consisting of 12,000 work

M in

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m e n ’s

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S

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stations. In 1993, a new contract was com petitively

Minority- and Women-Owned Business Database System

awarded to m anage the W A N , w h ich supports all

(M W O B -D B )— M W O B - D B tracks the certification

netw ork and data center systems, and capabilities

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such as video-teleconferencing between R T C head­
quarters and field offices. Contracts were also award­
ed to provide L A N support for R T C field offices.

AND

SALES

action plans for major inform ation systems.
The R T C changed its long-distance telephone
services from M C I to the FTS2000 network during

In 1993, the office began im plem enting a plan to

the year. M u ltip le 800 numbers previously used in

consolidate data center operations at the RTC's Virginia

each of the six field office cities were replaced w ith

Square data center in Arlington, Virginia. To improve

a single 800 num ber at each site, reducing the need

operational efficiency, the m ainfram e com puter at

for operator assistance and im proving call handling

Virginia Square was upgraded during the year. In addi­

for better service.

tion to R E O M S and RLIS, corporate contracting sys­

In 1993, teams of O C I managers and program
managers reviewed R E O M S , A M S , and C T M , and

tems were m oved to Virginia Square.
In 1993, the D ata Q u a lity Program was im ple­

determined that the three systems provide adequate

m ented to ensure that all R T C automated-systems

safeguards and achieve their stated objectives. A risk

data are com plete, accurate, and timely. T he branch

analysis of the Virginia Square data center was also

provided technical guidance and support to R T C

com pleted by the O ffice of Corporate Inform ation

managers in developing and executing data-quality

during the year, w ith no material weaknesses found.

32



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II

MINORITY
AND

WOMEN'S
PROGRAMS

MINORITY

AND

WOMEN’S

PROGRAMS

D iv i s io n o f M i n o r i t y a n d

ly w ith contract officers and oversight managers to

W omen's Programs (M W P ) man-

ensure M W O B participatio n in smaller contracts

ages and develops policy for the

(those w ith estimated fees below $50,000), as well

participation of minorities and w om en in

as with S A M D A contractors to increase M W O B par­

all RT C activities, including contracting,

ticipation in subcontracting activities.

purchasing assets and failed thrifts, and

T h ro u g h o u t the year, the office was actively

securitization,- a n d equal e m p lo y m e n t

involved in efforts to improve, identify, and preserve

opportunity activities. The division is co m ­

asset-acquisition opportunities for minorities, women,

prised of the Departments o f Minority- and Women-

and investors with moderate sources of capital through

O w n e d Business,- Legal Programs, Equal Employment

participation in the Small Investor Program. The pro­

O p p o r tu n ity (E E O ) and A ffirm ative A c tio n , and

gram is intended to develop greater opportunities

Policy, Evaluation and Field M anagem ent.

for smaller investors.

D u rin g 1993, the division experienced signifi­

T h e o ffic e a lso p a r tic ip a t e d in th e R T C 's

cant growth. In accordance w ith Treasury Secretary

Judgm ents, Deficiencies, and Chargeoffs (JD C ) in i­

Bentsen's m anagem ent reform agenda for the RTC,

tiative, a partnership arrangement designed to sell

which included the expansion of minority and women's

approximately $7 billio n (book value) of judgm ents,

program s, the R T C elevated the d iv isio n from a

deficiencies, and chargeoffs. Minority- andw om en-

departm ent and increased its role in m anagem ent

ow ned firms participated in the initiative as general

and disposition activities, contracting opportunities,

partners, joint-venture partners, and subcontractors.

legal engagements, sales and investment initiatives,

In September 1993, the office sponsored a one-

e m p lo y m e n t a c tiv itie s , a n d th e th r if t r e s o lu ­

day "teaming conference'' in Washington, D .C ., which

tion process.

allowed several R T C contractors and M W O B firms
to meet and discuss opportunities for subcontract­
ing, joint-venture, and other partnership arrange­

Department of Minority- and
Women-Owned Business

conferences, w hich will be held throughout the coun­

T he D epartm ent of Minority- and W o m e n - O w n ed

try, are scheduled in 1994.

ments. D u e to the event's success, several team ing

Business ( M W O B ) ensures that firms o w n ed and

In 1993, approxim ately 10,000 contracts were

operated by minorities and w om en have the m axi­

awarded to M W O B firms, representing more than

m u m o p p o rtu n itie s available to participate in all

40 percent of all R T C contracts awarded during the

contracting activities of the C orporation, as well as

year. Estimated contracting fees to the M W O B firms

at conservatorships and receiverships. D u rin g 1993,

exceeded $155 m illion, or more than 30 percent of

th e o ffic e p u rs u e d several avenues to increase

the estim ated fees for all R T C contracts awarded

th e p a r t ic ip a t io n o f m in o r it ie s a n d w o m e n in

in 1993.

these activities.
In an effort to strengthen the RTC's M W O B cer­
tification process against fraud and misrepresenta­
tion, the division published a circular in July outlining

Department of Legal Programs
The D epartm ent of Legal Programs establishes and

the certification procedures. T he M W O B depart­

im plem ents programs designed to ensure the inclu­

m ent notified contractors an d o ther affected per­

sio n o f m in o rity - a n d w o m e n - o w n e d law firm s

sonnel o f these procedures. To support this activity,

(M W O L F s ) and m inority and w om en attorneys in

an M W O B database was created, w hich contains a

n o n - M W O L F s in legal contracting w ith the RTC.
In 1993, while participating in the annual m eet­

nationw ide inventory of certified M W O B firms.
To im p r o v e c o n t r a c t in g o p p o r t u n it ie s for

ings o f several legal and bar associations, the office

M W O B s , office representatives served on Technical

identified and recruited M W O L F s and m inority and

Evaluation Panels, w h ic h evaluate proposals from

w om en attorneys in n o n - M W O L F s to serve as o u t­

prospective contractors. The staff also worked direct­

side counsel. These associations included the American

34



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Indian Bar A ssociation, N atio n a l Bar Association,-

M W O L F consortia, facilitate communication between

American Bar Association (w hich held a conference

M W O L F s and R T C legal staff, and promote interac­

on O pportu nities for M inorities in the Profession),

tion between M W O L F s and non-M W OLFs.

N a t io n a l A s s o c ia tio n o f W o m e n Law yers, an d

In 1993, th e R T C m ad e 1 1,417 referrals to

H ispanic N ational Bar Association. D urin g the year,

M W O L F s for legal work w ith the RTC, or 56.9 per­

the office published the National M W O L F Directory,

cent of all referrals to outside counsel, and paid them

featuring the specific skills and expertise o f RTC-

fees totaling $53.8 m illion, or 15.9 percent of all fees

approved M W O L F s .

paid to outside counsel during the year.

T he office sponsored several seminars d uring
the year to facilitate the assignm ent o f legal work
to M W O L F s , p r o v id e e d u c a tio n a l sessions to
M W O L F s o n the RTC's o utreach pro gram , give
guidance on the RTC's Professional Liability Section
an d Jo in t Representation programs, and prom ote

Department of Equal
Employment Opportunity and
Affirmative Action

co m m u nicatio n and interaction between M W O L F s

T he Departm ent of Equal Em ploym ent O pp ortu nity

an d R T C legal staff. Seminars were held in Atlanta,

and Affirmative Action provides leadership and guid­

D enve r,

P h ila d e lp h ia ,

N ew

O r le a n s ,

and

ance to the C o rp o ra tio n in all areas o f the equal

W a s h in g to n , D .C . T he office is also p la n n in g sim ­

em ploym ent opportunity program. D uring 1993, the

ilar forums in 1994.

departm ent expanded recruitment efforts to target

To ensure that the R T C engaged outside c o u n ­

a n d increase the representation of m inorities and

sel on a com petitive basis, an office representative

w o m e n in the w o rk force at headquarters a n d in

served as a v o tin g m e m b e r o f the Legal Services

the field.

C o m m ittee , w h ic h selects law firms to handle RT C

These increased recruitm ent efforts supported

work. T he co m m itte e operates in each field office

items in the RTC's Affirmative A ction Program plan.

an d at headquarters.

As a part of the plan, headquarters and the field offices

To assist M W O L F s in b e c o m in g in vo lve d in

established numerical objectives to improve the rep­

m o re c o m p le x legal issues, th e o ffice — in c o n ­

resentation o f m inorities, w om en, an d individuals

ju n c tio n w ith the D ivisio n o f Legal Services— pre­

w ith disabilities at senior-grade levels. These offices

sented tw o national M W O L F sym posium s as part

reported quarterly on their accom plishm ents, and

o f th e RT C 's M i n o r it y a n d W o m e n O u t r e a c h

u p d a te d th e ir n u m e r ic a l o b je c tiv e s as s ta ffin g

P r o g r a m . In J u n e 1 9 93 , th e R T C h o s te d th e

needs changed.

"N a tio n a l W o rk s h o p on the J o in t Representation

T he office m onitored the success of the offices

o f R T C 's P ro fe ss io n a l L ia b ilit y Cases" in N e w

in attaining their numerical objectives b y reviewing

O rleans. In S eptem ber 1993, the R T C sponsored

E E O efforts in the referral and selection processes.

"A n Inside L o o k at Legal M atters w ith the RTC's

As opportunities for hiring and promotions occurred,

D iv is io n o f Legal Services" in W a s h in g to n , D .C .,

all selections at the grades 13 and above in "major

w h ic h focused o n co m plex securities, real estate,

mission" occupations were reviewed by the depart­

litig a tio n , a n d affordable h o u s in g issues. Several

m ent before the selections were finalized. E E O Action

th o u sa n d attorneys a n d o th e r legal professionals

Officers also reviewed selections to assist offices in

participated in each sym posium .

m eeting their E E O objectives.

T he symposium objectives were to facilitate the

T he departm ent oversaw the E E O Com m ittees

assignment of work to M W O L F s already on the RTC's

in the six field offices, assisting them in b oth m eet­

List of O utside Counsel,- provide educational sessions

in g E E O o b je c tiv e s a n d ra is in g th e aw areness

to M W O L F s on procedural and legal issues applica­

and sensitivity o f R T C managers and employees on

ble to representing the RT C in complex legal matters,

E E O matters. T he committees sponsored several pro­

provide instruction on the formation of joint-venture,

gram s d u r in g th e year th a t e n h a n c e d d iv e rs ity

jo in t- c o un se l, a n d co-counsel arrangem ents an d

and awareness.

i 99i
 A n n u a l R e p o r t


M i n o r i t y

a n d

W o m e n ' s

P r o g r a m s

35

MINORITY

AND

WOMEN

Department of Policy, Evaluation,
and Field Management
T h e D e p a rtm e n t of Policy, E valuation, and Field

PROGRAMS
S

pation of minorities and w om en in all facets of the^
RTC's operations necessitated changes to the rule.
These revisions will be circulated internally for review
for com pliance w ith the provisions o f the act.

M a n a g e m e n t develops n a tio n w ide program stan­

The departm ent closely tracked, evaluated, and

dards, policies, and procedures for the RTC's m in or­

reported to the U.S. Congress on the im plem enta­

ity and women's programs, ensuring that they are in

tion of the RTC's M W P activities during 1993. In

com pliance w ith FIRREA; the RT C Funding A ct of

a d d i t i o n , it c o o r d i n a t e d w it h th e O f f i c e o f

1991,- the R T C R e fin a n c in g , R e structuring, a n d

A dm inistrative Evaluation to establish "assessable

Im provem ent A ct of 1991,- and the R T C C om pletion

units" (standards to measure program performance)

A ct of 1993. T he departm ent ensures standardized

as part of the Corporations Internal Controls Program.

im plem entation o f m inority and w om ens programs
throughout headquarters and in the field offices.
In 1993, the departm ent expanded its role to

The office increased the RTC's use of advertise­
ments targeting minorities and wom en. D u rin g the
year, the division also expanded its advertising in the

include oversight of business, legal, and equal employ­

m inority press and teamed w ith the N ational Asset

m ent oppo rtun ity programs at headquarters and in

M arketing G ro up in its efforts directed at m inority

the field. T he office defined standards an d criteria

investors. In 1993, advertisements were placed in

for the oversight and review of minority and womens

m o re th a n 40 p u b lic a tio n s a im e d at m in o ritie s

program s in the field to determ ine the programs'

and wom en.

effectiveness, and com pleted Program C o m pliance

D u rin g the year, the office participated in m eet­

Reviews of the six field offices to determ ine their

ings, conferences, and seminars representing Hispanic,

p r o g r a m s ' a d h e r e n c e to M W P p o lic ie s a n d

Black, Indian, Asian, and w om ens groups, w hich sig­

requirements.

nificantly increased the prom otion of the RTC's pro­

D uring the year, an interim final rule— "M inority and W om en-owned Business and Law Firm Program"
(12 CFR, Part 617)— was revised, providing the foun­

gram s to in v o lv e m in o r itie s a n d w o m e n w h ile
furthering the RTC's outreach efforts.
T hro ugh ou t 1993, the office focused on devel­

dation for uniform im plem entation of the M W O B

o p in g regulations to assure uniform im plem entation

and M W O L F programs. It also triggered the devel­

o f M W O B an d M W O L F programs,- tracked c o n ­

o p m e n t an d revision o f policies, procedures, an d

tracting activity and program performance,- drafted

other guidelines necessary for consistent program

p rocedures to im p le m e n t c o n tra c to r oversight,-

delivery. T he original version of the rule was p u b ­

and prepared reports on program accom plishments

lished for public com m ent in 1992. Provisions in the

fo r R T C

R T C C o m p le tio n A ct intended to increase partici­

general public.

36



Mi n o r i t y

a n d

W o m e n ' s

P r o g r a m s

m a n a g e m e n t , C o n g r e s s , a n d th e

R esoluti on

Tr u s t

Corporati on




A

S

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MANAGEMENT
A N D

S

A

L

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S

ASSET

MANAGEMENT

he D ivision of Asset M anagem ent
Sales manages and disposes of

AND

SALES

m aintenance, subcontracting oversight, and m a n ­
agement and disposition fee calculations.

assets acquired from failed thrifts.
T he division accom plishes this through
the Departments of Field Activities, Capital
M arkets, Asset M a rk e tin g , A ffo rd a b le
Housing, and the Small Investor Program.
D u rin g 1993, R T C asset sales and collec­
tions totaled $49 b illio n (net o f putbacks). From
inception through 1993, asset sales and collections
am ounted to $353 b illio n (net of putbacks),- book
value reductions totaled $393 b illio n for the same
period. T he asset inventory rem aining at yearend
1993 totaled $63 billion.

Office of Asset Management
The O ffice of Asset M anagem ent develops the RTC's
policies and procedures on asset valuation, seller
financing, subsidiary m anagem ent and disposition,
and general real estate and loan credit management.
In 1993, the office developed the Loan Servicer
O versight Program to m o n itor and oversee all types
of RT C loan servicing. The office also developed the
R T C Property Tax M anagem ent Program to m axi­
m ize real property tax savings through tim ely real
estate appraisals and property tax appeals.
D u rin g the year, the office im plem ented proce­

Department of Field Activities

dures developed in 1992 to originate seller-financ­

The Department of Field Activities coordinates nation­

and equity interests acquired from multiple asset sales

ing loans for commercial R E O and servicing notes,

al sales efforts and oversees field office sales and oper­

and multiple investor funds. In 1993, the R T C closed

ations. T he department also develops and implements

a pp ro x im a tely $1.6 b illio n in c o m m e rcial seller-

policies and procedures governing the m anagem ent

financed transactions. From inception of the program

and disposition o f assets, except for securitization

in M arch 1991 through yearend 1993, the RTC closed

transactions. T he departm ent consists o f the Offices

a pp ro x im a tely $3.1 b illio n in co m m e rcial seller-

of

financed transactions.

SAM DA

P ro g ram

M a n a g e m e n t,

A sset

M a n a g e m e n t, S ettlem en t W o rk o u t, Systems an d

T he office also com pleted the sale of 17 e nvi­
ronm entally significant properties, w ith a total book

Pipeline M anagem ent, and Field Activities.

value of $130.6 million, to conservation agencies and

Office of SA M D A Program Management

organizations for the protection o f approxim ately

The Office of S A M D A (Standard Asset M anagem ent
and D isposition Agreement) Program M anagem ent
issues and m onitors all S A M D A s, w hich totaled 187
from inception of the S A M D A program in August

6,062 acres.

Office of Settlement W orkout
The O ffice of Settlement W orkout restructures prob­

1990 through yearend 1993. At yearend, 91 S A M D A

lem loans and negotiates settlements w ith defaulted

contractors were m anaging assets w ith a total book

borrowers. Assets assigned to the office generally

value of approxim ately $ 10.9 billion.

have a h ig h book value,- may have the potential for

From A ug ust 1990 th ro u g h D e c e m b e r 1993,

substantial legal costs,- m ay be involved in, or have

S A M D A contractors m anag ed assets w ith a total

the threat of, com plex litigation, or m ay not have

b o o k value of $37.6 billio n and disposed o f 71 per­

sold after a prolonged period according to their pro ­

cent, or $26.7 billion, of those assets.

posed disposition plans.

In 1993, the office d eveloped procedures for

In 1993, the office's 23 settlement workout assis­

S A M D A an d o ther R T C contractors to com plete

tance teams restructured, sold, or worked out approx­

their contractual o bligatio ns before the contracts'

imately $2 b illion in problem assets,- total settlement

scheduled expiration dates. T he office also im p le ­

value on these assets was $951 m illion. A nother $2.9

mented internal control review procedures to strength-

billio n in assets were under review by the office at

en c o n t r o ls o v e r c a s h m a n a g e m e n t , sy s te m s

yearend 1993.

38



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Pipeline Management

CON SERVATO R SH IP A N D RECEIVERSHIP ASSETS UNDER
RTC M A N A G E M E N T AS OF DECEMBER 31, 1993

T he O ffice of Systems and Pipeline M an age m en t
coordinates the development, im plem entation, and

(percentage of gross assets)

Other Performing
Loans 4%

maintenance of the division's inform ation systems,
manages related contracts such as the D ata Integrity
Support and the Policy and Procedure Support c o n ­
tracts, and monitors the performance of m ajor opera tin g system s s u c h as th e Real E state O w n e d
M anagem ent System (R E O M S ), the Asset M anager
System (A M S ), an d the S u b s id ia ry In fo rm a tio n
M anagem ent System (S IM A N ).
D u r in g 1993, the data in te g rity o f R E O M S
im proved from 47 percent to 98 percent (based on
computerized assessments of the data). A n automated
clearinghouse was im plem ented for 67 percent of
the RTC's outstanding contracts, w ith improved fund­
ing controls and cash m anagem ent. In addition, the

Cash &
Securities
14%

Other
Assets 24%

office established the Central Loan Database to track
all R T C sales initiatives.

Mortgage Backed
Securities 3%
REO 9%

Office of Field Activities
T he O ffice of Field Activities oversees the asset m a n ­
agem ent and sales operations in the six field offices,

Total Assets: $63 Billion

w hich manage assets primarily through S A M D A co n ­
tracts, manages and disposes of RTC thrift subsidiaries,

This includes the creation and sale of securitized loan

and oversees the field responsibilities o f the RTC's

products, and the sale of debt and equity acquired

self-insurance program.

through R T C interventions. The departm ent c o n ­

T he office oversees all field office staff support
activities, such as facilities operations, b udgeting,

sists of the O ffice of Securities Transactions, and the
O ffice of Securitization.

inform ation services, resolutions, claims and settle­
ments, asset operations, and financial reporting.
D u rin g 1993, the office worked closely w ith the
field offices in co m ple ting the closure of seven R T C
offices, located in Baton Rouge, C hicago, FJouston,
Phoenix, San Antonio,- Somerset, N ew Jersey,- and
Tampa. At yearend, six field offices rem ained open
in A tlanta, Dallas, Denver, Kansas City, California,
and Valley Forge.

Office of Securities Transactions
T he O ffice of Securities Transactions sells securities
acquired th ro ug h R T C interventions and manages
the reinvestm ent o f the RTC's cash. T he types of
securities offered include jun k bonds, equity securi­
ties, U .S. Treasury obligations, federal agency and
mortgage-backed securities, limited partnership inter­
ests, and nationally syndicated bank loans.

In July 1993, the office coordinated a fun ctio n ­
al reorganization w ithin each field office.

Department of Capital Markets

From inception o f the securities sales program
in M arch 1990 through yearend 1993, the R T C sold
over $62.5 b illio n of securities, including $9 b illion
of interest-rate swaps and nearly $9 b illio n in jun k

T he D epartm ent of Capital Markets plans, co o rd i­

bonds, recovering approx im ately 65 cents on the

nates, and directs R T C capital markets transactions.

dollar for the taxpayers.

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ASSET

MANAGEMENT

AND

SALES

The office used several programs to sell highly

T hro ugh the securitization program, approxi­

illiquid securities, including limited partnership inter­

mately $3.8 billion (book value) in performing loans

ests, highly leveraged transactions, and subordinate

were sold in 1993. Five transactions were collateral­
ized by $ 1.6 billion in performing single-family m ort­

loan participations.

gages, three transactions were collateralized by $2.2

Office of Securitization

billio n in performing commercial and multi-family

T he O ffice of Securitization develops, manages, and
im plem ents programs to securitize financial assets
taken over by the RTC, including perform ing m ort­
gage loans, non-perform ing com m ercial mortgage
loans, and other loans.
In 1993, the office used the M u ltip le Investor
Fund, and the N-Series and S-Series transactions to
dispose of non-performing and sub-performing loans.
These transactions involve establishing partnerships
between the R T C and private investors w h o p u r­
chase, manage, and then sell portfolios of non-per­
form ing and sub-performing loan assets, and share
in the profits w ith the RTC. T he structure provides
incentives for equity partners to work out portfolios
w ith the highest returns to the partners and the RTC.
T h e S-Series is part o f the RTC's S m all Investor
Program (SIP), SIP's smaller offerings are specifical­
ly geared to investors w ith moderate capital levels.

mortgages.
A nother $4.1 billio n (book value) in non-per­
forming commercial and multi-family mortgage loans
were so Id in 1993. T h ree N-Series transactions
accounted for $1.7 b illio n o f these assets,- tw o SSeries transactions accounted for $.2 billion o f the
assets. The remaining $2.2 billion in assets were sold
through M ultiple Investor Fund transactions in 1993.
From inception o f the securitization program in
June 1991 to yearend 1993, over $36.6 b illio n in
assets were securitized, including single-family, m u l­
tifamily, and commercial mortgages, and com m er­
cial and consumer loans.

Department of Asset Marketing
T he D epartm ent o f Asset M arketing coordinates all
marketing programs supporting the sale of RTC assets.
T he departm ent consists of the O ffice o f N ational
M a rk e tin g and the N a tio n a l Sales Center, w h ic h

1993 A S S E T SALES A N D CO LLEC TIO NS—
C O N SE R V ATO R SH IPS , R ESO LU TIO N S A N D R ECEIVERSHIPS

c oordinate the asset m arketing functions between
W ashin gton and the six field offices.

Office of National Marketing
T he O ffice of N ational M arketing coordinates m ar­
keting programs nationw ide and provides asset sales
support through advertising, industry relations, mar­
keting systems, and customer services and telemar­
keting.
In 1993, the office designed and placed adver­
tisem ents in m ore th an 275 p u b lic atio n s, saving
approximately $1.5 m illion through direct placement
of the ads. The office also supported the Small Investor
Program, developing the initial advertising campaign
and creating brochures for the program.
D u rin g the year, the office increased direct mail
efforts to support sales initiatives and R T C programs
coordinated by the Small Investor Program and the
Affordable FHousing Disposition Program. M ore than

Total Sales and Collections: $49 Billion (net of putbacks*)

120,000 pieces o f direct mail were produced and
*Putbacks totaled $105 million in 1993. Putbacks include some assets returned pre-1993 resolution sales.

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In 1993, the N a tio n a l I -800 T e le m ark e ting

August 1993 auction, 11,200 loans w ith a total bal­

Program, developed by the office in 1991, c o n tin ­

ance of $670 m illion were sold, for a total recovery

ued to provide the general public w ith inform ation

o f $335 m illion.

about RT C offerings. From the program's inception

The office also established the partnership struc­

through yearend 1993, over 1.6 m illio n calls were

ture for the Judgments, Deficiencies, and Chargeoffs

received on the Affordable H ousing H otline, Broker

(JD C ) initiative, a partnership arrangement designed

H o t lin e , S m a ll In v e s to r P ro gram H o t lin e , an d

to sell approximately $7 billion (book value) of ju d g ­

Information Center Line. The Small Investor Program

ments, deficiencies, and chargeoffs. T he J D C initia­

H o tlin e was added in June 1993 to help respond to

tive was envisioned to create up to 30 partnerships

the needs of investors w ith moderate capital levels.

to receive approximately 70,000 assets with an aggre­

T he large num ber of callers enabled the office

gate principal am ount o f $7 billion. In 1993, 23 w in ­

to build a substantial investor database in 1993 to

n in g bidder teams were selected to participate in the

assist in direct m arketing efforts. Inform ation about

J D C Program. A dditional teams will be selected in

investor preferences was used to match investors with

1994.
In addition, during 1993 approximately $6.9 b il­

auctions and sealed bids.
In addition, the office increased the num ber of
investors listed on the N a tio n a l Asset M a rk e tin g

lion in mortgage-servicing rights were sold through
32 portfolio sales and four subsidiary sales.

A pp lication from 11,500 to 19,000 in 1993. T he list
serves as the prim ary m arketing source for field and
national sales cam paigns and event announcements.

National Sales Center

Department of Affordable Housing
T he D ep artm e nt o f Affordable H o u s in g identifies
real estate assets suitable for sale to low- to moder-

T he N ational Sales Center plans, coordinates w ith

ate-income families and individuals, as well as n o n ­

the field offices, and executes m ajor asset sales. The

profit housing organizations, through its Affordable

office disposes of illiq u id assets such as real estate

H o usin g D isposition Program.

and non-perform ing loans, and conducts portfolio

T he A ffordable H o u s in g D isposition Program

and structured sales (sales of pools o f assets chosen

offers income-eligible purchasers and non-profit hous­

by the RT C and a purchaser) o f more than $100 m il­

ing organizations an exclusive 97-day marketing peri­

lion in assets in a single transaction. T he latter offer­

od and option to purchase these properties. Non-profit

ings are composed primarily of commercial real estate

housing organizations include consumer and public

and non-perform ing mortgages.
T he Sales C e n te r develops marketing-related

interest groups, as well as state and local ho using
agencies.

data, develops and im plem ents new sales strategies

U nder the Affordable H ousing Disposition M u lti­

to dispose o f assets, and conducts nationw ide auc­

fam ily Program, m ultiple-unit dw ellings must in i­

tions o f real estate and loans.

tially be marketed exclusively to low-income housing

In 1993, the Sales C enter was involved in a n um ­

providers w h o agree to reserve at least 35 percent

ber of notable sales transactions. T he RT C completed

(15 percent for low-income individuals and families,

the sale o f the first N ational Land Fund, a $.8 b illion

and 20 percent for very low-income individuals and

innovative partnership structure in w hich the R T C

families) o f the units at restricted rent levels for the

retains a lim ited partnership interest and shares in

rem aining useful life of the property (40 to 50 years).
In 1993, 3,589 single-famijy properties were sold

the appreciation of land assets.
T he Sales C enter also participated w ith all the

through the affordable housing program for a total

field offices in c o n d u c tin g tw o national non-per­

of $96 m illion. From the program's inception in 1990

form ing loan auctions in Kansas City, Missouri. In

to yearend 1993, 20,197 single-family properties

the M arch 1993 auction, approximately 18,000 loans

were sold for a total of $553 m illion. These proper­

w ith a total balance of approxim ately $503 m illion

ties were offered prim arily th ro u g h auctions and

were sold, yielding a $249 m illio n recovery. In the

sealed bids.

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ASSET

MANAGEMENT

In 1993, the RTC sold the following properties to state and local hous­
ing authorities through its Affordable Housing Disposition Program:

AND

SALES

incomes of $21,866, or less than 80 percent o f the
national median income. The average sales price of
a single-family hom e in the program was $27,383.

PROPERTIES SOLD TO STATE A N D
LOCAL H O U SIN G A U TH O R ITIE S

The RT C provided seller financing for 1,225 sin­
gle-family homes sold under the affordable housing
program in 1993. From the program's in c e p tio n

Housing Authority

Property

Sales Price

Region III Housing
Authority
Las Lunas, NM

Casa De Chavez Apts.
Las Lunas, NM

$ 500 ,00 0

Reno Housing Authority
Reno, NV

7th Street Apts.
Reno, NV

Round Rock Housing
Authority
Round Rock, TX

Main St. Square Apts.
Round Rock, TX

Housing Authority of
the City of Del Rio
Del Rio, TX

Oakwood Apts.
Del Rio, TX

City of Temple Housing
Authority
Temple, TX

2 Properties:
Raintree Apts.
Temple, TX

th ro u g h yearend 1993, the R T C pro vid ed seller
financing for 4,339 single-family homes, or 21 per­
cent of the total sold. Purchasers of single-family
homes utilized $58 m illion o f RTC-sponsored m o rt­

180,000

gage revenue bonds.
1,095,000

In 1993, 151 m ulti-fam ily affordable housing
properties were sold for a total of $81 million,- the
R T C provided seller financing for 70 of the proper­

528 ,00 0

ties. From the program's inception through 1993, the
R T C sold 575 multi-family affordable housing prop­

1,604,000

e rtie s, c o n t a in in g 5 3 ,3 5 8 u n its , fo r a to ta l o f
$604 m illion.

Creekside Apts.
Temple, TX
City of Houston Housing
& Community Development
Houston, TX

T he R T C m ay donate properties w ith no rea­

3 Properties:
Bellfort Southwest Phase
Houston, TX

sonable recovery value to non-profit organizations

1 ,583,000

and public agencies that agree to make these p ro p ­
erties available for low-income housing and other

Tara Hall Apts.
Houston, TX

public uses. From inception of the affordable hous­

Bellfort Southwest III
Houston, TX
City of Lubbock
Housing Authority
Lubbock, TX

ing program through yearend 1993, 647 properties

2 Properties.
Normandy Apts.
Lubbock, TX

w ith no reasonable recovery value were made avail­

316 ,00 0

able for conveyance to non-profit organizations and
p u b lic agencies. O f th ose , 21 1 were c o n v e y e d

Lexington Royal Apts.
Lubbock, TX
City of San Antonio
Housing Authority
San Antonio, TX

in 1993.

2 Properties:
Castle Point Apts.
San Antonio, TX

2 ,7 8 0,00 0

Department of the Small
Investor Program

Burning Tree Apts.
San Antonio, TX
City of San Marcos
Housing Authority
San Marcos, TX

1,026,000

2 Properties:
Windmill Plaza
San Marcos, TX

The Department of the Small Investor Program (SIP),
created in April 1993, is responsible for ensuring that
the RTC's assets are offered for sale individually and

Langtry Apts.
San Marcos, TX

in pools to investors w ith moderate capital levels. In

2 Properties:
Heatherwood Club Apts.
Colorado Springs, CO

Colorado Springs
Housing Authority
Colorado Springs, CO

2 ,2 5 0 ,0 0 0

1993, SIP offices were established in the W ashington,
D C ., headquarters office and in each of the six field

Firtree Apts.
Colorado Springs, CO

offices, w ith staff dedicated to addressing the needs
continues on page 43

of investors w ith moderate financial capabilities.
U nder the program, all R T C loan and real estate

D u r in g the year, 26 affordable h o u s in g sales

assets not previously com m itted to scheduled events

events were held. Since the programs inception, over

are actively marketed individually for a m in im um of

235 affordable housing sales events have been held

120 days. Individual real estate assets are offered

in 32 states. Sixty-one percent of the purchasers were

through localized auctions and small loan pool offer­

from low er-incom e fam ilies, those w ith average

ings, as well as th ro ug h the real estate brokerage

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PROPERTIES SOLD TO STATE A N D
LOCAL H OU SIN G AU TH O R ITIE S

in ve sto rs, b id d e r e n try d e p o s its for lo an sales
were lowered.
D uring 1993, the department held several buyer
awareness seminars in advance of sales events to help
local and regional investors learn about the Small
Investor Program. M ore than 16,000 investors par­
ticipated in the seminars throughout the year.

continued from page 42

Housing Authority

Property

Sales Price

Colorado Housing and
Finance Authority
Denver, CO

7 Properties:
Hyland Park Center
Federal Heights, CO

$ 18 ,180,000

T he departm ent also worked w ith the O ffice of

Altamira Apts.
Colorado Springs, CO

N ational M arketing to expand the investor database

Summit Apts.
Colorado Springs, CO

to include investors in the moderate-capital range.
By yearend, 4,106 such investors had com pleted the

Vista Verde Townhomes
Hayden, CO

RT C Investor Profile and were registered in the Small

1467 Detroit Street
Denver, CO

Investor Database. O f this total, 969 investors in d i­
cated m inority status and 799 investors identified

Bronzetree Apts.
Colorado Springs, CO

themselves as minority- or w omen-owned firms.

Westree Apts.
Colorado Springs, CO

T he dep artm en t established a toll-free Sm all
Investor Program H o tlin e to provide inform ation,
brochures, calendars, and property listings on assets
offered through SIP.

Christy Apartments
Phoenix, AZ

T h e August 24 and 25, 1993, N atio n a l NonPerform ing Loan A uction in Kansas City, Missouri,

Sunset North Apts.
Phoenix, AZ

was the first auction in w hich the SIP program actu­

Whispering Willows
Phoenix, AZ

ally participated. One-third of the w in nin g bidders
had not previously participated in an R T C national
non-perform ing loan auction.
In 1993, the program also in tro du c ed the SSeries, an initiative sim ilar to the RTC's N-Series,
designed to dispose of sub-performing and non-per­
form ing commercial loans through a leveraged trust.
T he S-Series targets investors w ith moderate capi­

1,118,000

4 Properties:
Casa Castillo
Phoenix, AZ

Pima County Housing
Authority
Phoenix, AZ

Central City Housing
Development Corporation
New Orleans, LA
Las Cruces Housing
Authority
Las Cruces, NM

Jennings
University Blvd.
Las Cruces, NM

Selma Housing
Development Corporation
Selma, AL

1,000

2 4 1 6 -1 8 Rex Place
New Orleans, LA

2 15 Mabry Street
Selma, AL

418 ,00 0

4,0 0 0

tal levels by reducing the investor's equity require­
m ent to $4 m illio n to $9 m illion.
T he first 1993 S-Series initiatives, 1993-S1 and

a n d O k l a h o m a w i t h a t o t a l b o o k v a lu e o f
$1 12.2 m illion.

1993-S2, offered investors a portion of equity in a

After closing the S i and S2 transactions, the

total o f 132 non-performing commercial and m u lti­

program transferred responsibility for the S-Series

family assets w ith an aggregate book value of $ 186.6

to the field offices, w ith oversight retained by the

m illio n . N in e qualified investors subm itted bids for

National Sales Center and the Office of Securitization.

the 49 percent equity po rtio n o f 1993-Sl, w h ich

The first field S-Series transaction, 1993-S3, was c o n ­

pooled 44 non-perform ing loans secured by c o m ­

ducted by the RTC's Kansas C ity O ffice in 1993.

mercial and multi-family projects in Florida and Texas

Seven qualified investors submitted bids for the 49

w ith a total book value of $74 m illion. Seven qual­

percent equity portion of 1993-S3 (re-named 1994-

ified investors subm itted bids for 49 percent o f the

S l ), w hich pooled 86 commercial loans secured by

equity portion of 1993-S2, w hich pooled 88 n o n ­

real estate in Kansas, Missouri, O k la h o m a , O h io ,

p e r fo r m in g c o m m e rc ia l a n d m u lti- fa m ily m o r t­

Illinois, and M ic h ig a n w ith a total b o o k value of

gage loans secured by real estate in New Jersey, O h io ,

$99.8 m illion.

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CHIEF

FINANCIAL

OFFICER

D ivision of the C h ie f Financial

1993, 17,000 vendors were authorized and more than

O fficer was established in 1993 in

88,000 payments totaling approximately $ 1.5 billion

response to Treasury Secretary

were processed.

B entsen's R T C M a n a g e m e n t R e fo rm

T h e o ffice m an ag ed the a p p ro p ria te d funds

Agenda, w hich included a recommenda-

received from the U.S. Treasury, and the borrowings

tio n c a llin g for an in d e p e n d e n t C h ie f

from and repayments to the Federal Financing Bank,

F inancial O ffic e r ( C F O ). T he division

w hich provides loans to federal agencies for w ork­

J i ^ H L began operations on June I, 1993, w ith

ing capital purposes. In 1993, the office oversaw the

P re sid en t C lin to n 's a p p o in tm e n t o f D o n n a H .

net pay do w n of Federal F inancing Bank principal
borrow ings by $6.7 billio n . Interest costs in 1993

C un n ing ha m e as the C F O .
The division oversees financial management activ­

were $1 billion, compared w ith 1992 interest costs

ities relating to the RTC's programs and operations,

o f $1.9 b illio n . T he office also m anaged the d is­

including field and corporate accounting, the RT C

bursem ent of initial fu n d in g for the resolution of

budget, cash-management activities, financial report­

failed savings associations.

ing, internal controls, and audit follow-up. The d ivi­

T he office prepared RT C official financial infor­

sion is c o m p ris e d o f the O ffic e s o f A c c o u n tin g

mation for both internal and external sources, respond­

Services, Budget and Planning, Field A ccounting and

ing to inquiries from Congressional committees, the

Asset O perations, and M anagem ent C ontrol.

T hrift D epositor Protection Oversight Board, RT C

O n e o f the most significant achievements d ur­

senior m anagem ent, and the general public.

ing the year was the efforts of division personnel
w hich resulted in the RTC's receipt of an unqualified
o p in io n on its financial statements from G A O for
the second consecutive year.

Office of Budget and Planning
T he O ffice of Budget and Planning coordinates and
oversees the RTC's budget process, and facilitates
the use of corporate resources in business planning,

Office of Accounting Services

resource estimation, performance measurement, and

T he O ffice o f Accounting Services performs the cor­

progress m onitoring.

porate accounting functions for the RTC. The office

In 1993, the office com pleted enacting changes

produces and maintains the R T C corporate account­

in itia te d in 1992 to a c c o m m o d a te the m a tu rin g

ing records and related systems, the corporate fund-

operations of the RTC. The budget model was refined

ing/cash-m anagem ent operations, and the official

to further aid budget forecasting and RT C Business

corporate financial statements and reports that reflect

Plan preparation, budget reports were expanded to

the financial performance of the R T C in its co rpo ­

in clu d e b o th revenues a n d expenses, an d new ly

rate, conservatorship, and receivership capacities.

designed perform ance measurem ent reports were

In 1993, the office continued to record and rec­
oncile all corporate accounting transactions to ensure

in itia te d to assess p ro g ra m p e rfo rm a n c e in re ­
source consum ption.

the highest level of data integrity and consistency in

The Budget Inform ation System, w hich is used

the RT C General Ledger, the Corporation's official

for data collection, analysis, and reporting on the

accounting system.

R T C budget, was enhanced to include ad ditio nal

The office co m ple te d im p le m e n tin g the R T C

estimation capabilities and a full range of budget exe­

Accounts Payable System, establishing uniform c o n ­

cution reports. The office also assisted in enhancing

trols and procedures for the disbursement of RT C

the design and im p le m e n tatio n of the C o rporate

funds, and elim inating the previously separate field

Inform ation System and the Financial M anagem ent

and corporate accounts payable systems. A vendor

S yste m , in c lu d in g th e G e n e ra l L e dger a n d the

maintenance group was established as the sole author­

Accounts Payable System.

ity to review and establish authorized vendors, from

The office added staff in the field offices to expand

the group's inception in M arch 1993 through yearend

reporting and analysis capabilities and to provide

46



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more direct assistance to field budget activities.
In 1993, R T C non-interest operating expenses

and collections in 1993 through securitization, m u l­
tiple investor funds, structured transactions, auctions,

totaled $2.9 billion. O f this am ount, outside services

N-Series transactions, N ational Land Fund sales, and

accounted for 53 percent, receivership real estate

other sales initiatives.

accounted for 23 percent, and employee com pensa­

As part of the office's fiscal integrity maintenance

tion accounted for 14 percent. In 1993, the RTC's

program, an electronic journal entry interface, which

staff decreased by 627 employees, a nine percent

autom atically reconciles financial inform ation, was

reduction from the b eginning of the year.

im p le m e n te d b e tw e e n th e Real Estate O w n e d
M a n a g e m e n t System and the G eneral Ledger. In

Office of Field Accounting and
Asset Operations
T he O ffice of Field Accounting and Asset Operations
directs and manages all asset and field accounting
operations in support of R T C asset sales, m anage­
ment, and disposition activities. The office acts as a
liaison between the headquarters and field offices for
financial and related asset-management activities,
and coordinates w ith the RTC's four financial service
centers in Atlanta, Dallas, Denver, and Kansas C ity
to ensure their com pliance w ith procedures relating
to asset and accounting functions.
In 1993, all asset operations were consolidated
into the RTC's financial service centers to improve
efficiency in financial service center operations. A
standard service contract for three of the financial
service centers was developed and finalized, pro vid ­

ad ditio n , an autom ated reconciliation facility was
established to reconcile differences between General
Ledger balances and balances received from loan ser­
vicers. A Loan S ervicing O v e rs ig h t Program was
designed to detect and prevent waste, fraud, and
abuse by the RTC's loan servicers.
Two key organizations were created in the RTC's
financial service centers in 1993: D o c u m e n ta tio n
Control Units, which enforce documentation require­
ments for each type of R T C business/financial trans­
a c tio n , an d Q u a lity Assurance U n its , w h ic h are
responsible for internal-control im plem entation and
proper audit m anagem ent and follow-up w ithin the
financial service centers.

Office of Management Control
T he O ffice of M anagem ent C ontrol was created in

ing a uniform scope of work, tasks, performance cri­

1993 (its functions were originally part o f the Office

teria, budget, and expense and performance reporting

o f A d m in is tr a tiv e E v a lu a tio n in the D iv is io n o f

requirements. T he N ational Sales Support O ffice was

Adm inistration and Corporate Relations). The office

also created at headquarters to provide a c c o u n t­

assists the C h ie f Financial Officer in developing po li­

in g a n d asset o p e r a t io n s s u p p o r t fo r s p e c ia l

cies relating to internal control programs,- adm inis­

sales initiatives.

ters the Corporation's established internal control

T he office directs a national cash-management

and audit follow-up programs, serves as liaison w ith

program for receiverships that has an average m o n th ­

internal and external auditors,- administers the process

ly balance of $4 b illion, m onitors a national internal

of resolving audit issues and recommendations, reports

financial controls program, develops tax and account­

to m anagem ent on the status of corrective actions,

ing policies, conducts nationwide training for account-

prepares the annual report on the status of internal

in g a n d asset o p e r a t io n s s ta ff, a n d p r o v id e s

controls throughout the R T C on behalf of the C F O ,

m anagem ent reporting of the RTC's performance on

and participates in monitoring the Corporation's co m ­

asset sales, asset m a n a g e m e n t, an d p r o d u c tiv ity

pliance w ith the C h ie f Financial Officers Act of 1990

and efficiency.

and associated policies of the R T C T hrift D epositor

D u rin g the year, the office directed the day-to-

Protection O versight Board.

day accounting operations for assets retained from

In 1993, several m ajor internal control review

resolved thrift institutions, w hich totaled $40 billion

initiatives were im plem ented to improve the control

(book value) from 680 institutions at yearend 1993.

systems u tiliz e d b y the R T C . T h e M a n a g e m e n t

T he office also processed $33 b illio n in asset sales

Reporting System was put into effect, w hich records,

A

v ,v a

i

k I r 11 k r




C

h

i e

f

F

i

h

a

n

< i a

i.

()

f

f

i

< n k

A T 7

CHIEF

FINANCIAL

OFFICER

monitors, and reports to managem ent on the status

taken, and trained regional Internal Review Specialists

of audit findings and recommendations issued by the

in the use of the newly im plem ented M anagem ent

General Accounting O ffice and the RTC's O ffice of

R eporting System to ensure that audit follow-ups

Inspector General, and recommendations contained

are completed.

in internal reports. N ationw ide training on internal

D uring the year, the office coordinated with and

controls and audit follow-up was also provided dur­

assisted various RT C offices in preparing responses

ing the year to more than 1,000 headquarters, field

to 60 General A ccounting Office and 260 O ffice of

management, and senior employees.

Inspector G eneral o n g o in g and com pleted audits,

The office redefined and improved the Interna!

investigations, and hotline cases. The office also coor­

Review Program at all field offices to include proac­

dinated 65 internal control and program compliance

tive reviews and to ensure that corrective actions are

reviews, primarily of field offices.

48






REGULATIONS

REGULATIONS

Final Rules

Interim Rules

Privacy Act Regulations

Employee Responsibilities
and Conduct

Pu
E

J

blish ed

ffective

D

a n ua r y
ecem ber

6, 1993
21, 1992

February 12,1993

T he RT C adopted a regulation for the processing of

T he RT C adopted an interim rule requiring c o m p li­

requests for access to or amendm ent of records, other

a n c e w it h th e O f f i c e o f G o v e r n m e n t E th ic s

than the records of the R T C Inspector General, pur­

Regulations on C o n fid e ntial and Public Financial

suant to the Privacy Act of 1974. T he rule sets forth

D is c lo s u r e , S ta n d a r d s o f C o n d u c t , a n d Post-

procedures to be used in requesting records from the

E m ploym ent Rules as applied to Federal Employees

R T C or a p p e a ling denials o f access to corporate

( O G E Regulations). T he rule revokes those sections

records, the procedures for contesting the content

of the RTC's regulation on Employee Responsibilities

of records, and the identification of records that are

and C o n d u ct that conflict w ith or are superseded by

exempt from the access, am endm ent, and disclosure

the O G E Regulations and reaffirms those sections

accounting provisions of the Privacy Act. The reg­

o f its regulation on Employee Responsibilities and

ulation also establishes a fee schedule for the d u p li­

C o n d u ct not in conflict w ith or superseded by the

cation of corporate records, and establishes a minimum

O G E Regulations.

am ount under w hich fees will not be charged.

Program Fraud Civil Remedies
and Procedures
P

ublish ed

E

ffective

J
J

u n e

uly

30, 1993
30, 1993

Service of Process U pon the Resolution
Trust Corporation
A pril 8, 1993
T he R T C adopted an interim rule designating the
officers upon w hom service of process may be made

T he RT C adopted rules to im plem ent the Program

w hen the R T C is sued in its receivership, conserva­

Fraud C ivil Remedies Act of 1986. T he rules estab­

torship, or corporate capacities.

lish administrative procedures for determining whether
to impose the statutorily authorized civil penalties
against any person w ho makes, submits, or presents
a false, fictitious, or fraudulent claim or written state­
m ent to the C orporation.

Procedures Applicable to
RTC Investigations
N

o v em b er

5, 1993

T he R T C adopted a regulation establishing proce­
dures applicable to the conduct of R T C investiga­
tions that involve the exercise of powers established
in section 8(n) of the Federal D eposit Insurance Act,
as amended. T he RT C is authorized to exercise such
investigatory powers in carrying out its statutory
obligations to resolve failed savings associations.

50



R

l

<, II I

I I <l ,\ s
!

Policy Statement
Amended Statement of Policy on
Contracting W ith Firms That Are
Parties to Lawsuits W ith the RTC/FD1C
P u b l i s h e d N o v e m b e r 23, 1993
Effective November

10 .

1993

In July 1992, the RT C adopted a statement of p o li­
cy setting forth the facts to be considered in deter­
m ining whether the RT C w ould do business w ith a
firm that was being sued by it, the Federal D eposit
Insurance C orporation, or the Federal Savings and
Loan Insurance Corporation. U nder this policy state­
ment, as a general matter, the R T C will not do busi­
ness with entities that are defendants in these actions.
In m aking this determination, however, the R T C will
consider a num ber of factors, including, but not lim ­
ited to: the n um ber o f lawsuits, the total a m o un t
claimed, the num ber of individuals or offices named,
and the type of m isconduct alleged.
O n N ove m b e r 10, 1993, the RTC's Executive
C o m m ittee am ended the policy to permit the RTC
to apply these same factors to determine whether an
entity can do business w ith the RT C when the RTC
has authorized its counsel to sue this same entity, but
the proposed litigation has not yet been filed.




R

F I,

II

L ,\

I

I <I

iV v

51







FINANCIAL
STATEMENTS
AND

INTERNAL
CONTROLS

GAO

United States
General Accounting Office
Washington, D.C. 20548
Comptroller General
of the United States
B -2 4 0 1 0 8

June

27,

1994

To

th e T h r i f t D e p o s ito r P ro te c tio n
O v e r s ig h t B oard
R e s o lu tio n T r u s t C o rp o ra tio n

We h a v e a u d i t e d t h e R e s o l u t i o n T r u s t C o r p o r a t i o n ' s
a c c o m p a n y in g s ta te m e n ts o f f i n a n c i a l p o s i t i o n as o f
D e c e m b e r 3 1 , 1993 a n d 1 9 9 2 , and t h e r e l a t e d s t a t e m e n t s o f
r e v e n u e s , e x p e n s e s , a c c u m u la te d d e f i c i t , and c a s h flo w s f o r
th e y e a rs th en ended.
We f o u n d :
Th e C o r p o r a t io n 's f i n a n c i a l sta te m e n ts r e f e r r e d
w e re r e l i a b l e i n a l l m a t e r i a l r e s p e c t s .
--

to

above

I n t e r n a l c o n t r o l s as o f Decem ber 31 , 1993, w e re e f f e c t i v e
in s a fe g u a rd in g a sse ts a g a in s t u n a u th o riz e d a c q u is it io n ,
u s e , o r d is p o s it io n ; a s s u rin g th e e x e c u tio n o f
t r a n s a c t i o n s i n a c c o r d a n c e w i t h m a n a g e m e n t's a u t h o r i t y a n d
m a t e r i a l la w s and r e g u l a t i o n s ; and a s s u r i n g t h a t t h e r e
w e re no m a t e r i a l m i s s t a t e m e n t s i n t h e f i n a n c i a l
s ta te m e n ts .
W h i l e we i d e n t i f i e d s e v e r a l i n t e r n a l c o n t r o l
w e a k n e s s e s , we d o n o t c o n s i d e r t h e m t o b e m a t e r i a l
w e a k n e s s e s .1 O u r f i n d i n g s w e re c o n s is t e n t w i t h th e

*A m a t e r i a l w e a k n e s s i s a r e p o r t a b l e c o n d i t i o n i n w h i c h t h e
d e s ig n o r o p e ra tio n o f th e in t e r n a l c o n t r o ls does n o t re d u ce
t o a r e l a t i v e l y lo w l e v e l t h e r i s k t h a t lo s s e s ,
n o n c o m p l i a n c e , o r m is s t a t e m e n t s i n am o u n ts t h a t w o u ld be
m a t e r i a l i n r e l a t i o n t o t h e f i n a n c i a l s t a t e m e n t s m ay o c c u r
a n d n o t b e d e t e c t e d w i t h i n a t i m e l y p e r i o d b y e m p lo y e e s i n
th e n o rm a l c o u rs e o f t h e i r a s s ig n e d d u t i e s .
R e p o rta b le
c o n d i t i o n s i n v o l v e m a t t e r s c o m in g t o o u r a t t e n t i o n r e l a t i n g
t o s i g n i f i c a n t d e f ic i e n c i e s in th e d e s ig n o r o p e ra tio n o f
i n t e r n a l c o n t r o l s t h a t , i n t h e a u d i t o r 's ju d g m e n t, c o u ld
a d v e r s e l y a f f e c t an e n t i t y ' s a b i l i t y t o ( 1 ) s a f e g u a r d a s s e t s
a g a in s t lo s s from u n a u t h o r iz e d a c q u i s i t i o n , u s e , o r
d i s p o s i t i o n , (2 ) e n su re th e e x e c u tio n o f t r a n s a c t io n s in
a c c o r d a n c e w i t h m a n a g e m e n t's a u t h o r i t y a n d i n a c c o r d a n c e w i t h
la w s an d r e g u l a t i o n s , o r ( 3 ) p r o p e r l y r e c o r d , p r o c e s s , and
s u m m a riz e t r a n s a c t i o n s t o p e r m i t t h e p r e p a r a t i o n o f f i n a n c i a l

54



F /,\ ,\ I i AI S I

A I I M I
-

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T t II ' I
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11 N

B-240108

r e s u l t s o f th e C o r p o r a t io n 's
in c lu d e d i n a p p e n d ix I I I .

re v ie w

of

in te rn a l

la w s

c o n tro ls

--

T h e r e was n o m a t e r i a l n o n c o m p l i a n c e w i t h
r e g u l a t i o n s we t e s t e d .

and

--

Th e C o r p o r a t io n a d e q u a te ly a d d re ss e d th e m a t e r ia l weakness
a n d r e p o r t a b l e c o n d i t i o n s we i d e n t i f i e d i n o u r 19 92
a u d it.2

P re s e n te d in th e f o llo w in g s e c tio n a re s i g n i f i c a n t m a tte rs
c o n s id e re d i n p e rf o rm in g o u r a u d it and fo rm in g o u r o p in io n s .
T h i s r e p o r t a l s o d is c u s s e s i n m ore d e t a i l e a c h o f t h e a b o v e
a u d i t c o n c l u s i o n s , o u r re c o m m e n d a tio n f o r i m p r o v i n g t h e
C o r p o r a t io n 's i n t e r n a l c o n t r o l s t r u c t u r e , and th e
C o r p o r a t i o n ' s c o m m e n ts o n o u r r e p o r t .
A p p e n d ix I d is c u s s e s
th e scope o f o u r a u d it .
A p p e n d ix I I p r e s e n t s th e
C o r p o r a t io n 's f i n a n c ia l s ta te m e n ts .
A p p e n d ix I I I p r e s e n t s
th e r e s u l t s o f th e C o r p o r a t io n 's e v a lu a t io n o f i t s in t e r n a l
c o n tro ls .
A p p e n d ix IV p r e s e n t s th e i n t e r n a l c o n t r o l
w e a k n e s s e s we i d e n t i f i e d i n 1992 a n d t h e C o r p o r a t i o n ' s
p ro g re s s in a d d re s s in g th e s e w eaknesses.
The C o r p o r a t io n 's
w r i t t e n co m m e n ts o n a d r a f t o f t h i s r e p o r t a r e i n c l u d e d i n
a p p e n d ix V .
S I G N I F I C A N T M ATTERS
The fo llo w in g in fo rm a tio n is p re se n te d to h ig h lig h t
(1 ) u n c e r t a in t ie s t h a t c o u ld a f f e c t th e C o r p o r a t io n 's lo s s
e s t im a t e s , ( 2 ) th e p o t e n t i a l im p a c t o f c o n t r o l s o v e r
c o n t r a c t o r p e rfo rm a n c e on r e c o v e r i e s fro m r e c e i v e r s h i p s , and
(3 ) th e c u r r e n t s ta tu s o f th e C o r p o r a t io n and i t s f u n d in g .

s ta te m e n ts and t o m a in t a in a c c o u n t a b i l i t y f o r a s s e t s .
R e p o rta b le c o n d it io n s w h ic h a re n o t c o n s id e r e d to be m a t e r ia l
n e v e rth e le s s re p re s e n t s i g n i f i c a n t d e f ic ie n c ie s in th e d e s ig n
o r o p e r a t i o n o f i n t e r n a l c o n t r o l s and need t o be c o r r e c t e d b y
m an age m e nt.
f in a n c ia l A u d it:
R e s o l u t i o n T r u s t C o r p o r a t i o n ' s 1 9 92 a n d
1991 F i n a n c i a l S t a t e m e n t s ( G A O / A I M D - 9 3 - 6 , J u n e 3 0 , 1 9 9 3 ) a n d
F in a n c ia l A u d it:
R e s o lu tio n T r u s t C o r p o r a t io n 's I n t e r n a l
C o n t r o l s a t D e c e m b e r 3 1 , 1992 ( G A O / A I M D - 9 3 - 5 0 , S e p t e m b e r 2 8 ,
1 9 9 3 ).

 A '■:: I \ k i r •j f I


F I X A X I

I A I

S I

A I I At I

\

I s

55

B-240108

U n c e r t a i n t i e s A f f e c t E s tim a te d
R e c o v e r ie s From R e c e i v e r s h i p s
and C o s ts o f F u t u r e R e s o lu t io n s
A l t h o u g h t h e C o r p o r a t i o n u s e d an a p p r o p r i a t e m e t h o d o lo g y f o r
e s t im a t in g th e r e c o v e r y v a lu e o f r e c e i v e r s h i p a s s e t s and has
used th e b e s t a v a ila b le in f o rm a tio n , s i g n i f i c a n t
u n c e r t a i n t i e s s t i l l e x i s t r e g a r d i n g g e n e r a l e c o n o m ic
c o n d i t i o n s , i n t e r e s t r a t e s , and r e a l e s t a t e m a rk e ts t h a t
c o u ld a f f e c t th e v a lu e o f a s s e ts i n r e s o lv e d and u n re s o lv e d
in s titu tio n s .
As shown i n f i g u r e 1 , t h e C o r p o r a t i o n ' s
r e c e i v e r s h i p s a n d c o n s e r v a t o r s h i p s h e l d $54 b i l l i o n i n a s s e t s
a s o f M a r c h 3 1 , 1 9 9 4 , o f w h i c h 31 p e r c e n t w e r e p e r f o r m i n g 1 - 4
f a m i ly m o rtga ge s and ca sh and in v e s tm e n t s e c u r i t i e s .
The
r e m a i n i n g 69 p e r c e n t w e r e d e l i n q u e n t l o a n s , r e a l e s t a t e
owned, o t h e r a s s e t s , o t h e r m o rtg a g e s and lo a n s , and
in v e s tm e n ts i n s u b s i d i a r ie s o f f a i l e d t h r i f t s and a re
c o n s id e re d h a r d - t o - s e l l b y th e C o r p o r a t io n .
I t is
p a r t i c u l a r l y d i f f i c u l t f o r th e C o rp o ra tio n to p r e d ic t the
r e c o v e r y v a lu e and t im in g o f s a le s f o r th e s e h a r d - t o - s e l l
a sse ts.
T y p i c a l l y , i f a sse ts s e l l l a t e r o r f o r le s s th a n
p r e d i c t e d , th e C o r p o r a t io n 's c o s ts w i l l be h ig h e r th a n
e s tim a te d .
C o n v e r s e ly , h i g h e r o r e a r l i e r r e c o v e r i e s w o u ld
t y p i c a l l y lo w e r th e C o r p o r a t io n 's f i n a l c o s t s .
F ig u re

1:

C o n s e r v a t o r s h ip and R e c e i v e r s h ip A s s e t s as o f
M a r c h 3 1 , 1994 ( T o t a l a s s e t s = $54 b i l l i o n )

aL i q u i d a s s e t s i n c l u d e p e r f o r m i n g
ca sh and in v e s tm e n t s e c u r i t i e s .

1 -4

f a m ily m ortgages

and

bH a r d - t o - s e l l a s s e t s i n c l u d e d e l i n q u e n t l o a n s , r e a l e s t a t e
owned, o t h e r a s s e t s , o t h e r m o rtg a g e s and lo a n s , and
in v e s tm e n ts in s u b s id ia r ie s o f f a ile d t h r i f t s .




B-240108

A s d i s c u s s e d i n n o t e 15 t o t h e f i n a n c i a l s t a t e m e n t s , t h e
C o r p o r a t io n has s e t a s id e a p o r t i o n o f th e p ro c e e d s fro m
s e c u r i t i z a t i o n t r a n s a c t io n s to c o v e r f u t u r e c r e d i t lo s s e s
w i t h r e s p e c t t o th e u n d e r l y i n g l o a n s . 3 Th e C o r p o r a t io n and
i t s r e c e iv e r s h ip s a ls o p r o v id e r e p r e s e n t a t io n s and w a r r a n t ie s
on th e u n p a id p r i n c i p a l b a la n c e o f c e r t a i n lo a n s s o ld f o r
c a s h , s o l d as p a r t o f s e c u r i t i z a t i o n t r a n s a c t i o n s , e x c h a n g e d
f o r m o rtg a g e -b a c k e d s e c u r i t i e s , o r s o ld u n d e r s e r v i c i n g r i g h t
c o n t r a c t s . 4 As o f D ecem ber 3 1 , 1 9 9 3 , t h e C o r p o r a t i o n ' s l o s s
a llo w a n c e s f o r r e s o l v e d and u n r e s o lv e d i n s t i t u t i o n s i n c l u d e d
$ 1 .5 b i l l i o n f o r th e e x p e c te d c o s t o f f u t u r e s e c u r i t i z a t i o n
c r e d i t lo s s e s and $ 1 .2 b i l l i o n f o r c la im s a r i s i n g fro m th e
r e p r e s e n t a t i o n s and w a r r a n t i e s .
A lth o u g h th e C o r p o r a tio n
used th e b e s t a v a ila b le in f o rm a tio n to e s tim a te
s e c u r i t i z a t i o n c r e d i t lo s s e s and f u t u r e lo s s e s a r i s i n g fro m
r e p r e s e n t a t i o n s and w a r r a n t i e s , s i g n i f i c a n t u n c e r t a i n t i e s
e x is t.
Th e C o r p o r a t i o n 's c la im s e x p e r ie n c e t o d a te has been l i m i t e d ,
r a i s i n g t h e r i s k t h a t as a d d i t i o n a l e x p e r i e n c e i s g a i n e d , t h e
a m o u n t o f f u t u r e l o s s e s m ay s i g n i f i c a n t l y i n c r e a s e o r
d ecrea se .
Th e se f u t u r e lo s s e s w i l l be a f f e c t e d b y th e
b e h a v io r o f th e econom y, i n t e r e s t r a t e s , and r e a l e s t a t e
m a rk e ts as w e l l as th e p e rfo rm a n c e o f t h e c o l l a t e r a l
u n d e rly in g th e tra n s a c tio n s .
Changes i n th e s e f a c t o r s , w h ic h
a re beyond th e C o r p o r a t io n 's c o n t r o l , c o u ld r e s u l t i n h ig h e r
o r lo w e r c r e d i t and c la im s lo s s e s th a n c u r r e n t l y e s t im a t e d .
C o n tro ls O ver C o n tra c to r
P e rfo rm a n c e C o u ld A f f e c t
R e c o v e r i e s Fro m R e c e i v e r s h i p s
Weak o p e r a t i n g c o n t r o l s c o u l d i m p a c t t h e e s t i m a t e d r e c o v e r i e s
from r e c e iv e r s h i p s in c lu d e d i n th e C o r p o r a t io n 's f i n a n c i a l
s ta te m e n ts .
These o p e ra tin g c o n t r o l s , th o u g h n o t in c lu d e d in
th e scope o f i n t e r n a l c o n t r o ls o b je c t i v e s a s s e s se d as p a r t o f

3S e c u r i t i z a t i o n r e f e r s t o t h e p r a c t i c e o f g r o u p i n g a s s e t s
( u s u a l l y p e rf o rm in g m ortgage lo a n s ) and s e l l i n g s e c u r i t i e s
backed b y th e u n d e r ly in g f u t u r e cash flo w s o f th o s e a s s e t s .
P u r c h a s e r s o f t h e s e c u r i t i e s d em an d some p r o t e c t i o n a g a i n s t
c r e d i t l o s s e s w h i c h m ay o c c u r d u e t o d e f a u l t s a n d
d e l i n q u e n c i e s on th e u n d e r l y i n g l o a n s .
4T h e s e c o n t r a c t s c o n v e y t h e r i g h t t o s e r v i c e m o r t g a g e s , w h i c h
i n c l u d e s c o l l e c t i n g lo a n pa ym e n ts and c o n t r o l l i n g m o rtg a g e
e scrow fu n d s .




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G A O 's f i n a n c i a l a u d i t , w e re c o n s i d e r e d as p a r t o f G A O 's o t h e r
a u d it s and re v ie w s o f th e C o r p o r a t io n 's o p e r a t io n s .
In
re s p o n s e t o p r e v i o u s l y r e p o r t e d w e a k n e sse s, th e C h a irm a n o f
th e T h r i f t D e p o s it o r P r o t e c t io n O v e r s ig h t B oard announced a
m anagement r e f o r m agenda i n M arch 1 9 93 , w h ic h i n c l u d e d
re q u ire m e n ts t h a t th e C o r p o r a t io n s tr e n g th e n i t s i n t e r n a l
c o n t r o l s . 5 Th e s p e c i f i c re fo r m ite m s d e a l t w i t h im p r o v in g
i n t e r n a l c o n t r o l s i n s e v e r a l o p e r a t i o n a l a r e a s as w e l l as
f i n a n c i a l a c c o u n t in g and r e p o r t i n g c o n t r o l s .
T h e C o r p o r a t i o n has t a k e n s t e p s t o en h a n ce i t s o p e r a t i n g
c o n t r o ls d u r in g 1993, in c lu d in g o v e r s ig h t o f c o n t r a c t o r s t h a t
p e rfo rm s e rv ic e s fo r r e c e iv e rs h ip s .
H o w e v e r , a u d i t s o f some
c o n t r a c t o r s a re c o n tin u in g to i d e n t i f y c o n t r a c t o r p e rfo rm a n ce
p r o b l e m s , s u c h as p o o r a s s e t m anagem ent a n d d i s p o s i t i o n
p r a c t i c e s and q u e s t io n a b le b i l l i n g s , w h ic h c o u ld r e s u l t i n
in c r e a s e d e x pen ses o r re d u c e d r e c o v e r i e s on a s s e t s . 6 Th e
e s t im a t e d r e c o v e r i e s from r e c e i v e r s h i p s in c lu d e d i n th e
C o r p o r a t io n ’ s f i n a n c ia l sta te m e n ts in c lu d e th e r e s u l t s o f
ca sh r e c e iv e d and d is b u r s e d b y r e c e i v e r s h i p s d u r i n g th e y e a r .
H ow e ver, because o f c o n t r a c t o r p e rfo rm a n ce p ro b le m s , th e
C o r p o r a t io n c a n n o t be s u re t h a t i t i s r e c o v e r i n g a l l i t
s h o u ld fro m i t s r e c e i v e r s h i p s .
D u r i n g 1 9 9 3 , GAO i s s u e d a t o t a l o f 22 r e p o r t s r e s u l t i n g f r o m
i t s a u d i t s and re v ie w s o f th e C o r p o r a t i o n 's o p e r a t i o n s , a
number o f w h ic h a d d re ss c o n t r a c t o r p e rfo rm a n c e p ro b le m s .
F u n d in g and C u r r e n t
o f th e C o rp o ra tio n

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F o r each i n s t i t u t i o n i t r e s o lv e s , th e C o r p o r a t io n c a lc u la t e s
t h e am ount i t w i l l have t o p a y t o c o v e r d e p o s i t o r c la im s and
t h e n e s t i m a t e s how m uch o f t h a t c o s t i t w i l l r e c o v e r f r o m t h e
s a le o f th e f a ile d i n s t i t u t i o n 's a s s e ts .
Th e am ount e x p e c te d
t o be r e c o v e r e d i s b o rro w e d fro m T r e a s u r y 's F e d e r a l F in a n c i n g
Bank (F F B ) and i s c o n s id e r e d w o r k in g c a p i t a l .
The p o r tio n
n o t r e c o v e r a b l e i s a lo s s t o t h e C o r p o r a t i o n and m ust be
co ve re d w ith lo s s fu n d s.

5I n D e c e m b e r 1 9 9 3 , s i m i l a r r e q u i r e m e n t s w e r e l e g i s l a t i v e l y
m an da te d i n t h e R e s o l u t i o n T r u s t C o r p o r a t i o n C o m p le t io n A c t .
R e s o lu t io n T r u s t C o rp o ra tio n :
O v e r s i g h t o f SAMDA P r o p e r t y
M anagem ent C o n t r a c t s Needs Im p ro ve m e n t (G A O / G G D -9 4 -5 ,
Novem ber 30 , 1 9 9 3 ).

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c o n s e r v a t o r s h i p s , and i n s t i t u t i o n s f o r w h ic h i t i s p r o b a b le
o r p o s s i b l e t h a t g o v e r n m e n t a s s i s t a n c e m ay b e r e q u i r e d o n o r
b e f o r e M a rc h 3 1 , 1 9 9 5 .7 B ased on f i g u r e s p r e s e n t e d i n t h e
f i n a n c i a l s t a t e m e n t s , $82 b i l l i o n h a s b e e n u s e d t o r e s o l v e
t h e 680 i n s t i t u t i o n s c l o s e d as o f D e ce m b e r 3 1 , 1 9 9 3 , a n d an
e s t i m a t e d $10 b i l l i o n w i l l b e u s e d t o r e s o l v e t h e
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p r o b a b l e f a i l u r e s , a n d t h e 18 i n s t i t u t i o n s c o n s i d e r e d
p o s s ib le f a il u r e s b e fo re th e C o r p o r a t io n 's a u t h o r it y to ta k e
in s t i t u t i o n s in t o c o n s e rv a to rs h ip e x p ire s .

7T h e R e s o l u t i o n T r u s t C o r p o r a t i o n C o m p l e t i o n A c t e x t e n d e d t h e
p e r io d o f th e C o r p o r a t io n 's a u t h o r it y to ta k e i n s t i t u t i o n s
i n t o c o n s e r v a t o r s h ip to a d a te n o t e a r l i e r th a n J a n u a ry 1,
1995, and n o t l a t e r th a n J u l y 1, 1995.
The a c t re q u ire s th e
C h a irp e rs o n o f th e T h r i f t D e p o s ito r P r o te c tio n O v e rs ig h t
B o ard to s e le c t th e a c tu a l d a te .
The C o rp o ra tio n based i t s
e s t im a t e on t h e O f f i c e o f T h r i f t S u p e r v i s i o n ' s l i s t o f
i n s t i t u t i o n s w h ic h a re p ro b a b le o r p o s s ib le f a i l u r e s b y
M arch 3 1 , 1995, th e m id p o in t o f th e ra n g e o f d a te s s p e c i f i e d
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a n d I m p r o v e m e n t A c t o f 1991 ( P u b l i c L a w 1 0 2 - 2 3 3 ) p r o v i d e d
$25 b i l l i o n i n D e c e m b e r 1 9 9 1 , w h i c h w as o n l y a v a i l a b l e f o r
o b l i g a t i o n u n t i l A p r i l 1, 1992.
As a r e s u l t o f t h e d e a d l i n e ,
t h e C o r p o r a t io n r e t u r n e d $ 1 8 .3 b i l l i o n o f u n o b l i g a t e d fu n d s
to th e T r e a s u ry in A p r i l 1992.
I n D e c e m b e r 1 9 9 3 , t h e R TC
C o m p le t io n A c t rem oved t h e A p r i l 1, 1 9 9 2 , d e a d l i n e , t h u s
m a k in g t h e $ 1 8 .3 b i l l i o n a v a i l a b l e t o t h e C o r p o r a t i o n f o r
re s o lu tio n a c t iv it ie s .

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C o r p o r a t io n to c o v e r lo s s e s a s s o c ia t e d w it h r e s o l u t i o n s .
B a s e d o n t h e e s t i m a t e s p r e s e n t e d i n t h e C o r p o r a t i o n ' s 19 93
f i n a n c i a l s ta te m e n ts , w h ic h a re s u b je c t t o th e u n c e r t a i n t ie s
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At
D ecem be r 3 1 , 1 9 9 3 , t h e s e e s t i m a t e s show t h a t t h e C o r p o r a t i o n
w i l l be a b le t o r e p a y i t s $ 3 0 .8 b i l l i o n i n w o r k in g c a p i t a l
b o r r o w in g s fro m th e F F B .
FFB b o rro w in g s a re r e p a id u s in g
asset re c o v e rie s .
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e s tim a te d o r f u tu r e r e s o lu t io n c o s ts a re g r e a t e r th a n
a n t i c i p a t e d , th e C o r p o r a t io n w i l l need t o use a d d i t i o n a l lo s s
fu n d s.
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n e e d s , t h e C o r p o r a t i o n w i l l o n l y be i n a p o s i t i o n w h e re i t i s
u n a b le t o r e p a y i t s FFB b o r r o w in g s i f i t s c o m b in e d l o s s e s on
r e c e i v e r s h i p a s s e t s a n d f u t u r e r e s o l u t i o n s a r e $13 b i l l i o n
m ore t h a n c u r r e n t l y e s t i m a t e d .
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lo s s e s in c u r r e d by th e S a v in g s A s s o c ia t io n In s u ra n c e Fund
( S A I F ) , s u b je c t to th e c o n d itio n s s e t f o r t h in th e R e s o lu tio n
T r u s t C o r p o r a t io n C o m p le tio n A c t . 8 Funds i n excess o f th e
a m o u n ts n e e d e d b y b o t h t h e C o r p o r a t i o n and S A I F w i l l be
r e t u r n e d t o th e g e n e ra l fu nd o f th e T r e a s u r y .
U n d e r th e R e s o lu tio n T r u s t C o r p o r a t io n C o m p le tio n A c t , th e
C o r p o r a t i o n w i l l t e r m i n a t e on o r b e f o r e D ecem be r 3 1 , 1 9 9 5 .
A l l r e m a in in g a s s e ts and l i a b i l i t i e s w i l l be t r a n s f e r r e d t o
t h e F S L IC R e s o l u t i o n F u n d , w h ic h i s m anaged b y t h e F D I C .
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a v a i l a b l e t o S A I F , d u r i n g th e 2 y e a r p e r i o d b e g i n n in g on t h e
d a te o f th e C o r p o r a t io n 's t e r m in a t io n , any o f th e
$ 1 8 .3 b i l l i o n i n a p p r o p r ia t e d fu nd s n o t used b y th e
C o rp o ra tio n .
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F e d e r a l D e p o s it In s u ra n c e C o r p o r a t io n (F D IC ) m ust f i r s t
c e r t i f y , am ong o t h e r t h i n g s , t h a t S A I F c a n n o t f u n d i n s u r a n c e
l o s s e s t h r o u g h i n d u s t r y p re m iu m a s s e s s m e n t s o r T r e a s u r y
b o rro w in g s w ith o u t a d v e rs e ly a f f e c t in g th e h e a lth o f i t s
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t h i s r e p o r t a n d i n n o t e s 5 a n d 10 t o t h e f i n a n c i a l
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f i n a n c i a l s ta te m e n t s w o u ld be p r e v e n t e d o r d e t e c t e d .
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p r o p e r l y r e c o r d , p r o c e s s , and s u m m a riz e t r a n s a c t i o n s t o
p e rm it th e p r e p a r a tio n o f f i n a n c ia l sta te m e n ts in
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c o n d itio n s .
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i n t e r n a l c o n t r o l s , lo s s e s , n o n c o m p lia n c e , o r m is s ta te m e n ts
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c o m p l i a n c e w i t h s u c h c o n t r o l s m ay d e t e r i o r a t e .
T h e C o r p o r a t i o n ' s m anagement a s s e r t e d t h a t i n t e r n a l c o n t r o l s
i n e f f e c t on Decem ber 3 1 , 19 93 , p r o v id e d r e a s o n a b le a s s u ra n c e
t h a t lo s s e s , n o n c o m p lia n c e , o r m is s ta te m e n ts m a t e r i a l i n
r e l a t i o n t o th e f i n a n c i a l s ta te m e n ts w o u ld be p r e v e n te d o r
d e t e c t e d on a t i m e l y b a s i s .
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B-240108

i n c l u d e d i n a p p e n d i x I I I , was p a r t o f m a n a g e m e n t ' s e v a l u a t i o n
o f in t e r n a l c o n tr o ls under th e C h ie f F in a n c ia l O f f ic e r s A c t
o f 1990.
M a n a g e m e n t made t h i s a s s e r t i o n u s i n g t h e i n t e r n a l
c o n t r o l and r e p o r t i n g c r i t e r i a s e t f o r t h i n th e im p le m e n tin g
g u id a n c e f o r th e F e d e ra l M a n a ge rs' F in a n c ia l I n t e g r i t y A c t o f
1982.
I n m a k in g t h i s a s s e r t i o n , m anagem ent c o n s i d e r e d t h e
r e p o r t a b l e c o n d i t i o n s we f o u n d .
We f o u n d t h a t m a n a g e m e n t ' s
a s s e rtio n is c o n s is te n t w ith th e r e s u lts o f o u r e v a lu a tio n of
c o n tro ls .
REPORTABLE C O N D ITIO N S
Th e f o llo w in g re p o r t a b le c o n d it io n s , a lth o u g h n o t c o n s id e re d
t o be m a t e r i a l , re p r e s e n t s i g n i f i c a n t d e f i c i e n c i e s i n th e
d e s ig n o r o p e ra tio n o f th e C o r p o r a t io n 's in t e r n a l c o n t r o ls
and s h o u ld be c o r r e c t e d .
1.
G e n e r a l c o n t r o l s o v e r some o f t h e C o r p o r a t i o n ' s
c o m p u t e r iz e d in f o r m a t i o n sys te m s d i d n o t p r o v i d e a d e q u a te
a s s u ra n c e t h a t d a ta f i l e s and c o m p u te r p ro g ra m s w e re f u l l y
p r o t e c t e d from u n a u t h o r iz e d a c c e s s and m o d i f i c a t i o n .
A b a s ic
i n t e r n a l c o n t r o l o b j e c t i v e f o r c o m p u te r iz e d syste m s i s t o
p r o t e c t d a ta and p ro g ra m s from u n a u t h o r iz e d ch an g e s and t o
p re v e n t u n a u th o riz e d access to s e n s it iv e d a ta .
The
e ffe c tiv e n e s s o f g e n e ra l c o n tro ls is a s ig n if ic a n t f a c t o r in
e n s u r in g th e i n t e g r i t y and r e l i a b i l i t y o f f i n a n c i a l d a ta .
D u r in g 1993 , th e C o r p o r a t io n had c o m p e n s a tin g c o n t r o l s i n
p l a c e , s u c h as m an ual c o m p a ris o n s an d r e c o n c i l i a t i o n s , w h ic h
w o u ld h a ve d e t e c t e d m a t e r i a l d a ta i n t e g r i t y p ro b le m s
r e s u l t i n g from in a d e q u a te g e n e r a l c o n t r o l s .
W ith o u t th e
c o m p e n s a tin g c o n t r o l s , th e w eaknesses i n g e n e r a l c o n t r o l s
w o u ld r a i s e s i g n i f i c a n t c o n c e rn s o v e r th e i n t e g r i t y o f
in f o r m a t io n o b ta in e d from th e a f f e c t e d s y s te m s .
T h e C o r p o r a t i o n has d e v e lo p e d an a c t i o n p l a n i n t e n d e d t o
a d d re s s th e above c o n d i t io n and i s c u r r e n t l y im p le m e n tin g th e
c o rre c tiv e a c tio n s .
We b e l i e v e t h a t t h e c o r r e c t i v e a c t i o n s ,
i f p r o p e r l y i m p l e m e n t e d , w i l l c o r r e c t t h e p r o b l e m s we f o u n d .
2.
Th e C o r p o r a t i o n 's f i e l d o f f i c e s d i d n o t a lw a y s p o s t w i r e
r e c e ip t s to th e c o r r e c t g e n e ra l le d g e r a c c o u n ts .
B a se d on
t h e r e s u l t s o f o u r t e s t i n g , we e s t i m a t e d t h a t a p p r o x i m a t e l y
11 p e r c e n t o f a l l w i r e r e c e i p t s f r o m t h i r d p a r t i e s i n 1 9 93




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B-240108

c o n t a i n e d one o r m ore p o s t i n g e r r o r s . 9 M ore t h a n h a l f o f
t h e w ir e s c o n t a i n i n g p o s t in g e r r o r s w ere s e c u r i t i z a t i o n re la te d re c e ip ts .
A b o u t h a l f o f t h e s e c u r i t i z a t i o n w i r e s had
e r r o r s b e t w e e n in c o m e a c c o u n t s o n l y .
Th e o t h e r h a l f a l s o had
e r r o r s betw ee n p r i n c i p a l r e d u c t i o n a c c o u n ts o r i n th e
a l l o c a t i o n b e tw e e n p r i n c i p a l and in co m e a c c o u n t s .
In o rd e r
f o r r e c e i v e r s h i p f i n a n c i a l i n f o r m a t i o n t o be r e l i a b l e and
u s e f u l , t r a n s a c t i o n s s h o u ld be c o n s i s t e n t l y and a c c u r a t e l y
r e c o r d e d and s u m m a riz e d .
The p o s tin g e r r o r s c o u ld cause
c e r t a i n f i n a n c i a l i n f o r m a t i o n u s e d b y m anagement t o be
in a c c u ra te .
I n 1993 a n d 1 9 9 4 , t h e C o r p o r a t i o n t o o k a c t i o n t o a d d r e s s t h e
p ro b le m s a s s o c ia t e d w i t h s e c u r i t i z a t i o n - r e l a t e d w i r e
r e c e i p t s . The C o r p o r a t io n i n i t i a t e d a p o l i c y w he re by th e
h e a d q u a rte rs o f f ic e re s p o n s ib le f o r m a in ta in in g th e s u p p o rt
f o r s e c u r i t i z a t i o n t r a n s a c t io n s a s s ig n s th e g e n e ra l le d g e r
a c c o u n ts t o be used b y th e f i e l d o f f i c e s f o r p o s t in g each
w ire r e c e ip t.
T h e new p o l i c y s t a t e s t h a t t h e f i e l d o f f i c e
p e rs o n n e l s h o u ld n o t use a c c o u n ts o t h e r th a n th o s e a s s ig n e d
w ith o u t f i r s t c h e c k in g w ith th e h e a d q u a rte rs o f f i c e .
We
b e l i e v e t h a t t h e new p o l i c y , i f p r o p e r l y i m p l e m e n t e d , s h o u l d
re d u c e t h e o v e r a l l r a t e o f p o s t i n g e r r o r s t o an a c c e p t a b le
le v e l.
3 . Th e C o r p o r a t i o n 's f i e l d o f f i c e s d id n o t a lw a y s use c o r r e c t
a m oun ts fro m t h e d e t a i l e d a s s e t r e c o r d s when r e c o n c i l i n g t h e
r e c e i v e r s h i p s ' a s s e t b a la n c e s to th o s e r e c o r d s .
In o rd e r fo r
t h e a s s e t r e c o n c i l i a t i o n p r o c e s s t o be e f f e c t i v e , p r o p e r
a m oun ts fro m t h e d e t a i l e d a s s e t r e c o r d s m u s t be u s e d .
Use o f
t h e i n c o r r e c t am o un ts c o n t r i b u t e d t o u n r e c o n c i l e d d i f f e r e n c e s
and u n r e p o r t e d d i f f e r e n c e s b etw ee n th e r e c e i v e r s h i p s ' a s s e t
b a la n c e s and t h e b a la n c e s i n th e d e t a i l e d a s s e t r e c o r d s .
I n 1993 a n d 1 9 9 4 , t h e C o r p o r a t i o n h a s i m p l e m e n t e d a c t i o n s t o
a d d re ss th e above c o n d it io n in c l u d i n g (1 ) p r o v id i n g
a d d it io n a l t r a i n in g to f i e l d p e rs o n n e l re g a rd in g use o f
s e r v i c e r r e p o r t s i n th e a s s e t r e c o n c i l i a t i o n p ro c e s s and (2 )
m o n ito r in g to en sure t h a t f i e l d o f f ic e s a re u s in g p ro p e r
a m o u n ts i n t h e r e c o n c i l i a t i o n s .
We b e l i e v e t h a t t h e s e

9B a s e d o n t h e r e s u l t s o f o u r s a m p l e , we c a n c o n c l u d e w i t h 90
p e r c e n t c o n f id e n c e t h a t betw ee n 7 .1 p e r c e n t and 1 5 .5 p e r c e n t
o f a l l w i r e r e c e i p t s from t h i r d p a r t i e s c o n t a in e d a t l e a s t
one p o s t i n g e r r o r , w i t h th e m ost l i k e l y e r r o r r a t e a t 1 1 .3
p e rce n t.

64




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B-240108

a c t i o n s , i f e f f e c t i v e l y im p le m e n te d , s h o u ld r e s u l t
a m oun ts b e i n g u s e d i n f u t u r e r e c o n c i l i a t i o n s .

in

prope r

We a l s o n o t e d o t h e r l e s s s i g n i f i c a n t m a t t e r s i n v o l v i n g t h e
i n t e r n a l c o n t r o l s t r u c t u r e a n d i t s o p e r a t i o n w h i c h we w i l l
c o m m u n ic a te s e p a r a t e l y t o t h e C o r p o r a t i o n ' s m anagem ent.
C O M P L IA N C E W I T H LAWS AND R E G U L A T IO N S
O u r t e s t s f o r c o m p lia n c e w i t h s i g n i f i c a n t p r o v i s i o n s o f
s e l e c t e d la w s and r e g u l a t i o n s d i s c l o s e d no m a t e r i a l i n s t a n c e s
o f n o n c o m p l i a n c e . 10 A l s o , n o t h i n g came t o o u r a t t e n t i o n i n
t h e c o u rs e o f o u r o t h e r w o rk t o i n d i c a t e t h a t m a t e r i a l
n o n c o m p lia n c e w i t h such p r o v i s i o n s o c c u r r e d .
PROGRESS ON 1992 A U D I T RECOM M ENDATIONS
I n c o n d u c t i n g o u r 19 93 a u d i t , we f o u n d t h a t t h e C o r p o r a t i o n
m ade s i g n i f i c a n t p r o g r e s s i n a d d r e s s i n g t h e i n t e r n a l c o n t r o l
w e a k n e s s e s we i d e n t i f i e d i n o u r r e p o r t s o n t h e r e s u l t s o f o u r
19 92 a u d i t .
T h e C o r p o r a t i o n ' s a c t i o n s d u r i n g 1 9 93 f u l l y
r e s o l v e d t h e o n e w e a k n e s s we c o n s i d e r e d m a t e r i a l a n d a l l o f
t h e r e p o r t a b l e c o n d i t i o n s we r e p o r t e d i n 1 9 9 2 .
A p p e n d ix IV
s u m m a r i z e s t h e 1992 i n t e r n a l c o n t r o l w e a k n e s s e s a n d t h e
a c tio n s ta ke n b y th e C o rp o ra tio n to a d d re ss th o se w e akn esse s.
RECO M M ENDATIO N
We r e c o m m e n d t h a t t h e C o r p o r a t i o n ' s C h i e f F i n a n c i a l O f f i c e r
d i r e c t t h e C o r p o r a t io n s t a f f t o m o n it o r im p le m e n t a t io n and
p ro g re s s o f th e c o r r e c t iv e a c tio n s r e la t e d to th e weaknesses
we i d e n t i f i e d i n g e n e r a l c o n t r o l s o v e r some o f t h e
C o r p o r a t io n 's c o m p u te riz e d in f o r m a t io n s y s te m s , p o s t in g
s e c u r i t i z a t i o n - r e l a t e d w ir e r e c e i p t s , and r e c o n c i l i a t i o n s o f
r e c e i v e r s h i p s ' a s s e t b a la n c e s t o d e t a i l e d a s s e t r e c o r d s .

10T h e F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n I m p r o v e m e n t A c t
o f 1 9 91 r e q u i r e s t h e C o r p o r a t i o n t o r e s o l v e i n s t i t u t i o n s i n
t h e l e a s t c o s t l y m a n n e r a n d GAO t o r e p o r t t o t h e C o n g r e s s
a n n u a l l y on th e C o r p o r a t i o n 's c o m p lia n c e w i t h t h e l e a s t - c o s t
p ro v is io n s .
GAO r e c e n t l y c o m p l e t e d i t s 1992 l e a s t - c o s t
c o m p lia n c e re v ie w o f th e C o r p o r a t io n .
The re v ie w id e n t if ie d
s e v e r a l c o m p lia n c e is s u e s , none o f w h ic h w e re m a t e r i a l t o th e
C o r p o r a t io n 's f i n a n c ia l s ta te m e n ts .
A d e ta ile d d is c u s s io n o f
G A O 's f i n d i n g s i s p r e s e n t e d i n P o l i c i e s and P r a c t i c e s D i d N o t
F u l l y C o m p ly W it h L e a s t - C o s t P r o v i s i o n s ( G A O / G G D -9 4 -H O ,
Ju n e 17, 19 94 ).




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B -2 4 0 1 0 8

C O R P O R A T IO N COMMENTS
AND OUR E V A L U A T I O N
C o m m e n tin g on a d r a f t o f t h i s r e p o r t , t h e C o r p o r a t i o n ' s C h i e f
F i n a n c i a l O f f i c e r a g re e d w i t h o u r f i n d i n g s and
re c o m m e n d a tio n .
The C h ie f F in a n c ia l O f f i c e r 's w r it t e n
com m ents, p r o v i d e d i n a p p e n d ix V , d is c u s s v a r i o u s e f f o r t s ,
m any o f w h ic h a r e o n g o i n g , i n t e n d e d t o a d d r e s s t h e r e p o r t a b l e
c o n d itio n s .
We p l a n t o e v a l u a t e t h e a d e q u a c y a n d
e f f e c t i v e n e s s o f th e s e e f f o r t s as p a r t o f o u r a n n u a l a u d i t s
o f th e C o r p o r a t io n 's f i n a n c ia l s ta te m e n ts .

C h a rle s A . Bowsher
C o m p tro lle r G en eral
o f th e U n ite d S ta te s
June

15,

1994

APPENDIX I

O B JE C TIV E S ,

The

C o r p o r a t io n 's
p re p a rin g
g e n e ra lly

m anagement

SCOPE,

is

AND M ETHODOLOGY

re s p o n s ib le

fo r

a n n u a l f i n a n c i a l sta te m e n ts in c o n fo r m ity w it h
a cce p te d a c c o u n tin g p r i n c i p l e s ;

e s t a b l i s h i n g , m a in t a i n i n g and e v a l u a t i n g th e i n t e r n a l c o n t r o l
s t r u c t u r e to e n s u re t h a t i t p ro v id e s re a s o n a b le a s s u ra n c e t h a t
th e i n t e r n a l c o n t r o l o b j e c t i v e s p r e v i o u s l y m e n tio n e d a r e m e t;
and
c o m p ly in g w it h

a p p lic a b le

la w s

and r e g u la t i o n s .

We a r e r e s p o n s i b l e f o r o b t a i n i n g r e a s o n a b l e a s s u r a n c e a b o u t w h e t h e r
( 1 ) th e f i n a n c i a l s ta te m e n ts a r e f r e e o f m a t e r i a l m is s ta te m e n t and
p re s e n te d f a i r l y in c o n fo rm ity w ith g e n e r a lly acce pted a c c o u n tin g
p r i n c i p l e s and ( 2 ) r e l e v a n t i n t e r n a l c o n t r o l s a r e i n p l a c e and
o p e ra tin g e f f e c t iv e ly .
We a r e a l s o r e s p o n s i b l e f o r t e s t i n g
c o m p li a n c e w i t h s i g n i f i c a n t p r o v i s i o n s o f s e l e c t e d la w s and
re g u la tio n s .
In

o rd e r

to

fu lfill

th e se

re s p o n s ib ilitie s ,

we

e x a m in e d , on a t e s t b a s i s , e v id e n c e s u p p o r t i n g
d is c lo s u re s in th e f in a n c ia l s ta te m e n ts;

the

am o u n ts

and

a s s e s s e d th e a c c o u n tin g p r i n c i p l e s used and s i g n i f i c a n t
e s t i m a t e s made b y t h e C o r p o r a t i o n ' s m a n a g e m e n t ;
e v a lu a te d th e
sta te m e n ts ;

o v e ra ll

p re s e n ta tio n

e v a lu a te d and t e s t e d r e le v a n t
fo llo w in g s ig n if ic a n t c y c le s ,
a cco u n t b a la n c e s :
--

--

of

th e

fin a n c ia l

in t e r n a l c o n tro ls o ve r th e
c la s s e s o f t r a n s a c t i o n s , and

r e s o lv e d i n s t i t u t i o n s , c o n s i s t i n g o f p o l i c i e s and
pro ce dures re la te d to (1 ) r e s o lu tio n a c t i v i t i e s , (2 )
r e c e i p t s and d is b u rs e m e n ts i n r e c e i v e r s h i p s , and ( 3 )
v a l u a t i o n o f th e C o r p o r a t io n 's n e t r e c e iv a b le s from
r e s o l u t i o n t r a n s a c t i o n s and a s s is t a n c e ;
u n r e s o lv e d i n s t i t u t i o n s , c o n s i s t i n g o f p o l i c i e s and
p ro c e d u re s r e la t e d to i d e n t i f y i n g and e s t im a t in g th e
o f f u t u r e r e s o lu t i o n s and o f p r o v id i n g advances to
in s t i t u t i o n s in c o n s e rv a to rs h ip ;




f / ,Y4X'/.II

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T A I [ MI

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67

cost

A PPEN DIX I

--

---

F e d e r a l F in a n c i n g Bank b o r r o w in g s , c o n s i s t i n g o f p o l i c i e s
and p ro c e d u re s r e l a t e d to th e b o r r o w in g , use and re p a ym e n t
o f w o rk in g c a p i t a l ;
t r e a s u r y , c o n s i s t i n g o f p o l i c i e s and p ro c e d u re s r e l a t e d t o
C o r p o r a t e ca sh r e c e i p t s and d is b u rs e m e n ts ; and
f i n a n c i a l r e p o r t i n g , c o n s i s t i n g o f p o l i c i e s and p ro c e d u re s
r e la t e d to th e p ro c e s s in g o f jo u r n a l e n t r ie s in t o th e
g e n e r a l le d g e r and t h e p r e p a r a t io n o f f i n a n c i a l s t a te m e n t s ;
and

t e s t e d c o m p lia n c e w it h
la w s and r e g u l a t i o n s :
---

s ig n ific a n t

p ro v is io n s

of

the

fo llo w in g

s e c t i o n 2 1 A o f t h e F e d e r a l Home L o a n B a n k A c t ( 1 2 U . S . C .
1441a) and
C h i e f F i n a n c i a l O f f i c e r s A c t o f 1 990 ( P u b l i c L a w 1 0 1 - 5 7 6 ) .

We l i m i t e d o u r w o r k t o
a c h ie v e th e o b je c t iv e s
c o n tro ls .

a c c o u n tin g and o t h e r c o n t r o ls n e c e s s a ry to
o u t l i n e d i n o u r o p i n i o n on i n t e r n a l

We c o n d u c t e d o u r a u d i t s i n a c c o r d a n c e w i t h
go ve rn m e n t a u d i t i n g s ta n d a rd s .
We b e l i e v e
a re a s o n a b le b a s is f o r o u r o p in io n s .

g e n e r a lly a cce p te d
th a t o u r a u d its p ro v id e

T h e C o r p o r a t i o n ' s C h i e f F i n a n c i a l O f f i c e r p r o v i d e d w r i t t e n co m m e n ts
on a d r a f t o f t h i s r e p o r t .
T h e s e c o m m e n ts a r e d i s c u s s e d i n t h e
" C o r p o r a t i o n C o m m e nts a n d O u r E v a l u a t i o n " s e c t i o n o f t h e o p i n i o n
l e t t e r and a r e r e p r i n t e d i n a p p e n d ix V .
We h a v e i n c o r p o r a t e d t h e
C o r p o r a t i o n 's v ie w s w he re a p p r o p r ia t e .

6 8




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Financial Statements

A P P E N D I X II

RESOL UTI ON TR US T CORPORATION S TA T E ME NT S OF FI NA NCI A L POSI TI ON
(dollars in thousands)

December 31,1993

December 31,1992

$ 6,470,428

$ 3,048,320

7,337,863

9,331,348

21,158,047

32,490,003

Net assets purchased by the Corporation (Note 6 ,7 and 15)

76,387

82,305

Other assets

10,120

13,319

$35,052,845

$44,965,295

ASSETS
Cash (Note 3)
Net advances (Note 4 ,6 ,1 5 and 18)
Net subrogated claims (Note 5 ,6 ,1 5 and 18)

TOTAL ASSETS (Note 14)

LIABILITIES
Accounts payable, accrued liabilities, and other (Note 16 and 17)

$

169,822

$

224,558

13,790

29,111

30,773,103

37,474,371

8,097,851

16,858,857

171,633

375,375

39,226,199

54,962,272

Contributed capital (Note 3)

55,523,993

55,522,019

Capital certificates

31,286,325

31,286,325

(90,983,672)

(96,805,321)

(4,173,354)

(9,996,977)

$35,052,845

$44,965,295

Due to receiverships/conservatorships (Note 8)
Notes payable and accrued interest (Note 9)
Estimated cost of unresolved cases (Note 6,10 and 15)
Estimated losses from corporate litigation (Note 6 and 11)

TOTAL LIABILITIES

EQUITY

Accumulated deficit

TOTAL EQUITY (Note 12)
TOTAL LIABILITIES AND EQUITY (Note 14)
See accom panying notes




A P P E N D IX II

RESOLUTI ON TR US T CORPORATION S TA T E ME NT S OF REVENUES, EXPENSES A N D ACCUMULATED DEFICIT
(dollars in thousands)

Year Ended
December 31,1992

Year Ended
December 31,1993
REVENUES
$

Interest on advances and subrogated claims

$

367,751

532,183

Other interest income

12,061

10,087

Other revenue (Note 3)

48,106

33,288

427,918

575,558

1,010,562

1,928,623

72,977

774,320

TOTAL REVENUES

EXPENSES
Interest expense on notes issued by the Corporation
Interest expense on amounts due receiverships

(8,116,762)

(6,579,610)

Reduction in loss allowances (Note 6)
Administrative operating and other expenses (Note 2 ,1 4 and 17)

54,213

102,340

(5,393,731)

NET REVENUE
ACCUMULATED DEFICIT, BEGINNING

(5,359,606)

5,821,649

TOTAL EXPENSES

5,935,164

(96,805,321)

($90,983,672)

ACCUMULATED DEFICIT, ENDING (Note 12)

(102,740,485)

($96,805,321)

See accom panying notes

70



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A P P E N D IX II

RESOLUTI ON TR US T CORPORATION S TA T E ME NT S OF CASH FLOWS
(dollars in thousands)

Year Ended
December 31,1993

Year Ended
December 31,1992

CASH FLOWS FROM OPERATING ACTIVITIES
Cash inflows from:
Receipts from subrogated claims

$14,577,355

$29,655,899

5,836,959

14,772,701

Receipts of interest on advances

322,666

754,480

Receipts from asset liquidations

35,663

53,089

Receipts from other operations

41,433

32,140

Disbursements for subrogated claims

(4,931,341)

(22,668,747)

Disbursements for advances

(3,241,601)

(11,735,557)

Disbursements for reimbursable expenditures

(1,446,145)

(1,554,588)

(95,366)

(41,555)

(770,709)

(1,605,807)

10,328,914

7,662,055

34,314

25,033,510

4,100,000

7,500,000

0

203

0

(18,314,767)

(11,041,120)

(27,867,007)

(6,906,806)

(13,648,061)

Net increase (decrease) in Cash

3,422,108

(5,986,006)

CASH-BEGINNING

3,048,320

9,034,326

$6,470,428

$3,048,320

Repayments of advances and reimbursable expenditures

Cash outflows for:

Administrative operating and other expenditures
Interest paid on notes payable

Net Cash Provided by Operating Activities (Note 13):

CASH FLOWS FROM FINANCING ACTIVITIES
Cash inflows from:
Contributed capital
Notes payable
Capital certificates

Cash outflows for:
Contributed capital returned to the Treasury (Note 1)
Repayment of notes payable, principal

Net Cash Used by Financing Activities

CASH-ENDING
See accom panying notes




A P P E N D IX II

Resolution Trust Corporation Notes to Financial Statements
December 31, 1993 and 1992
1. Impact of Legislation:
T he RT C , a G ove rnm en t C o rp oratio n , was created by the Financial Institutions Reform, Recovery, and
Enforcement Act o f 1989 (FIRREA) to manage and resolve all troubled savings institutions that were previ­
ously insured by the Federal Savings and Loan Insurance Corporation (FSLIC) and for w hich a conservator
or receiver was appointed during the period January 1, 1989, through August 8, 1992. This period was extend­
ed to September 30, 1993, by the Resolution Trust C orporation Refinancing, Restructuring, and Improvement
Act of 1991 and in D ecem ber 1993, the period was extended to a date not earlier than January 1, 1995, nor
later than July 1, 1995, by the Resolution Trust C o rporatio n C o m p le tio n Act of 1993. The final date will be
determined by the Chairperson of the T D P O versight Board.
The activities of the R T C are subject to the general oversight of the Oversight Board, w hich was redesig­
nated the T hrift D epositor Protection (T D P ) O versight Board and increased in size by the D ecem ber 1991
legislation. T he T D P O versight Board m onitors the operations of the RTC, provides the R T C w ith general
policy direction, and reviews the RTC's performance. T he seven members on the T D P O versight Board
include: the Secretary of the Treasury,- the Chairperson of the Board of Governors of the Federal Reserve
System,- the D irector of the O ffice of T hrift Supervision (OTS),- the Chairperson of the Board of Directors
of the Federal D eposit Insurance C orporation (F D IC ), the C h ie f Executive Officer of the RTC,- and two inde­
pendent members appointed by the President, w ith the advice and consent of the Senate.
U nd e r current law, the R T C will terminate on or before D ecem ber 31, 1995. All rem aining assets and lia­
bilities will be transferred to the FSLIC Resolution Fund w hich is m anaged by the F D IC . Proceeds from the
sale of such assets will be transferred to the Resolution Funding Corporation (R E F C O R P ) for interest pay­
ments after satisfaction of any outstanding liabilities.

Source of Funds:
T he R T C is funded from the follow ing sources: 1) U .S. Treasury appropriations and borrowings,- 2) a c o n ­
tribution from the Federal FJome Loan Banks through REFCORP,- 3) amounts borrowed by R E F C O R P w hich
is authorized to issue long-term debt securities,- 4) the issuance o f debt obligations and guarantees as per­
m itted by the T D P O versight Board, and 5) incom e earned on the assets of the RTC, proceeds from the sale
of assets, and collections m ade on claims received by the R T C from receiverships.
T he Secretary of the Treasury has contributed capital of $55.5 b illio n to the R T C as of D ecem ber 31,1993,
$18.8 billio n of w hich was authorized by FIRREA, $30 b illion o f w hich was authorized by the Resolution
Taist C orporation Funding Act of 1991 and $6.7 b illion of w hich related to the Resolution Trust Corporation
Refinancing, Restaicturing, and Improvement Act of 1991 (See N ote 12). This legislation, signed in December
1991, authorized the Secretary o f the Treasury to provide an additional $25 b illion in capital to the R T C
for its operations th ro ug h M a rch 31, 1992. These funds were received in January 1992. In A pril 1992,
the RT C returned $18.3 billion to the Treasury w hich represented funds not com m itted by the M arch 31,
1992, deadline.




A P P E N D IX II

In D ecem ber 1993, the Resolution Trust Corporation C o m p le tio n Act authorized funding of the $18.3 b il­
lion previously returned to Treasury. Expenditure of funds in excess of $10 billion requires certification by
the Secretary of the Treasury that certain statutory requirements have been met. In January 1994, the T D P
O versight Board received $10 billion in funds, of w hich $4 billion was forwarded to the RTC.
T he RT C has also issued capital certificates of $3 1.3 b illion to R E F C O R P as of D ecem ber 31, 1993 (see N ote
12). FIRREA prohibits the paym ent o f dividends on any o f these capital certificates. The RT C is also autho­
rized to borrow directly from the Treasury an am ount not to exceed in the aggregate $5.0 billion. There
have been no draws against these authorized borrowings through the end of 1993.

2. Summary of Significant Accounting Policies;
General. These statements do not include accountability for assets and liabilities of closed thrifts for w hich
the R T C acts as receiver/liquidating agent or of thrifts in conservatorship for w hich the RT C acts as m an ­
aging agent.
Allowance lor Losses on Advances. T he R T C recognizes an estim ated loss on advances. T he allow ance for
losses represents the difference between amounts advanced to conservatorships or receiverships and expect­
ed repayments.
Allowance for Losses on Subrogated Claims. The R T C records as assets the am ounts disbursed for assisting and clos­
ing thrifts, prim arily the am ounts for insured deposit liabilities. An allowance for losses is established against
subrogated claims representing the difference between the amounts disbursed and the expected repayments.
T he allowance is based on the estimated cash recoveries from the assets of the assisted or failed thrifts, net
of estimated asset liquidation and overhead expenses, including interest costs.
Estimated Cost of Unresolved Cases. The R T C records the estimated losses related to thrifts in conservatorship and
those identified in the regulatory process as probable to fail on or before the statutory date of between January
1, 1995, and July 1, 1995.
Litigation Losses. T he R T C recognizes an estimated loss for litigation against it in its Corporate, conservator­
ship and receivership capacities. T he R T C Legal D ivision recommends these estimated losses on a case-bycase basis.
Due to Receiverships-Assets Sold. T he R T C establishes a contra asset account to record the am ount payable to
receiverships for the purchase price of receivership assets sold to acquiring institutions in resolution trans­
actions. This is done in lieu o f the receivership receiving the cash proceeds from the sale of its assets. This
contra account offsets the balance due from the receiverships for subrogated claims. T he amounts that exceed
the expected recovery of subrogated claims due from the receiverships are recorded as a liability entitled
"D ue to receiverships." T he R T C accrues interest on the total of the contra asset and liability accounts.
National Judgments, Deficiencies and Chargeoffs Joint Venture Program. T he R T C purchases assets from receiverships,
conservatorships, and their subsidiaries to facilitate the sale and/or transfer of selected assets to several Joint
Ventures in w hich the R T C retains a financial interest.
Allocation of Common Expenses. T he R T C shares certain administrative operating expenses w ith several funds of
the F D IC in c lu d in g the Bank Insurance Fund, the F S LIC Resolution Fund, and the Savings Association
Insurance Fund. T he administrative operating expenses include allocated personnel, administrative, and other
overhead expenses.

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A P P E N D IX II

Allocation of Corporate Expenses. T he R T C recovers costs incurred by the C orporation in support of liq uida­
tion/receivership activities, including a portion of administrative expenses. These costs are billed to in d iv id ­
ual receiverships w ith the offsetting credits reducing the Corporation's "Administrative operating and other
expenses."
Depreciation. T he cost of furniture, fixtures, equipm ent and other fixed assets is expensed at the time of acqui­
sition and is reported as "Administrative operating and other expenses." This policy is a departure from gen­
erally accepted accounting principles, however, the financial im pact is not material to the RTC's financial
statements.
Cash Equivalents. The R T C considers cash equivalents to be short-term, high ly liquid investments w ith origi­
nal maturities of three m onths or less. As of D ecem ber 31, 1993, and 1992, the R T C did not have any cash
equivalents.
Fair Value of Financial Instruments. The balances of financial instruments included in the RTC's Statement of
Financial Position approximate their estimated fair values. T he values of "N et advances" and "N et subrogat­
ed claims'' are based on the discounted net cash flows expected to be received from those instruments. The
frequent repricing of the balances of "D ue to receiverships" and the short-term nature of "Notes payable''
result in face amounts of such instruments w hich approximate their fair values.

3. Office of Inspector General:
FIRREA established an Inspector General of the C o rporatio n and authorized to be appropriated such sums
as m ay be necessary for the operation o f the O ffice o f Inspector General ( O IG ) . All financial transactions
related to the O I G are included in the Corporation's financial statements.
T he O I G has received $108.9 m illion o f appropriated funds from the U.S. Treasury since it was established
of w hich $34.3 m illion relate to the Government's Fiscal Year (FY) 1994 and $33.5 m illion relate to FY 1993.
These funds are used to finance the activities of the O I G . Restricted amounts of $5,805,385 for FY 1993,
$9,571,221 for FY 1992 and $773,671 for FY 1991 are included in "Cash." These funds were unobligated at
year end.
R eductions to the O I G appropriated funds resulting from o bligatio ns are recorded as "O th e r revenue."
Accordingly, the O I G appropriated funds were reduced by $32,339,972 and $24,274,873 during 1993 and
1992, respectively, and recorded as "O th e r revenue."
Disbursements of the O I G appropriated funds for expenditures are recorded as "Administrative operating
and other expenses." These disbursements totalled $34,538,230 during 1993 and $20,955,917 during 1992.
As of D ecem ber 3 1, 1993, and 1992, the unobligated O I G appropriation balances included in "C ontributed
capital" were $38.8 m illion and $36.8 m illion, respectively.

4. N et Advances (in thousands):
T he R T C makes advances to receiverships and conservatorships. Advances are made to conservatorships to
provide funds for liquidity needs and to reduce the cost of funds, and to receiverships to provide w orking
capital. T he advances generally are either secured by the assets of the conservatorship or receivership at the
tim e the advances were made or have the highest priority of unsecured claims. T he C o rporatio n accrues
interest on these advances w hich is included in the Statements of Revenues, Expenses and A ccum ulated

74



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A P P E N D IX II

Deficit. T he C orporation expects repayment of these advances, includ ing interest, before any subrogated
claim s are paid by receiverships. T he advances carry a floating rate o f interest based upon the 13-week
Treasury Bill rate. Interest rates charged during 1993 ranged between 3.1 3% and 3.54% , and between 2.98%
and 4.44% in 1992. A t D ecem ber 3 1, 1993, and 1992, the interest rates on advances were 3.37% and 3.54%,
respectively.

December 31,
1993

December 31,
1992

$6,522,853

$6,777,066

5,406,256

6,379,436

307,268

419,611

Accrued interest

73,165

38,921

Write-offs at termination - advances
(Note 6 and 7)

(3,815)

(3,575)

Allowance for losses on receivership
advances (Note 6)

(3,981,719)

(3,907,079)

(986,145)

(373,032)

Advances to conservatorships
Advances to receiverships
Reimbursements due from receiverships
and conservatorships

Allowance for losses on conservatorship
advances (Note 6)

$7,337,863

$9,331,348

Reimbursements due from receiverships and conservatorships represent operating expenses paid by the RT C
on behalf of the receiverships and conservatorships for w hich repayment is expected in full. Interest is not
accrued on these reimbursements.

5. N et Subrogated Claims (in thousands):
Subrogated claims represent disbursements made by the R T C primarily for deposit liabilities. The Corporation
recognizes an estimated loss on these subrogated claims. These estimates are based in part on a statistical
sam pling of receivership assets subject to a sam pling error o f plus or minus $0.8 billio n w ith a 95 percent
confidence interval.
T he value of assets under R T C m anagem ent could be lower (or higher) than projected because general eco­
n om ic conditions, interest rates and real estate markets could change. Because of these uncertainties, it is
reasonably possible that the actual losses m ay be higher (or lower) than the current “Allow ance for losses on
subrogated claims."
Receiverships frequently sell a portion of their assets to institutions acquiring their deposit liabilities. In lieu
of the receiverships receiving cash for the sale, the purchase price of the assets sold is recorded by the receiver­
ship as a receivable and by the R T C in a contra asset account entitled "D ue to receiverships - assets sold.''
T his account is offset against subrogated claims expected to be collected from the receivership. T he portion
of the contra asset account, if any, in excess of expected subrogated claim recoveries is recorded as a liabil-

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A P P E N D IX II

ity entitled "D ue to receiverships" (see N ote 8). T he R T C accrues interest payable to the receiverships on
the total of the contra asset and liability accounts. The rates used by the R T C to accrue interest are based
upon the C h icago FHLB D a ily Investment D eposit Rates. Interest rates paid during 1993 ranged between
2.50% and 3.64% , and between 2.59% and 4.74% in 1992. At Decem ber 31, 1993, and 1992, the interest
rates paid on these accounts were 2.79% and 2.63% , respectively.

December 31,
1993

December 31,
1992

Subrogated claims

$208,331,406

$200,461,308

Recovery of subrogated claims

(115,566,781)

(92,855,555)

17,540

19,974

(2,316,651)

(7,520,378)

(639,585)

(352,712)

(68,667,882)

(67,262,634)

Claims of depositors pending and unpaid
Due to receiverships - assets sold
Write-offs at termination - subrogated claims
(Note 6 and 7)
Allowance for losses on subrogated claims (Note 6)

$21,158,047

$32,490,003

6. Changes in Allowance for Losses (in thousands):
Allowance for
losses on
subrogated claims

Allowance for
losses on
advances

$ 6 8 ,0 8 8 ,1 1 1

$ 3 ,4 8 2 ,8 8 9

Balance, Dec 3 1 ,1 9 9 1
Provision (reductions)

(7 ,6 6 3 ,2 6 4 )

8 0 0 ,7 9 7

W rite-offs a t term ination
(Note 7)
Cost of Resolutions
Balance, Dec 3 1 ,1 9 9 2
Provision (reductions)

(3 5 2 ,7 1 2 )

(3 ,5 7 5 )

Cost of resolutions

Balance, Dec 3 1 ,19 9 3

7 6



$

0
1 1,2 2 5

-

-

6 7 ,2 6 2 ,6 3 4

4 ,2 8 0 ,1 1 1

1 1,2 25

6 2 ,3 7 7

6 8 7 ,9 9 2

5 ,0 2 5

(2 8 6 ,8 7 3 )

(2 3 9 )
-

-

$68,667,882

$4,967,864

$16,250

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Estimated losses
from corporate
litigation

TOTAL

$ 2 5 ,4 9 2 ,6 5 2

$ 1 9 7 ,5 9 9

$ 9 7 ,2 6 1 ,2 5 1

(1 ,4 4 3 ,2 9 6 )

(8 ,1 1 6 ,7 6 2 )

1 7 7 ,7 7 6

.

_

(7 ,1 9 0 ,4 9 9 )

(3 5 6 ,2 8 7 )

-

0

1 6 ,8 5 8 ,8 5 7

3 7 5 ,3 7 5

8 8 ,7 8 8 ,2 0 2

(7 ,1 3 1 ,2 6 2 )

(2 0 3 ,7 4 2 )

(6 ,5 7 9 ,6 1 0 )

_

_

(2 8 7 ,1 1 2 )

_

1 ,6 2 9 ,7 4 4

F , ,V ,

Estimated cost
of unresolved
cases

_

7 ,1 9 0 ,4 9 9

W rite-offs a t term ination
(Note 7)

Allowance for
losses on
corp assets

(1 ,6 2 9 ,7 4 4 )

-

$171,633

$ 8,097,851

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T he "Allowance for losses on subrogated claims" includes future interest costs and overhead expenses. Total
"reductions" in loss allowances contain the offset of net interest costs incurred in the current period that were
previously included in provisions. "Cost of resolutions" represent amounts transferred from "Estimated cost
of unresolved cases" to "Allowance for losses on subrogated claims" as a result of case resolutions in each year.

7. Net Assets Purchased by the Corporation (in thousands):
T he R T C has purchased the rem aining assets o f selected receiverships in order to expedite the termination
of the receivership entity. As of D ecem ber 31, 1993, the RT C had purchased assets from 77 receiverships
for $173 m illion, in order to pay a final dividend to the receiverships' creditors and to begin the process of
legally term inating the receivership entities (assets from 36 receiverships for $142 m illion at D ecem ber 31,
1992). U p o n term ination, the R T C may realize a loss on advances and subrogated claims that was previously
included in the respective allowances and recognized in the provision for losses in a prior year. A dditionally,
during 1993, the R T C purchased assets from receiverships, conservatorships, and their subsidiaries for $1.5
m illio n to facilitate the sale and/or transfer of selected assets to several Jo in t Ventures in w hich the RT C
retained a financial interest.

December 31,
1993

December 31,
1992

$173,075

$141,795

Sales, collections and adjustments

(80,438)

(48,265)

Allowance for losses on corporate assets (Note 6)

(16,250)

(11,225)

$ 76,387

$ 82,305

Assets in liquidation purchased

Assets purchased include m ortgage loans backed by 1-4 family homes, multi-family dwellings or com m er­
cial real estate,- consumer loans,- real estate,- and other assets including receivership interests in credit enhance­
m ent reserve funds created w hen receiverships participated in R T C loan securitizations.

8. D ue to Receiverships/Conservatorships:
Receiverships frequently sell some of their assets to institutions acquiring their deposit liabilities. In lieu of
the receiverships receiving cash for the sale, the R T C establishes a contra asset account equal to the pur­
chase price of the assets sold and the receiverships record a receivable. This account is offset against the sub­
rogated claims due from the receivership to the extent that the R T C expects full repayment o f such claims.
If a receivership's contra account exceeds the expected repayment of its subrogated claims to the RTC, the
excess is recorded as "Due to receiverships." T he balance of "D ue to receiverships" was $13.4 m illion and
$29.1 m illio n at D ecem ber 31, 1993, and 1992, respectively.

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A P P E N D IX II

Conservatorships participating in RTC'S N ational Judgm ents, Deficiencies and Chargeoffs Jo in t Venture
Program (J D C JV ) have sold judgm ents and deficiencies to the RTC. The liability, "D ue to conservatorshipsassets purchased," w ith a $0.4 m illion balance at D ecem ber 31,1993, represents the am ount due to these c o n ­
servatorships for the purchase of their JDC's.

9. Notes Payable and Accrued Interest:
W o rk in g capital has been made available to the RT C under an agreement between the RT C and the Federal
Financing Bank. The w orking capital is available to fund the resolution of thrifts and for use in the RTC's
high-cost funds replacement and emergency liquidity programs. T he outstanding notes mature at the end of
each calendar quarter, at w hich time they are generally refinanced at similar terms. Payments on the note bal­
ance may also be made during each calendar quarter. T he notes payable carry a floating rate of interest estab­
lished by the Federal Financing Bank and ranged between 2.88 and 3.27% during 1993 and between 2.82%
and 5.09% in 1992. As of D ecem ber 31, 1993, and 1992, the R T C had $30.8 b illion and $37.5 billion, respec­
tively, in borrowings and accrued interest outstanding from the Federal Financing Bank. These borrowings,
approved by the Oversight Board, are w ithin the lim itations im posed under FIRREA.

10. Estimated Cost of Unresolved Cases:
T he RT C has established a liability of $8.1 billio n at D ecem ber 31, 1993, for the anticipated costs of resolv­
ing an additional 67 troubled institutions. O f the 67 institutions, 63 were in conservatorship as o f that date.
T he other 4 associations were identified by the O T S as institutions for w hich it is probable that governm ent
assistance m ay be required on or before the last date by w hich the R T C may be appointed conservator.
T he 1993 "Estimated cost of unresolved cases" has declined from the D ecem ber 31, 1992, and 1991, esti­
mates o f $ 16.9 billion and $25.5 billion, respectively. The primary reasons for this decline were O T S changes
in estimated caseload, R T C revisions to cost estimates for existing conservatorships, and resolution of cases
during 1993 leaving fewer unresolved cases at the end of the year.
T he O T S has also identified 18 savings associations for w hich it is reasonably possible that governm ent assis­
tance may be required. The estimated cost to resolve these 18 institutions could be up to $1 billion.
Furthermore, the value of assets anticipated to com e to the R T C could be lower (or higher) than projected
because general econom ic conditions, interest rates, and real estate markets could change. Because of these
uncertainties, it is reasonably possible that the cost of unresolved cases will be higher (or lower) than w hat
has been estimated.

1 1. Estimated Losses from Corporate Litigation:
As of Decem ber 31,1993, the RT C has been named in several thousand lawsuits while serving in its Corporate,
conservatorship or receivership capacities. Currently, it is not possible to predict the outcom e for all of the
various actions. An allowance for loss totalling $171.6 m illio n has been established as of D ecem ber 31, 1993,
for the 40 actions that managem ent feels are probable to result in a significant loss ($375.4 m illion at December
31 ,199 2, for 71 actions). A dditionally, the C o rporatio n could possibly incur further losses of approximately
$400 m illio n from other pe nd ing lawsuits and other yet unasserted claims.

78



F I .V ,1 V < I A L

y T A T E

M E ,V I

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f S i ) I. ( I T I O ,V

T

k U S T

C <) k /' I ) k A T I ( l iV

A P P E N D IX II

1 2 . Changes in Equity (in thousands):
Contributed
Capital

Accumulated
Deficit

Total
Equity

$48,827,551

Balance, Dec 31,1991

Capital
Certificates
$31,286,122

$(102,740,485)

$(22,626,812)

-

-

1992 Net revenue
Resolution Trust Corporation
Refinancing, Restructuring and
Improvement Act of 1991

5,935,164

5,935,164

6,685,233

6,685,233

FY 93 OIG appropriation

33,510

-

-

33,510

1992 Obligated OIG funds

(24,275)

-

-

(24,275)

Issuance of capital certificates:
01/30/92
Balance, Dec 31,1992

55,522,019
-

1993 Net revenue
FY 94 OIG appropriation

34,314

1993 Obligated OIG funds

(32,340)

Balance, Dec 31,1993

A X X II

!

k I I' i )



l

$55,523,993

K

I

203

203
31,286,325

(96,805,321)

-

5,821,649

-

-

-

-

$31,286,325

$ (90,983,672)

F i x a

xi

i

i.

S t a t e

(9,996,977)
5,821,649
34,314
(32,340)
$ (4,173,354)

ae x t s
i

73

A P P E N D IX II

13. Supplementary Information Relating to the Statement of Cash Flows
(in thousands):
Reconciliation of net revenue to net cash provided by operating activities.

For the Years Ended
December 31,
December 31,
1992
1993
Net Revenue
Reduction in loss allowances

$ 5,821,649
(6,579,610)

$ 5,935,164
(8,116,762)

Interest expense financed as additional notes payable

278,975

545,215

Decrease in accrued interest on notes payable

(39,122)

(222,398)

72,977

774,320

(35,033)

238,115

14,577,355

29,655,899

5,836,959

14,772,701

35,663

53,089

(56,628)

(7,400)

55,290

39,045

Increase in accrued interest on amounts due to receiverships
(Increase) decrease in accrued interest due from advances
Receipts from subrogated claims
Repayments of advances and reimbursable expenditures
Receipts from asset liquidations
Decrease in accounts payable, accrued liabilities and other
Decrease in reimbursable portion of liabilities above
Disbursements for advances

(3,241,601)

(11,735,557)

Disbursements for subrogated claims

(4,931,341)

(22,668,747)

Disbursements for reimbursable expenditures

(1,446,145)

(1,554,588)

(32,340)

(24,275)

Other non-cash (income) and expenses (net)

8,594

(22,564)

Decrease in other assets

3,272

798

$10,328,914

$ 7,662,055

OIG income recognized

Net cash provided by operating activities

N oncash transactions incurred from thrift assistance and failures (in thousands):
■ $ 1,629,744 and $7,190,499 were reclassified from "Estimated cost of unresolved cases” to "Allowance for
losses on subrogated claims" during 1993 and 1992, respectively, due to the resolution of 27 cases during
1993 and 69 cases in 1992.
H "D ue to receiverships - assets sold" decreased by $62,157 and $3,661,299 in 1993 and 1992, respective­
ly, w ith offsetting decreases o f $61,364 and $3,61 1,547 to "Advances to receiverships" and of $793 and
$49,752 to "Accrued interest" to repay receivership advances and related interest.
B $278,975 and $545,215 of interest expense was financed through increases in notes payable in 1993 and
1992, respectively.

80



A P P E N D IX II

I

"Recovery of subrogated claims" increased by $7,602,027 and $21,630,902 during 1993 and 1992, respec­

tively, w ith an offsetting decrease in "D ue to receiverships - assets sold", to record liquidating dividends
declared by receiverships.
I

"Subrogated claims" increased by $2,983,857 and $5,190,331 in 1993 and 1992, respectively, resulting

from resolution activity w ith an offsetting increase in "D ue to receiverships - assets sold."
■ "D ue to receiverships" decreased by $ 15,715 and $ 1,605,088 in 1993 and 1992, respectively, w ith the off­
set to "Due to receiverships - assets sold" (a co m po nent of "Net subrogated claims") for amounts exceeding
the expected recovery of subrogated claims due from the receiverships.
■ "Reimbursements due from receiverships and conservatorships" decreased by $89,272 and $389,551 dur­
ing 1993 and 1992, respectively, w ith an offsetting decrease to "D ue to receiverships - assets sold."
B "Due to receiverships - assets sold" increased by $31,280 and $141,795 in 1993 and 1992, respectively,
w ith an offsetting increase to "N et assets purchased by the C orporation" relating to the purchase of receiver­
ship assets by the C orporation.

14. Related Party Transactions:
T he Financial Institutions Reform, Recovery, and Enforcement Act of 1989 established the R T C to manage
and resolve failed savings institutions that were formerly insured by the FSLIC and for w hich a receiver or
conservator was appointed after January 1, 1989. At D ecem ber 31, 1993, there were 743 institutions w ith
$75.5 b illion of assets for w hich the RT C was appointed conservator or receiver. This compares to 734 insti­
tutions w ith $ 124.0 billion of assets at D ecem ber 31,1992.
In its fiduciary capacity as receiver or conservator, the R T C has substantial control over the operations of
the institutions placed in receivership or conservatorship by the O T S . T he RT C, as receiver or conservator,
has ultim ate authority in the day-to-day operations, including the tim ing and m ethods of the disposal of the
institutions' assets in an effort to m aximize returns on such assets.
T he R T C does not include the assets and liabilities of the receiverships and conservatorships in its financial
statements. FHowever, certain transactions w ith these institutions, including advances to and receivables from
the institutions, as well as interest paid or received on such items, are included in the RTC's financial records.
A t D ecem ber 31,1993, the net balances of advances and subrogated claims were $7.3 b illion and $21.2 b il­
lion (net of "D ue to receiverships - assets sold" of $2.3 billion), respectively. T he R T C owed $2.3 billion to
receiverships, including the liability account of $13 m illion, at D ecem ber 31, 1993, resulting from resolu­
tion transactions (see notes 5 and 8). Interest incom e earned on advances and subrogated claims was $368
m illio n during the year ended D ecem ber 3 1, 1993, and interest expense on amounts due receiverships was
$73 m illion.
At D ecem ber 3 1, 1992, the net balances o f advances and subrogated claims were $9.3 billion and $32.5 b il­
lion (net of "Due to receiverships - assets sold" of $7.5 billion), respectively. Total am ounts due receiverships
were $7.5 billion, including the liability account of $29 m illion. Interest incom e on advances and subrogat­
ed claims was $0.5 b illion during the year ended D ecem ber 31,199 2, and interest expense on amounts due
receiverships was $0.8 billion.
R T C receiverships and conservatorships are holders of lim ited partnership equity interests as a result of var­
ious R T C sales programs w hich include the N ational Land Fund, M u ltip le Investor Funds, N-Series and SSeries programs. T hro ugh 1993, the RT C sold $5.2 billio n of loans through these programs.




F !

v .i .v i j ; : s r , r t u r .v i ■
1
,

81

A P P E N D IX II

The RTC funds the activities of the T D P Oversight Board based on its fiscal year budgets. The amounts
funded in 1993 and 1992 were $5.1 m illion and $5.0 m illion, respectively. These amounts are subject to the
Corporation's policy of allocating corporate expenses to the receiverships.
"Administrative operating and other expenses" for the C orporation were $102.3 m illion and $54.2 m illion
for the years ended D ecem ber 31, 1993, and 1992, respectively (total costs of $933.0 m illion and $970.9
m illion less $830.7 m illion and $916.7 m illion billed back to receiverships during 1993 and 1992, respec­
tively). T he C orporation bears the costs o f administrative expenses for terminated receiverships since they
are managed by the C orporation.

15. Commitments and Guarantees:
S

e c u r it iz a t io n

C

R

r e d it

e s e r v e s

:

T hrough 1993, the R T C sold through its mortgage-backed securities securitization program $36.6 billion of
receivership, conservatorship and Corporate loans ($32.8 billion through 1992). The loans sold were secured
by various types of real estate including 1-4 family homes, multi-family dwellings and commercial real estate.
Each securitization transaction is accom plished through the creation of a trust, w hich purchases the loans
to be securitized from one or more institutions for w hich the Corporation acts as a receiver or conservator
or purchases loans ow ned by the Corporation. The loans in each trust are pooled and stratified and the result­
ing cash flow is directed into a num ber of different classes of pass-through certificates. T he regular pass­
through certificates are sold to the public through licensed brokerage houses. R T C and its receiverships and
conservatorships retain residual pass-through certificates w hich are entitled to any rem aining cash flows from
the trust after obligations to regular pass-through holders have been met.
To increase the likelihood of full and tim ely distributions of interest and principal to the holders of the reg­
ular pass-through certificates, and thus the marketability of such certificates, a portion of the proceeds from
the sale of the certificates is placed in credit enhancem ent reserve funds (reserve funds) to cover future cred­
it losses w ith respect to the loans underlying the certificates. The reserve funds' structure limits the receiver­
ships', conservatorships' or C o rp oratio n 's exposure from credit losses on loans sold th ro u g h the R T C
securitization program to the balance of the reserve funds. T he initial balances of the reserve funds are deter­
m ined by independent rating agencies and are subsequently reduced for claims paid. T hrough Decem ber
1993, the am o unt of claims paid is 1% of the initial reserve balances. A t D ecem ber 31, 1993, and 1992,
reserve funds related to the R T C securitization program totalled $6.6 b illion and $6.2 b illion, respectively.
R T C m anagem ent expects to recover a substantial portion of the reserve funds over time. The RT C estimates
C o rp o ra te losses related to the receiverships' reserve funds as part of the RTC's allow ances for losses.
A dditionally, the R T C estimates C orporate losses related to conservatorships' reserve funds as part of the
RTC's "Estimated cost of unresolved cases." As of D ecem ber 31, 1993, the R T C included $1.5 billion, net of
realized losses, in these provisions to cover estimated losses on the reserve funds ($1.3 m illion as of December
31, 1992). As of D ecem ber 31, 1993, the provisions were offset by $844 m illion of securitization residual
values ($755 m illion as o f D ecem ber 3 1, 1992).
R

e p r e s e n t a t i o n s

a n d

W

a r r a n t i e s

:

T he R T C provides certain representations and warranties on loans sold through the securitization program.
Funds have been placed in escrow by the receiverships and conservatorships participating in the securitiza­
tion transactions to honor obligations that may arise from the representations and warranties. The Corporation
has also established a liability for the estimate of representation and warranty claims associated w ith the secu­
ritization transactions that involved corporate purchased assets.




A P P E N D IX II

T he RT C has provided guarantees, representations and warranties on approximately $52 billion in unpaid
principal of loans sold for cash or exchanged for mortgage-backed securities. T he RT C also has provided
guarantees, representations and warranties on approximately $143 b illion of loans under servicing rights c o n ­
tracts w hich have been sold. T he representations and warranties made in connection w ith the sale of ser­
vicing rights are lim ited to the responsibilities of acting as a servicer of loans. W h ere there are corporate
guarantees, institutions have established escrow fund accounts containing a portion of the sales proceeds to
h o n or any obligations that m igh t arise from the guarantees, representations and warranties.
T he R T C estimates Corporate losses related to the receiverships' representation and warranty claims as part
of the RTC's allowances for losses. Additionally, the R T C estimates Corporate losses related to the conser­
vatorships' representation and warranty claims as part of the RTC's "Estimated cost of unresolved cases." As
of D ecem ber 3 1, 1993, the RT C included $ 1.2 billion in these provisions to cover the estimated costs of rep­
resentation and warranty claims ($1.5 billion as of D ecem ber 31 ,199 2).
L

e t t e r s

o f

C

r e d i t

:

T he R T C has adopted special policies for outstanding R T C conservatorship and receivership collateralized
letters of credit. These policies enable the R T C to m in im ize the im pact of its actions on capital markets. In
most cases, these letters of credit are used to guarantee tax exempt bonds issued by state and local housing
authorities or other public agencies to finance housing projects for low and moderate incom e individuals or
families. As of D ecem ber 31, 1993, the R T C has issued a co m m itm e nt to ho n o r approximately $2.4 b illion
o f these letters o f credit. T he total am o unt that will ultim ately be paid, the fair value of such letters of cred­
it, and the losses resulting from these letters of credit are not reasonably estimable at D ecem ber 31, 1993.
A

f f o r d a b l e

H

o u s in g

P

r o g r a m

:

As part of its Affordable H o usin g Program, R T C m anagem ent has com m itted to expend up to $6 m illion to
pay reasonable and customary co m m itm e n t fees to various state and local housing authorities w h o will, in
turn, assist in providing financing to low and moderate incom e families. U nd e r this program, the RT C works
w ith state and local housing finance agencies to secure com m itm ents of Mortgage Revenue Bond and Mortgage
C red it Certificate funds w hich will be lent to qualifying families to enable them to purchase properties from
the RT C . A t D ecem ber 31,199 3, $2.1 m illio n remains unexpended. N o substantial recoveries are anticipat­
ed from the program.
R

e n t a l

E

x p e n s e

:

T he R T C is currently leasing office space at several locations to accom m odate its staff. As of D ecem ber 31,
1993, these offices include: (1) the W ashin gton , D C . Headquarters offices, (2) the six megasite offices, and
(3) four satellite offices located thro ug ho ut the country. A ddition al satellite offices have been closed, but the
R T C remains obligated for the remainder of their lease terms pe nd ing negotiations for lease buyouts or sub­
leases. These obligations total $0.9 m illion. T he RTC's rental expense for 1993 and 1992 totalled $59.5 m il­
lion and $44.8 m illion, respectively. The RTC's total contractual obligations under lease agreements for office
space are approxim ately $128.9 m illion. These agreements often contain escalation clauses w hich can result
in adjustments to rental fees for future years. The m in im u m yearly rental expense for all locations is as fol­
lows (in thousands):

1994
$38,690

1995
$32,258

VV
 A i . II AI H Fr n H


1996
$18,329

1997
$6,616

1998
$7,069

F I

.V,1 ,V( I A L

1999/Thereafter
$25,920

S I' ,1

FEA F,v r s
l

83

A P P E N D IX II

Lease obligations for 1997 and beyond are exclusively for the RT C headquarters building in W ashington,
D C . This lease was entered into by the now defunct FSLIC in 1987. At the date of RTC's termination, w hich
undercurrent law shall not be later than D ecem ber 31, 1995, all of the RTC's debts, obligations and assets,
including the above lease obligations, shall be transferred to the FSLIC Resolution Fund w hich is managed
by the FD IC .

16. Pension Plan and Accrued Annual Leave:
T he F D IC eligible employees assigned to the RT C are covered by the Civil Service Retirement System and
the Federal Employees Retirem ent System. Em ployer contributions provided by the R T C for all eligible
employees for the years ended Decem ber 31, 1993, and 1992, were approximately $16.9 m illion and $16.9
m illion, respectively.
A lth ou gh the RT C contributes a portion of pension benefits for eligible employees and makes the necessary
payroll w ithholdings from them, the R T C does not account for the assets of either of these retirement funds
and does not have actuarial data w ith respect to accumulated plan benefits or the unfunded liability relative
to its eligible employees. These am ounts are reported by the U .S. O ffice of Personnel M anagem ent (O P M )
and are not allocated to the individual employers. O P M also accounts for Federal health and life insurance
programs for those R T C retired eligible employees w h o had selected Federal governm ent sponsored plans.
T he RTC's liability to employees for accrued annual leave was approximately $20.2 m illion at D ecem ber 31,
1993, and $20.0 m illion at D ecem ber 31 ,1992.

17. Health, Dental and Life Insurance Plans for Retirees:
T he RTC, through its association w ith the F D IC , provides certain health, dental and life insurance coverage
for its eligible retirees, the retirees' beneficiaries and covered dependents. Eligible retirees are those w ho have
elected the FDIC's health and/or life insurance programs and are entitled to an im mediate annuity (dental
coverage is autom atic at retirement). The health insurance coverage is a comprehensive fee-for-service pro ­
gram, w ith hospital coverage and a m ajor medical wraparound.
Corporate contributions for retirees are the same as those for active employees. Premiums are paid to the
F D IC , where they are held until plan fixed costs and expenses are paid. The life insurance program provides
for basic coverage at no cost and allows converting optional coverages to direct-pay plans. The cost of pro ­
viding this benefit is not separable from the cost of providing benefits for active employees, as the charge for
retirees is built into rates for active employees.
The RT C adopted Financial Accounting Standard N o. 106 (FAS 106), Employer's Accounting for Postretirement
Benefits O th e r than Pensions, as of January 1, 1992. FAS 106 requires the accrual m ethod of accounting for
postretirement health and life insurance costs. These costs are generally recognized over the period from the
date of hire to the full eligibility date of employees w h o are expected to qualify for such benefits.
T he R T C elected to recognize im m ediately the accumulated postretirement benefit liability of $18.1 m illion
as of January 1, 1992. T he accum ulated liability, know n as the transition obligation, represents that portion
of future retiree benefit costs related to service rendered by both active and retired employees prior to the
date of adoption. The R T C recorded charges of $ 13.8 m illion and $1 1.0 m illion for the current periodic cost,
for 1993 and 1992, respectively. All am ounts have been reflected in the "Administrative operating and other
expenses'' line of the Statements of Revenues, Expenses and A ccum ulated Deficit.

84



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A P P E N D IX II

T he net p e rio dic postretirem ent benefit cost for 1993 and 1992 in c lud e d the fo llo w in g c o m po n en ts
(in millions):

1993
$ 8.5
4.4
____.9

Net periodic postretirement benefit cost

$ 6.8
4.2
____ -

$13.8

Service cost, benefits attributed to employee service during the year
Interest cost on accumulated postretirement benefit obligations
Net amortization and deferral

1992

$11.0

T he RT C, as a governm ent corporation scheduled under current law to terminate on or before Decem ber
3 I, 1995, decided, in conjunction w ith the FD1C, that the liability for postretirement benefits for eligible
employees assigned to the R T C will be recorded on the books of the F D IC . T he RT C pays the F D IC an
am ount equal to the RTC's obligation. In return, the F D IC agrees to pay the costs associated w ith postre­
tirement benefits due to eligible employees assigned to the R T C upon their retirement. D urin g 1993, the
RT C paid the F D IC an am ount equal to the RTC's transition o bligation plus the RTC's 1992 net periodic
postretirement cost and the estimated 1993 net periodic postretirement cost. As of Decem ber 31, 1993, the
R T C has included as a current liability on its Statement of Financial Position an am ount equal to $5.2 m il­
lion for a revised 1993 net periodic postretirement cost w hich the R T C expects to pay to the F D IC in 1994.
T he discount rate used in the calculation of the postretirement benefit obligation was 6.0% in 1993. The
assumed m edical inflation trend in 1993 was 14.0%, decreasing to an ultim ate rate o f 8.0% in 1998 and
rem aining at that level thereafter. T he dental cost trend rate in 1993 and thereafter was 8.0% . Both the
assumed discount rate and health care cost trend rates have a significant effect on the am ount of the o b lig ­
ation and periodic cost reported.
If the health care cost trend rate was increased one percent, the accumulated postretirement benefit obliga­
tion for he alth care benefits as of D ece m b e r 31, 1993, w o uld have increased $17.8 m illio n , or 27.3% .
A dditionally, a one percent increase w ould have increased the aggregate service and interest costs of the
1993 net periodic postretirement health care benefit cost by $3.7 m illion, or 31.7%.

18. Concentration of Credit Risk:
T he R T C has receivables from conservatorships and receiverships located th ro ug ho ut the U n ite d States
w h ich are experiencing problems w ith both loans and real estate. T heir ability to make repayments to the
R T C is largely influenced by the econom y of the area in w hich they are located. T he gross balance of these
receivables at D ecem ber 31,1993, is $ 105.1 billion (against w hich $76.6 b illion of reserves and contra assets
have been recorded). O f this total, $27.4 billion is attributable to institutions located in Texas, $17.5 billion
is attributable to institutions located in California, $7.6 billion is attributable to institutions located in Florida
and $6.5 billio n is attributable to institutions located in Arizona.




F I ,V A X I I .A L

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A P P E N D IX 1 1
1

RESOLUTION

M A N A G E M E N T S A S S E S S M E N T O F IN T E R N A L C O N T R O L S

TRUST C O R P O R A T I O N

Resolving The Crisis
Restoring The Confidence

Chief Financial Officer

1993 M anagem ent Report on Internal Controls
Corporate Internal C ontrol O bjective
The Resolution Trust C orporation (RT C ) maintains an internal control system w hich is designed to pro­
vide reasonable assurance that assets are safeguarded against loss from unauthorized acquisition, use or dis­
position,- transactions are executed in accordance w ith m anagem ents authority and w ith laws and
regulations,- and transactions are properly recorded, processed, and summ arized in accordance w ith gener­
ally accepted accounting principles and to m aintain accountability for assets. The internal control system
includes a docum ented organizational structure, division of responsibility, and established policies and pro ­
cedures. T he corporate policy sets a positive tone for the organization and is intended to influence the
control consciousness of R T C personnel.
T he Thrift D epositor Protection O versight Board (T D P O B ) has issued a policy statement on internal c o n ­
trols dated July 25, 1991. T he objectives o f the policy statements are to encourage the R T C to establish
and adhere to internal control standards, including evaluation and reporting standards, that are no less
stringent than those required of certain agencies pursuant to the Federal Managers' Financial Integrity Act
of 1982 (FMFIA) and to encourage the R T C to vest in its C h ie f Financial Officer powers substantially sim i­
lar to those provided in the C h ie f Financial Officers A ct of 1990.
Internal C o n tro l Program Activity
In 1993, the R T C significantly enhanced its internal control system. In M arch, Treasury Secretary Bentsen,
as C hairm an of the T D P O B , announced the R T C m anagem ent reform agenda, w hich included require­
ments that R T C strengthen its internal controls and im plem ent a new audit follow-up system. In response,
the R T C reinforced its co m m itm e n t to prom ote and encourage internal control program activity and took
several m ajor steps to measurably im prove internal controls throughout the Corporation.
D u rin g the year a new audit follow-up program was established, w hich required the Corporation to
respond prom ptly and thoroughly to all recom m endations contained in reports issued by both internal and
external auditors. The follow-up program includes procedures for tracking audit findings and recom m enda­
tions by the General A ccounting O ffice ( G A O ), the RTC's O ffice of Inspector General ( O IG ) , and other
audit and review organizations. The C o rporatio n im proved the internal control program by enhancing the
coordination am o n g the internal review activities at the six asset m anagem ent and sales field offices, the
quality assurance activities at the four field financial service centers, and the headquarters m anagem ent
control activities. A dditional resources were allocated to the field Internal Review Units, and their respon­
sibilities were expanded to include a proactive program of evaluating internal controls. Also, the field
Q u a lity Assurance U nits began reporting directly to the Vice Presidents of the Financial Service Centers
during 1993.
T he R T C trained more than 1,000 managers and senior personnel in the concepts of RTC's internal control
program, a comprehensive internal control review initiative and the new audit follow-up procedures.
N ational conferences were held for b oth the field Internal Review and Q u a lity Assurance personnel.

801 17th Street, NW, Washington, DC 20434-0001

86



F I S A ,V I

I A L

S i

A I' E Al F V T <

Tel. (202) 416-7221

R f S (l L U T I < iV
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Fax (202) 416-7226

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A P P E N D IX III

D urin g the year, the Corporation continued to aggressively pursue its internal control and review program.
T he inventory o f corporate units for w hich individual control and com pliance assessments can be made
was revised to reflect organizational changes,- vulnerability assessments were conducted, and scheduled
internal control and program com pliance reviews were completed.
N ew autom ated systems designed to track o ng o in g audits and follow-up on audit recommendations were
made available to headquarters and field managem ent. T he M anagem ent Reporting System (M R S ), w hich
m onitors audit findings and recom m endations along w ith corrective actions taken by the RTC, became
fully operational in m id-1993. The A udit M anagem ent Tracking System (A M T S ), w hich tracks the
progress of o ng o in g audits, was installed at headquarters, the financial service centers and the asset m a n ­
agem ent and sales field offices during the year. Field personnel were trained in the use of both M R S and
AM TS.
Internal C o n tro l and O perations Reviews
In 1993, R T C program managers com pleted 65 internal control and program com pliance reviews covering
all m ajor programs and financial m anagem ent systems. T he reviews m onitored com pliance w ith corporate
policies and the adequacy o f internal control objectives and techniques. Also during 1993, the G A O issued
a total of 24 reports resulting from its audits and reviews of R T C operations and financial statements, and
the RTC's O I G issued a total of 71 reports on its audits and reviews.
In its Sem iannual Report to the Congress, dated September 30, 1993, the O I G com m ented favorably on
the RTC's initiatives to improve audit follow-up and internal control training, and to im plem ent the M RS.
T he O I G also com pleted a review of the RTC's internal control program and concluded that the RT C has
adhered to the internal control policy statement issued by the T D P O B and that its internal control system
meets the requirements of the FMFIA.
T he R T C has im proved its internal control program by incorporating the results o f audits and reviews,
thereby allow ing the RT C to take advantage o f the benefits derived from the audit process.
M anagem ent's Assertion
D u rin g the year, m anagem ent evaluated the Corporation's internal control system of safeguarding assets
against loss from unauthorized acquisition, use or disposition,- assuring the execution of transactions in
accordance w ith management's authority and w ith laws and regulations, and properly recording, process­
ing, and sum m arizing transactions in accordance w ith generally accepted accounting principles and m a in ­
tain in g accountability for assets using the control criteria described in FM FIA and other selective laws,
federal directives and applicable policy statements of the T D P O B . Based on that evaluation, m anagem ent
believes that the Corporation's internal control system m et those criteria as of D ecem ber 31, 1993.
There are, however, inherent lim itations in the effectiveness of any internal control system, including the
possibility of hum an error and the circum vention or overriding of controls. Accordingly, even the most
effective internal control system can provide o nly reasonable assurance w ith respect to safeguarding of
assets against unauthorized acquisition, use or disposition, com pliance w ith laws and regulations, and
financial statement preparation. Furthermore, the effectiveness o f an internal control system can change
w ith circumstances.
N o tw ith s ta n d in g the Corporation's evaluation of its internal control system, it should be noted that
through the reviews undertaken during 1993, certain h ig h risk areas were identified and operating control



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A P P E N D IX III

weaknesses disclosed. However, managem ent does not consider the weaknesses disclosed to be material in
relation to the financial statements or the purpose for w hich the Corporation's overall system was designed.
T hrough D ecem ber 3 1, 1993, the weaknesses, along w ith the status of corrective actions taken or pro­
posed, were disclosed in the Corporation's 1993 Internal C o n tro l Report to the T D P O B dated M arch 31,
1994. Subsequent to D ecem ber 3 1, 1993, the follow ing additional weaknesses, w hich were also considered
not to be material, were discovered:
• the general controls over some of the Corporation's com puterized inform ation systems did not
provide adequate assurance that data files and com puter programs were fully protected from unau­
thorized access and m odification,
• the Corporation's field offices did not always post wire receipts to the correct general ledger
accounts, and
• the C orporations field offices did not always use correct amounts from the detailed asset
records when reconciling the receiverships' asset balances to those records.
T he C orporation is currently im plem enting corrective actions necessary to address these weaknesses.

APPENDIX I V

C O R P O R A T I O N 'S PROGRESS ON IM P L E M E N T IN G GAP RECOM M ENDATIONS
C O N C E R N IN G 1992 I N T E R N A L C O N TR O L WEAKNESSES

D u r i n g 1993 , t h e C o r p o r a t i o n im p le m e n te d p r o c e d u r e s t o a d d re s s t h e
1 9 92 m a t e r i a l i n t e r n a l c o n t r o l w e a k n e s s r e l a t e d t o l a c k o f c o n t r o l
p r o c e d u r e s w h ic h r e s u l t e d i n an u n d e t e c t e d e r r o r i n a co m p o n e n t o f
th e C o r p o r a t io n 's lo s s a llo w a n c e c a l c u l a t i o n f o r s u b ro g a te d c la im s .
S p e c i f i c a l l y , th e s e p ro ce d u re s r e q u ir e t h a t th e d a ta used to
c a l c u l a t e th e s y s te m -g e n e ra te d p e rfo rm in g / rio n p e rfo rm in g a s s e t
s p l i t s be v a l i d a t e d b y c o m p a ris o n w i t h s i m i l a r d a t a fro m an
in d e p e n d e n t s o u rc e .
A dherence to th e s e p ro c e d u re s s h o u ld e n s u re
t h a t e r r o r s i n t h e p e rf o rm in g / n o n p e r fo rm in g a s s e t s p l i t s w i l l be
d e t e c t e d i n a t i m e l y m anner.
T h e C o r p o r a t i o n a l s o t o o k a c t i o n s d u r i n g 1 9 93 t o a d d r e s s e a c h o f
t h e f o l l o w i n g r e p o r t a b l e c o n d i t i o n s i d e n t i f i e d i n o u r 1992 r e p o r t s .
--

A t Decem ber 3 1 , 1992, th e C o r p o r a t io n used in f o r m a t io n fro m th e
w ro n g d a ta base syste m t o c a l c u l a t e i t s lo s s a c c r u a l f o r c la im s
a r i s i n g fro m r e p r e s e n t a t i o n s and w a r r a n t i e s t h a t a r e o f f e r e d
w i t h th e s a le o f lo a n s and s e r v i c i n g r i g h t s .
D u rin g 1993, th e
C o r p o r a t io n d e v e lo p e d fo rm a l p ro c e d u re s f o r e s t im a t in g i t s lo s s
a c c r u a l i n w h ic h th e W a r ra n tie s and R e p re s e n ta tio n s A c c o u n ts
P r o c e s s in g System i s th e s t a r t i n g p o i n t .
A d d it io n a lly , the
C o r p o r a t i o n d e v e lo p e d and im p le m e n te d s e v e r a l m a jo r en h a n c e m e n ts
t o t h e s y s te m w h i c h , co m b in e d w i t h t h e f o r m a l p r o c e d u r e s , h e l p
e n s u re th e i n t e g r i t y o f th e d a ta used to e s tim a te th e lo s s
a c c ru a l.
As a r e s u l t o f t h e a c t i o n s im p le m e n te d d u r i n g 1 9 93 ,
o u r t e s t s fo u nd t h a t th e Decem ber 31 , 1993, e s tim a te d lo s s
a c c r u a l was r e a s o n a b l e .

--

Th e C o r p o r a t io n 's c o n t r a c t o r e s tim a te d r e c o v e r y v a lu e s f o r
r e c e i v e r s h i p a s s e t s i n 1992 w i t h o u t a d e q u a t e s u p p o r t i n g f i l e
d o c u m e n ta tio n .
D u r in g 1993, th e C o r p o r a t io n enhanced th e
t r a i n i n g and o v e r s ig h t o f th e c o n t r a c t o r h i r e d t o e s t im a t e a s s e t
re c o v e rie s .
A s a r e s u l t o f t h e s e e f f o r t s , we f o u n d a n i m p r o v e d
a u d i t t r a i l and m ore c o n s i s t e n t p r o c e d u r e s i n p l a c e t o e s t i m a t e
re c o v e rie s fo r assets.
S p e c i f i c a l l y , we f o u n d t h a t t h e
c o n t r a c t o r b ased t h e e s t im a t e s on t h e C o r p o r a t i o n 's h i s t o r i c a l
s a l e s e x p e r i e n c e a n d o t h e r i n f o r m a t i o n , a n d we f o u n d t h e
e s t im a t e s t o be d o cu m en te d a d e q u a t e l y .

--

D u r in g 1992, th e C o r p o r a t io n 's c o n t r a c t o r d id n o t c o n s id e r a l l
r e le v a n t f i l e d o c u m e n ta tio n o r in f o r m a t io n i n e s t im a t in g
r e c e i v e r s h i p a s s e t r e c o v e r i e s o r made e r r o r s i n r e c o r d i n g
v a lu a tio n in fo rm a tio n .
D u r i n g 1 9 9 3 , we f o u n d t h e e r r o r s w e r e

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APPENDIX I V

r e d u c e d t o an a c c e p t a b l e l e v e l s u c h
t h i s t o be a r e p o r t a b l e c o n d i t i o n .

t h a t we n o l o n g e r c o n s i d e r

--

N i n e o f t h e C o r p o r a t i o n ' s 13 f i e l d o f f i c e s d i d n o t p e r f o r m t h e
r e q u ir e d r e c o n c i l i a t i o n o f ch ecks r e c e iv e d and p ro c e s s e d d u r i n g
1992.
Th e C o r p o r a t io n u p d a te d th e F i e l d A c c o u n tin g M anual
d u r i n g 19 93 a n d p r o v i d e d a s t a n d a r d f o r m a t t o e n s u r e t h e u n i f o r m
p re p a ra tio n o f d a ily r e c o n c ilia t io n s of cash re c e iv e d .
A t th e
e n d o f 1 9 9 3 , we f o u n d t h a t a l l f i e l d o f f i c e s p e r f o r m e d t h e
r e q u ir e d r e c o n c i l i a t i o n o f checks r e c e iv e d and p ro c e s s e d .

--

I n 1992, th e C o r p o r a t io n 's f i e l d o f f i c e s d id n o t p o s t w ir e
d is b u rs e m e n ts t o th e c o r r e c t g e n e ra l le d g e r a c c o u n t s .
D u rin g
1993 , t h e C o r p o r a t i o n c o m p le te d t r a i n i n g i n i t i a t i v e s t o im p ro v e
th e a c c u r a c y o f p o s t in g w ir e d is b u rs e m e n ts i n th e f i e l d o f f i c e s .
T h e r e s u l t s o f o u r 1993 t e s t i n g s h o w e d a n i m p r o v e m e n t i n t h e
e r r o r r a t e o f p o s t i n g w i r e d i s b u r s e m e n t s s u c h t h a t we n o l o n g e r
c o n s i d e r t h i s t o be a r e p o r t a b l e c o n d i t i o n .
H o w e v e r , i n 1 9 9 3 we
fo u n d a h ig h p o s t in g e r r o r r a t e r e l a t e d t o w ir e r e c e i p t s , w h ic h
we r e p o r t e d .

—

Th e C o r p o r a t io n d id n o t i d e n t i f y th e m a t e r ia l weakness o r th e
f i v e r e p o r t a b l e c o n d i t i o n s d e s c r i b e d a b o v e i n i t s 1992 s t a t e m e n t
on th e e f f e c t iv e n e s s o f i t s i n t e r n a l a c c o u n tin g and
a d m in is tra tiv e c o n tro ls .
D u r i n g 1 9 9 3 , we f o u n d n o m a t e r i a l
w e a k n e s s e s and t h e C o r p o r a t i o n t o o k im m e d ia te a c t i o n s t o a d d re s s
t h e r e p o r t a b l e c o n d i t i o n s we i d e n t i f i e d .
In a d d it io n , th e
C o r p o r a t i o n m o d i f i e d i t s own i n t e r n a l r e v i e w p r o c e d u r e s t o
in c lu d e th ese a re a s .

--

D u r i n g t h e f i r s t 8 m onths o f 19 92, t h e C o r p o r a t i o n p r o c e s s e d i t s
f i n a n c i a l i n f o r m a t i o n on t h e F e d e r a l D e p o s i t I n s u r a n c e
C o r p o r a t io n 's ( F D I C ) g e n e ra l le d g e r s ys te m .
F D IC had in a d e q u a te
c o n t r o ls o v e r access to i t s e le c t r o n ic d a ta p ro c e s s in g c e n te r
and syste m s s o f t w a r e .
I n S e p tem be r 1992, th e C o r p o r a t io n
i m p l e m e n t e d i t s own g e n e r a l l e d g e r s y s t e m a t a s e p a r a t e d a t a
c e n t e r and no l o n g e r p r o c e s s e s i t s f i n a n c i a l i n f o r m a t i o n a t t h e
F D IC d a ta c e n t e r .

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C O M M E N T S F R O M T H E R E S O L U T IO N T R U S T C O R P O R A T IO N

RESOLUTION

A P P E N D IX V

TRUST C O R P O R A T I O N

Resolving The Crisis
Restoring The Confidence

Chief Financial Officer

June 20, 1994

T he FHonorable Charles A. Bowsher
C o m ptroller General of the U nited States
U nite d States General A ccounting Office
W ashington, D G . 20548
Re: Financial A udit— Resolution Trust Corporation
1993 and 1992 Financial Statements
D ear Mr. Bowsher:
T hank you for the o ppo rtunity to respond to the General A ccounting O ffice ( G A O ) draft audit report of
the Resolution Trust Corporation's (RT C ) 1993 and 1992 financial statements. W e appreciate the o ppo rtu­
nity to review and com m ent on the report in draft form prior to its issuance.
It has been a co ntin uin g objective of the R T C to receive from the G A O an unqualified o pin ion on its
financial statements. W e are pleased, therefore, that since 1992 the G A O has concluded that RTC's finan­
cial statements are reliable in all material respects. W e are also pleased to note the G A O 's conclusion that
the RT C made significant progress in addressing the internal control weaknesses identified in the 1992
audit. W e concur w ith these findings, and we are appreciative of G A O 's co ntinuing assistance in achieving
these results.
T he follow ing addresses the significant matters and the reportable conditions identified in the G A O draft
audit report for 1993.

SIGNIFICANT MATTERS
1.

Uncertainties Affect Estimated Recoveries From
Receiverships and Costs of Future Resolutions

W e concur w ith the G A O 's assessment that changes in various factors such as general econom ic c o n d i­
tions, interest rates and real estate markets that are b ey ond RTC's control may have some im pact on the
ultim ate financial results of the RTC. G iven the econom ic factors that existed at year-end 1993, we believe
that the estimated recoveries on assets, and the reserve requirements for future credit losses on securitiza­
tions and for claims arising from representations and warranties are appropriate.

2.

Controls over Contractor Performance Could
Affect Recoveries from Receiverships

W e concur that a significant issue is the need for co n tin u in g im provem ent in contractor oversight to
ensure accurate recoveries from receiverships. As a result, we have established a num ber of major m anage­
m ent initiatives w hich we anticipate will im prove RTC's contractor oversight program:
A.

W e have initiated a formal Loan Servicing O versight Program to continually review the ong o ing
coordination and supervision o f all loan servicer activities,-

B.

W e have co m m itte d significant additional staff resources to the O ffice of C ontractor Oversight
and Surveillance,- and

801 17th Street, NW, Washington, DC 20434-0001




Tel. (202) 416-7221

Fax (202) 416-7226

A P P E N D IX V

C.

3.

W e have added internally the necessary resources to support the expanded efforts of RTC's Office
of the Inspector General in formally auditing the activities of various RT C contractors.

F u nd ing

and Current Status of the Corporation

As correctly noted in your report, there is, and will continue to be, a significant level o f uncertainty per­
taining to the actual financial outcom e of the RTC. T he D ecem ber 31, 1993 financial statements reflect
loss funding needs of up to $92 b illion w hich is $1 3 b illion less than the loss funds of $105 billion made
available to the Corporation.
However, it must be remembered that the loss funding of $92 billio n is only an estimate. Changes in eco­
nom ic conditions, unanticipated additional savings and loan failures, and unforeseen problems im pacting
the value of rem aining assets or RT C liabilities are just a few o f the factors that could cause substantial vari­
ation from current estimates. Therefore, the total am o unt of loss funds used by the RT C will not be know n
w ith certainty until the last institution is resolved and the last asset is sold.

REPORTABLE CONDITIONS
1.

Computerized Information Systems

In response to the findings o f the 1993 G A O Financial Statement Audit, the D epartm ent of Inform ation
Resources M anagem ent (D IR M ) has made significant progress in effecting the corrective actions required.
T he changes have included establishing and im proving access control, inform ation security practices and
procedures, change control procedures, and business recovery procedures. By September 30, 1994, D IR M
expects to com plete corrective actions necessary to address the deficiencies w hich had been identified. In
addition, tw o other efforts involving a lim ited business recovery test w ith no w arning and a standardized
system software platform are planned for com pletion in accordance w ith the action plan already submitted
to the G A O .
These corrective actions are designed to:
•
•

Strengthen and form alize security programs,

•

Strengthen independent review and testing of system software change controls,

•

Improve the application change control process, and

•

2.

Improve controls over access to data and programs,

Strengthen the business recovery plan.

Posting Wire Receipts

W e have taken a num ber of significant steps to reduce the errors referenced to in your report. A com plete­
ly separate function called the N ational Sales S upport O ffice was formed to support financial integrity in
connection w ith national sales initiatives. W e revised the C hart of Accounts and enhanced formal proce­
dures associated w ith our posting and reconciliation requirements.
D u rin g 1994, internal control testing w ill be conducted to ensure that these revised procedures and
processes are achieving the intended result of decreasing the referenced posting errors.

3.

Reconciliation of Receivership Assets

T he organization in recent m onths has also taken significant steps to improve its reconciliation processes
w ith its loan servicers to ensure that servicer balances are reported correctly: the RTC's loan servicer over­
sight program now reviews the m ajor servicer's rem ittance reporting processes for com pliance w ith existing

92



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A P P E N D IX V

reporting requirements, a formal training program has been developed and im plem ented w hich allows ser­
vicers to better understand the full range of RTC's reporting requirements,- an autom ation project is under­
way to improve servicer reporting for those servicers using specialized software, and the RTC has a
m o n th ly reconciliation procedure in place to identify and correct servicer balance variances. In the months
ahead, we will continue the servicer balance reporting and reconciliation efforts so that in the future exist­
ing shortcomings will be corrected in a timely manner.
W e believe that these efforts will be successful in correcting the internal control weaknesses identified in
your report. T he corporate staff will be directed to m onitor the com pletion and progress of the corrective
actions. W e look forward to w orking w ith G A O representatives in assessing their success.
Sincerely,

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STATISTICS

STATISTICS

RTC Conservatorships
J a nu ary

1,

State

1993 t h rou g h

D ec em b er

CALIFORNIA
CONNECTICUT

1993

Associations
Placed into
Conservatorship
January 1,1993 - December 31,1993

Associations in
Conservatorship
December 31,1992

ALABAMA

31,

Conservatorship Resolutions
January 1,1993 - December 31,1993
P&A
2

3

1

1

1

1

0

1

0

IOWA

1

KANSAS

2

1

LOUISIANA

3
1

2

1

0
1

1

5

1

2

0
0

2

MICHIGAN

10

2

1

MAINE

MASSACHUSETTS

8

1

2

MARYLAND

1

6

1

3

ILLINOIS

2

5

1
10

GEORGIA

Total

4

10

FLORIDA

Payoff

Associations in
Conservatorship
December 31,1993

4
1

1

1

4

1

0

2

0
1

MISSISSIPPI

1

0

NEW HAMPSHIRE

1

0

NEW JERSEY

8

NEW YORK

1

1
1

1

1
0

7
1

NORTH CAROLINA

2

2

2

OHIO

2

1

1

1

OKLAHOMA

1

1

1

0

0

1

4

4

3

0

1

2

2

2

OREGON

1

PENNSYLVANIA

7

RHODE ISLAND

0

SOUTH CAROLINA

4

1

0

TENNESSEE

1

0

1

VIRGINIA

6

0

6

WEST VIRGINIA

Total

2

2

81

8

*D oes not include 1 institution resolved under the Accelerated Resolutions Program in 1993.

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New RTC Conservatorships
JANUARY

1, 1993 T H R O U G H D E C E M B E R 31, 1993

(dollars in thousands)

Date of
Conservatorship

Name of Institution
and Location

29-Jan

Life FSB, Baton Rouge, LA*

29-Jan

Old Stone FSB, Providence, Rl

29-Jan

Vista FSA, Canoga Park, CA

16-M ar

The Guardian Bank, a FSB, Boca Raton, FL^

02-Apr

The Pioneer FS&LA, Prairie Village, KS

04-Jun

Western FSB, Marina Del Rey, CA

Gross
Assets
$

16,811

Total
Liabilities
$

16,535

Total
Deposits
$

Number of
Deposit Accounts

16,470

4,357

1,699,352

232,543

1,924,902

1,821,049

108,573

103,096

94,482

980

65,735

66,255

60,394

4,597

139,385

129,833

127,478

9,030

3 ,894,870

3,6 5 9,63 0

2,6 7 1,80 8

134,097

13-Aug

Golden State FSB, Irvine, CA

51,341

4 8,818

46,517

786

24-Sep

Westside Bank, a FSB, Los Angeles, CA

82,433

79,004

76,949

2,671

Total

8 Institutions

$6,284,050

$5,924,220

$4,793,450

389,061

Note: Data based on TFR data for the quarter prior to date of conservatorship, except as noted.
*S eptem ber 1992 TFR data
f March 1993 TFR data

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STATISTICS

RTC Resolutions
Ja n u a ry

1 1993, t h r o u g h
,

D ecem ber

31, 1993

(dollars in thousands)

Date of
Resolution

Name of Institution and Location

Gross
Assets

Type

Total
Liabilities

Total
Deposits

Number of
Deposit
Accounts

Estimated
Cost of
Resolution

Acquiring Institution and Location

845
$ Fam ily SB, FSB , Los Angeles, CA
0
8 ,7 8 0
$
8 $ 7 5 8,3 5 7
,3
4 8 0 ,7 7 7
51 ,8 9 0
B ranch Sale
48 6 ,8 8 5
0
51 7 ,3 9 7
751
7,029
None
9 4 ,0 9 5
8 9 ,2 9 5 7 2 ,7 7 2
9 5 ,2 3 6
16 ,586
0
First Hom e FSB , FSB, Pittsburgh, PA
9 7 ,1 0 4
102,291
Roxb orough-M an ayunk FSB , Philadelphia, PA
6,1 3 5
2 ,5 3 4 372
2,203
4 ,1 5 7
Bran ch Sale
12 ,766
105
7 0 ,1 1 2
65 ,7 8 5 5 9 ,7 0 6
8,8 4 9
341 2,2 4 9
Sterling B & T , FSB , Southfield, Ml
10 ,153
10 ,807
3 ,4 2 0
5,081
Prem ier B & T , Elyria, OH
2 4 ,8 0 0
2 3 ,9 4 5 16 ,817
United B an k of Philadelphia, Philadelphia, PA
1,769 8,4 4 6
17 ,306
19 ,280 12 ,565
First C o m m,190 Bank, B irm ingham , AL
5 6 ,0 8 3
4 9 ,7 1 3
5,9 4 9
10 e rcial
5 4 ,6 5 7
7,6 08
28 ,2 1 2
Household Bank, FSB , a FSB , New port Beach, CA
1 1 1,832
1 1 8,863 1 1 8 ,1 5 0
S u m m it Bank, C ha tham , NJ
PA
8 8 ,1 4 3
8 7 ,4 8 81 0 ,582
6,2 67
9 2 ,3 1 7
10 0,417
6 2 ,1 5 6
3,8,89 8
Conservative SB, FSB, O m aha, NE
97 ,591
837
2 7 ,0 5 2
Arundel F S B , Baltimore, M D
28 ,5 6 3
5,9 59
2,7 33
2 6 ,9 7 2
27 98
35 ,5 6 5
Bran ch Sale
PA/PO
3 2 3 ,6 6 ,9 5 6
3 2 4 7 ,9 6 0
1 ,8 6 3
6 8 ,9 3 4
6 8 ,5 9 0
15 ,288
3,3 6 9
First Citizens B & TC , Raleigh, N C
6 3 ,8 2 6
8 1 ,9 6 7 39 ,9 9 6
Bran ch Sale
4 2 7 ,1 1 0
4 4 2 ,8 8 0 4 3 5 ,7 9 1
4 1 ,1 5 0
6,961 2,1 1 8
C o m m u n ity First N B, Pleasanton, CA
4 3 ,7 8 0
4 2 ,8 5 0
2 4 3,951 72 ,8 6 4
Bran ch Sale
8 7 1 ,7 7 7
8 2 9 ,6 4 3 8 0 7 ,1 2 4
16 ,562
1 6 ,927
2,2 6 9
2,5 7 0
Th e M erchants N B of Montgom ery, M ontgom ery, W V
15,081
1,314 6,2 3 0
2 3 ,9 4 3
25 ,901 16 ,5 6 4
So uth Tru st B ank of Charleston, NA, Charleston, SC
PA
167,961
16 4 ,9 9 0
2 8 ,2 7 5
9,4 82
Th e N B of South Carolina, C olu m b ia, SC
16 3,194
2 8 ,8 0 4
1,294 14 ,730
S outhBank, a FSB , Palm Beach G a rdens, FL
51 ,1 0 2
53 ,4 7 7
52 ,1 3 6
6 0 ,1 8 4
C entura Bank, Rocky M ount, N C
34 4 ,0 8 9
3 9 4 ,3 6 0 3 9 1 ,7 9 3
PA
4 4 ,4 4 0
4 3 ,5 3 3
9,7 6 5
5,287
Blue Ridge Bank, M artinsburg, W V
4 1 ,8 4 5
6 4 ,1 9 5
10 ,586 7,083
B ranch Sale
8 2 ,3 4 7
8 0 ,0 5 9
PA/PO 4 ,9 9 0 ,2 8 5
4 ,7 2 4 ,4 9 0
4 4 0 ,8 7 6
1 ,2 88,87 3
B ranch Sale
4 ,3 1 3 ,8 7 7

0 5 -M a r
2 1 -M a y
0 4 -Ju n
3 0 -Ju n
0 9 -Ju l
2 3 -Ju l
2 3 -Ju l
3 0 -Ju l
3 0 -Ju l
0 6 -A u g
0 6 -A u g
0 6 -A u g
1 3 -A u g
2 0 -A u g
2 7 -A u g
2 7 -A u g
2 7 -A u g
1 0 -S e p
1 7 -S e p
1 7 -S e p
2 4 -S e p
2 4 -S e p
0 8 -0 c t
0 8 -0 c t
1 5 -0 c t
0 5 -N o v
0 3 -D e c

PA
Enterprise S& LA , Com pton, CA
PA
C im arron FSA, M uskogee, OK
PO
Vista FSA, Canoga Park, CA
PA
First Hom e FSA, Pittsburgh, PA
PA
A lp ha Indian Rock FS& LA, Philadelphia, PA
PA
First FS& LA of Russell Co, FA, Phenix City, A L
First N ew p ort FSB, N ew p ort Beach, C A PA
PA
Crestline FS& LA , Crestline, OH
PA
Ch a se FS& LA, Philadelphia, PA
PA
B irm ingh am FSB , B irm in gh a m , A L
San Clem ente FSB , San C lem ente, CA PA
M arine V iew FSB , M iddletow n, NJ
Th e Overland Park FS& LA , O verland Park, PA
KS
PA
Irvington FSB, Glen Burnie, M D
First FS& LA, Pontiac, Ml
PA
Surety FS& LA , M organton, N C
PA
H om e U nity FS& LA , Lafayette Hill, PA
PA
A m a d o r Valley S& LA , Pleasanton, C A *
PA/PO
Hom estead FSA, San Francisco, CA
PA
Evergreen FS& LA , Charle ston , WV
PA
First South FS B , C o lu m b ia , S C
Stan dard FS& LA , C olu m b ia, SC
PA
P alm Beach FSA, Palm Beach G ardens, FL
PA
First A m e rican F S B , Greensboro, NC
Shena ndoah FSA, M artinsburg, WV
PA
First FSB of GA, FA, W inder, GA
H om eFed Bank, FA, San Diego, CA

$

Total

27 Institutions

$7,997,940

$8,679,449

$8,182,714

1,065,319

$1,629,744

Notes:

1) Data based on T F R data for the quarter prior to the date of resolution.
2 ) PO — Deposit Payoff; PA— Purchase & Assum ption
3 ) “ Estim ated C o st of Resolution" as of date of resolution.
4 ) For all 1993 activity, the R TC resolved institutions using fund s from funding bills prior to the Com pletion Act.
Th e $ 4 billion that the R TC received in Jan uary 1994 p u rs uan t to the Com pletion Act will be used
for 19 94 resolutions.
*lnstitution w a s resolved un der the Accelerated Resolutions Program (A R P ). There w a s 1 AR P resolution in 1993.

98



s

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RTC Resolved Conservatorships
A u g u s t

9, 1989 t o

D ecem ber

31, 1993

(dollars in thousands)

Number of
Accounts

Number

Assets

Liabilities

262

$114 ,3 2 2,6 27

$120 ,7 8 8,2 39

$ 9 1,721,957

8 ,787,092

Added in 1989

56

25,8 72 ,9 2 8

25,7 74 ,1 1 5

1 9,774,644

2 ,230,425

Resolved in 1989

37

13,730,737

1 4,459,356

11,308,281

1,159,387

281

$ 12 6 ,4 6 4,8 18

$ 1 3 2 ,1 0 2,9 98

$ 100 ,1 8 8,3 20

9 ,858,130

Added in 1990

207

1 29,778,490

1 28,889,934

9 4,8 26 ,4 2 4

9,218,763

Resolved in 1990

309

134,521,901

1 38,580,070

105,329,383

11,168,506

In Conservatorship as of 8 /9 /8 9

In Conservatorship as of 1 2/3 1 /8 9

Deposits

In Conservatorship as of 1 2 /3 1 /9 0

179

$12 1 ,7 2 1,4 07

$122 ,4 1 2,8 62

$ 8 9,685,361

7,908,387

Added in 1991

123

71,0 89 ,3 5 8

70,2 56 ,4 7 4

55,9 92 ,8 3 5

4,9 7 9,96 3

Resolved in 1991

211

122,399,634

1 23,758,665

9 3,8 98 ,2 4 7

8,3 3 7,01 5

In Conservatorship as of 1 2/3 1/91

91

$ 70,411,131

$ 68,910,671

$ 5 1,779,949

4,5 5 1,33 5

Added in 1992

50

3 5,9 12 ,4 5 6

34,7 37 ,8 5 7

2 5,2 57 ,1 1 0

2,9 9 6,54 5

Resolved in 1992

60

3 4,452,261

3 3,8 63 ,2 7 5

26,7 71 ,4 3 8

2 ,559,752

In Conservatorship as of 1 2 /3 1 /9 2

81

$ 71,8 71 ,3 2 6

$ 69,7 85 ,2 5 3

$ 50,265,621

4 ,9 8 8,12 8

8

6,2 8 4,05 0

5,9 2 4,22 0

4 ,7 9 3,45 0

389,061

Resolved in 1993

26

19,485,058

18,828,229

14,253,104

1,599,988

In Conservatorship as of 1 2 /3 1 /9 3

63

$ 58,670,318

$ 56,881,244

$ 40,805,967

3,777,201

6

$ 4,0 00 ,2 0 7

$4,4 21 ,6 6 9

$ 3,7 24 ,2 9 6

560,411

21

$ 8 ,8 28 ,5 5 9

$ 8 ,5 71 ,5 6 4

$ 7,3 94 ,1 9 8

1,053,701

9

$ 9 ,7 27 ,7 9 8

$ 9,7 07 ,8 5 2

$ 8,5 11 ,0 2 9

993,251

1

$

$

$

Added in 1993

Institutions never placed in
conservatorship prior to
resolution in 1990
Institutions resolved under the
Accelerated Resolutions Program
in 1991
Institutions resolved under the
Accelerated Resolutions Program
in 1992
Institutions resolved under the
Accelerated Resolutions Program
in 1993

4 2,8 50

4 3,7 80

4 1,150

6,961

Note: Data a t quarter prior to date of conservatorship (date of resolution for non-conservatorship resolutions).

V

V

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99

I N DEX

A
Accelerated Resolutions Program
20, 26, 27, 28-29, 98, 99

Contracts, Oversight,
and Evaluation,
Department of 15-17

Accounting Scrviccs,
Office of 46

Corporate Affairs,
Department of 8, 9-10

Administration and
Corporate Relations,
Division of 13-18, 47

Corporate Communications,
Office of 18
Corporate Information,
Office of 14, 30, 31-32

Administration,
Department of 14-15

Corporate Issues, Office of 9

Administrative Evaluation
Staff 16-17

E
Equal Employment O pportunity
and Affirmative Action,
Department of 34, 35

Administrative Services,
Office of 14
Affordable Housing,
Department of 38, 41-42

Ethics, Office of 9, 17-18
Executive Committee 6, 17, 51

Affordable Housing Disposition
Program 40, 41, 42, 43, 83

F
Federal Deposit Insurance
Corporation 2, 4, 6, 10, 11,
14, 15, 30, 50, 61, 72, 73,
84, 85, 90

Altman, Roger C. 6
Asset Disposition,
Department of 8
Asset Management and Sales,
Division of 37-44

Legal Services, Division
of 7-11, 25, 35, 73
Litigation, Department
of 8, 10-11
Litigation, Office of 10-11
M
M ajor Resolutions,
Office of 26-28
Management Control,
Office of 16, 46, 47-48

M ino rity Participation 2, 29, 34
Minority- and Women-Owned
Business, Department of 34

Savings Association Insurance
Fund (SA IF ) 6, 61, 73

M inority and Women's
Programs, Division
of 2, 9, 33-36

Securities and Finance,
Office of 8

N

Securitization, Office of 40, 43
Seller Financing 38, 42

O
Office of Thrift Supervision 4,
6, 26, 28, 29, 59, 72, 78, 81

Settlement Workout,
Office of 38

Field Activities, Office of 39

Operations, Office of 20-25

Budget and Planning,
Office of 46-47

Field Resolutions,
Office of 28-29

C

Financial Institutions Reform,
Recovery, and Enforcement
Act of 1989 1, 4, 17, 36, 60,
72, 78, 81

Organization and Resource
Management,
Office of 14-15

Chief Financial Officer,
Division of the 45-48

G

Complex Litigation,
O ffice of 1 1

Governmental Relations,
Office of 17

Conservatorships, Receiverships,
and Resolutions, O ffice of 8-9
Contract Operations,
O ffice of 9, 15-16
Contract Po licy and M ajor
Dispute Resolution,
Office of I 5
Contracting, O ffice of 9
Contractor Oversight and
Surveillance, O ffice of 16, 91

1o o



Securities Transactions,
Office of 39-40

National Sales Center 4 1 ,4 3

Field Activities,
Department of 38-39

Conservatorships and
Receiverships,
Department of 8-9

Secretary, Office of the 17

National Marketing,
Office of 40-41, 43

Bentsen, Lloyd C. 6, 14, 15, 34,
46, 86

8, I 5,
25, 26,
59, 73,
83, 85,

Ryan, John E. 1, 2
S
S A M D A Program Management,
Office of 38

Management Report on Internal
Controls 86-88

Operations,
Department of 20-26

Conservatorships 2, 4,
20, 21, 22, 23, 24,
27, 28, 34, 40, 56,
74, 75, 77, 81, 82,
96, 97, 99

Resolutions,
Department of 20, 26-29

Field Accounting and Asset
Operations, O ffice of 46, 47

Asset Marketing,
Department of 38, 40-41

Capital Markets,
Department of 38, 39-40

Resolutions 2, 4, 8, 20, 21, 23,
26, 27, 28, 40, 76, 98, 99

Federal Savings and Loan
Insurance Corporation 4, 50,
72, 81, 84

Asset Management, Office of 38

B

Organization Chart 5
Resolution Trust Corporation
Refinancing, Restructuring,
and Improvement Act of 1991
4, 26, 29, 36, 60, 72, 79

H
Human Resources Management,
Office of 14, 3 1

I
Information Resources
Management, Department
of 20, 30-32, 92

P
Planning and Analysis,
Department of 20, 29-30

Statistics
R T C Conservatorships,
January 1, 1993-December 31,
1993 96
N ew R T C Conservatorships,
January 1, 1993-December 31,
1993 97

Real Estate, Office of 8, 10

R T C Resolutions,
January I, 1993-December 3 1,
1993 98

Receiverships 8, 9, 15, 20, 21,
23, 25, 34, 39, 40, 56, 57,
58, 59, 73, 74, 75, 76, 77,
80, 81, 82, 83, 85, 92

R T C Resolved
Conservatorships,
August 9, 1989-December 31,
1993 99

Investigations, O ffice of 25-26

J

Resolution Trust Corporation
Completion Act 2, 4, 9, 17,
21, 26, 36, 59, 60, 6 1, 72,
73

Legal Programs,
Department of 34-35

Standard Asset Management
and Disposition
Agreements 38, 39

R

Regulations 49-51

Labor and Employment,
O ffice of 10

Special Projects, Office of 10

Professional Liability,
Office of 1 1

Research and Statistics,
Office of 29-30

L

Small Investor Program,
Department of the 38, 42-43

Policy, Evaluation,
and Field Management,
Department of 34, 36

Institution Operations and Sales,
Division of 19-32

Justice, Department of 25, 26

Small Investor Program 2, 34,
40, 42-43

Resolution Trust Corporation
Financial Statements and
Internal Controls 53-93

Systems and Pipeline
Management, Office of 39
Systems Development,
Office of 14, 30-31
T
Thrift Depositor Protection
Oversight Board 4, 6, 17, 30,
46, 47, 54, 58, 59, 72, 73,
78, 82, 86, 87, 88




The 1993 RTC Annual Report
Published by:
The Resolution Trust Corporation
Office of Corporate Communications
801 17th Street, N W
Washington, D C 20434-0001

Director
Stephen J. Katsanos

Deputy Director
Elizabeth R. Ford

i S ' ? \ R e soluti
A n n u a l report *
unnuai r p "

1 9 ? 3 204O1
Cor
199 “ P°'“a t i o n
^

332.32 Resoluti 1993 20401
Resolution Trust Corporation
Annual report, 1993

DEM C0