Summary: Pursuant to a congressional request, GAO reviewed the financial condition of the thrift industry and the Federal Savings and Loan Insurance Corporation's (FSLIC) fund.
GAO found that: (1) a growing portion of the thrift industry is technically insolvent but, despite the significant losses the industry experienced during the crises of 1981 and 1982, the industry has been profitable; (2) average industry net worth declined from the end of 1979 until the first half of 1985; (3) the number of thrift institutions which were insolvent under generally accepted accounting principles (GAAP) continued to grow through the first half of 1985; and (4) as of June 1985, there were 461 institutions with assets of $113 billion that were technically insolvent because they had negative GAAP net worth. GAO also found that FSLIC and the Federal Home Loan Bank Board have the power to levy a supplemental insurance assessment on their constituent institutions equal to 1 percent of deposits, but the effect of such a levy would increase the number of GAAP-insolvent institutions and the number of institutions with a net worth of 0 to 3 percent.
