Summary: Pursuant to a congressional request, GAO investigated four allegations of wrongdoing concerning a Federal Savings and Loan Insurance Corporation (FSLIC) receivership.
GAO found that the receivership: (1) had an invalid contract with a former receivership property manager to appeal property taxes, since the managing officer exceeded her authority in entering the contract, and the contractor charged for work he performed while still a receivership employee; (2) improperly restricted a property auction to employees and did not determine fair market value for the property; (3) approved a loan to a debtor with other loans in default, although, contrary to allegations, the loan was secured by an escrow account; and (4) did not violate procedures in obtaining insurance from a debtor whose loan was in default, since no law or regulation precluded such contracting. GAO also found that: (1) the Federal Home Loan Bank Board's (FHLBB) Office of Inspector General (OIG) closed its investigation regarding the former employee's contract, stating that it could not apply federal conflict-of-interest statutes to receivership employees, since they were not federal employees; (2) FHLBB OIG did not investigate the restricted auction, since it did not believe that the action violated any laws or regulations; and (3) FSLIC suspended the receivership's managing officer pending further review of the contract with the former employee.
