Summary: GAO discussed the Federal Savings and Loan Corporation's (FSLIC) financial statements as of August, 1989, focusing on how much money would be needed to resolve the savings and loan crisis. GAO found that: (1) FSLIC needed $325 billion to pay off its obligations, resolve the problems of institutions awaiting resolution, pay interest on $30 billion in bonds, and pay some administrative expenses; (2) legislation authorized $50 billion to cover certain costs, but the Resolution Trust Corporation (RTC) needed to develop proposals to provide additional funds; (3) the actual costs needed to resolve troubled institutions depended on the extent of operating losses, the quality and value of their assets, and future interest rates; and (4) the funds necessary to pay for FSLIC obligations will come from the sales of assets in FSLIC receiverships, insurance premiums assessed against savings institutions until the end of 1991, and Treasury appropriations. GAO also found that: (1) the estimated cost to resolve the crisis did not include any interest Treasury would incur on funds it would have to borrow to provide its share of the total funds needed; (2) RTC had sufficient funds to start resolving the problems of institutions currently in conservatorship; and (3) fraud, insider abuse, and mismanagement were evident at each institution it reviewed.
