Summary: GAO discussed the: (1) Resolution Trust Corporation's (RTC) estimates for future funding; (2) status of RTC operations and initiatives; and (3) reconstruction of RTC. GAO noted that: (1) the $80 billion Congress provided will not be sufficient to resolve all expected thrift failures; (2) since RTC sales of troubled assets were slower than hoped and future proceeds will be lower than anticipated, resolution costs are likely to exceed RTC and Oversight Board estimates; (3) RTC would need at least an additional $50 billion in 1992, which could increase significantly if RTC accelerates its resolution schedule; (4) it is likely that some RTC working capital will not be repaid from asset sales, due to RTC policy that allows it to aggressively discount distressed properties; (5) such practices mean that RTC could receive much less for an asset than it borrowed to purchase it at resolution; (6) RTC had difficulty in reconciling its accounts and was late in supplying its financial statements; (7) any plans to recapitalize the Bank Insurance Fund or provide additional resolution funding to RTC without reforms to correct accounting and internal control problems will only perpetuate the insurance problems; (8) if the proposed expanded bank powers are enacted without accounting and internal control reforms, Fund losses are likely to worsen; and (9) RTC has taken a number of actions to improve management and strengthen internal controls.
