Summary: GAO discussed: (1) the Resolution Trust Corporation's (RTC) estimates for future funding; (2) the status of RTC current operations and initiatives; and (3) reconstructing RTC. GAO noted that: (1) the $80-billion RTC appropriation would not be sufficient to resolve all expected thrift failures; (2) due to slow RTC sales of troubled assets, resolution costs are likely to exceed RTC and Oversight Board estimates; (3) RTC will need at least $50 billion in 1992 and will require additional working capital to fund the purchase of failed institutions' assets and its management until sale; (4) the amount needed to resolve the remaining troubled thrifts could increase significantly if RTC accelerates its resolution schedule, or more thrifts than predicted fail; (5) due to a new policy allowing RTC to discount distressed properties, some RTC working capital may not be repaid from asset sales proceeds, requiring additional funding; (6) due to RTC difficulty in reconciling its accounts and the late receipt of RTC financial statements, GAO will be unable to provide Congress with its audit opinion by the statutory reporting date; (7) any plan to recapitalize the Bank Insurance Fund or to provide funding to RTC without initially reforming the accounting and internal control problems would only perpetuate the problems that have contributed significantly to demise of the insurance funds; (8) RTC established a task force to develop and implement standardized procedures for auditing conservatorships to monitor managing agents' performance and ensure compliance with policies and procedures; and (9) RTC needs to improve its approaches to selling assets.
