Summary: Sunbelt Savings Bank was created in August 1988 when the Federal Home Loan Bank Board consolidated eight failed Texas thrifts, and it has been under federal control ever since. This lengthy period of federal operation is traceable to (1) a lack of funding to liquidate Sunbelt before passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989; (2) transfers of responsibility and staff from the Federal Savings and Loan Insurance Corporation (FSLIC) to the Federal Deposit Insurance Corporation (FDIC); and (3) a belief by agency officials that Sunbelt's management was competent and would not significantly increase the ultimate resolution costs. GAO cannot determine how much money the government might have saved or lost by not resolving Sunbelt earlier because the necessary data are not yet available. Some of the costs of running Sunbelt could have been avoided, however. Most significantly, the money Sunbelt borrowed to help fund its liquidity needs cost the government about $53 million more than if it had been borrowed from the Department of the Treasury. Further, expenses authorized by FSLIC and FDIC to operate and improve Sunbelt as a going concern in anticipation of selling it as a whole thrift may not be fully recovered.
