Savings and Loan Crisis

GAO discussed the federal response to fraud in depository institutions. GAO noted that: (1) in the past 4.5 years, 831 banks and 515 thrifts have failed and have been resolved; (2) of the 7,097 financial institution fraud investigations underway, 3,027 were major investigations involving banks', thrifts', and credit unions' potential losses of $100,000 or more; (3) the full cost of insured thrift failures could be as much as $500 billion; (4) Congress and the administration increased the resources allocated to financial institution fraud; (5) financial regulatory agencies developed new task forces and priority lists, and the Department of Justice (DOJ) appointed a Special Counsel for Financial Institution Fraud; (6) determining the adequacy of the federal response to financial institution fraud was difficult; (7) DOJ lacked a mechanism that would allow the Special Counsel access to the information needed to effectively oversee and coordinate efforts to pursue financial institution fraud; and (8) DOJ and regulatory agencies need to pay close attention to whether their newly expanded coordination initiatives are having the intended results by concentrating resources on the top priority targets and determining the best way to proceed against those targets.