Obligations Limitation

Resolution Trust Corporation's Compliance as of September 30, 1990 Gao ID: AFMD-91-63 May 31, 1991

Pursuant to a congressional request, GAO assessed the Resolution Trust Corporation's (RTC) third-quarter compliance with the maximum RTC obligation limit set forth by the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989, which provided a formula calculating maximum allowable obligations.

GAO found that: (1) none of the formula categories required by FIRREA were omitted from the RTC calculation; (2) since RTC changed its calculation method for its third-quarter compliance to eliminate Department of the Treasury funding, its adjusted obligation level was not comparable to the amounts calculated for the first- and second-quarter reports; (3) excluding Treasury funding from the formula eliminated the 15-percent cash reserve feature and resulted in a potentially misleading assessment of RTC ability to fund any future losses resulting from asset sales; (4) RTC financial accounts had errors and misclassifications, but none of them materially affected the adjusted obligation level; and (5) RTC addressed one of three recommendations GAO previously made and continues to work on the other two.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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