Deposit Insurance Funds

The Federal Deposit Insurance Corporation's (FDIC) maximum obligation limitation calculations show that as of June 30, 1992, the Bank Insurance Fund's assets and other funding sources exceeded its obligations by $36.9 million and the Savings Association Insurance Fund's assets and other funding sources exceeded its obligations by $155 million. Nothing came to GAO's attention that would lead it to question the reasonableness of the amounts reported. However, FDIC had not yet finalized a policy for allocating Treasury borrowing authority between the two funds. FDIC had borrowed about $15 billion from the Federal Financing Bank for the Bank Insurance Fund's working capital needs. These borrowings are to be repaid primarily with proceeds from the management and disposition of failed bank assets. GAO estimates, subject to considerable uncertainties, that future net recoveries from the Bank Insurance Fund's inventory of failed bank assets will be about $22.3 million.

GAO found that: (1) as of June 30, 1992, BIF assets and other funding sources exceeded its obligations by $36.9 billion and the Savings Association Insurance Fund's (SAIF) assets and other funding sources exceeded its obligations by $155 million; (2) FDIC has not yet finalized a policy for allocating Treasury borrowing authority between BIF and SAIF; (3) SAIF is scheduled to begin its full resolution responsibility on October 1, 1993, but prior to that time it could incur resolution costs related to certain institutions; (4) FDIC has not borrowed funds from Treasury to cover insurance losses for BIF or SAIF; (5) FDIC does not anticipate that BIF will need to borrow from Treasury for insurance losses during fiscal year 1993 based on cash flow projections for BIF; and (6) FDIC ability to generate future collections from its asset liquidation activity to repay BIF outstanding borrowings depends on the impact of future economic conditions on financial institutions failures, the cost of these failures to the insurance funds, and other funding alternatives.