Deposit Insurance Funds

The Federal Deposit Insurance Corporation's (FDIC) maximum obligation calculations show that as of December 31, 1993, (1) the Bank Insurance Fund's (BIF) assets and other funding sources exceeded its obligations by $44 billion and (2) the Savings Association Insurance Fund's (SAIF) assets and other funding sources exceeded its obligations by $1.2 billion. Nothing came to GAO's attention that would lead it to question the reasonableness of the amounts reported. As of December 31, 1993, neither BIF nor SAIF had borrowed funds for insurance losses from the U.S. Treasury, although changing economic conditions and other factors could affect the need for future borrowings. FDIC anticipates that neither BIF nor SAIF will need to borrow money from Treasury to cover insurance losses through fiscal year 1999 and that BIF and SAIF will achieve their designated ratio of reserves to insured deposits of 1.25 percent by 1996 and 2004, respectively. FDIC borrowed no funds from the Federal Financing Bank for working capital needs during the quarter ending December 31, 1993. FDIC repaid the outstanding balance of BIF's previous borrowings from the Federal Financing Bank on August 6, 1993.

GAO found that: (1) as of December 31, 1993, BIF assets and other funding sources exceeded its obligations by $44 billion and SAIF assets and other funding sources exceeded its obligations by $1.2 billion; (2) there was no evidence that the FDIC calculations were unreasonable; (3) as of December 31, 1993, FDIC allocated all of its borrowing authority to BIF and neither fund had borrowed funds for insurance losses from Treasury; (4) the need for future BIF and SAIF borrowings and each fund's ability to repay such loans depends on the impact of future economic conditions on financial institutions' failures, the cost of these failures to the funds, the impact of recent legislation, future assessment revenues, and other funding alternatives; (5) FDIC expects that BIF and SAIF will not need to borrow funds to cover insurance losses until after fiscal year (FY) 1999; (6) BIF will reach its designated ratio of reserves to insured deposits by FY 1996, and SAIF will reach its designated ratio of reserves to insured deposits by FY 2004; (7) during the quarter ending December 31, 1993, FDIC did not borrow any funds from the Federal Financing Bank (FFB) for working capital needs; and (8) in 1993, FDIC repaid the outstanding balance of BIF borrowings from FFB.