Bank Insurance Fund (BIF):
- Revenue totaled $914 million for the six months
ending June 30, 2002. The fund earned $868 million in interest on investments in U.S.
Treasury obligations and $36 million in deposit insurance assessments.
- Comprehensive income (net income plus current
period unrealized gains/losses on available-for-sale securities) was $748 million for the
six months ending June 30, 2002, increasing the fund balance to $31.2 billion.
- BIF's Reserve Ratio fell from 1.26 percent at
December 31, 2001 to 1.24 percent at March 31, 2002, as a result of an increase in
estimated insured deposits of $75 billion, or 3.1 percent. This is the first time since
1995 that the reserve ratio has fallen below the designated reserve ratio (DRR) of
1.25 percent. The deposit growth in the first quarter resulted primarily from a reporting
change in the quarterly Call Reports that provide the source data for estimating insured
deposits. The reporting change, which was effective with the March 31 Call Report,
required banks to report the amount of uninsured deposits so that a better estimate of
insured deposits could be calculated.
When this ratio falls below the DRR, the Federal
Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) requires that the FDIC
raise deposit insurance premiums to a level sufficient to restore the reserve ratio to the
DRR within a year after premiums are set, or else charge every institution insured by the
fund at least 23 basis points (23 cents per $100 of assessable deposits) until the reserve
ratio meets the DRR.
- Receivables from bank resolutions increased by
$1.3 billion to $1.4 billion during the six months of 2002. This net increase was
due to the failure of seven BIF-insured institutions in 2002. Total assets at failure were
$2.4 billion, and the BIF made payments of $1.7 billion to cover obligations to insured
depositors.
- Assets in liquidation increased by $1.2 billion
to $1.4 billion during the six months of 2002.
Savings
Association Insurance Fund (SAIF):
- Revenue totaled $296 million for the six months
ending June 30, 2002. The fund earned $284 million in interest on U.S. Treasury
obligations and $11 million in deposit insurance assessments.
- Comprehensive income was $388 million for the six
months ending June 30, 2002, increasing the fund balance to $11.3 billion.
- Receivables from thrift resolutions decreased by
$870 million to $415 million during the first six months of 2002. This decrease was
primarily due to: 1) recoveries totaling $732 million of payments made to cover
obligations to insured depositors for the Superior Bank, FSB receivership, 2) a final
payment of $212 million from the Superior conservatorship to repay the line of credit, and
3) a net receivable of $25 million for payments made to fund the insured deposits of
Universal Federal Savings Bank, which failed on June 27, 2002.
- Assets in liquidation increased by $404 million
to $598 million during the six months of 2002. This increase was primarily due to the
consolidation of the Superior Bank conservatorship and receivership.
FSLIC
Resolution Fund (FRF):
~FRF-FSLIC~
- The U.S. Department of Treasury (U.S. Treasury)
has determined that the FRF is responsible for the payment of judgments and settlements in
most supervisory goodwill litigation cases against the U.S. Government.
Future goodwill
litigation judgements and/or settlements cannot be reasonably estimated at this time. This
uncertainty arises, in part, from the existence of significant unresolved issues pending
at the appellate or trial court level, as well as the unique circumstances of each case.
Funds to cover goodwill judgments and settlements are provided by an open-ended
appropriation as provided by section 110 of the Department of Justice Appropriations Act,
2000. Because of this, any liabilities for goodwill litigation should have no material
impact on the financial condition of the FRF-FSLIC.
In addition to payments for
goodwill settlements, the FRF is responsible for reimbursing the U.S. Department of
Justice for its goodwill litigation expenses.
During the second quarter of
2002, the trial court in the following five cases entered an order dismissing the cases
based upon an agreement reached by the parties: (1) CityFed v. the United States;
(2) First Commerce v. the United States; (3) Independence Federal
v. United States; (4) Hometown Savings and Loan, et al. v. United States;
and (5) Allan H. Pollack, et al. v. United States.
On May 29, 2002, the trial court
in FDIC as Successor to the Rights of Karnes County Savings and Loan Association
v. United States dismissed the complaints filed by both the private shareholder
plaintiffs and by the FDIC. The court determined that the private shareholder plaintiffs
lacked privity of contract on which to sue and the FDIC did not have standing to sue based
on the "lack of a case or controversy" guidelines established in the Landmark
decision. Private plaintiffs filed a motion for reconsideration, which was rejected by the
Court on June 14, 2002.
On June 6, 2002, the trial court
in C. Robert Suess, et al. v. United States entered a final judgment
against the United States in the amount of $34,672,500.00. Both Plaintiff-Shareholders and
the United States have filed motions for reconsideration.
Paralleling the goodwill
litigation cases are eight similar cases alleging that the government breached agreements
regarding tax benefits associated with certain FSLIC-assisted acquisitions. These
agreements contained the promise of tax deductions for losses incurred on the sale of
certain thrift assets purchased by plaintiffs, from the FSLIC, even though the FSLIC
provided them with tax-exempt reimbursement. A provision in the Omnibus Budget
Reconciliation Act of 1993 (popularly referred to as the "Guarini legislation")
eliminated the tax deductions for these losses. To date, there have been liability
determinations in five of the "Guarini cases."
The FDIC believes that it is
possible that substantial amounts may be paid from the FRF-FSLIC as a result of the
judgments and settlements from the "Guarini litigation." However, because of the
uncertainty surrounding the method of computing damages, the amount of the damages is not
estimable at this time.
- Assets in liquidation totaled $14 million as of
June 30, 2002.
~FRF-RTC~
- The RTC Completion Act (Act) requires the
FDIC to return to the U.S. Treasury any funds that were transferred to the RTC pursuant to
the Act but not needed by the RTC. The Act made available approximately $18 billion worth
of additional funding, of which $4.556 billion was used. In addition, the FDIC must
transfer to the Resolution Funding Corporation (REFCORP) the net proceeds from the sale of
FRF-RTC assets (once all liabilities of the FRF-RTC have been provided for) to pay the
interest on REFCORP bonds. Any such payments benefit the U.S. Treasury, which would
otherwise be obligated to pay the interest on the bonds.
With the last payment of $271 million on March 3, 2000,
the FRF-RTC has fully repaid the $4.556 billion to the U.S. Treasury. Beginning in April
2000, the FRF-RTC has made nine payments totaling $3.722 billion to REFCORP. The last
payment to REFCORP of $375 million was made on April 10, 2002. The FRF-RTC cash balance is
$682 million at June 30, 2002.
- Assets in liquidation totaled $205 million as of
June 30, 2002.
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