Bank Insurance Fund (BIF):
- Comprehensive income was $750 million
for the six months ending June 30, 2003, compared to $748 million for
the same period last year. While interest revenue and unrealized gains
from U.S. Treasury obligations decreased by $131 million, this was offset
by lower operating expenses of $24 million and lower estimated losses for
future and actual failures of $110 million.
- BIF's Reserve Ratio increased
from 1.27% at 12/31/02 to 1/28% at 03/31/03. The fund balance increased by
$332 million, or 1.0% while the estimated insured deposits increased by
$3.3 billion or 0.1%. For the first six months of 2003, the fund balance
increased by $750 million or 2.3%.
- Receivables from bank resolutions increased by
$118 million to $623 million during the first six months of 2003 due to the
failure of two BIF-insured institutions. This
line item peaked at $1.2 billion at March 31, 2003, and then subsequently
declined during the second quarter due to $556 million in recoveries of
payments made to cover obligations to insured depositors of these failed
banks.
- As of June 30, 2003, the
balance of assets in liquidation was $657 million, which was unchanged
from the December 31, 2002 balance. This is primarily due to the fact that
88% of the $1.05 billion in assets retained from the failure of Southern
Pacific Bank in February 2003 have already been liquidated and resolved. The failure of
The First National Bank of Blanchardville in May 2003 had a minimal effect
on the asset portfolio, adding only $35 million in assets at closing.
Savings
Association Insurance Fund (SAIF):
- SAIF's comprehensive income was $336 million for
the six months ending June 30, 2003,
compared to $388 million for the same period last year. This decrease of
$52 million resulted primarily from significant fluctuations in the
estimated losses for future failures and unrealized gains on
available-for-sale securities.
- SAIF's Reserve Ratio remained
at 1.37% at 3/31/03.
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 judgments 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 judgments and settlements, the FRF is responsible for reimbursing the U.S.
Department of Justice (DOJ) for its goodwill litigation expenses.
In June 2003, the
United States Supreme Court declined to hear plaintiff's appeal of an
unfavorable ruling by the Circuit Court of Appeals. Additionally,
the plaintiff in another case decided to withdraw its claim after receiving an
unfavorable ruling from the Appeals Court. The FRF-FSLIC also paid $954
thousand for stipulated attorneys fees and costs in one goodwill case
during June 2003. For the year, the trial court entered orders dismissing
15 goodwill litigation cases, and two goodwill cases were settled for a
total of $30 thousand. In April 2003, FRF-FSLIC paid the first goodwill
settlement for $10 thousand and received an appropriation for the same
amount from the U.S. Treasury. The second settlement for $20 thousand has
not yet been paid by FRF-FSLIC.
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 allegedly 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 six of the "Guarini" cases. In two of
these cases, damages of approximately $28 million and $70 million were
awarded in February and April 2003, respectively, by the Court of Federal
Claims. Both cases have been appealed by the Department of Justice. In a
third case decided on June 3, 2003, the Court ruled that the plaintiffs
were entitled to damages (approximately $48.7 million) but ordered further
proceedings to determine the exact amount. A decision on liability has not
been made in the one pending Guarini case. An eighth case was settled
during 2002 for $20 thousand.
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
litigation of damages computation is still ongoing, the amount of the damages
in all of these cases is not
estimable at this time.
~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 twelve payments totaling $4.572 billion to REFCORP. The last
payment to REFCORP of $50 million was made on April 10, 2003. The FRF-RTC cash balance is
$310 million at June 30, 2003.
One securitization deal remains
active as of June 30, 2003, and is expected to terminate in 2003.
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