Bank Insurance Fund (BIF):
- Comprehensive income was $332 million
for the three months ending March 31, 2003, compared to $258 million for
the same period last year. This increase is primarily attributable to
higher unrealized gains on available-for-sale securities of $81 million in
2003.
- Operating expenses totaled $175
million for the first quarter of 2003, compared to $183 million for the
same period last year. The decrease is primarily attributable to lower
salary/benefit expenses resulting from the workforce reduction programs in
2002.
- Receivables from bank resolutions increased by
$674 million to $1.2 billion during the first three months of 2003. This
net increase was due to the failure of one BIF-insured institution during
this period with assets at failure of $1.1 billion an estimated loss
of $135 million. The BIF made
payments of $850 million to cover obligations to insured depositors.
- Assets in liquidation increased by $484 million
to $1.1 billion during the first three months of 2003 primarily due to assets that were retained from the failure
of Southern Pacific Bank in February 2003. However, during March, assets
in liquidation decreased by $322 million, or 22%, due to the net effect of
collections on assets plus repurchases of assets for Southern Pacific
Bank.
Savings
Association Insurance Fund (SAIF):
- SAIF's comprehensive income was $159 million for
the three months ending March 31, 2003,
compared to $114 million for the same period last year. This increase is primarily due
to
higher unrealized gains of $23 million on available-for-sale securities
and lower estimated losses on future failures of $21 million.
- The contingent liability for anticipated failures
decreased by $21 million, or 23 percent, to $69 million during the first
quarter of 2003 primarily due to the
improvement in the financial condition of a few large thrifts.
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.
During the first
three months of 2003, the
trial court entered orders dismissing 8 goodwill litigation cases, and one
goodwill case was settled during March 2003 for $10 thousand.
Additionally, on March 17, 2003, an opinion was issued in the Good will
case of Westfed Holdings, Inc v. United States, awarding plaintiffs $305
million in damages. This case has been appealed by DOJ.
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, one of the
eight "Guarini" cases was settled for $20 thousand in 2002.
Additionally, there have been liability determinations in five of the
eight Guarini cases. In one of the five cases, damages of approximately
$28 million were awarded by the Court of Federal Calims in February 2003.
However, as the time for filing an appeal has not lapsed, there may be
appeals. Further, decisions on liability have not been made in the
remaining two pending 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
litigation of damages computation is still ongoing, the amount of the damages is not
estimable at this time.
- Assets in liquidation totaled $12 million as of
March 31, 2003.
~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 ten payments totaling $4.122 billion to REFCORP. The last
payment to REFCORP of $400 million was made on January 10, 2003. The FRF-RTC cash balance is
$351 million at March 31, 2003.
One securitization deal remains
active as of March 31, 2003, and is expected to terminate in 2003.
- Assets in liquidation totaled $160 million as of
March 31, 2003.
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