Bank Insurance Fund (BIF):
- Revenue totaled $1.5 billion for the nine months
ending September 30, 2001. The fund earned $1.4 million in interest on investments in U.S.
Treasury obligations and $35 million in deposit insurance assessments. In addition, the
BIF realized a gain of $78 million on the sale of $1.4 billion of U.S. Treasury securities
designated as available-for-sale.
- Comprehensive income (net income plus current
period unrealized gains/losses on available-for-sale securities) was $859 million for the
nine months ending September 30, 2001, increasing the fund balance to $31.8 billion.
- Receivables from bank resolutions decreased by
$262 million from year-end 2000 to $88 million at September 30, 2001. This decrease was
due to recoveries of payments made to cover obligations to insured depositors for failed
institutions.
- The contingent liability for anticipated failures
increased by $331 million to $457 million during the third quarter to reflect a higher
risk of loss to the BIF from a weakening economy and the worsening financial condition of
a small number of BIF-insured institutions.
- Three BIF-insured institutions failed during the
first nine months of 2001. Total assets at failure were $54 million.
Savings
Association Insurance Fund (SAIF):
- Revenue totaled $555 million for the nine months
ending September 30, 2001. The fund earned $494 million in interest on U.S. Treasury
obligations and $27 million in deposit insurance assessments. In addition, the SAIF
realized a gain of $28 million on the sale of $401 million of U.S. Treasury securities
designated as available-for-sale.
- Comprehensive income was $56 million for the nine
months ending September 30, 2001, increasing the fund balance to $10.8 billion.
On July 27, 2001, the Office of Thrift
Supervision (OTS) closed Superior Bank, FSB, Hinsdale, Illinois, and named FDIC receiver
of the failed institution and conservator of a newly chartered, full-service mutual
savings bank. Superior Bank, FSB, a nationwide subprime mortgage lender, had total assets
of $2.3 billion and total deposits of $1.6 billion. The financial condition of Superior
Bank rapidly deteriorated, and Bank management was unable to resolve existing problems.
The FDIC Board of Directors decided that the least-cost resolution alternative was to
organize a new institution under FDIC control to maximize the value of the institution,
effect an orderly resolution, and minimize disruption to insured depositors and other
customers. At this time, the FDIC estimates the loss to the SAIF for the failure of
Superior Bank to be in the range of $450 million to $550 million. The September 30, 2001
fund balance reflects the low end of this estimated range of loss. The final cost will be
affected by the actual recoveries on the remaining assets and claims less expenses.Additionally, FDIC extended a $1.5 billion line of credit to the
conservatorship for liquidity purposes. As of September 30, 2001, SAIF disbursed $797
million to this conservatorship.
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 payments 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. If an appropriation to the FRF-FSLIC
was not available to pay the goodwill litigation judgments and compromise settlements,
these liabilities would be material and could adversely affect the financial condition of
the fund.
In addition to payments for
goodwill settlements, the FRF is responsible for reimbursing the U.S. Department of
Justice for its goodwill litigation expenses.
Recent Good will Litigation
Actions:
On July 24, 2001, the United
States Court of Appeals for the Federal Circuit issued its opinion in the appeal of the
case Landmark Land Co. v. United States. The court affirmed the award of
$21.5 million in favor of the Landmark Land Co., and vacated the part of the decision
awarding $17.7 million to the FDIC as successor to the rights of the thrift and the thrift
receivership (FDIC). The case was remanded to the trial court to dismiss the FDIC becasue
the court determined that the amount claimed by the FDIC was insufficient to pay off
claims other than those of the United States and that therefore the case lacked a true
controversy as required under the constitution for federal court jurisdiction.
On July 24, 2001, the United
States Court of appeals for the Federal Circuit issued its opinion in the appeal of the
case Glass v. United States. The court reversed the summary judgment in
favor of the Glass plantiffs and vacated the $3.97 million judgment in their favor finding
they were not third party beneficiaries of an implied contract. The court vacated the
judgment for $2.1 million in favor of the FDIC as successor to the rights of the thrift
and the thrift receivership (FDIC) because the court determined that the amount claimed by
the FDIC was insufficient to pay off claims other than those of the united States and that
therefore the case lacked a true controversy as required under the constitution for
federal court jurisdiction. The case was remanded to the trial court to determine any
remaining claims of the Glass plantiffs and to dismiss the FDIC.
In both of the above cases, on
September 7, 2001 both plaintiff FDIC, as successor to the rights of the thrift and the
thrift receivership (FDIC), and the private plaintiff filed petitions for rehearing (a
request for a review by the original panel) and rehearing en banc (a request for a review
by the full court) with the Federal Circuit. The Department of Justice did not file for
rehearing.
On September 24, 2001, the Federal
Circuit invited the Department of Justice to respond by October 15, 2001 to the petitions
for rehearing and rehearing en banc filed by the FDIC and private plaintiffs in the Glass
case.
- Assets in liquidation totaled $14 million as of
September 30, 2001.
~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 six payments totaling $2.656 billion to REFCORP. The last
payment to REFCORP of $300 million was made on July 11, 2001. The FRF-RTC cash balance is
$734 million at September 30, 2001.
- Assets in liquidation totaled $234 million as of
September 30, 2001.
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