Bank Insurance Fund (BIF):
- Comprehensive income was $1.6 billion
for 2002, compared to a comprehensive loss of $536 million for 2001. The increase in
comprehensive income over the prior period was primarily due to lower estimated losses for
anticipated bank failures and higher unrealized gains on available-for-sale securities
(AFS) in 2002.
- Receivables from bank resolutions increased by
$426 million to $505 million during 2002. This net increase was due to the failure of ten
BIF-insured institutions in 2002, with assets at failure of $2.5 billion. The BIF made
payments of $2.1 billion to cover obligations to insured depositors, and subsequently
recovered $1.0 billion of these disbursements. The estimated cost to the BIF for these ten
failures is $628 million.
- Contingent liabilities for anticipated failures
decreased by $903 million, or 47 percent, to $1.0 billion during 2002. This decrease is
due to 1) the reversal of $628 million in estimated losses for the ten 2002 failures and
2) the improvement in the financial condition of a few large banks.
- BIF's reserve ratio was 1.27 percent at December
31, 2002, up slightly from 1.26 percent at December 31, 2001. The fund balance increased
by $1.6 billion, or 5.3 percent, during 2002, whereas estimated insured deposits grew by
$118 billion, or 4.9 percent, during this period.
- Assets in liquidation increased by $525 million
to $657 million during 2002 primarily due to assets that were retained from the current
year bank failures.
- Operating expenses totaled $821 million for 2002
compared to $786 million for 2001. This increase is primarily attributable to termination
benefits resulting from the Corporation's voluntary employee buyout programs and
reduction-in-force that were conducted in 2002.
Savings
Association Insurance Fund (SAIF):
- Comprehensive income was $812 million for 2002,
compared to $176 million for 2001. This increase over the prior period was primarily due
to SAIF experiencing lower estimated losses for actual and expected thrift failures and
higher unrealized gains on AFS securities in 2002.
- Receivables from thrift resolutions decreased by
$997 million, or 78 percent, to $288 million during 2002. This decrease was primarily due
to: 1) recoveries totaling $850 million of payments made to cover obligations to insured
depositors for the Superior Bank, FSB receivership and 2) a final payment of $213
million from the Superior conservatorship to repay the line of credit.
- Contingent liabilities for anticipated failures
decreased by $143 million, or 61 percent, to $90 million during 2002 primarily due to the
improvement in the financial condition of a few large thrifts.
- Assets in liquidation increased by $203 million
to $397 million during 2002, 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 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.
On October 1, 2002, FRF-FSLIC
disbursed $17.5 million to DOJ as payment of goodwill litigation expenses for projected
fiscal year 2003 charges. At September 30, 2002, DOJ had $68.6 million in unused prior
year funds that were applied against projected FY 2003 charges of $86.1 million, resulting
in the net payment of $17.5 million.
During the past twelve months, the
trial court entered orders dismissing 22 goodwill litigation cases.
Paralleling the goodwill
litigation cases are seven 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 seven pending "Guarini cases." On October 16,
2002, an eighth case was settled 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 is not
estimable at this time.
- Assets in liquidation totaled $13 million as of
December 31, 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 ten payments totaling $4.122 billion to REFCORP. The last
payment to REFCORP of $400 million was made on July 10, 2002. The FRF-RTC cash balance is
$720 million at December 31, 2002.
- The investment in securitization-related assets
decreased by $989 million to $98 million since year end 2001 due primarily to the
termination of fifteen securitization deals. One deal remains active as of December 31,
2002, and is expected to terminate in 2003.
- Assets in liquidation totaled $173 million as of
December 31, 2002.
|
