Bank Insurance Fund (BIF):
- Revenue totaled $478 million for the three months ending March 31, 2001.
The fund earned $462 million in interest on investments in U.S. Treasury obligations and
$11 million in deposit insurance assessments.
- Comprehensive income (net income plus current period unrealized
gains/losses on available-for-sale securities) was $451 million for the three months
ending March 31, 2001, increasing the fund balance to $31.4 billion.
- Receivables from bank resolutions are $60 million at March 31, 2001. This
receivable peaked at $27.8 billion in 1992 due to the large number of bank failures
occurring at that time.
- One BIF-insured institution failed during the first quarter of 2001.
Total assets at failure were $17 million.
Savings
Association Insurance Fund (SAIF):
- Revenue totaled $174 million for the three months ending March 31, 2001.
The fund earned $164 million in interest on U.S. Treasury obligations and $9 million in
deposit insurance assessments.
- Comprehensive income was $214 million for the three months ending March
31, 2001, increasing the fund balance to $11 billion.
- The contingent liability for anticipated failures remained unchanged from year-end 2000
at $234 million as of March 31, 2001. In addition to this recorded contingent liability,
the FDIC has identified a small number of SAIF-insured financial institutions that may
pose a greater risk of loss to the insurance fund unless institution management can
resolve existing problems. If these institutions fail, they may cause a material loss to
the SAIF.
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.
- On February 16, 2001, the Federal Circuit Court of Appeals reversed in
part, and remanded, the judgment previously entered in favor of Glendale Federal Bank in
the amount of $909 million. In this open bank case, the trial court had initially
determined that Glendale should be awarded over $500 million in restitution based
primarily on the amount Glendale saved FSLIC through its 1981 acquisition of Broward
Savings. The Federal Circuit concluded that a restitution award granted on this basis was
inappropriate in this case because FSLIC would not have liquidated Broward but instead had
other alternatives to liquidation. The Federal Circuit did, however, determine that as a
general matter Glendale was entitled to reliance damages that would consist of both pre-
and post-FIRREA costs that Glendale incurred in reliance on its contract with the
Government. The Federal Circuit did not determine how reliance damages should be
calculated. Rather, it remanded the case back to the trial court for a determination of
the specific amount of reliance damages.
On April 3, 2001, the United States Court of
Appeals for the Federal Circuit rendered its decision in California Federal v.
United States. The Court clarified the law for Goodwill cases in two significant
areas. First, the Court sustained the lower court on the contract issue by holding that no
signed assistance agreement is required to have an enforceable contract. Second, the Court
reversed the lower court holding that a claim of lost profits is not, as a matter of law,
too speculative as to prevent
a trial on that issue. The Court then affirmed the lower court’s award of $24 million
in damages and the case was remanded to the lower court for further proceedings on damages
based on lost profits.
- Assets in liquidation totaled $24 million as of March 31, 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 four payments totaling $1.956
billion to REFCORP. The last payment to REFCORP of $507 million was made on January 8,
2001. The FRF-RTC cash balance is $806 million at March 31, 2001.
- Assets in liquidation totaled $264 million as of March 31, 2001.
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