FDIG NEWS RELEASE
ROHM DPOSIT INWlANCl COt"DIA!ION
FOR IMMEDIATE RELEASE
FDIC CONFIRMS ADMINISTRATION'S ESTIMATE
OF LOSS IN INSOLVENT THRIFTS
PR-99-89 {5-18-89)
The Federal Deposit Insurance Corporation today reported that estimated
losses in the 212 11 RAP 11 insolvent savings and loan associations under its
supervision as of April 15 amount to $29.8 billion, or 40 percent of their
$73.4 billion in assets. This level of loss is consistent with the Bush
Administration's estimate of losses in all insolvent institutions to be handled
by the new Resolution Trust Corporation.
11 RAP 11 insolvent institutions are viewed as the worst cases among troubled
thrifts. These institutions are insolvent under liberal regulatory accounting
principles for the thrift industry.
The FDIC 1 s estimate of S&L losses is contained in a report released today
on the status of the agency• s admi ni strati on of conservatorships. Including
the 219 institutions now in conservatorship, the number of institutions now
targeted to be in the program totals 279 with assets of $115.5 billion.
FDIC Chairman L. William Seidman said: 11 This report indicates that the
Administration's program is based on realistic loss estimates. It outlines
the steps that have been taken to stabi 1i ze these institutions, and to verify
their true financial condition. The report shows that concrete progress has
been made in reducing losses and preparing to structure permanent solutions
to their problems when President Bush's S&L legislation is enacted. 11
- more -
FEDERAL DEPOSIT INSURANCE CORPORATION, 550 Seventeenth St., N.W., Washington, D.C. 20429 • 202-898-6996
ROHM DPOSIT INWlANCl COt"DIA!ION
FOR IMMEDIATE RELEASE
FDIC CONFIRMS ADMINISTRATION'S ESTIMATE
OF LOSS IN INSOLVENT THRIFTS
PR-99-89 {5-18-89)
The Federal Deposit Insurance Corporation today reported that estimated
losses in the 212 11 RAP 11 insolvent savings and loan associations under its
supervision as of April 15 amount to $29.8 billion, or 40 percent of their
$73.4 billion in assets. This level of loss is consistent with the Bush
Administration's estimate of losses in all insolvent institutions to be handled
by the new Resolution Trust Corporation.
11 RAP 11 insolvent institutions are viewed as the worst cases among troubled
thrifts. These institutions are insolvent under liberal regulatory accounting
principles for the thrift industry.
The FDIC 1 s estimate of S&L losses is contained in a report released today
on the status of the agency• s admi ni strati on of conservatorships. Including
the 219 institutions now in conservatorship, the number of institutions now
targeted to be in the program totals 279 with assets of $115.5 billion.
FDIC Chairman L. William Seidman said: 11 This report indicates that the
Administration's program is based on realistic loss estimates. It outlines
the steps that have been taken to stabi 1i ze these institutions, and to verify
their true financial condition. The report shows that concrete progress has
been made in reducing losses and preparing to structure permanent solutions
to their problems when President Bush's S&L legislation is enacted. 11
- more -
FEDERAL DEPOSIT INSURANCE CORPORATION, 550 Seventeenth St., N.W., Washington, D.C. 20429 • 202-898-6996
- 2 -
Other highlights from the FDIC report include:
• Approximately 50 percent of the conservatorships have been in
operation for two full months. Cost savings averaging $13.6 million per month
have been achieved at these institutions. On an annualized basis, $105 million
in savings are anticipated. FDIC managing agents have eliminated nearly 1,000
positions in S&Ls under their supervision.
• FDIC and FSLIC fraud specialists and other supervisory personnel
have uncovered potential criminal violations in about 50 S&Ls, resulting in
criminal referrals to the Department of Justice. A total of 35 FDIC fraud
specialists are investigating serious cases of fraud and insider abuse in
29 institutions.
• As of May 12, 1,029 FDIC employees were assigned to 219
conservatorships, including 513 examiners. The number of examiners will decline
to less than 100 by the end of June -- about 4.0 percent of the agency's field
examiner force. Bank examinations declined 22 percent since the conservatorship
program began on February 3, compared to the same period a year earlier;
however, the number of exams this year will be slightly more than in 1988.
In 1988, the FDIC conducted 4,019 examinations. For all of 1989, the FDIC
projects that total examinations will be about 4,100, nine percent less than
originally scheduled, but ahead of the previous year. Most of the decline
since the conservatorship program began represents short-term postponements
of examinations of well-run banks. No examinations of problem banks have
been delayed •
• At present, 20 S&Ls have been certified and eight are in process
to participate in funding arrangements provided by the Federal Reserve, FHL
banks and Treasury. Only two S&Ls are currently using this funding.
• The FDIC's S&L Management Group has met with 100 potential acquirers
and responded to about 400 written requests for information on purchasing
Other highlights from the FDIC report include:
• Approximately 50 percent of the conservatorships have been in
operation for two full months. Cost savings averaging $13.6 million per month
have been achieved at these institutions. On an annualized basis, $105 million
in savings are anticipated. FDIC managing agents have eliminated nearly 1,000
positions in S&Ls under their supervision.
• FDIC and FSLIC fraud specialists and other supervisory personnel
have uncovered potential criminal violations in about 50 S&Ls, resulting in
criminal referrals to the Department of Justice. A total of 35 FDIC fraud
specialists are investigating serious cases of fraud and insider abuse in
29 institutions.
• As of May 12, 1,029 FDIC employees were assigned to 219
conservatorships, including 513 examiners. The number of examiners will decline
to less than 100 by the end of June -- about 4.0 percent of the agency's field
examiner force. Bank examinations declined 22 percent since the conservatorship
program began on February 3, compared to the same period a year earlier;
however, the number of exams this year will be slightly more than in 1988.
In 1988, the FDIC conducted 4,019 examinations. For all of 1989, the FDIC
projects that total examinations will be about 4,100, nine percent less than
originally scheduled, but ahead of the previous year. Most of the decline
since the conservatorship program began represents short-term postponements
of examinations of well-run banks. No examinations of problem banks have
been delayed •
• At present, 20 S&Ls have been certified and eight are in process
to participate in funding arrangements provided by the Federal Reserve, FHL
banks and Treasury. Only two S&Ls are currently using this funding.
• The FDIC's S&L Management Group has met with 100 potential acquirers
and responded to about 400 written requests for information on purchasing