Magazine article The CPA Journal

Latest GAO Report on FDIC

Magazine article The CPA Journal

Latest GAO Report on FDIC

Article excerpt

Earlier this year, the General Accounting Office (GAO) issued its report on the three funds administered by the Federal Deposit Insurance Corporation (FDIC) for the year ended December 31, 1994. The three funds are the Bank Insurance Fund (BIF), which covers commercial banks and savings banks; the Savings Association Insurance Fund (SAIF), which covers thrifts; and the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund (FRF), which is to liquidate the assets and contractual obligations of the defunct FSLIC. The reports on the funds' financial statements are unqualified, and the one material weakness reported on in 1993 has improved to the point it is no longer considered a material weakness.

The continued improvement of the financial condition of commercial and savings banks has led to some interesting developments. While the GAO report notes the improvement, it is not until you look at the financial statements for BIC that you see how large it is. For the years 1994 and 1993, BIC had a negative provision for insurance losses of $2.9 billion and $7.7 billion respectively. The notes disclose this was caused by a take back of $10.9 billion of prior years' provisions over the two-year period. Most of this related to the estimated liability for anticipated failures of insured institutions. …

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