CHAP TER 1 4
Asset Management Contracting
This chapter reviews the types of asset management and disposition contracts used by the Fed-
eral Deposit Insurance Corporation (FDIC) and the Resolution Trust Corporation (RTC).
The analysis includes a discussion of the evolution, strengths, and weaknesses of those contracts.
During the 1970s and the early 1980s, the FDIC used its internal staff to conduct most
of its asset disposition activity. As the number of failures rose and the total volume of
assets to be liquidated increased, the FDIC found it more difficult to perform those
functions entirely with in-house personnel.
In the mid-1980s the FDIC first began using contractors to manage and dispose of
distressed assets with the resolutions of Continental Illinois National Bank and Trust
Company (Continental), Chicago, Illinois,1 and First National Bank and Trust Com-
pany of Oklahoma City, Oklahoma City, Oklahoma. By the late 1980s, however, it was
standard practice for the FDIC to use contractors for the management and disposition
of assets retained from some of the larger bank failures. The RTC, with its large volume
of assets, used asset management contractors from the outset.
From 1988 to 1993, the FDIC used 14 asset management contracts to liquidate
assets with a book value of more than $33 billion, or more than 45 percent of the post-
resolution assets the FDIC retained for liquidation. The RTC issued 199 Standard Asset
1. See Part II, Case Studies of Significant Bank Resolutions, Chapter 4, Continental Illinois National Bank and
M A NAGIN G THE CRISIS
Management and Disposition Agreements (SAMDAs) to 91 contractors from 1991 to
1993 to cover assets with a book value of $48.5 billion.
Continental Illinois National Bank and Trust Company, Chicago, Illinois
On September 26, 1984, the FDIC entered into a five-year assistance agreement with
Continental Illinois Corporation, the holding company of Continental. In exchange for
assuming Continental’s $3.5 billion debt t