CHAP TER 4
Evolution of the RTC’s
On August 9, 1989, the Financial Institutions Reform, Recovery, and Enforcement Act
(FIRREA) of 1989 abolished the Federal Savings and Loan Insurance Corporation
(FSLIC) and the Federal Home Loan Bank Board (FHLBB) and created the Resolution
Trust Corporation (RTC). The RTC’s primary mission was to manage and resolve failed
thrift institutions for which a conservator or receiver was appointed. Initially, Congress
gave the Federal Deposit Insurance Corporation (FDIC) the authority and responsibil-
ity to act as the RTC’s “exclusive manager.” The FDIC managed the RTC’s activities
until November 27, 1991, when the Resolution Trust Corporation Refinancing,
Restructuring, and Improvement Act (RTCRRIA) separated the RTC from the FDIC.
Figure I.4-1 shows the impact of FIRREA.
During the RTC’s existence from August 9, 1989, to December 31, 1995, it was
responsible for resolving 747 insolvent thrifts with assets of $402.6 billion. (See table
I.4-1.) The final cost to taxpayers for that cleanup activity is estimated to be $87.5 bil-
lion.1 The scope and magnitude of such a cleanup effort was unprecedented, yet essen-
tially was completed in just six and one-half years. On December 31, 1995, the RTC
was shut down, and its remaining work was transferred back to the FDIC.
This chapter focuses on an important part of the RTC’s overall activity: the evolu-
tion of its resolution practices. Later chapters will discuss the RTC’s asset disposition
activities in greater detail.
Because of a number of factors, including the sale of assets in receivership and updated appraisals, this figure
is adjusted periodically. The most recent estimate of RTC losses, as of December 31, 1996, is $86.4 billion.
M A NAGIN G THE CRISIS
Source: RTC , 1
that failed b
January 1, 1
August 9, 19
989 Annual Report.
f all thrifts
989, or that