Managing the Crisis: The FDIC and RTC Experience is the result of a study conducted by the FDIC on the banking crisis of the 1980s and early 1990s. It examines the evolution of the processes used by the two agencies to resolve banking problems, protect depositors, and dispose of the assets of the failed institutions. In conjunction with this book, a related symposium was held in April 1998 to discuss the resolution and disposition techniques used during the crisis period. The study would not have occurred without the vision of former FDIC Chairman Ricki Helfer, who initiated the project, and the continued support of then-Acting Chairman Andrew C. Hove, Jr. The project team was ably led by William R. Ostermiller, who organized and managed the writers, researchers, and editors for this project. The book would not have been completed without his dedication and effort. Two other members of the project team also deserve special mention and thanks. Martha Duncan-Hodge and Kate McDermott time and time again went above and beyond the call of duty to keep the project on track. They helped guide the project along from start to finish. Special thanks also go to the individuals named below for their contributions along with their creativity, diligence, and perseverance. Final review and validation of factual data—Henry W. Abbot Management of project’s statistical database—James J. Gallagher Editorial and writing staff—Mary Ledwin Bean, Shelby Heyn-Rigg, Mike Spaid, R. Steve Stockton, and Frank A. Willis Technical and support staff—Donna Cady, Lali Crampton, Beatrice P. Culley, Anna M. Gay, Fay Scheer, and Nancy Smith
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Every effort was made to ensure the accuracy of the information contained in this study and to provide an impartial assessment of what occurred. As is the case with any history, however, the interpretations made by those who have written it are important to its structure and conclusions and these interpretations are not necessarily those of the Federal Deposit Insurance Corporation.
Authors and Contributing Writers The primary authors and contributing writers were as follows: PART I, Resolution and Asset Disposition Practices Executive Summary Mary Ledwin Bean, Martha Duncan-Hodge, William R. Ostermiller, Mike Spaid, R. Steve Stockton Chapter 2. Overview of the Resolution Process William R. Ostermiller, Mike Spaid Chapter 3. Evolution of the FDIC’s Resolution Practices Eric Bloecher, John F. Bovenzi Chapter 4. Evolution of the RTC’s Resolution Practices Mike Spaid and Edward D. Thomas, with contributions by James J. Gallagher Chapter 5. Open Bank Assistance Sean Forbush, Mike Spaid Chapter 6. Bridge Banks Herbert J. Held, Wendy Hoskins Chapter 7. Loss Sharing James J. Gallagher, with contributions by Carol S. Armstrong Chapter 8. The FDIC’s Role as Receiver John F. Bovenzi, Mike Spaid Chapter 9. The Closing Process and the Payment of Insured Depositors Jeanne McBride and Al Porterfield, with contributions by John F. Bovenzi and James J. Gallagher Chapter 10. Treatment of Uninsured Depositors and Other Receivership Creditors S. Blair Bean, with contributions by John F. Bovenzi Chapter 11. Professional Liability Claims Andrew Gilbert, with contributions by James P. Clark, Ashley Doherty, Edward F. X. Gilbride, Richard Gill, Floyd Robinson, Jon A. Stewart, Catherine Topping, and Randy Walls Chapter 12. Evolution of the Asset Disposition Process John F. Bovenzi, Lee J. Kutlich, and G. Michael Newton Chapter 1.
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Chapter 13. Auctions and Sealed Bids Gary P. Bowen Chapter 14. Asset Management Contracting Henry W. Abbot and Andrew F. Basel, with contributions by Mary Ledwin Bean, William R. Ostermiller, and James R. Wigand Chapter 15. Affordable Housing Programs Stephen S. Allen, Deidra Young Chapter 16. Securitizations Sandra L. Thompson, with contributions by Carol S. Marks Chapter 17. Partnership Programs Mary Ledwin Bean, with contributions by David M. McDonough, Ronald C. Sommers, and James R. Wigand Chapter 18. The FDIC’s Use of Outside Counsel Janice Butler and Mary H. Ratchford, with contributions by Betty J. DeRentis, Gayle L. Furtney, Donald B. McKinley, Barbara Nalepa, Marguerite Sagatelian, and Valerie R. Zeman Chapter 19. Internal Controls Pauline Tao, with contributions by Douglas G. Stinchcum and R. Steve Stockton PART II, Case Studies of Significant Bank Resolutions Kate McDermott, with contributions by John F. Bovenzi, Stephen C. Douglas, Mitchell L. Glassman, James E. Heath, William R. Ostermiller, Robert W. Schwarzlose, Mike Spaid, and William R. Watson PART III, Appendices Appendix A. Legislation Governing the FDIC’s Roles as Insurer and Receiver Charlotte M. Kaplow and Jerilyn Rogin, with contributions by David M. Gearin Appendix B. List of Abbreviations and Glossary of Terms Henry W. Abbot, with contributions by David M. Gearin and Barbara I. Taft Appendix C. Statistical Data James J. Gallagher
Other Acknowledgments Much of the data provided to the project team and some of the early analysis used was gathered and provided by an earlier team headed by Craig A. Rice. The results of that
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group’s efforts provided a valuable foundation for this project. I want to acknowledge the important contributions to that effort by Robert Arsineau, Edward Barker, Richard Brown, Thuan Le, Jean Litzler, Marsha Martin, Robert Polarek, Betty L. Tartt, Eric L. Winge, and Hugo A. Zia. Many others in the FDIC Division of Resolutions and Receiverships analyzed data, reviewed chapters, and helped in a variety of ways. Important contributions were made by George C. Alexander, Martin W. Becker, Bruce E. Brown, Frank C. Campagna, Robert L. Carman, Michael C. Clark, James E. Crum, Nancy Deyerle, Stephen C. Douglas, Joseph A. Fanelli, Carlos M. Fiol, Mitchell L. Glassman, Kathleen M. Halpin, Stacey L. Hayashi, Sharon C. Lusk, James A. Meyer, Frederick J. Ozyp, Lorraine Padgett, Gail Patelunas, Richard O. Romero, Thomas A. Rose, Russell S. Rumelt, Robert C. Schoppe, Gary A. Seale, Patrick J. Shute, Joci M. Spector, Alan P. Strom, Lesylee Sullivan, William C. Thomas, and Susan E. Whited. The FDIC Legal Division provided valuable assistance throughout the project, with special thanks to Henry R. F. Griffin and Barbara I. Taft for coordinating the support efforts. Valuable contributions were made by Richard T. Aboussie, Paul D. Arends, Jock A. Banks, Thomas P. Bolt, Kevin Carver, Robert G. Clark, Chris J. Conanan, Patricia E. Davison, Thomas M. Dietz, John P. Dolan, Jacqueline Edwards, David G. Eisenstein, Elizabeth Falloon, David Fisher, David M. Gearin, Christopher L. Hencke, Howard Herman, Douglas H. Jones, Charlotte M. Kaplow, James Lantelme, Mark A. Libera, Donald B. McKinley, JoAnne Morris, Richard H. Mounts, Richard J. Osterman, Richard W. Owen, Richard I. Peyster, Michael B. Phillips, Elliott M. Pinta, Carl A. Polvinale, Rodney D. Ray, Catherine A. Ribnick, Leslie Sallburg, Thomas A. Schulz, Cynthia Z. Shaughnessy, Gregory B. Smith, R. Penfield Starke, Gregory Taylor, John V. Thomas, Barbara Starke Tishuk, Arturo Vera-Rojas, and Patrick S. Vincent. In addition, the FDIC Division of Research and Statistics provided valuable analytical and editorial services to the project. We acknowledge the help of Thuan Le in the analysis of the statistical data. We also acknowledge the analytical help in Part I provided by James E. Heath, Brian D. Lamm, James A. Marino, Jack Reidhill, and Steven A. Seelig. We appreciate the editorial and analytical support in Part II provided by Lynn Shibut and William R. Watson. For help in the development of the project’s statistical database, we acknowledge the assistance of Heather Gratton, Bruce McWilliams, Lynn Shibut, and Katie A. Wehner. We also acknowledge the valuable editorial work and extensive proofreading of James P. Battey, Marjorie C. Bradshaw, and Elizabeth A. Ford in the FDIC Office of Corporate Communications. We wish to thank Brent D. Harral, Thomas N. Hearn, and Michael J. Rubino in the FDIC Division of Administration for their help on a number of contracting matters that arose during the course of the project. James D. Collins, of the Executive Office, provided us with needed guidance and insight into the topic of internal controls, and we wish to thank him for his assistance.
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We also want to thank the FDIC Division of Finance for their assistance. We acknowledge the help in obtaining data provided by Casey Catterton, Kenneth R. Fitzgerald, Timothy H. Hobbs, Alvin E. Kitchen, Elvis J. Nelson, Richard Sassoon, and Mark Weaver. We also acknowledge the helpful reviews of draft chapters by Bobby R. Bean, Bret D. Edwards, Arthur D. Murphy, David R. Wiley, and Louis E. Wright. Thanks also goes to Richard Brown and Maureen Sweeney of the Division of Insurance. We appreciate all the work done by the technical and support staff throughout the FDIC over the course of the project, especially the efforts of Denise S. Anthony, F. Cynthia Ballard, Gloria W. Massey, and Jacqueline B. Richardson. We would like to thank Addie M. Hargrove and her staff in the Graphics Department of the FDIC Division of Administration for designing the book cover and for their help with publishing the book. Several persons outside the FDIC devoted time to the project by either meeting with us or providing helpful reviews of draft chapters. In particular, we want to thank Donald W. Crocker, vice chairman of J. E. Robert Company, Inc., Christopher Kallivokas, chief executive officer of RER Financial Group, Inc., and Sherwin R. Koopmans, a former FDIC manager. —John F. Bovenzi Director Division of Resolutions and Receiverships
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