The Timeliness of Regulatory Action

Abstract

In this Chapter we examine the sources of liability growth and analyze FSLIC’s efforts to control this growth. Much of this Chapter provides institutional detail about the process by which an insolvent institution is identified and brought under FSLIC control. It is important to point out that inasmuch as FSLIC’s exposure to deposit insurance claims reflects poor investment decisions made by thrifts in the past, the net worth deficit represents a problem that cannot be undone by FSLIC or the FHLBB. Hence, attention should be focused on the time required for FSLIC to assume control of insolvent thrifts and the rate of growth of FSLIC liabilities once an insolvent thrift is under FSLIC control.