Resolution Trust Corporation: Implementation of the Management Reforms in
the RTC Completion Act (Letter Report, 03/09/95, GAO/GGD-95-67).

This is the second of two required reports on the Resolution Trust
Corporation's (RTC) efforts to implement 21 management reforms mandated
by the RTC Completion Act.  GAO discusses the manner in which RTC and
the Thrift Depositor Protection Oversight Board implemented the mandated
reforms.  It also describes their progress toward achieving full
compliance during the year since the act became law in December 1993.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-95-67
     TITLE:  Resolution Trust Corporation: Implementation of the 
             Management Reforms in the RTC Completion Act
      DATE:  03/09/95
   SUBJECT:  Liability (legal)
             Property disposal
             Assets
             Savings and loan associations
             Bank failures
             Contracting procedures
             Management information systems
             Auditing procedures
             Internal controls
             Federal agency reorganization
IDENTIFIER:  GAO High Risk Program
             High Risk Series 1995
             
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Cover
================================================================ COVER


Report to Congressional Committees

March 1995

RESOLUTION TRUST CORPORATION -
IMPLEMENTATION OF THE MANAGEMENT
REFORMS IN THE RTC COMPLETION ACT

GAO/GGD-95-67

RTC Management Reforms

(247121)


Abbreviations
=============================================================== ABBREV

  AGC - Assistant General Counsel
  CEO - Chief Executive Officer
  CFO - Chief Financial Officer
  CLD - Central Loan Database
  CPPM - Contracting Policies and Procedures Manual
  DIRM - Department of Information Resources Management
  FDIC - Federal Deposit Insurance Corporation
  IG - Inspector General
  MWOB - minority- and women-owned business
  MWOLF - minority- and women-owned law firm
  OCOS - Office of Contractor Oversight and Surveillance
  PMN - predominantly minority neighborhood
  REOMS - Real Estate Owned Management System
  RTC - Resolution Trust Corporation
  SAMDA - Standard Asset Management and Disposition Agreement

Letter
=============================================================== LETTER


B-257544

March 9, 1995

The Honorable Alfonse M.  D'Amato
Chairman
The Honorable Paul S.  Sarbanes
Ranking Minority Member
Committee on Banking, Housing, and
 Urban Affairs
United States Senate

The Honorable James A.  Leach
Chairman
The Honorable Henry B.  Gonzalez
Ranking Minority Member
Committee on Banking and Financial Services
House of Representatives

This is the second of two required reports on the Resolution Trust
Corporation's (RTC) efforts to implement 21 management reforms
mandated by the RTC Completion Act.\1 This report provides
information on the manner in which RTC and the Thrift Depositor
Protection Oversight Board (hereafter called the Oversight Board)
implemented the mandated reforms.  It also describes the progress
they made toward achieving full compliance during the year since the
act became law in December 1993.  Our interim report presented our
preliminary findings as of June 1994.\2


--------------------
\1 The Resolution Trust Corporation Completion Act, Pub.  L.  No. 
103-204, 107 Stat.  2369 (1993), required GAO to submit to Congress
two reports--an interim report 6 months after the enactment of the
act and a final report 1 year after the act became law--on the manner
in which the reforms required by the act were being implemented by
RTC and the progress being made by RTC toward achieving full
compliance with the requirements. 

\2 Resolution Trust Corporation:  Interim Report on the Management
Reforms in the RTC Completion Act (GAO/GGD-94-114, June 30, 1994). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The manner in which RTC and the Oversight Board proceeded to
implement the 21 management reforms varied from reform to reform. 
Actions have been initiated to implement all the reforms.  Monitoring
is required for most reforms until RTC ceases its operations at the
end of 1995. 

Specifically, RTC has completed 3 of the 21 reforms.  Actions on
these reforms were initiated before the RTC Completion Act became
law, and involved (1) designating the Department of Minority and
Women's Programs as a division and appointing a Vice President to
head the division who also serves on RTC's Executive Committee, (2)
appointing an individual to the position of Chief Financial Officer
(CFO), and (3) establishing and maintaining client responsiveness
units in RTC's field offices. 

Actions have been taken to implement another 16 reforms.  For
example, RTC has taken steps to (1) strengthen its contracting
activities, (2) increase its efforts to implement audit
recommendations and correct internal control weaknesses, and (3)
unify the legal and investigative teams of its professional liability
program.  Furthermore, the Oversight Board has established an audit
committee to monitor RTC's audit follow-up activities, internal
controls, and financial operations.  While the actions taken should
enable RTC and the Oversight Board to fulfill the requirements of the
16 reforms, monitoring is needed to ensure full compliance. 

Finally, for the remaining two reforms, which are designated work in
progress, RTC has taken steps to implement them, but all of its
planned actions have not been completed.  Some of the actions in
progress include (1) selectively enhancing the primary information
systems that support RTC's financial operations and asset disposition
activities and (2) developing draft guidelines to improve specific
minority- and women-owned businesses (MWOB) and minority- and
women-owned law firms (MWOLF) contracting procedures.  RTC's planned
actions on these two reforms are scheduled to be accomplished by the
end of March 1995. 


   BACKGROUND
------------------------------------------------------------ Letter :2

For over 50 years, the savings and loan industry promoted home
ownership through home mortgage lending and was the nation's primary
lender in the housing finance market.  During the 1980s, the industry
ran into financial difficulties, and the number of insolvent savings
and loan institutions, also known as thrifts, rose dramatically. 
Between 1980 and 1988, over 500 thrifts failed--more than three and a
half times as many as in the previous 45 years combined.\3
Furthermore, hundreds more thrifts remained insolvent or appeared
likely to become insolvent. 

Faced with a crisis of national dimensions, 1989 legislation, among
other things, created RTC as a temporary mixed-ownership government
corporation to resolve thrifts that were insolvent or in imminent
danger of becoming insolvent.  Initially, RTC was given 7 1/2 years
to resolve the failed thrifts and dispose of their assets, but
subsequent legislation reduced the time RTC will be in existence.\4
The Federal Deposit Insurance Corporation (FDIC) is to inherit from
RTC resolution responsibility for any thrifts that fail after July 1,
1995.\5

RTC is scheduled to cease all of its operations on December 31, 1995,
when any remaining RTC asset disposition workload and supporting
operations are to be transferred to FDIC.  As of February 1995, RTC
estimated that assets with a book value of approximately $8 billion
will be transferred to FDIC for disposition. 

GAO identified RTC as 1 of 18 high-risk areas that were particularly
vulnerable to fraud, waste, and mismanagement.  This identification
was made mainly because of the large dollar value of the assets under
RTC's control, the heavy reliance to be placed on private sector
contractors, and the need for strong management information systems
and oversight capabilities.\6

Because RTC has taken actions that improved its operations, the level
of risk is not as great as it once was.  Thus, as discussed in our
February 1995 High-Risk Series report,\7 we removed RTC's high-risk
designation. 

Also, in our High-Risk report, we stated that the transition of RTC
operations and workload to FDIC by January 1996 is a continuing risk. 
The task of winding down a large and complex organization with
thousands of personnel and billions of dollars in assets, while
minimizing the adverse consequences, is a very difficult one.  For a
successful transition, RTC and FDIC will need to ensure that
sufficient controls are in place over the assets that will be sold
during the final year of RTC's existence, as well as over the assets
that will be transferred to FDIC.  It is also important that the
transition planners give early attention to the quality of data that
FDIC will receive from RTC so that RTC will have sufficient time to
prepare for and respond to FDIC's information needs. 

Throughout RTC's existence, its management and support systems have
evolved in response to changing conditions and legislative mandates,
as well as internal and external criticism of its operations. 
However, certain problems have continually hampered RTC's ability to
effectively accomplish its mission.  These problems included
weaknesses in its contracting system that contributed to excessive
contract costs and in its automated systems that could not adequately
support RTC's asset management and disposition activities.  In
December 1993, due to concerns about RTC's performance, Congress
included in the RTC Completion Act a number of reforms to improve the
management of RTC. 

Despite such problems and the difficult economic environment in which
RTC had to operate, it has accomplished a great deal in resolving a
large number of failed thrifts and selling assets during its
relatively short existence.  From its inception in August 1989
through December 1994, RTC accepted responsibility for 745 failed
thrifts.  Figure 1 shows the locations of the thrifts that were
placed under RTC's control. 

   Figure 1:  Location of the 745
   Failed Thrifts Placed Under
   RTC's Control from Inception
   Through December 1994

   (See figure in printed
   edition.)

   Source:  RTC data.

   (See figure in printed
   edition.)

By the end of December 1994, RTC had resolved 744 of these 745
thrifts.  It is currently working to resolve one New Jersey thrift;
it expects to accomplish this resolution by March 31, 1995. 

RTC had under its control assets with a total book value of about
$463 billion.  As of November 30, 1994, RTC had disposed of about 93
percent of these assets ($432 billion) and had about $31 billion in
assets remaining in its inventory.  As shown in figure 2, RTC has
classified most of these remaining assets as hard-to-sell. 

   Figure 2:  Composition of
   Assets Remaining in RTC's
   Inventory, as of November 30,
   1994

   (See figure in printed
   edition.)

Source:  RTC data. 

In his March 1993 testimony before the Senate Committee on Banking,
Housing, and Urban Affairs, the former Secretary of the Treasury
Lloyd Bentsen, speaking in his capacity as Chairman of the Thrift
Depositor Protection Oversight Board, outlined a 9-point plan to help
RTC improve its management practices.  Later, a tenth item--the
establishment of an interagency transition task force made up of RTC
and FDIC personnel--was added to the plan to address the transfer of
RTC's personnel and systems to FDIC when RTC ceases operations on
December 31, 1995.  Secretary Bentsen said that such a task force was
needed to help ensure an orderly transition to FDIC without impairing
RTC's operations. 

The RTC Completion Act, which became law in December 1993, included
21 management reforms--those in Secretary Bentsen's 9-point plan
along with 12 others.\8 The establishment of the RTC/FDIC transition
task force was not included among the 21 reforms but was required by
a separate section in the act.\9

For reporting purposes, we organized the 21 reforms into 4 categories
that reflected the organizational components that would be
responsible for taking the implementation actions.  These categories
are (1) RTC general management functions; (2) RTC resolution and
disposition activities; (3) RTC contracting, including related MWOB
activities; and (4) the Oversight Board reform.  Appendix I includes
more detailed information on the reforms in these categories and
shows the progress RTC and the Oversight Board have made in
implementing the 21 management reforms since we issued our interim
report in June 1994. 


--------------------
\3 Financial Institutions Reform, Recovery, and Enforcement Act of
1989, Report of the Committee on Banking, Housing, and Urban Affairs,
U.  S.  Senate, Report 101-19 (Apr.  13, 1989). 

\4 The Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (P.L.  101-73, 103 Stat.  183), which established RTC,
specified that RTC would terminate not later than December 31, 1996
and that FDIC would be its successor.  The RTC Completion Act changed
RTC's termination date to December 31, 1995. 

\5 As specified by the RTC Completion Act, the Chairperson of the
Oversight Board determined that RTC's resolution responsibilities for
newly failed thrifts will end on July 1, 1995. 

\6 Government Management:  Status of Progress in Correcting Selected
High-Risk Areas (GAO/T-AFMD-93-1, Feb.  3, 1993). 

\7 High-Risk Series:  Quick Reference Guide (GAO/HR-95-2, Feb. 
1995). 

\8 Section 3(a) of the RTC Completion Act amended section 21A of the
Federal Home Loan Bank Act by adding a new subsection (w), which
contains the 21 mandated management reforms. 

\9 The requirement to establish an RTC/FDIC transition task force is
in section 6 of the RTC Completion Act.  We are reviewing the
transition efforts of RTC and FDIC in a separate assignment. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :3

Our objectives for this report, as set forth in the RTC Completion
Act, were to determine (1) the manner in which the 21 management
reforms were being implemented and (2) the progress being made toward
achieving full compliance. 

We accomplished these objectives through (1) interviews with
responsible RTC headquarters and field officials and Oversight Board
staff and (2) reviews of applicable statutes and RTC and Oversight
Board documents, including status reports identifying actions taken
to implement the reforms' requirements, specific policies and
procedures designed to implement the reforms, and recent Office of
Inspector General (IG) reports that addressed areas related to the
management reforms.  Also, we obtained supporting documentation to
determine the extent to which actions were taken to correct internal
control weaknesses and implement audit recommendations and other
management reforms.  In addition, we used our other ongoing work at
RTC to verify that planned actions to implement the reforms had been
completed or were in process.  For reporting purposes, we classified
each of the 21 reforms into one of three status categories:  (1) work
in progress, (2) action taken/monitoring required, or (3) action
completed. 

From January 18 through January 31, 1995, we discussed a draft of
this report with RTC and the Oversight Board.  Specifically, we
discussed the detailed information on each of the 20 RTC reforms with
the RTC senior officials\10 responsible for implementing these
reforms or their designated representatives.  For the Oversight Board
reform, we discussed detailed information with the individual on the
Oversight Board staff who is responsible for monitoring the
implementation of the reform.  In addition, on February 7, 1995, we
discussed the contents of the draft report with representatives from
RTC's Office of the CFO and Office of Planning, Research and
Statistics, who are responsible for tracking RTC's progress in
implementing the reforms.  These individuals agreed that the
information in the report provided a fair and accurate summary of the
manner in which RTC and the Oversight Board implemented the reforms
and the progress they made to achieve full compliance.  Also, these
individuals agreed with our determinations of the implementation
status for each of the 21 reforms.  We included their comments where
appropriate throughout the report. 

We did our work from June 1994 through January 1995 in accordance
with generally accepted government auditing standards.  Appendix II
provides more detailed information on our objectives, scope, and
methodology. 


--------------------
\10 These officials included the CFO and the General Counsel.  Also
included were the Vice Presidents of Asset Management and Sales;
Resolutions; Administration; Contracts, Oversight, and Evaluation;
and Minority and Women's Programs; and the Director of Information
Resources Management. 


   REFORMS INVOLVING RTC GENERAL
   MANAGEMENT FUNCTIONS
------------------------------------------------------------ Letter :4

Table 1 shows the implementation status we determined for each of the
10 reforms in this category. 



                                     Table 1
                     
                     Implementation Status of Reforms in the
                      General Management Functions Category


                                              Action
Reform                                        taken/          Action
number  Management          Work in           monitoring      comple         See
\a      reform              progress          required\b      ted          page:
------  --------------  --  ------------  --  ----------  --  ------  --  ------
1       Comprehensive                                                        27
        business
        plan\c

4       Division of                                                          29
        minorities and
        women
        programs\c

5       Appoint CFO\c                                                        29

9       Corrective                                                           31
        responses to
        audit
        problems\c

10      Assistant                                                            39
        General
        Counsel for
        Professional
        Liability

11      Management                                                           41
        information
        system\c

12      Internal                                                             44
        controls\c

13      Fill certain                                                         46
        vacant
        positions

14      Annual                                                               47
        reporting

21      Client                                                               47
        responsiveness
        units
--------------------------------------------------------------------------------
\a This is the reform number from the RTC Completion Act (see app. 
III). 

\b RTC has taken actions that should enable it to fulfill the
requirements of the reform, but monitoring is required to ensure that
appropriate future actions are taken when necessary. 

\c This reform was also included in Secretary Bentsen's March 1993
9-point plan. 

Source:  RTC Completion Act and GAO assessment of implementation
status. 

For two of the three completed reforms shown in table 1, RTC (1) in
April 1993, created the Division of Minority and Women's Programs and
appointed a Vice President to head this division who also serves on
RTC's Executive Committee (reform 4); and (2) in June 1993, appointed
a CFO who reports directly to RTC's Chief Executive Officer (CEO)
(reform 5).  These actions were completed before the act became law
in December 1993.  For reform 21, which is the third completed
reform, by the time the act became law, RTC had already initiated a
program that included establishing client responsiveness units in its
field offices.  In August 1994, RTC completed updating its client
responsiveness policy to emphasize the importance of this function
and distributed the policy to all RTC personnel. 

As shown in table 1, the implementation status for six reforms is
action taken/monitoring required.  Highlights of some of the actions
taken to implement these reforms are listed below. 

  -- RTC updated its comprehensive business plan in August 1994, in
     part, to ensure that the requirements of the RTC Completion Act
     were included in the plan.  (Reform 1). 

  -- RTC established a management decision and audit follow-up
     process that encompasses all efforts to address findings,
     implement accepted recommendations, and verify completion of
     corrective actions.  (Reform 9). 

  -- RTC established and filled the position of Assistant General
     Counsel (AGC) for Professional Liability who is to manage the
     investigation, evaluation, and prosecution of all professional
     liability claims involving RTC and who has since submitted to
     Congress two semiannual reports that included information on
     various litigation activities.  (Reform 10). 

  -- RTC established a program to assess the adequacy of its internal
     controls and issued its annual assessment report on March 31,
     1994, identifying internal control weaknesses that needed to be
     corrected.  (Reform 12). 

  -- RTC ensured that specific senior executive positions were
     filled.  (Reform 13). 

  -- RTC included in its 1993 annual report\11 information on the
     expenditure of loss funds and the salaries and other
     compensation paid to directors and senior executive officers of
     RTC-controlled thrifts.  (Reform 14). 

The nature of these reforms requires RTC to monitor them to ensure
that appropriate future actions it must take are initiated when
necessary.  For example, to maintain the comprehensive business plan
required under reform 1, RTC plans to continue to measure its
performance against the goals in the plan and make adjustments in the
goals as necessary to reflect changing conditions.  Also, to maintain
effective internal controls as required by reform 12, RTC plans to
continue to assess the adequacy of its internal controls and take
actions to correct any weaknesses it, its IG, or we identify. 

For reform 11, which is in the work in progress category, RTC has
implemented a corporate-wide data quality policy requiring program
managers to develop data quality action plans.  RTC has not yet
finished its planned enhancements to the primary information systems
that support its financial operations and asset disposition
activities.  RTC expects to complete this work by the end of March
1995.  In addition, RTC is reassessing its efforts to improve the
quality of data in its information systems to help ensure that these
efforts are properly focused on the data most critical to completing
its mission.  RTC expects to complete this reassessment by the end of
March 1995. 

Additional details on the manner in which RTC proceeded to implement
these reforms, as well as their status, are included in appendix III. 


--------------------
\11 1993 Annual Report, Sept.  30, 1994. 


   REFORMS INVOLVING RTC
   RESOLUTION AND DISPOSITION
   ACTIVITIES
------------------------------------------------------------ Letter :5

The three reforms in this category affect the manner in which RTC
markets and attempts to dispose of failed thrifts and specific assets
under its control.  They are intended to ensure that individual
acquirers, small investors, and MWOB firms are given sufficient
opportunity to participate in RTC's thrift resolution and asset
disposition activities.  Table 2 shows the implementation status we
determined for each of the three reforms in this category. 



                                Table 2
                
                Implementation Status of Reforms in the
                 Resolution and Disposition Activities
                                Category


                                          Action
                              Work        taken/
Reform                        in          monitori  Action
number  Management            progre      ng        comple         See
\a      reform                ss          required  ted           page
------  ----------------  --  ------  --  --------  ------  --  ------
2       Marketing real                                             51
        property on an
        individual basis

3       Disposition of                                             52
        real estate
        related assets

17      Minority                                                   53
        preference
        -thrifts in
        predominantly
        minority
        neighborhoods
----------------------------------------------------------------------
\a This is the reform number from the RTC Completion Act.  (See app. 
IV.)

Source:  RTC Completion Act and GAO assessment of implementation
status. 

As shown in table 2, the implementation status for all three reforms
is action taken/monitoring required.  For reform 2, RTC issued a
memorandum to establish a 120-day period to market real property
assets on an individual basis before they may be included in any
multiasset sales initiative.  The memorandum also required written
justifications for including these assets in multiasset sales
initiatives if they did not sell during the 120-day period.  For
reform 3, RTC issued a memorandum informing staff of the requirements
to prepare written justifications for selling certain nonperforming
real estate loans and other real property.  In November 1994, RTC
published in the Federal Register its final rule that adopted the
policies and procedures for implementing the requirements of reforms
2 and 3.  RTC monitors the implementation of these two reforms
primarily through its internal control review and program compliance
review processes. 

For reform 17, in July 1994, RTC published in the Federal Register
the final rule defining a predominantly minority neighborhood (PMN)
as any U.S.  postal ZIP code area in which 50 percent or more of the
residents are minorities according to the most recent Census data. 
However, RTC has the discretion to use other data that may indicate
more accurate neighborhood boundaries.  This rule was the subject of
extensive review and debate because its implementation could have a
significant effect on the extent to which minority individuals or
minority-owned institutions can acquire failed thrifts in PMNs.  In
addition, RTC established a program that provides minority acquirers
of thrifts in PMNs with opportunities to purchase performing 1-4
family mortgage loans.  As of February 1, 1995, RTC had sold a total
of about $207 million in loans through this program.  As required by
the RTC Completion Act, we are reviewing RTC's valuation of loans
offered through this program and will report on the results of our
review later in 1995. 

Additional details on the manner in which RTC proceeded to implement
these reforms, as well as their status, are included in appendix IV. 


   REFORMS INVOLVING RTC
   CONTRACTING AND RELATED MWOB
   ACTIVITIES
------------------------------------------------------------ Letter :6

In this category, we included seven reforms that affect RTC's
contracting activities, including several intended to improve RTC's
contracting system, strengthen its contractor oversight, and ensure
that MWOB firms receive sufficient opportunities to obtain RTC
contracts.  Table 3 shows the implementation status we determined for
each of the seven reforms in this category. 



                                Table 3
                
                Implementation Status of Reforms in the
                Contracting and Related MWOB Activities
                                Category


                                              Action
                                  Work        taken/
Reform                            in          monitori  Action
number                            progre      ng        comple     See
\a      Management reform         ss          required  ted       page
------  --------------------  --  ------  --  --------  ------  ------
6       Basic ordering                                             55
        agreements

7       Improve contracting                                        55
        systems and
        contractor
        oversight\b

15      MWOB contract                                              58
        parity
        guidelines

16      Subcontracting and                                         59
        joint ventures
        contract sanctions

18      Subcontracts with                                          59
        MWOBs

19      Contracting                                                60
        procedures

20      Management of legal                                        61
        services
----------------------------------------------------------------------
\a This is the reform number from the RTC Completion Act.  (See app. 
V.)

\b This reform was also included in Secretary Bentsen's 9-point plan. 

Source:  RTC Completion Act and GAO assessment of implementation
status. 

As shown in table 3, the implementation status for six reforms is
action taken/monitoring required.  Highlights of some of the actions
taken to implement these reforms are listed below. 

  -- In May 1994, RTC issued a policy memorandum that included
     guidance on basic ordering agreements, which is designed to
     ensure a thorough review of source lists for prospective RTC
     contract solicitations.  On February 8, 1995, RTC published in
     the Federal Register its final rule, which, among other things,
     defines procedures for ensuring that MWOBs and MWOLFs are not
     excluded from eligibility for task orders and other contracting
     activities.  (Reform 6). 

  -- RTC revised the Contracting Policies and Procedures Manual
     (CPPM) to provide uniform contracting procedures and strengthen
     contractor oversight.  Also, RTC provided additional RTC staff
     for contracting related activities, issued additional procedures
     for the oversight of property management subcontractors, and
     implemented RTC-wide legal services contracting procedures. 
     (Reform 7). 

  -- RTC has developed specific sanctions, such as contract
     suspensions, for violations of MWOB/MWOLF subcontracting and
     joint venture requirements.  On February 8, 1995, RTC published
     in the Federal Register its final rule, which included these
     sanctions.  (Reform 16). 

  -- On February 8, 1995, RTC published in the Federal Register its
     final rule establishing required MWOB and MWOLF subcontracting
     goals for contracts with fees of $500,000 or more.  (Reform 18). 

  -- RTC has revised the CPPM to incorporate the two requirements of
     this reform that relate to RTC's competitive bidding procedures
     and costs to the taxpayer.  (Reform 19). 

  -- RTC issued in August 1994 revised policies and procedures and
     implementing guidelines designed to ensure that RTC's Division
     of Legal Services hires outside counsel only when the
     requirements of this reform have been met.  (Reform 20). 

For reform 15, which is in the work in progress category, RTC has
developed draft guidelines to achieve the goal of a reasonable
distribution of contract awards and fees to each minority subgroup of
contractors.  At the time of our interim report, RTC had planned to
issue these guidelines by the end of July 1994.  According to an RTC
official, the guidelines were not issued in July 1994 mainly because
RTC's efforts were focused on developing the final rule that would
implement reforms 6, 16, and 18.  Since the final rule was published
on February 8, 1995, RTC is preparing the parity guidelines which are
scheduled to be issued by the end of March 1995. 

Additional details on the manner in which RTC proceeded to implement
these reforms, as well as their status, are included in appendix V. 


   REFORM TO BE IMPLEMENTED BY THE
   OVERSIGHT BOARD
------------------------------------------------------------ Letter :7

The establishment of an audit committee was included in Secretary
Bentsen's 9-point plan.  The implementation status of this reform,
which the RTC Completion Act designated as reform 8, is action
taken/monitoring required.  By November 1994, three individuals had
agreed to serve as members of the audit committee, and the Oversight
Board had published a charter that described the duties and
responsibilities of the committee.  Since the establishment of its
charter, the audit committee has held two meetings, one in November
1994 and one in January 1995. 

Additional details on the manner in which the Oversight Board
proceeded to implement this reform, as well as its status, are
included in appendix VI. 


   CONCLUSIONS
------------------------------------------------------------ Letter :8

Since our interim report was issued in June 1994, RTC and the
Oversight Board have continued to move forward in their actions to
implement the 21 management reforms.  RTC has completed three
reforms, and has work in progress to implement two other reforms. 
Furthermore, actions have been taken to implement the remaining 16
reforms.  While these actions will enable RTC and the Oversight Board
to fulfill the reforms' requirements, monitoring will be needed to
ensure full compliance. 

While RTC has made dramatic progress in reducing its inventory of
thrifts and assets, it still had about $31 billion in assets
remaining as of November 1994.  As of February 1995, RTC estimated
that about $8 billion in assets will be transferred to FDIC when RTC
ceases operations in December 1995.  Further, RTC will be faced with
significant challenges in the task of winding down a large and
complex organization with thousands of personnel and billions of
dollars in assets while attempting to minimize adverse consequences. 
These responsibilities will require substantial attention from both
RTC's top management and the Oversight Board.  In addition, continued
attention to the implementation of the reforms should help ensure
that the reforms' intended benefits are achieved to the fullest
extent possible before RTC ceases its operations. 

At this time, we are not making any recommendations for further
legislative or administrative actions.  However, we will continue to
monitor RTC and Oversight Board activities during the final year of
operation and the transfer of RTC activities to FDIC. 


   COMMENTS ON THE REPORT
------------------------------------------------------------ Letter :9

Generally, RTC officials with whom we discussed this report agreed
that it provides a fair and accurate summary of the manner in which
RTC was implementing the reforms and the progress it has achieved
during the year since the act became law.  In addition, RTC officials
agreed with our assessment of the implementation status for the 20
RTC reforms.  During our discussions, RTC officials provided us with
information that updated and clarified their actions in implementing
various reforms.  We included this information in the report where
appropriate. 

The individuals with whom we discussed the reform implemented by the
Oversight Board agreed that the information we included in our report
about the audit committee provides an accurate summary of the
Oversight Board's efforts to implement this reform.  Also, the
individuals agreed that the appropriate implementation status for
this reform is action taken/monitoring required. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this report to RTC's Deputy and Acting Chief
Executive Officer, the Chairman of the Thrift Depositor Protection
Oversight Board, the Chairman of the Federal Deposit Insurance
Corporation, and other interested congressional committees and
subcommittees.  Copies will be made available to others upon request. 

This report was prepared under the direction of Ronald L.  King,
Assistant Director, Government Business Operations Issues.  Other
major contributors to this report are listed in appendix VIII.  If
you have any questions, please contact me on (202) 736-0479. 

Gaston L.  Gianni, Jr.,
Associate Director, Government
 Business Operations Issues


DESCRIPTION OF FOUR CATEGORIES OF
MANAGEMENT REFORMS AND PROGRESS IN
THEIR IMPLEMENTATION
=========================================================== Appendix I

For reporting purposes, we organized the 21 reforms into 4 categories
that reflected the organizational components that would be
responsible for taking the implementation actions.  These categories
are:  (1) RTC general management functions; (2) RTC resolution and
disposition activities; (3) RTC contracting, including related MWOB
activities; and (4) the Oversight Board reform. 


   GENERAL MANAGEMENT FUNCTIONS
--------------------------------------------------------- Appendix I:1

In the first category--general management functions--we included the
10 reforms that are the responsibility of RTC's corporate top
management.\1 These reforms require RTC to

  -- develop and maintain a comprehensive business plan (reform 1);

  -- maintain a division of minority and women's programs (reform 4);

  -- appoint a CFO (reform 5);

  -- correct problems identified by auditors, including GAO and the
     RTC IG (reform 9);

  -- appoint an AGC for professional liability (reform 10);

  -- maintain an effective management information system (reform 11);

  -- maintain effective internal controls (reform 12);

  -- fill any vacancies that occur in specific senior executive
     positions (reform 13);

  -- itemize specific expenditures for the year, and disclose
     salaries and other compensation paid during the year to
     directors and senior executive officers at thrifts under RTC's
     control as part of RTC's annual report (reform 14); and

  -- ensure that every field office has a client responsiveness unit
     (reform 21). 


--------------------
\1 These included the CEO; CFO; General Counsel; Vice President for
Planning, Research, and Statistics; and Vice President for
Administration. 


   RESOLUTION AND DISPOSITION
   ACTIVITIES
--------------------------------------------------------- Appendix I:2

In the second category--resolution and disposition activities--we
included the three reforms that are the responsibility of RTC's Vice
Presidents of Asset Management and Sales, and Resolutions.  These
reforms require RTC to: 

  -- revise marketing procedures for disposing of real property
     (reform 2),

  -- justify asset disposition methods used to sell certain real
     property and nonperforming real estate loans (reform 3), and

  -- give preference to minority acquirers of thrifts in PMNs (reform
     17). 


   CONTRACTING AND RELATED MWOB
   ACTIVITIES
--------------------------------------------------------- Appendix I:3

In the third category--contracting and related MWOB activities--we
included the seven reforms that are the responsibility of RTC's Vice
Presidents for Contracts, Oversight and Evaluation; Minority and
Women's Programs; and Legal Services.  These reforms require RTC to

  -- revise contracting procedures for basic ordering agreements to
     ensure that small businesses and MWOBs are not inadvertently
     excluded (reform 6);

  -- maintain procedures and uniform standards for contracting with
     private contractors and overseeing contractors' and
     subcontractors' performance (reform 7);

  -- establish guidelines for achieving the goal of a reasonably even
     distribution of contracts awarded and fees paid to various MWOB
     and MWOLF subgroups (reform 15);

  -- prescribe regulations specifying sanctions, including contract
     penalties and suspensions, for subcontracting and joint venture
     violations (reform 16);

  -- set procedures and goals for MWOB and MWOLF subcontracting
     (reform 18);

  -- ensure that, in awarding competitively bid contracts, procedures
     used are no less stringent than those in effect when the RTC
     Completion Act became law in December 1993 (reform 19); and

  -- improve the management of legal services (reform 20). 


   OVERSIGHT BOARD REFORM
--------------------------------------------------------- Appendix I:4

The fourth category contains a single reform that requires the
Oversight Board to establish an audit committee to monitor and advise
RTC on its efforts to improve internal controls and implement audit
recommendations.  The Oversight Board is responsible for implementing
this reform.  (Reform 8.)

As shown in table I.1, RTC and the Oversight Board have made progress
in implementing the management reforms since our interim report was
issued in June 1994. 



                                    Table I.1
                     
                     Progress in Implementing the Management
                       Reforms Since the Interim Report Was
                               Issued in June 1994



        Ma
        na
        ge
        me
        nt      Work        Action                Work        Action
Reform  re      in          taken/      Action    in          taken/      Action
number  fo      progre      monitoring  complete  progre      monitoring  comple
\a      rm      ss          required    d         ss          required    ted
------  --  --  ------  --  ----------  --------  ------  --  ----------  ------
1       Co                                                   
        mp
        re
        he
        ns
        iv
        e
        bu
        si
        ne
        ss
        pl
        an

2       Ma                                                   
        rk
        et
        in
        g
        re
        al
        pr
        op
        er
        ty
        on
        an
        in
        di
        vi
        du
        al
        ba
        si
        s

3       Di                                                   
        sp
        os
        it
        io
        n
        of
        re
        al
        es
        ta
        te
        re
        la
        te
        d
        as
        se
        ts

4       Di                                                               
        vi
        si
        on
        of
        mi
        no
        ri
        ti
        es
        an
        d
        wo
        me
        n
        pr
        og
        ra
        ms

5       Ap                                                               
        po
        in
        t
        CF
        O

6       Ba                                                   
        si
        c
        or
        de
        ri
        ng
        ag
        re
        em
        en
        ts

7       Im                                                   
        pr
        ov
        e
        co
        nt
        ra
        ct
        in
        g
        sy
        st
        em
        s
        an
        d
        co
        nt
        ra
        ct
        or
        ov
        er
        si
        gh
        t

8       Au                                                   
        di
        t
        co
        mm
        it
        te
        e

9       Co                                                   
        rr
        ec
        ti
        ve
        re
        sp
        on
        se
        s
        to
        au
        di
        t
        pr
        ob
        le
        ms

10      AG                                                   
        C
        fo
        r
        Pr
        of
        es
        si
        on
        al
        Li
        ab
        il
        it
        y

11      Ma                                       
        na
        ge
        me
        nt
        in
        fo
        rm
        at
        io
        n
        sy
        st
        em
        s

12      In                                                   
        te
        rn
        al
        co
        nt
        ro
        ls

13      Fi                                                   
        ll
        ce
        rt
        ai
        n
        va
        ca
        nt
        po
        si
        ti
        on
        s

14      An                                                   
        nu
        al
        re
        po
        rt
        in
        g

15      MW                                       
        OB
        co
        nt
        ra
        ct
        pa
        ri
        ty
        gu
        id
        el
        in
        es

16      Su                                                   
        bc
        on
        tr
        ac
        ti
        ng
        an
        d
        jo
        in
        t
        ve
        nt
        ur
        es
        co
        nt
        ra
        ct
        sa
        nc
        ti
        on
        s

17      Mi                                                   
        no
        ri
        ty
        pr
        ef
        er
        en
        ce
        -
        th
        ri
        ft
        s
        in
        PM
        Ns

18      Su                                                   
        bc
        on
        tr
        ac
        ts
        wi
        th
        MW
        OB
        s

19      Co                                                   
        nt
        ra
        ct
        in
        g
        pr
        oc
        ed
        ur
        es

20      Ma                                                   
        na
        ge
        me
        nt
        of
        le
        ga
        l
        se
        rv
        ic
        es

21      Cl                                                               
        ie
        nt
        re
        sp
        on
        si
        ve
        ne
        ss
        un
        it
        s
--------------------------------------------------------------------------------
\a This is the reform number from the RTC Completion Act.  (See apps. 
III through VI.)


OBJECTIVES, SCOPE, AND METHODOLOGY
========================================================== Appendix II

Our objectives, as set forth in the RTC Completion Act, were to
determine (1) the manner in which RTC and the Oversight Board were
implementing the 21 management reforms mandated by the act and (2)
the progress being made by RTC and the Oversight Board toward
achieving full compliance.  The act required that we issue an interim
report with our preliminary findings 6 months after the RTC
Completion Act became law in December 1993, and a final report. 

To accomplish these two objectives, we reviewed RTC's management
reform status reports to identify actions taken to implement the
reforms' requirements.  After identifying the actions, we interviewed
responsible RTC officials and Oversight Board staff to obtain
information on the status and progress being made in implementing
them.  The officials we interviewed were in the following RTC
headquarters divisions:  Administration; Asset Management and Sales;
Contracts, Oversight and Evaluation; Resolutions; CFO; Legal
Services; and Minority and Women's Programs.  We also interviewed RTC
officials in the Department of Information Resources Management
(DIRM); Office of Planning, Research and Statistics; and Office of
IG.  Also, we interviewed field office officials in Atlanta; Dallas;
Denver; Kansas City; Newport Beach, CA; and Valley Forge, PA; to
verify the status and progress of the actions being implemented at
field locations. 

We reviewed supporting documents for evidence that planned actions
had been completed, as well as recently issued reports by RTC's IG
covering the management reform areas.  We also monitored the monthly
Oversight Board meetings at which RTC reported its progress in
implementing the reforms.  To determine whether internal control
corrective actions had been completed as reported, we randomly
selected 50 of 191 completed actions and reviewed the supporting
documentation.  Further, we used our other ongoing work at RTC to
verify that 27 additional actions had been completed. 

On the basis of information obtained from RTC and the Oversight
Board, each reform was classified into one of the following three
status categories: 

(1)work in progress (i.e., some planned actions have been implemented
and others are under way);

(2)action taken/monitoring required (i.e., planned actions have been
taken to fulfill the requirements of the reform, but monitoring is
needed to ensure full compliance); and

(3)action completed (i.e., all planned actions have been
implemented). 

From January 18 through January 31, 1995, we discussed a draft of
this report with RTC and the Oversight Board.  Specifically, we
discussed the detailed information on each of the 20 RTC reforms with
the RTC senior officials responsible for implementing these reforms
or their designated representatives.  For the Oversight Board reform,
we discussed detailed information with the individual on the
Oversight Board staff who is responsible for monitoring the
implementation of the reform.  In addition, on February 7, 1995, we
discussed the contents of the draft report with representatives from
RTC's Office of the CFO and Office of Planning, Research and
Statistics, who are responsible for tracking RTC's progress in
implementing the reforms.  These individuals agreed that the
information in the draft report provided a fair and accurate summary
of the manner in which RTC and the Oversight Board implemented the
reforms and the progress they made to achieve full compliance.  Also,
these individuals agreed with our determinations of the
implementation status for each of the 21 reforms.  We included their
comments where appropriate throughout the report. 


ADDITIONAL DETAILS ON ACTIONS
TAKEN BY RTC TO IMPLEMENT REFORMS
INVOLVING ITS GENERAL MANAGEMENT
FUNCTIONS
========================================================= Appendix III


   REFORM 1:  COMPREHENSIVE
   BUSINESS PLAN
   [SEC.  21A(W)(1)]\1
------------------------------------------------------- Appendix III:1

Requirements of the Reform:  This reform requires that RTC establish
and maintain a comprehensive business plan covering RTC's operations,
including the disposition of assets, for the remainder of its
existence.




         STATUS
--------------------------------------------------- Appendix III:1.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:1.1

RTC developed a comprehensive business plan that set forth the major
goals to be achieved during the remainder of its existence.  The plan
was submitted to Congress on December 15, 1993.  It established the
following six goals for RTC to strive for in completing the thrift
clean up. 

  -- Minimize losses on resolutions of failed thrifts. 

  -- Maximize recoveries from asset disposition while minimizing the
     impact on local markets and preserving the availability of
     affordable housing. 

  -- Maximize opportunities for minorities and women in all RTC
     activities. 

  -- Strengthen safeguards against waste, fraud, and mismanagement. 

  -- Pursue professional liability cases on a cost effective basis
     and refer criminal cases to the Department of Justice. 

  -- Terminate RTC operations and transfer personnel, assets, and
     systems to FDIC by December 31, 1995. 

Depending on RTC's accomplishments, the business plan is to be
revised where needed.  RTC's Office of Planning, Research and
Statistics is responsible for maintaining the business plan and
updating it as circumstances warrant. 

In June 1994, RTC provided to the Oversight Board a new report that
provided detailed information on the extent to which RTC was
achieving the plan's goals.  This report, which is to be prepared
quarterly, is used to monitor RTC's performance against the plan. 
For example, as shown in Figure III.1, the 1994 quarterly reports
include information comparing RTC sales and collections goals with
actual results. 

   Figure III.1:  Comparison of
   1994 RTC Quarterly Sales and
   Collections Goals With Actual
   Results

   (See figure in printed
   edition.)

\a The figure for actual sales and collections results as of December
31, 1994 is a preliminary figure subject to adjustment. 

Source:  RTC data. 

In August 1994, RTC issued an updated business plan.  The revised
plan incorporated the requirements of the RTC Completion Act
management reforms that were not included in the original plan.  For
example, RTC changed its asset disposition priorities for performing
1-4 family mortgage loans to include the minority preference
resolutions program.\2 Also, asset sales projections were updated. 
For example, for 1994, total projected book value reductions from
sales and collections increased from $35.7 billion to $43.8 billion
and for 1995, decreased from $15.2 billion to $12.1 billion. 

The underlying economic assumptions and annual asset sales goals in
the revised plan generally appear to be reasonable.  However, as
discussed in our report entitled Resolution Trust Corporation:  Data
Limitations Impaired Analysis of Sales Methods (GAO/GGD-93-139, Sept. 
27, 1993), without consistent and comprehensive sales and related
financial data for individual asset dispositions, which RTC does not
have, it cannot accurately measure the effectiveness of its sales
strategies. 


--------------------
\1 Refers to section 21A of the Federal Home Loan Bank Act, which was
amended by section 3 of the RTC Completion Act.  The reforms in
appendixes III through VI are numbered as they are in the RTC
Completion Act. 

\2 Under this program, minority acquirers of thrifts in PMNs may
exercise an option to purchase performing 1-4 family mortgage loans
from RTC at fair market value.  (See reform 17 in app.  IV.)


   REFORM 4:  DIVISION OF
   MINORITIES AND WOMEN PROGRAMS
   [SEC.  21A(W)(4)]
------------------------------------------------------- Appendix III:2

Requirements of the Reform:  This reform requires that RTC maintain a
division of minorities and women programs.  Also, RTC is required to
establish the head of this division as a vice president and member of
RTC's Executive Committee.



         STATUS
--------------------------------------------------- Appendix III:2.0.1

Action completed. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:2.1

This reform was fully implemented before the RTC Completion Act
became law.  In April 1993, RTC elevated the Assistant Vice President
of the Department of Minority and Women's Programs to Vice President
and moved the program up in the organizational level to the Division
of Minority and Women's Programs.  As a Vice President, the head of
the division serves on RTC's Executive Committee. 


   REFORM 5:  CHIEF FINANCIAL
   OFFICER
   [SEC.  21A(W)(5)]
------------------------------------------------------- Appendix III:3

Requirements of the Reform:  This reform requires RTC's CEO to
appoint a CFO.  The CFO is to have no operating responsibilities
other than as CFO and is to report directly to RTC's CEO.  In
addition, the CFO will have similar authority and duties pursuant to
the Chief Financial Officers Act of 1990\3 that the Oversight Board
determines to be appropriate for RTC. 


--------------------
\3 31 U.S.C.  901 (Supp.  IV 1993). 


         STATUS
--------------------------------------------------- Appendix III:3.0.1

Action completed. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:3.1

This reform was implemented before the RTC Completion Act became law. 
On June 1, 1993, RTC appointed a CFO who reports directly to RTC's
CEO and is responsible for all RTC accounting and financial
management activities.  Along with this appointment, RTC consolidated
various accounting and financial management functions into a division
headed by the CFO and placed specific units under the CFO's
direction.  These units included the offices of Budget and Planning,
Management Control, Field Accounting and Asset Operations, and
Accounting Services.  Also, the financial service centers at the four
main RTC field offices in Atlanta, Dallas, Denver, and Kansas City
report directly to the CFO. 

In addition, the CFO made changes to enhance RTC's efforts to
strengthen and improve internal control systems.  These changes
included the following: 

  -- Developing and implementing systems to monitor ongoing audits,
     assuring appropriate monitoring and reporting to management of
     findings related to internal control systems, and tracking the
     progress of timely and effective corrective actions. 

  -- Setting up quality assurance units in the financial service
     centers with direct reporting responsibility to the Vice
     Presidents, who in turn report to the CFO. 

  -- Allocating additional resources to the internal control function
     in order to assure that the commitment to improve and strengthen
     internal control is achieved. 

  -- Developing and presenting a required nationwide internal control
     training program for all RTC management personnel. 

In our report, Resolution Trust Corporation:  Status of Management
Efforts to Control Costs (GAO/GGD-94-19, Oct.  28, 1993), we
recommended that RTC support its newly appointed CFO in efforts to
control costs, strengthen the use of the budget process as a fiscal
control tool, and improve the usefulness of expense accounting
information so it could be used as a managerial tool.  In response to
our recommendations, the CFO was given clear authority over all
agency financial functions, including cost control, and several
financial integrity initiatives were implemented. 

In March 1994, the CFO informed us that RTC estimated that its
efforts, up to that date, in implementing our cost control audit
recommendations had resulted in cost savings of about $30 million in
the operations of three financial service centers.  These savings
were achieved by renegotiating with contractors for better rates,
consolidating and standardizing contracts, as well as improving
centers' operational efficiencies.  In September 1994, the CFO
advised us that RTC had strengthened its budget process to better
control and reduce expenses.  Due in part to measures implemented to
control expenses, RTC's spending against its 1994 budget of $2.64
billion for noninterest expenses was about $2.20 billion, or 17
percent ($437 million) under budget. 

Furthermore, the CFO's operating philosophy was designed to improve
RTC's responsiveness to audit findings in general.  This operating
philosophy consists of the following: 

  -- Encouraging positive and concise responses to audit findings and
     recommendations. 

  -- Utilizing audit findings to assist in managing RTC. 

  -- Making a strong commitment to taking corrective actions for
     improvements. 

  -- Encouraging external audit entities to report issues to RTC
     management for early resolution of control weaknesses or cost
     recovery. 

  -- Maintaining a strong audit control and follow-up system. 


   REFORM 9:  CORRECTIVE RESPONSES
   TO AUDIT PROBLEMS
   [SEC.  21A(W)(9)]
------------------------------------------------------- Appendix III:4

Requirements of the Reform:  This reform requires RTC to respond to
problems identified by auditors of its financial and asset
disposition operations, including problems identified in IG, GAO, and
the Oversight Board's audit committee reports; or to certify to the
Oversight Board that no action is necessary or appropriate.


         STATUS
--------------------------------------------------- Appendix III:4.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:4.1

Under Secretary Bentsen's 9-point plan, RTC was directed to implement
a system--such as is required under Office of Management and Budget
guidelines for executive agencies--to provide prompt, systematic, and
effective follow-up on the findings and recommendations contained in
the audit reports.  As of December 31, 1994, GAO, IG, and RTC's
Office of Contractor Oversight and Surveillance (OCOS) had issued a
combined total of 835 audit reports as shown in Figure III.2. 

   Figure III.2:  Number of Audit
   Reports Issued by GAO, IG, and
   OCOS from January 1, 1990,
   through December 31, 1994

   (See figure in printed
   edition.)

Note:  The substantial increases in IG and OCOS audit reports in 1993
and 1994 are primarily attributable to final audits at the time
contracts were completed or terminated. 

Source:  GAO and RTC data. 

At the beginning of October 1994, the three audit organizations had
collectively 475 audits under way.  In addition, the IG had plans for
another 125 audits and OCOS had plans for another 250 audits for the
15-month period from October 1994 through December 1995. 

To strengthen its audit resolution controls, on July 20, 1993, RTC
issued Circular 1250.2 Management Decision Process and Audit
Followup.  This directive established a new audit follow-up system
for all internal and external reviews and other evaluations of RTC
organizations, programs, operations, and contractors.  The management
decision and audit follow-up process encompasses all efforts taken by
RTC to address findings, implement accepted recommendations, and
verify completion of corrective actions. 

RTC's process incorporates, as appropriate, the concepts of Office of
Management and Budget Circular A-50 on audit follow-up, although, as
a mixed-ownership government corporation, RTC is not required to
follow this circular.  The audit follow-up system RTC has installed
requires it to

  -- maintain records on the status of audit reports and associated
     recommendations,

  -- track management decisions and final actions,

  -- establish accounting controls over amounts due RTC from
     contractors as a result of costs disallowed by management, and

  -- provide periodic reports to RTC senior management and the
     Oversight Board. 

The audit follow-up directive states that RTC managers at all levels
will ensure completion of corrective actions and submission of
required supporting documentation in a timely manner.  Those managers
responsible for taking corrective actions are required to complete
and sign an "Audit Follow-up Action Certification Statement"
certifying that all necessary corrective actions have been taken and
all necessary documentation has been obtained. 

In March 1993, when the 9-point plan was announced, RTC did not know
the total number of audit recommendations that were still open, from
all sources, that had to be addressed.  Since then, RTC has placed a
high priority on identifying and tracking GAO and IG audit
recommendations and corrective actions.  During 1994, RTC expanded
its focus to include OCOS recommendations resulting from OCOS'
contract audits. 

As of December 17, 1993, when the RTC Completion Act became law, RTC
data indicated that it had completed about 95 percent (1,438 of
1,511) of the actions to implement GAO and IG audit recommendations. 
This percentage does not include actions taken on OCOS
recommendations because, at the time, RTC was not tracking these
actions.  However, during 1994, RTC expanded the scope of its audit
follow-up system to include OCOS findings, recommendations, and
planned corrective actions.  As of January 23, 1995, the percentage
of completed corrective actions to implement GAO, IG, and OCOS audit
recommendations was about 76 percent (3,485 of 4,587).  This decrease
is due primarily to the substantial increase in the number of audit
reports issued by the IG and OCOS during 1993 and 1994.  Table III.1
shows the status of corrective actions on GAO, IG, and OCOS
recommendations, as of January 23, 1995. 



                              Table III.1
                
                 Summary of Corrective Actions on GAO,
                IG, and OCOS Audit Reports Since January
                    1, 1990, as of January 23, 1995


                                                   GAO      IG  OCOS\a
----------------------------------------------  ------  ------  ------
Number of corrective actions RTC management        456   2,115   2,016
 agreed to take
Corrective actions completed                       438   1,712   1,335
Corrective actions expected to be completed         18     403     681
by April 30, 1995                                   13     349     502
by August 31, 1995                                   2       7     178
by December 31, 1995                                 0      12       1
after December 31, 1995                              0       1       0
no completion date set                               3      34       0
----------------------------------------------------------------------
Note:  GAO and IG data includes all planned actions.  OCOS data
includes only planned actions for significant findings identified by
OCOS in its report abstracts since January 1993. 

\a OCOS Data as of December 31, 1994. 

Source:  RTC Management Reporting System. 

The data in table III.1 do not include audit recommendations for
which a management decision has not been made.  RTC refers to these
recommendations as "unresolved management decisions." These are
situations where RTC management has not yet committed to implementing
a specific audit recommendation or agreed upon the specific actions
to be taken. 

RTC's policy is to make a final management decision on addressing an
audit recommendation as soon as possible, but not later than 180 days
after the date of the final audit report.  Corrective actions are to
begin as soon as practical once the final management decision is
made.  Figure III.3 summarizes the number and age of unresolved
management decisions on GAO, IG, and OCOS recommendations as of
January 23, 1995. 

   Figure III.3:  Summary of
   Unresolved Management Decisions
   by Audit/Review Source, as of
   January 23, 1995

   (See figure in printed
   edition.)

Source:  RTC Management Reporting System. 

Although there are a number of instances for which RTC management and
the auditors have not agreed upon specific actions to be taken to
implement audit recommendations, RTC has been working to reduce the
number of unresolved management decisions.  However, it still has a
high number of recommendations for which RTC has not reached
agreement with the auditors.  As of January 23, 1995, the total
number of unresolved management decisions was 703.  This condition is
primarily the result of 225 audit reports issued by OCOS in 1994. 

As shown in Figure III.3, nearly all of the unresolved management
decisions that exceed RTC's goal of 180 days, as of January 23, 1995,
were on OCOS recommendations (234 of 254).  Our analysis showed that
86 of these recommendations had been unresolved for over 540 days, or
3 times RTC's goal.  The oldest were two recommendations from a
report issued November 14, 1991, that had been unresolved for 1,166
days.\4

GAO's recommendation tracking system differs from RTC's system. 
GAO's system tracks recommendations closed while RTC's system tracks
corrective actions completed.  As of January 23, 1995, GAO's tracking
system showed that 88 of 120 (73 percent) of the recommendations that
we have made to RTC since January 1990 were closed.  Thirty-two (27
percent) of our recommendations were still open.  These
recommendations are listed in appendix VII.  Figure III.4 shows the
status of GAO recommendations as of January 23, 1995. 

   Figure III.4:  Status of GAO
   Recommendations Made to RTC
   Since January 1990, as of
   January 23, 1995

   (See figure in printed
   edition.)

Source:  GAO data. 

Audit reports issued by the IG and OCOS often include questioned
costs associated with the activities they reviewed.  None of GAO's
audit reports questioned specific costs.  Table III.2 shows the
status of IG and OCOS questioned costs, as of January 19, 1995. 



                              Table III.2
                
                Status of Questioned Costs by the IG and
                      OCOS, as of January 19, 1995

                         (Dollars in millions)

Questioned costs                                    IG    OCOS   Total
----------------------------------------------  ------  ------  ------
Total identified                                  $161     $79    $240
Documented or otherwise resolved by management      41      51      92
Pending management decision                         43      20      73
Management agreed to pursue                         77       8      85
----------------------------------------------------------------------
Source:  RTC data. 

Of the $240 million of total questioned costs identified by the IG
and OCOS, RTC management has agreed to pursue $85 million.  Also, in
taking action to address audit findings, RTC management identified an
additional $23 million of questioned costs, which raises the total
amount being pursued from $85 million to $108 million.  Table III.3
shows the status of management's pursuit of the questioned costs, as
of January 19, 1995. 



                              Table III.3
                
                Status of Questioned Costs Being Pursued
                  by RTC Management, as of January 19,
                                  1995

                         (Dollars in millions)

Questioned costs                                    IG    OCOS   Total
----------------------------------------------  ------  ------  ------
Total costs being pursued by management           $100      $8    $108
Recovered                                           51       4      55
Written-off                                          4       1       5
In process                                          45       3      48
----------------------------------------------------------------------
Source:  RTC data. 

In January 1995, RTC reported to the Oversight Board Audit Committee
that it had recovered $55 million of the $240 million identified by
the IG and OCOS as questioned costs.\5

Reform 9 also requires RTC to notify the Oversight Board when no
action is needed or appropriate in response to an audit
recommendation.  In such instances, RTC's procedures require the CFO,
on behalf of the CEO, to certify accordingly to the Oversight Board. 
RTC has reviewed all of its GAO and IG audit resolution actions since
December 17, 1993.  On November 16, 1994, the CFO informed the
Oversight Board that RTC field office vice presidents and senior
headquarters managers have determined and certified that in certain
instances no action was required on 2 GAO and 57 IG recommendations. 
Such circumstances occurred, for example, when a property was sold, a
former contractor was no longer in business, or the estimated cost of
litigation or other recovery attempts would exceed the potential
recovery amount.  We concur with RTC's decisions on the two GAO
recommendations.  In each case, we agreed that implementing the
recommendation was not feasible. 

While RTC has completed actions to establish an audit follow-up
system, RTC plans to continue monitoring audit resolution activities
with this system to ensure that (1) as many recommendations as
feasible are fully implemented prior to RTC's termination and (2) any
open recommendations, which are still valid at that time, such as
those related to questioned contract costs, are transferred to FDIC
for final action.  RTC plans to focus special attention on
recommendations in contract audit reports issued by OCOS and the IG
in the final year of RTC operation. 


--------------------
\4 Termination of Ralph Edgar Group, Inc.  Asset Management
Contracts, RTC Office of Contractor Oversight and Surveillance
(OCOSCOS-91-02-SP, Nov.  14, 1991). 

\5 GAO did not audit or verify the accuracy of these figures. 


   REFORM 10:  ASSISTANT GENERAL
   COUNSEL FOR PROFESSIONAL
   LIABILITY
   [SEC.  21A(W)(10)]
------------------------------------------------------- Appendix III:5

Requirements of the Reform:  The reform requires RTC to appoint,
within the Division of Legal Services, an AGC for Professional
Liability.  The AGC is to (1) direct the investigation, evaluation,
and prosecution of all professional liability claims involving RTC
and (2) supervise all legal, investigative, and other personnel and
contractors involved in the litigation of such claims.  Also, the AGC
is required to semiannually submit to Congress a comprehensive
litigation report on all civil actions in which RTC is a party that
were initiated or pending during the period covered by the report and
on other activities of the AGC.  These reports are due on April 30
and October 31 of each year. 


         STATUS
--------------------------------------------------- Appendix III:5.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:5.1

By the time the RTC Completion Act became law, the position for an
AGC for Professional Liability had already been established and
filled.  Subsequently, the AGC was given the responsibilities of the
statutory position and actions were completed to implement the
mandated organizational changes and fulfill the semiannual reporting
requirements.  RTC plans to continue monitoring the results of these
actions to ensure that (1) a unified legal and investigative team is
maintained and (2) the semiannual reports on the professional
liability program are submitted to Congress as required. 

At the time that the act became law, RTC's investigators and its
attorneys were in two different organizational units.  RTC's AGC for
Professional Liability believes that this reform's intent is to
ensure that RTC professional liability personnel, including
investigators and attorneys, operate as a fully unified legal and
investigative team, able to make decisions and recommendations on
professional liability issues in a coordinated manner. 

RTC took its first formal step toward implementing these
organizational changes when RTC's General Counsel issued a memorandum
dated March 25, 1994.  The memorandum informed affected RTC staff
that the reform required a unified management structure for the
professional liability program and the incorporation of the
Investigations Unit into the Legal Services Division. 

In May 1994, RTC's Acting CEO and its General Counsel each signed an
organization chart that showed the Office of Investigations to be a
unit within the Division of Legal Services.  During April, May, and
June, a series of delegations of authority were issued to further
implement the organizational changes.  On July 18, 1994, a memorandum
issued jointly by RTC's AGC for Professional Liability and the
Director of its Office of Investigations restated and redefined the
roles and responsibilities of RTC's Professional Liability Section
and its Office of Investigations. 

These actions provided the framework for implementing the required
changes.  RTC plans to continue monitoring and evaluating the
effectiveness of these organizational changes, and if additional
actions are needed, they are to be taken in order to assure a
complete unification of the legal and investigative team. 

On October 31, 1994, RTC submitted to Congress its second semiannual
report for the period ending September 30, 1994.\6 It contained
information on initiated and pending civil actions, program
achievements, and impediments to RTC's ability to assert claims.  In
addition, the second semiannual report noted that "the [Professional
Liability Section] managerial reforms required by the [RTC
Completion] Act have been fully implemented."


--------------------
\6 Professional Liability Section Semiannual Report, for the period
April 1, 1994 through September 30, 1994, RTC (Oct.  31, 1994). 


   REFORM 11:  MANAGEMENT
   INFORMATION SYSTEM
   [SEC.  21A(W)(11)]
------------------------------------------------------- Appendix III:6

Requirements of the Reform:  This reform requires RTC to maintain an
effective management information system capable of providing complete
and current information to the extent that the provision of such
information is appropriate and cost-effective.



         STATUS
--------------------------------------------------- Appendix III:6.0.1

Work in progress. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:6.1

Secretary Bentsen's March 1993 9-point plan included a reform that
required RTC to improve its management information systems.  At that
time, RTC established three objectives to implement this reform:  (1)
improve the quality of data in its systems, (2) enhance information
systems to support business needs, and (3) improve information
provided to senior executives for decisionmaking. 

When the RTC Completion Act became law in December 1993, it included
a similar reform that required RTC to maintain a management
information system capable of providing complete and current
information.  To implement the act's reform, RTC decided to address
only the first two objectives that it initially established to
address the reform under Secretary Bentsen's plan.  According to
officials in DIRM, the third objective was dropped because RTC's
senior executives had not identified any information needs that would
require systems' modifications. 

RTC's information systems remain critical to its efforts to manage
and sell failed thrift assets and to FDIC's task of assuming
responsibility for any remaining RTC operations after December 31,
1995.  In the past, RTC's information system problems included
unclear or changing requirements, poor response time, difficulty of
use, and inaccurate and incomplete data.  Over the last 2 years, RTC
has made many improvements.  Its system requirements are now better
defined, and it has completed all of its system development projects. 
In addition, it has modified its systems to improve response times
and make them easier to use. 

Accurate and complete information is still critical to RTC's ability
to efficiently and effectively dispose of assets.  Poor information
can increase the uncertainty faced by investors and, therefore, may
reduce the prices that they are willing to pay for RTC's assets.  In
June 1994, RTC completed initial data quality action plans for its 17
critical information systems.  RTC uses these 17 systems to manage
unsold assets, support financial transactions, and report on
activities in which congressional oversight committees have had
significant interest.  A major component of RTC's strategy to improve
the quality of data in these systems is the use of computer software
to identify problems such as missing or inconsistent data. 

While RTC is making progress in improving the quality of data in its
systems, some data quality problems continue.  On November 30, 1994,
RTC had unsold real estate with a total book value of about $2
billion and unsold loans with a total book value of about $17
billion.  RTC's December 1994 internal reports showed that about 9
percent of unsold real estate records in the Real Estate Owned
Management System (REOMS) had computer detectable errors, such as
missing data, and about 19 percent had potential errors called
warnings.  For example, a large discrepancy between the book value
and appraised value of an asset is called a warning.  Warnings
require follow up to determine whether the questionable data is
correct.  Also, RTC reports showed data quality improvements in the
Central Loan Database (CLD), which includes information on loans and
which is used to help develop loan sales initiatives.  As of October
1994, the number of loan records with one or more computer detectable
errors was about 19 percent compared to 57 percent when we analyzed
the CLD data in December 1993. 

Although RTC is continuing its data quality program, RTC officials
stated that further reductions in the percentage of computer
detectable errors in both REOMS and CLD will be difficult to achieve,
and errors may increase over the next several months.  Officials gave
three reasons for this view:  (1) as asset sales occur, those assets
for which there is deficient data are more likely to remain unsold
and become an increasing percentage of the total loan portfolio or
real estate property inventory; (2) much of the deficient data
predates 1992 and is either unavailable or not easily accessible; and
(3) as RTC reduces staffing levels, there will be fewer resources to
research potential data errors.  In addition, with fewer resources,
it will become increasingly difficult to ensure that data errors are
corrected. 

For these reasons, RTC is reassessing its efforts to improve the
quality of data in the 17 major systems to help ensure that these
efforts are properly focused on the data most critical to completing
its mission.  Its goal is to target critical data elements that, if
not correct, could have a significant negative impact on the
management of assets or the accuracy of information reported to
oversight committees.  This reassessment is expected to be completed
by the end of March 1995. 

We agree with this approach in RTC's final year of existence.  The
ultimate value of RTC's efforts, however, depends on its ability to
complete the implementation of the data quality action plans in time
to affect current operations and on RTC's ability to sustain
improvements in data quality.  By concentrating on the most critical
data elements that are important to managing and selling assets, RTC
should make the best use of its efforts.  In addition, the benefits
of better data should also help FDIC when it assumes responsibility
for those assets that remain to be sold after RTC's termination. 
Furthermore, RTC's ongoing need for up-to-date, accurate, and
complete corporate information is intensified by its need for
information to support appropriate short-term business decisions,
given that RTC's responsibilities will soon transfer to FDIC. 

The Secretary of the Treasury, in his capacity as Chairman of the
Oversight Board, will need similar information to carry out his
responsibility for overseeing the transfer of RTC personnel and
systems to FDIC, as required under section 7 of the RTC Completion
Act.  This section requires that in the transfer of RTC systems to
FDIC, any RTC management, resolution, or asset disposition system
that the Secretary of the Treasury determines, after considering the
recommendations of the interagency RTC/FDIC transition task force,
has benefited RTC shall be transferred to and used by FDIC.  Also,
section 7 requires that RTC personnel involved with these systems who
are eligible for transfer to FDIC shall be transferred for continued
employment.  In this area, RTC has begun working with FDIC to
identify systems and data that could be transferred to FDIC as it
picks up responsibility for RTC's activities. 

Under the second objective, RTC is selectively enhancing its primary
information systems that support its financial operations and asset
disposition activities.  A total of 11 enhancements are under way or
have been completed for 4 primary systems at an estimated cost of
about $1 million.  RTC expects this work to be completed by the end
of March 1995.  The systems to be enhanced are the (l) Control Totals
Module, which is used to post summary asset related financial
transactions to the general ledger; (2) Warranties and
Representations Accounts Processing System, which tracks information
for each asset sale that includes a representation and warranty; (3)
Seller Financing System's Commercial and Multi-Family module, which
maintains data RTC needs to close on loans secured by commercial real
estate properties; and (4) Asset Manager System, which is a cash
management system that captures all income and expenses associated
with RTC assets managed by Standard Asset Management and Disposition
Agreement (SAMDA) contractors. 

Although RTC dropped the third objective--to improve information to
senior executives for decisionmaking--RTC officials told us that the
needs of senior executives continue to be considered as they
implement the second objective of enhancing systems to support
business needs and modify management information reports.  Our
interim report noted that we believed that the third objective was
still relevant because of RTC's ongoing need for up-to-date,
accurate, and complete information, especially in light of the
pending transition of RTC responsibilities to FDIC.  In response to
our concern, in November 1994, DIRM completed a survey to determine
whether there were any unmet senior management reporting needs.  The
survey results showed that RTC managers were generally pleased with
the information systems and the reports available to them. 


   REFORM 12:  INTERNAL CONTROLS
   AGAINST FRAUD, WASTE, AND ABUSE
   [SEC.  21A(W)(12)]
------------------------------------------------------- Appendix III:7

Requirements of the Reform:  This reform requires RTC to maintain
effective internal controls designed to prevent fraud, waste, and
abuse; identify any such activity should it occur; and promptly
correct any such activity.





         STATUS
--------------------------------------------------- Appendix III:7.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:7.1

On March 27, 1992, RTC issued Circular 1250.l, Internal Control
Systems, that established its internal control program and requires
managers to (1) identify activities or functions (assessable units)
subject to risk; (2) conduct an assessment and rate the
susceptibility of the function or activity to risk (vulnerability
assessment); (3) schedule high-risk functions for annual examination
(management control plan); (4) conduct detailed examination (internal
control review) of the function to determine if internal controls and
procedures are current, adequate, and cost effective; and (5) develop
and implement corrective actions to resolve deficiencies and
strengthen controls. 

Due to the high cost of resolutions and the volume of the assets
under its control, RTC needs a strong internal control structure to
protect against loss and provide accurate reporting.  To address this
need, RTC has implemented procedures to assess the effectiveness of
its internal controls, to report the results of that assessment, and
to track the status of weaknesses identified by the internal process,
as well as those identified by GAO and RTC's IG.  RTC also trained
more than 1,000 managers and senior personnel in the concepts of
RTC's internal control system and the new audit follow-up procedures. 

On March 31, 1994, RTC issued its third annual report on its system
of internal controls as of December 31, 1993.  RTC reported that
during 1993 it had stepped up its efforts to correct internal control
deficiencies in all of its high-risk areas.  Specifically, it
reported that additional staff and contractor support resources were
acquired and dedicated to correcting previously identified material
weaknesses and nonconformances, increasing contractor oversight, and
completing development and implementation of needed information
systems and information system modifications.  The report identified
five high-risk areas in its operations.  These areas were:  (1)
contracting systems/systems oversight; (2) accounting, financial
management and reporting, and operations; (3) asset management and
disposition; (4) information systems management; and (5) legal
services. 

RTC stated in the report that during 1993 it had completed 191 of the
223 actions planned to correct material weaknesses and material
nonconformances, which had been identified in 1993 and prior years,
as shown in table III.4.  RTC expects to complete planned actions on
the remaining 32 material weaknesses and material noncomformances
during 1994. 



                              Table III.4
                
                  Status of Planned Actions to Correct
                    Material Weaknesses and Material
                 Nonconformances Identified in 1993 and
                              Prior Years

                                       Action
                                            s               Actions in
                                       planne     Actions   process as
                                         d in   completed    of 12/31/
High-risk area                           1993     in 1993           93
-------------------------------------  ------  ----------  -----------
Contracting systems/systems oversight      40          29           11
Accounting, financial management and       58          51            7
 reporting, and operations
Asset management and disposition           84          80            4
Information systems management             28          22            6
Legal services                             13           9            4
======================================================================
Totals                                    223         191           32
----------------------------------------------------------------------
Source:  RTC 1993 Internal Control Report, March 31, 1994. 

We tested these results to determine whether the actions indicated as
completed had actually been accomplished.  We randomly selected 50 of
the 191 actions RTC reported it had completed during 1993.  RTC
provided documentary evidence for 44 of the 50 actions showing that
the planned actions had been completed.  For the other six actions,
RTC did not have adequate supporting documentation in its files,
although we have no evidence that indicates that the actions were not
completed.  Furthermore, on the basis of work done and documentation
gathered on other assignments, we confirmed the completion of 27
additional planned actions not included above. 

Also, our work showed that one action, which RTC reported as
completed had not corrected the targeted internal control weakness. 
RTC reported that, as of December 1993, suspense items were being
cleared within 60 days.  However, although RTC's clearance of
suspense items had improved, our 1993 financial audit work showed
that cash items were not always posted within 60 days.  Subsequently,
RTC improved its performance.  Current RTC reports show that as of
November 1994, 97 percent of the items placed in suspense are being
posted within the 60-day goal. 


   REFORM 13:  FAILURE TO APPOINT
   CERTAIN OFFICERS OF THE
   CORPORATION
   [SEC.  21A(W)(13)]
------------------------------------------------------- Appendix III:8

Requirements of the Reform:  Under this reform, the failure to fill
any positions established by section 21A of the Federal Home Loan
Bank Act (12 U.S.C.  1441a) or any vacancy in any such positions,\7
is to be treated as a failure to comply with the requirements of the
management reforms.  RTC is required to ensure that any vacancies in
these senior level positions are filled.  If additional RTC funding
in excess of $10 billion is needed, the Secretary of the Treasury
must certify that RTC has taken action necessary to comply with the
requirements of the management reforms or is making adequate progress
towards full compliance. 


--------------------
\7 These include the RTC's Deputy CEO; General Counsel; CFO; Vice
President for Minorities and Women Programs; Assistant General
Counsel for Professional Liability; and an executive-level position
for pursuing cases, civil claims, and administrative actions against
institution affiliated parties of thrifts under RTC's jurisdiction. 


         STATUS
--------------------------------------------------- Appendix III:8.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:8.1

By appointing individuals to the positions identified in section 21A
of the Federal Home Loan Bank Act, RTC has fulfilled the initial
requirements of this reform.  However, RTC officials recognize--and
we agree--that oversight must be maintained so that if a vacancy
occurs in any of these positions, appropriate steps can be taken to
quickly appoint replacements. 

Through December 31, 1994, the positions required by this reform
remained filled. 


   REFORM 14:  REPORTS (DISCLOSURE
   OF EXPENDITURES AND PUBLIC
   DISCLOSURE OF SALARIES)
   [SEC.  21A(W)(14)]
------------------------------------------------------- Appendix III:9

Requirements of the Reform:  This reform requires RTC to include in
its annual report an itemization of specific expenditures during the
year covered by the report.  Also, the annual report is to disclose
salaries and other compensation paid during the year to directors and
senior executive officers at any thrift for which RTC was appointed
conservator or receiver.





         STATUS
--------------------------------------------------- Appendix III:9.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
----------------------------------------------------- Appendix III:9.1

As part of its 1993 annual report, which was issued in September
1994, RTC included information on (1) the failed thrifts resolved
during 1993 and the amount of loss funds used for each resolution
transaction and (2) the salaries and other compensation paid to
senior executive officers at all the thrifts that were in RTC's
conservatorship program during 1993.  The report showed that no
compensation was paid to directors of thrifts in conservatorship
because RTC did not retain any of the directors.  Also, RTC did not
appoint new directors for these thrifts.  Furthermore, thrifts in
receivership do not have directors or officers and therefore, no
disclosure of salaries and other compensation is required. 

RTC plans to ensure that similar information is included in its 1994
and 1995 annual reports. 


   REFORM 21:  CLIENT
   RESPONSIVENESS UNITS [SEC. 
   21A(W)(21)]
------------------------------------------------------ Appendix III:10

Requirements of the Reform:  This reform requires RTC to ensure that
every RTC regional office has a client responsiveness unit
responsible to the RTC's ombudsman.



         STATUS
-------------------------------------------------- Appendix III:10.0.1

Action completed. 


      DESCRIPTION OF RTC ACTIONS
---------------------------------------------------- Appendix III:10.1

According to the RTC ombudsman, the client responsiveness program was
established in July 1992.  The purpose of the program was to (1)
ensure that RTC employees responded to inquiries, complaints, and
requests for general assistance from the public--whom RTC generally
refers to as clients--in a timely and accurate manner and (2) provide
resolutions to such inquiries, complaints, and requests that would be
equitable to both the client and RTC. 

To implement the reform, RTC updated its policy directive on the
client responsiveness program.  In August 1994, RTC's Deputy and
Acting CEO distributed the updated directive to all RTC employees. 
According to the RTC ombudsman, this action was taken to reinforce
the importance of the program and ensure that all RTC employees were
aware of the standardized procedures for responding to client
inquiries and complaints.  In distributing the updated directive,
RTC's Deputy and Acting CEO also highlighted how the program was
designed to ensure that RTC would be as responsive as possible to the
public, in keeping with the recommendations of the National
Performance Review that identified ways in which government agencies
can improve their methods for dealing with and responding to the
public.\8

To track its workload under the client responsiveness program, RTC
set up three categories of contacts it receives:  (1) general
assistance, which includes requests that can be resolved and answered
quickly and do not require research or consultation with other RTC
personnel, such as requests for directions to an RTC office; (2)
inquiries, which include questions or requests for assistance from
clients that take more time to resolve than do general assistance
requests because they require some research or consultation with
other RTC personnel, such as questions about the disposition of a
specific asset; and (3) complaints, which involve clients who are
dissatisfied or have expressed grievances in dealing with RTC. 
According to RTC, during the period June 1994 through December 1994,
RTC received a total of 19,300 general assistance requests,
inquiries, and complaints.  Figure III.5 shows a percentage breakdown
of these three categories of client contacts that RTC received during
this period. 

   Figure III.5:  Percentage of
   General Assistance Requests,
   Inquiries, and Complaints RTC
   Received During the Period June
   1994 through December 1994

   (See figure in printed
   edition.)

Source:  RTC ombudsman's office. 

The RTC ombudsman oversees the client responsiveness program by
requiring that monthly reports be prepared to provide information on
the extent of client responsiveness activities in RTC headquarters
and the six field offices.  The reports include such data as the
number of general assistance requests, inquiries, and complaints
received and the number of inquiries and complaints resolved. 
Because general assistance requests are resolved in a single
telephone contact, RTC does not maintain statistics on the time it
takes to resolve such requests.  However, because inquiries and
complaints require additional research, RTC keeps track of the length
of time it takes to resolve them. 

The updated client responsiveness directive dated August 5, 1994,
included a time standard of 15 business or working days for resolving
clients' inquiries and complaints.  In the monthly reports, RTC
includes data on the average time it takes to resolve inquiries and
complaints.  This figure varies from month to month, depending on the
number of inquiries and complaints received and resolved and their
complexity.  Most recently, in December 1994, the average resolution
time for inquiries and complaints was about 12 business days. 

According to the RTC ombudsman, complaints generally comprise the
smallest percentage of the three types of client contacts that RTC
receives.  During the period June 1994 through December 1994, the
complaints most often involved client concerns about (1) information
on RTC-controlled assets, (2) performance by RTC contractors, and (3)
communications with RTC. 

Since the RTC Completion Act became law, RTC has ensured that all its
field offices had client responsiveness units.  Also, the RTC
ombudsman has provided policy guidance and direction to the managers
of the client responsiveness departments in the six field offices and
ensured that the program is administered consistently. 


--------------------
\8 The National Performance Review was a major management reform
initiative that identified ways to make the government work better
and cost less.  Its September 1993 report made nearly 400
recommendations for improving operations in a wide range of
government programs and activities (From Red Tape to Results: 
Creating a Government That Works Better and Costs Less, report of the
National Performance Review, Vice President Al Gore, Sept.  7, 1993). 


ADDITIONAL DETAILS ON ACTIONS
TAKEN BY RTC TO IMPLEMENT REFORMS
INVOLVING ITS RESOLUTION AND
DISPOSITION ACTIVITIES
========================================================== Appendix IV


   REFORM 2:  MARKETING REAL
   PROPERTY ON AN INDIVIDUAL BASIS
   [SEC.  21A(W)(2)]
-------------------------------------------------------- Appendix IV:1

Requirements of the Reform:  This reform established requirements
concerning how RTC marketed and justified the disposition of real
property.  Specifically, RTC is required to market any undivided or
controlling interest in real property assets on an individual basis
(excluding assets transferred in purchase and assumption transactions
and assets transferred to a new thrift organized by RTC under section
11(d)(2)(F) of the Federal Deposit Insurance Act) for at least 120
days before making these assets available for sale or other
disposition on a portfolio basis or otherwise included in a
multiasset sales initiative. 

Also, RTC is required to publish regulations that (1) implement these
marketing requirements and (2) justify in writing the inclusion of
real property assets in a portfolio or other multiasset sales
initiative after the 120-day marketing period. 


         STATUS
---------------------------------------------------- Appendix IV:1.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------ Appendix IV:1.1

On April 15, 1993, RTC's Vice President for Asset Management and
Sales issued a memorandum to RTC senior managers and SAMDA
contractors stating that all real property assets must be marketed
for at least 120 days before being offered in multiasset sales
initiatives, such as portfolio sales.  Auctions of single real
property assets were exempt from this requirement.  The memorandum
further stated that real property assets remaining unsold after 120
days of active marketing may be included in multiasset sales
initiatives only after meeting certain requirements.  Specifically,
RTC asset specialists were required to substantiate that including
these real property assets in multiasset sales initiatives would
result in a greater return to RTC than if the assets were sold
individually.  These justifications would be included in the
specialist's case memorandum requesting approval to dispose of assets
on a portfolio basis. 

In November 1994, RTC published in the Federal Register a final rule
adopting the policies and procedures for implementing the
requirements of this reform.  However, RTC field office officials
believe that the reform's requirements had minimal effect on their
operations because

  -- inventories of real property assets have decreased,

  -- remaining real property assets generally did not meet the
     criteria established by the reform, and

  -- they have been successfully selling real property assets
     individually through sealed bids and auctions and believe that
     they are getting a good return. 

According to RTC officials, shortly after the RTC Completion Act
became law, efforts were initiated to ensure implementation of the
reform's requirements.  For example, training on the reform's
requirements was provided to RTC field office officials who had been
delegated specific authority to approve multiasset sales initiatives. 
Also, as part of its internal control reviews, RTC monitors the field
offices' management of remaining asset inventories and sales
initiatives to ensure compliance with the reform's requirements. 


   REFORM 3:  DISPOSITION OF REAL
   ESTATE RELATED ASSETS
   [SEC.  21A(W)(3)]
-------------------------------------------------------- Appendix IV:2

Requirements of the Reform:  This reform establishes various
requirements for the disposition of real property and nonperforming
real estate loan assets.  Specifically, before selling such assets,
RTC must assign the responsibility for the management and disposition
of such assets to a qualified person or entity.  This responsibility
includes (1) analyzing each asset and considering alternative
disposition strategies, (2) developing a written management and
disposition plan for the asset, and (3) implementing this plan for a
reasonable period of time.  However, the asset may be included in a
bulk transaction if RTC determines in writing that this method of
asset disposition would maximize net recovery to RTC while providing
opportunity for broad participation by qualified bidders, including
MWOBs. 

Also, the reform exempted the following assets from these
requirements:  (1) assets transferred in purchase and assumption
transactions; (2) assets transferred to a new institution organized
by RTC under section 11(d)(2)(F) of the Federal Deposit Insurance
Act; (3) nonperforming real estate loan assets with a book value of
not more than $1 million; and (4) real property assets with a book
value of not more than $400,000.  In addition, nonperforming real
estate loan assets and real property assets above these dollar values
could be exempted from the reform's requirements if RTC determines in
writing that other disposition methods would bring RTC a greater
return. 


         STATUS
---------------------------------------------------- Appendix IV:2.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------ Appendix IV:2.1

In February 1994, RTC issued a memorandum that informed staff of the
requirements to prepare the appropriate written documents to justify
the sales of certain nonperforming real estate loans and other real
property.  In November 1994, RTC issued in the Federal Register a
final rule that adopted the policies and procedures for implementing
the reform's requirements.  RTC monitors the implementation of the
reform's requirements through various methods, including contractor
oversight, the internal control review process, and program
compliance reviews. 


   REFORM 17:  MINORITY PREFERENCE
   IN ACQUISITION OF THRIFTS IN
   PREDOMINANTLY MINORITY
   NEIGHBORHOODS
   [SEC.  21A(W)(17)]
-------------------------------------------------------- Appendix IV:3

Requirements of the Reform:  The requirements of this reform are as
follows:  (1) subject to the least-cost test in section 13(c)(4) of
the Federal Deposit Insurance Act, RTC is to give preference to
offers from minority bidders for acquiring thrifts located in PMNs;
(2) any minority bidder is to be eligible for capital assistance
under the minority interim capital assistance program, provided that
granting the assistance is consistent with the least-cost test; (3)
in connection with the acquisition of a thrift in a PMN by a minority
acquirer, RTC is permitted to transfer performing assets from other
failed thrifts in addition to the performing assets of the thrift
being acquired; and (4) in connection with the acquisition of a
thrift in a PMN by a minority acquirer, the acquirer is to have first
priority in RTC's disposition of the performing assets. 


         STATUS
---------------------------------------------------- Appendix IV:3.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------ Appendix IV:3.1

RTC has issued several policies and procedures to implement this
reform.  In July 1994, RTC published a final rule in the Federal
Register that defines "predominantly minority neighborhood" as any
U.S.  Postal ZIP code area in which 50 percent or more of the
residents are minorities according to the most recent Census data. 
However, RTC has the discretion to use other data that may indicate
more accurate neighborhood boundaries. 

Also, RTC issued a directive that summarized its minority preference
resolutions program in three parts.  First, RTC will offer a failed
minority-owned thrift to investors of the same ethnic group as the
failed minority-owned thrift before offering it to others.  Second,
bidding preferences will be given to offers from minority-owned
financial institutions to acquire any failed thrift whose home office
is located in a PMN or has 50 percent or more of its offices in PMNs
provided this preference results in the least cost to RTC.  Moreover,
if a minority bidder is within 10 percent of the highest bid made by
the nonminority bidder, then a "best and final" round of bidding will
take place between the best minority and nonminority bids.  RTC also
may provide to a winning minority bidder (1) interim capital
assistance of up to two-thirds of the required regulatory capital,
(2) the option to purchase performing loans (1-4 family mortgages),
and (3) branch facilities located in a PMN owned by RTC on a rent
free basis for 5 years.  Third, RTC will reoffer a failed thrift or
its branches to minority-owned financial institutions and make
interim capital assistance available if no other acceptable bid not
dependent on interim capital assistance is received. 

In addition, RTC made significant changes to its minority preference
resolutions program.  For example, RTC announced that expanded
opportunities and incentives would be available for minorities to
purchase failed financial institutions.  RTC informed nonminority
acquirers of offices located in PMNs of minority interest in
acquiring these offices and encouraged them to sell such branches to
minority acquirers, particularly in cases where the nonminority
acquirer planned to close the office.  Under this approach, RTC
assistance will also be made available to minority acquirers as if
the minority acquirer had originally purchased the office. 

Furthermore, RTC announced a pilot initiative for the sale of RTC's
10 remaining thrifts in PMNs.  Under the pilot initiative, RTC plans
to permit the highest minority bidder to match the highest
nonminority bid, provided that the minority bid is within 10 percent
of the highest premium. 

As of December 31, 1994, RTC had resolved all but 1 of the 21 thrifts
that had offices in PMNs.  Collectively, the 21 thrifts had 58 PMN
offices.  Of these offices, twelve minority bidders acquired 36
percent (21 of 58).  As part of these resolutions, almost $20 million
in capital assistance was provided to these acquirers.  In addition,
rent free offices and the option to purchase assets at market price
were also made available.  According to RTC, for 4 thrifts, no
minority bids were received, and for 5 thrifts, the minority bid was
not within the 10 percent of the majority bid. 

As part of RTC's minority preference resolutions program, minority
acquirers of thrifts in PMNs are provided opportunities to purchase
performing 1-4 family mortgage loans.  As of February 1, 1995, a
total of about $207 million in loans had been sold through this
program.  In addition, two transactions were still pending at that
time.  Seven acquirers have purchased loans, one additional acquirer
has a purchase that is pending, and two acquirers did not exercise
their purchase options.  As required by the RTC Completion Act, we
are reviewing RTC's valuation of loans offered through this program
and will report on the results of our review later in 1995. 


ADDITIONAL DETAILS ON ACTIONS
TAKEN BY RTC TO IMPLEMENT REFORMS
INVOLVING ITS CONTRACTING AND
RELATED MWOB ACTIVITIES
=========================================================== Appendix V


   REFORM 6:  BASIC ORDERING
   AGREEMENTS
   [SEC.  21A(W)(6)]
--------------------------------------------------------- Appendix V:1

Requirements of the Reform:  This reform included the following
requirements:  (1) RTC is required to revise the procedure for
reviewing and qualifying applicants for eligibility for future basic
ordering agreements to ensure that small businesses, minorities, and
women are not inadvertently excluded from eligibility for such
agreements and (2) to ensure maximum participation by MWOBs, RTC
shall review all lists of eligible contractors and prescribe
regulations and procedures. 


         STATUS
----------------------------------------------------- Appendix V:1.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------- Appendix V:1.1

In May 1994, RTC issued a policy memorandum to all Minority and
Women's Program Directors that is designed to ensure a full and
thorough review of source lists for prospective RTC contract
solicitations.  RTC has also included these requirements in the CPPM
revision 7, dated May 16, 1994.  In addition, on February 8, 1995,
RTC published in the Federal Register its final rule entitled
Minority- and Women-Owned Business and Law Firm Program that, among
other things, defines procedures for ensuring that MWOBs and MWOLFs
are not excluded from eligibility for task orders and other
contracting activities.  Although the issuance of these documents
fulfills the requirements of the reform, RTC plans to monitor
contracting activities to ensure that the procedures are fully
implemented on any new contracts awarded. 


   REFORM 7:  IMPROVEMENT OF
   CONTRACTING SYSTEMS AND
   CONTRACTOR OVERSIGHT
   [SEC.  21A(W)(7)]
--------------------------------------------------------- Appendix V:2

Requirements of the Reform:  This reform requires RTC to (1) maintain
procedures and uniform standards for entering into contracts with
private contractors, and for overseeing contractors' and
subcontractors' performance and their compliance with the terms of
the contracts and applicable regulations, orders, policies, and
guidelines, so that RTC's operations are carried out in as efficient
and economical a manner as practicable; (2) commit sufficient
resources, including personnel, to contract oversight and the
enforcement of all laws, regulations, orders, policies, and standards
applicable to RTC contracts; and (3) maintain uniform procurement
guidelines for basic goods and administrative services to prevent the
acquisition of such goods and services at widely different prices. 


         STATUS
----------------------------------------------------- Appendix V:2.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------- Appendix V:2.1

Before the RTC Completion Act became law, RTC had already issued the
CPPM to provide uniform standards and procedures that RTC staff must
follow in awarding all RTC contracts for other than legal services. 
Also, RTC had committed additional resources to contractor oversight. 
In May 1993, the RTC Executive Committee approved 214 additional
positions for contracting issues.  These positions were added to
provide greater emphasis on contracting, contractor oversight,
internal controls, and other related functions to implement Secretary
Bentsen's 9-point plan for RTC. 

Concerning uniform standards for the oversight of RTC contractors and
subcontractors, chapter 10 of the CPPM provides detailed requirements
for RTC contractor oversight.  At the time the contract is awarded,
RTC staff are required to complete a contract administration plan to
ensure that they have a common understanding of both RTC's and the
contractor's obligations under the contract.  Also, a June 1993
reorganization of RTC's contracting program placed additional
emphasis on contract oversight issues.  For subcontractor oversight,
RTC has always required that its contractors, not RTC employees,
monitor the work of subcontractors.  According to RTC contracting
officials, if subcontracting is a significant portion of a contract,
plans for monitoring the subcontractors should be included in the
contract administration plan.  RTC officials told us that they
believed the act did not require a revision to its subcontractor
oversight policy. 

In February 1994, RTC's Office of General Counsel developed a program
for warranting Legal Division employees to execute contracts for
legal services and take related actions on behalf of RTC.  The goal
of the program is to promote quality performance and effective
contracting by establishing uniform procedures and minimum standards
for certification, maintenance, and termination of warrants issued to
"Legal Officers." In the February 7, 1994, Federal Register, RTC
notified the public that only legal officers who are issued a warrant
can execute contracts for legal services on behalf of RTC. 

In April 1994, RTC issued procedures to implement our recommendation
that SAMDA contractors be required to regularly report on steps taken
to oversee their subcontractors.  In our interim report, we observed
that by ensuring the full implementation of these procedures, RTC
could help reduce the vulnerability of its property management
subcontractors to potential fraud, waste, and mismanagement. 

RTC has issued some additional procedures for the oversight of
property management subcontractors and plans to continue reviewing
its contractor oversight activities to identify areas for
improvement.  In addition, because many of its contracts are being
completed, RTC has increased its focus on another aspect of contract
administration--contract closing. 

After the terms of a contract have been accomplished, it needs to be
closed out.  To do so, contracting officers are required by RTC's
CPPM to determine, among other things, that (1) all deliverables,
including reports, have been received by RTC and accepted; (2) final
payment has been made to the contractor; (3) all collections of funds
due to RTC have been completed; (4) all financial documents are in
the file; (5) all RTC property has been returned and accounted for;
and (6) all RTC files have been returned.  According to RTC
estimates, at least 12,000 prime contracts issued before December 31,
1992, with estimated fees of about $2.8 billion, still need to be
closed. 

In April 1994, we discussed this matter with RTC officials who agreed
that to help protect RTC's interests, the contract close-out process
should be done as soon as possible after contract completion. 
Subsequently, RTC stepped up its actions to ensure that contracts are
closed.  In June 1994, RTC revised its contracting information system
to include additional information about contract closings.  Further,
the RTC Office of Contracts and OCOS established a joint program to
identify whether certain contracts with fees in excess of $500,000
should be audited.  During its last year of operation, RTC plans to
continue its efforts to ensure that all contracts are properly
closed.  Further, to the extent that contracts remain open at RTC's
termination, RTC is working to help ensure that FDIC will be prepared
to complete this important task. 

In addition, to prevent the acquisition of basic goods and
administrative services at widely different prices, RTC issued an
interim policy revision to its CPPM on October 7, 1994.  The revision
defines goods and administrative services as including--but not
limited to--the purchase of furniture, fixtures, and equipment;
publishing and printing; computer equipment and services; and
day-to-day services, such as the procurement of supplies and the
employment of security guards.  The revision is applicable to all
purchases of goods and administrative services with fees greater than
$100,000.  Under this revision, the contracting officer is to develop
a written price history for procurements of similar services.  If the
proposed contract price is within 10 percent of the price history for
similar services, the proposed contract price would satisfy the
requirement of the CPPM.  This change was formally incorporated into
revision 8 to the CPPM, which was issued on February 15, 1995. 


   REFORM 15:  MINORITY- AND
   WOMEN-OWNED BUSINESSES CONTRACT
   PARITY GUIDELINES
   [SEC.  21A(W)(15)]
--------------------------------------------------------- Appendix V:3

Requirements of the Reform:  This reform requires RTC to establish
guidelines for achieving the goal of a reasonably even distribution
of contracts awarded to various MWOB and MWOLF subgroups whose total
number of certified contractors comprise not less than 5 percent of
all MWOB and MWOLF certified contractors.  These guidelines may
reflect the regional and local geographic distributions of minority
subgroups.  The distribution of contracts should not be accomplished
at the expense of any eligible MWOB or MWOLF in any subgroup that
falls below the 5-percent threshold in any region or locality. 


         STATUS
----------------------------------------------------- Appendix V:3.0.1

Work in progress. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------- Appendix V:3.1

As discussed in our interim report, RTC planned to issue written
guidelines that were designed to establish procedures for ensuring
that a reasonably even distribution of contracts and commensurate
fees are awarded to each minority subgroup.  In developing the
guidelines, an analysis of the level of contracting activity to MWOBs
and MWOLFs by subgroups for each field office was completed in
February 1994.  This analysis included the identification and
assessment of the ethnic and gender representation among the MWOB and
MWOLF contractors and the actual level of contract awards to each
group on a region-by-region basis.  Headquarters is to provide
ongoing technical assistance to the field offices in their efforts to
increase participation levels in any subgroup where the distribution
of contracts falls below the 5-percent threshold within any region. 
Initially, RTC had planned to issue these guidelines by the end of
July 1994. 

Although final written guidelines have not yet been issued to the
field offices, in November 1994, RTC headquarters provided draft
guidelines to these offices.  The draft guidelines were intended to
provide RTC field offices with information on how they should be
working to achieve parity in their contracting activities.  RTC's
objectives are to ensure that the number of contracts awarded and the
amount of fees paid to minority subgroups equals the subgroups'
percentage of representation in RTC's national certified database. 

RTC agrees that although draft guidelines for achieving contract
parity have been provided to RTC field offices, the status of this
reform should remain work in progress until the guidelines have been
finalized.  According to an RTC official, the guidelines were not
issued in July 1994 as initially planned mainly because work was
still being done to issue the final rule on Minority- and Women-Owned
Business and Law Firm Program that would implement reforms 6, 16, and
18.  Since the final rule was published on February 8, 1995, RTC is
preparing the contract parity guidelines, which are scheduled to be
issued by the end of March 1995.  After the guidelines have been
finalized and distributed to RTC field offices, RTC plans to monitor
contracts awarded and fees paid to ensure that the guidelines are
fully implemented. 


   REFORM 16:  CONTRACT SANCTIONS
   FOR FAILURE TO COMPLY WITH
   SUBCONTRACT AND JOINT VENTURE
   REQUIREMENTS
   [SEC.  21A(W)(16)]
--------------------------------------------------------- Appendix V:4

Requirements of the Reform:  This reform requires RTC to prescribe
regulations that provide sanctions, including contract penalties and
suspensions, for violations by contractors of requirements relating
to subcontractors and joint ventures.






         STATUS
----------------------------------------------------- Appendix V:4.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------- Appendix V:4.1

RTC developed specific sanctions for violations of MWOB and MWOLF
subcontracting and joint venture requirements that were incorporated
in the final rule entitled Minority- and Women-Owned Business and Law
Firm Program published in the Federal Register on February 8, 1995. 
These sanctions, which include contract termination, suspension, or
exclusion from the RTC contracting program, have been incorporated in
the CPPM.  In addition, RTC officials told us that all standard
contract agreements have been modified to include these sanctions. 
RTC plans to monitor contractor performance to ensure that the
sanctions are imposed when appropriate. 


   REFORM 18:  SUBCONTRACTS WITH
   MWOBS
   [SEC.  21A(W)(18)]
--------------------------------------------------------- Appendix V:5

Requirements of the Reform:  This reform includes the following
requirements:  (1) RTC is to establish reasonable goals for
contractors to subcontract with MWOBs and MWOLFs, and (2) with
certain exceptions, RTC may not contract for services, including
legal services, under which the contractor would receive fees or
other compensation equal to or greater than $500,000, unless RTC
requires the contractor to subcontract with MWOBs and MWOLFs and pay
fees or other compensation to the subcontractor in an amount
commensurate with the amount of services it provided. 

This reform allows RTC to exclude a contract from these requirements
if the CEO determines in writing that the subcontracting requirement
would substantially increase the cost of contract performance or
undermine the contractor's ability to perform its obligations.  The
reform also permitted RTC to grant waivers of these requirements to
contractors who certify that no eligible MWOBs are available to enter
into subcontracts and provide an explanation for the basis of such a
determination.  Also, any granting of such a waiver shall be made in
writing by RTC's CEO.  Finally, the reform required RTC to report to
Congress a description of such exceptions and waivers granted during
each quarter. 


         STATUS
----------------------------------------------------- Appendix V:5.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------- Appendix V:5.1

On February 8, 1995, RTC published in the Federal Register its final
rule entitled Minority- and Women-Owned Business and Law Firm
Program, which established required MWOB and MWOLF subcontracting
goals.  Specifically, RTC required that for all contracts with fees
of $500,000 or more, MWOB/MWOLF subcontracting be 10 percent for
non-MWOB/MWOLF contractors and joint ventures with less than
50-percent MWOB/MWOLF participation, and 5 percent for MWOB/MWOLF
firms or joint ventures with more than 50-percent MWOB/MWOLF
participation.  Although the required subcontracting goals have been
established, RTC plans to monitor the awarded contracts to ensure
that the goals are achieved. 


   REFORM 19:  CONTRACTING
   PROCEDURES
   [SEC.  21A(W)(19)]
--------------------------------------------------------- Appendix V:6

Requirements of the Reform:  This reform requires that:  (1) in
awarding any contract subject to the competitive bidding process, RTC
is to apply competitive bidding procedures that are no less stringent
than those in effect on the date of the enactment of the RTC
Completion Act and (2) nothing in this act, or any other provision of
law, shall supersede RTC's primary duty of minimizing costs to the
taxpayer and maximizing the total return to the government. 


         STATUS
----------------------------------------------------- Appendix V:6.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------- Appendix V:6.1

At the time of our interim report, RTC had taken preliminary action
to implement the first of the two sections of this reform.  After the
act became law, RTC revised the CPPM to incorporate the reform's
competitive bidding procedures requirement as a policy.  RTC
officials said that revision 7 of RTC's CPPM was carefully reviewed
to ensure compliance with this reform.  They also said that as
contracting policies are updated, headquarters staff will ensure that
RTC is in compliance with the requirement. 

In February 1995, RTC issued revision 8 to its CPPM, which included
the second section of the reform requiring that no provision of the
RTC Completion Act or any other provision of law would supersede
RTC's primary duty of minimizing costs to the taxpayer and maximizing
the total return to the government.  Also, RTC's Director of
Contracting Policy and Major Dispute Resolution stated that he has
emphasized compliance with this requirement during 1994 training
sessions for RTC contracting staff.  The Director of RTC's Office of
Contracts is responsible for ensuring that all future contracting
policies and procedures comply with the reform's requirements.  RTC
plans to monitor the implementation of this reform through the Office
of the Vice President for Contracts, Oversight and Evaluation. 


   REFORM 20:  MANAGEMENT OF LEGAL
   SERVICES
   [SEC.  21A(W)(20)]
--------------------------------------------------------- Appendix V:7

Requirements of the Reform:  Under this reform, to improve the
management of legal services, RTC is required to utilize staff
counsel when such utilization would provide the same level of quality
in legal services as the use of outside counsel at the same or a
lower estimated cost.  Also, RTC may only employ outside counsel (1)
if the use of outside counsel would provide the most practicable,
efficient, and cost effective resolution to the action and (2) under
a negotiated fee, contingent fee, or competitively bid fee agreement. 


         STATUS
----------------------------------------------------- Appendix V:7.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------- Appendix V:7.1

RTC has taken the actions necessary for achieving this reform.  It
has developed a policy and procedures for the selection and
engagement of outside counsel and issued guidelines for determining
whether the engagement of outside counsel for particular matters is
warranted under the requirements of the RTC Completion Act.  However,
as workload and staffing levels change, RTC plans to closely monitor
the effects of its changes to policy and procedures to ensure that it
continues to seek the most practicable, efficient, and cost-effective
resolution to legal matters. 

On July 8, 1994, RTC's General Counsel issued a memorandum
distributing the newly-developed Policy and Procedures for the
Selection and Engagement of Outside Counsel.  The General Counsel
said in that memorandum that the new guidance was effective for all
new engagements, modifications, and terminations after July 8, 1994. 
The policy statement states that the Division of Legal Services will
use its in-house staff when it can to provide the same level of
quality legal services that outside counsel would provide at the same
or a lower estimated cost.  Further, it adds that the Division will
only employ outside counsel when such use provides the most
practicable, efficient, and cost-effective alternative.  The
accompanying procedures require that engagements of outside counsel
be based upon a determination that each of the elements of
practicability, efficiency, and cost effectiveness will be met, and
that the oversight attorney for each engagement document the reasons
for the engagement of outside counsel.  Some RTC officials expressed
their belief that the current policies and procedures have resulted
in a decrease in RTC's use of outside counsel, with RTC's in-house
attorneys doing more of the legal work related to matters such as
bankruptcies. 

The July 1994 policy statement further states that RTC's Division of
Legal Services will only employ outside counsel under a negotiated,
contingent, or competitively bid fee arrangement.  The new procedures
permit four selection methods for engaging outside counsel and
provide guidance on when each of the four methods should be used. 
The procedures also describe the contracting authorities and
responsibilities of various levels of RTC Legal Division officials
and of the Legal Services Committees that must approve legal
contracting decisions in each RTC office. 

On August 26, 1994, RTC's General Counsel issued Guidelines for the
Handling of Matters Within RTC's Legal Division and the Engagement of
Outside Counsel, which are meant to be used in conjunction with the
July 8, 1994, policy and procedures.  These guidelines describe eight
general factors, including availability of staff resources, to be
considered in determining whether particular matters should be
handled by attorneys within the Legal Division (in-house) or referred
to outside counsel.  In addition, the guidelines recognize that other
factors may be relevant to determining whether the use of RTC
attorneys or the engagement of outside counsel will provide the most
practicable, efficient, and cost-effective resolution of a matter. 

The August 26, 1994, guidelines also contain a listing of several
categories of matters that "should generally be handled in-house
unless the caseload and staffing considerations in a particular
office mitigate to the contrary." The guidelines caution that because
workload and staffing levels will vary in each RTC office, senior
legal management in each office will have to reassess, from time to
time, the practicality of handling, or continuing to handle, certain
types of matters in-house.  The guidelines also direct the senior
legal management in each office to "seek to identify regularly
additional categories of matters appropriate for in-house handling,"
and they require that senior legal management monitor compliance with
the guidelines with respect to documenting the reasons for hiring
outside counsel. 

Also, RTC has established a legal services contracting officer
warrant program.  This program is discussed under reform 7. 


ADDITIONAL DETAILS ON ACTIONS
TAKEN BY THE THRIFT DEPOSITOR
PROTECTION OVERSIGHT BOARD TO
IMPLEMENT ITS REFORM
========================================================== Appendix VI


   REFORM 8:  AUDIT COMMITTEE
   [SEC.  21A(W)(8)]
-------------------------------------------------------- Appendix VI:1

Requirements of the Reform:  This reform requires the Oversight Board
to establish and maintain an audit committee whose duties include (1)
monitoring RTC's internal controls; (2) monitoring the audit findings
and recommendations of RTC's IG, the Comptroller General of the
United States, and RTC's response to the findings and
recommendations; (3) maintaining a close working relationship with
RTC's IG and the Comptroller General; (4) regularly reporting any of
its findings and recommendations to RTC and the Oversight Board; and
(5) monitoring RTC's financial operations and reporting any incipient
problem identified to RTC and the Oversight Board. 


         STATUS
---------------------------------------------------- Appendix VI:1.0.1

Action taken/monitoring required. 


      DESCRIPTION OF RTC ACTIONS
------------------------------------------------------ Appendix VI:1.1

The Oversight Board established the audit committee on September 20,
1994.  Three members have been appointed to the committee.  On
November 10, 1994, the Oversight Board adopted a charter for the
audit committee that defined its duties and responsibilities.  The
committee has the following duties: 

  -- monitor RTC's internal controls;

  -- monitor the audit findings and recommendations of RTC's IG and
     GAO, as well as RTC's responses to the findings and
     recommendations;

  -- maintain a close working relationship with the IG and the
     Comptroller General;

  -- regularly report findings and recommendations to RTC and the
     Oversight Board;

  -- monitor RTC's financial operations and report any incipient
     problems identified to RTC and the Oversight Board; and

  -- meet at least quarterly. 

Since the establishment of its charter, the audit committee has held
two meetings, one in November 1994 and one in January 1995.  At the
November meeting, the chairman identified three areas for priority
attention by the committee:  (1) ensuring that RTC and the IG
continue to have an active audit program; (2) reviewing transition
issues, such as asset valuation, staffing, and reserves; and (3)
evaluating RTC procedures as they are changed during RTC's final year
of operation. 


LIST OF OPEN GAO RECOMMENDATIONS
MADE TO RTC, AS OF JANUARY 23,
1995
========================================================= Appendix VII


   CORRECTIVE ACTIONS
   IN PROCESS (TWENTY-THREE
   RECOMMENDATIONS)
------------------------------------------------------- Appendix VII:1


      BANK AND THRIFT FAILURES: 
      FDIC AND RTC COULD DO MORE
      TO PURSUE PROFESSIONAL
      LIABILITY CLAIMS
      (GAO/T-GGD-92-42, JUNE 2,
      1992). 
----------------------------------------------------- Appendix VII:1.1

  -- FDIC and RTC should work together to plan for the future of the
     professional liability program.  This planning needs to address
     how FDIC will assume responsibility for the RTC professional
     liability cases. 


      THRIFT FAILURES:  ACTIONS
      NEEDED TO STABILIZE
      RTC'S PROFESSIONAL
      LIABILITY PROGRAM
      (GAO/GGD-93-105,
      JUNE 28, 1993). 
----------------------------------------------------- Appendix VII:1.2

  -- Analyze and address current and future operational and staffing
     needs of the professional liability program. 

  -- Keep professional liability attorneys informed of agencies'
     plans and decisions concerning the professional liability
     program to help decrease the level of uncertainty surrounding
     the program. 


      RESOLUTION TRUST
      CORPORATION:  LOAN PORTFOLIO
      PRICING
      AND SALES PROCESS
      COULD BE IMPROVED
      (GAO/GGD-93-116,
      JULY 23, 1993). 
----------------------------------------------------- Appendix VII:1.3

  -- Schedule periodic management reviews of the loan portfolio sales
     process to ensure that National Sales Center and field office
     staff are setting reserve prices based on the characteristics of
     the loan portfolios offered for sale. 

  -- Schedule periodic management reviews to ensure that bid packages
     contain accurate and complete information about the loan
     portfolios being sold. 

  -- Schedule periodic management reviews to ensure that bidding
     results are being provided to all investors as quickly as
     possible after the closing of each individual transaction
     without placing the transaction in jeopardy. 

  -- Schedule periodic management reviews to ensure that investors'
     post-closing problems are responded to promptly. 

  -- Schedule periodic management reviews to ensure that loan
     portfolio sales data are collected, summarized, and analyzed
     consistently and comprehensively. 

  -- Schedule periodic management reviews to ensure that the loan
     portfolio sales database provides the information necessary to
     evaluate RTC progress in achieving program goals. 


      RESOLUTION TRUST
      CORPORATION:  OVERSIGHT OF
      SAMDA PROPERTY MANAGEMENT
      CONTRACTORS NEEDS
      IMPROVEMENT (GAO/GGD-94-5,
      NOV.  30, 1993). 
----------------------------------------------------- Appendix VII:1.4

  -- Change RTC's SAMDA performance reviews by completing them more
     than once a year and during those reviews include specific steps
     focused on the SAMDA contractor's efforts to oversee their
     property management contractors or require the SAMDAs to
     regularly report on steps taken to oversee their property
     management contractors. 


      RESOLUTION TRUST
      CORPORATION:  INEFFECTIVE
      MANAGEMENT OF HOMEFED BANK
      ENVIRONMENTAL SERVICES
      CONTRACTING (GAO/GGD-94-62,
      DEC.  28, 1993). 
----------------------------------------------------- Appendix VII:1.5

  -- Reemphasize the importance of supervision and assessment of
     staff performance and ensure that the internal control
     supervision standard is followed. 

  -- Require that sufficient staff are assigned to manage and
     administer contracts and ensure management continuity throughout
     the full term of contracts. 


      FINANCIAL AUDIT:  RESOLUTION
      TRUST CORPORATION'S
      1993 AND 1992 FINANCIAL
      STATEMENTS (GAO/AIMD-94-148,
      JUNE 27, 1994). 
----------------------------------------------------- Appendix VII:1.6

  -- Direct the Corporation staff to monitor implementation and
     progress of the corrective actions related to the weaknesses we
     identified in general controls over some of the Corporation's
     computerized information systems, posting securitization-related
     wire receipts, and reconciliations of receiverships' asset
     balances to detailed asset records. 


      RESOLUTION TRUST
      CORPORATION:  BETTER
      ANALYSES NEEDED BEFORE
      TERMINATING ASSET MANAGEMENT
      CONTRACTS (GAO/GGD-94-147,
      JULY 8, 1994). 
----------------------------------------------------- Appendix VII:1.7

  -- Require SAMDA contract oversight managers to work with the SAMDA
     contractors to help them prepare, summarize, and reconcile their
     asset activity records before the final OCOS reviews. 


      MANAGEMENT LETTER TO RTC'S
      CFO (GAO/AIMD-94-181ML, AUG. 
      30, 1994). 
----------------------------------------------------- Appendix VII:1.8

  -- Periodically review the subrogated claims receivable balances to
     identify situations in which actual recoveries exceed the
     recorded receivable balances prior to receipt of the final
     dividend.  In these situations, we suggest that the Corporation
     immediately record the interest income for the excess
     recoveries. 

  -- Monitor the logs prepared by the field offices to ensure that
     they are submitted to the Corporate Accounting Unit in a timely
     manner and contain all the information needed for the
     reconciliation process for account 060109, Non-cash Recoveries
     on Subrogated Claims. 

  -- Temporarily reopen the general ledgers for the terminated
     receiverships and correct misclassifications. 

  -- Establish procedures to require that all general ledger
     adjustments identified during the monthly reconciliation process
     be forwarded to the Financial Reporting Unit to ensure that all
     adjustments are considered in preparing the financial
     statements. 


      FAILED FINANCIAL
      INSTITUTIONS:  RTC/FDIC RISK
      FRAUD AND MISMANAGEMENT BY
      EMPLOYING THOSE DEEMED
      CULPABLE (GAO/OSI-95-1, OCT. 
      3, 1994). 
----------------------------------------------------- Appendix VII:1.9

  -- Perform employment screening before hiring individuals and
     routinely do so for current employees, using reliable databases
     of individuals found responsible for institution failures. 

  -- Develop reliable databases that will effectively identify
     individuals found culpable in institution failures. 

  -- Share information systematically, enabling each (RTC and FDIC)
     to be aware of those individuals the other has found culpable in
     the failure of federally insured institutions. 

  -- Ensure that personnel guidance is clear and appropriate
     regarding employees and prospective employees for whom the
     Corporation has made culpability determinations. 

  -- Ensure that conservatorship employees who occupy positions with
     responsibilities for asset disposition--such as those performing
     loan workout functions--be included in the employment screening
     process. 


   MANAGEMENT AGREEMENT NOT
   REACHED (NINE RECOMMENDATIONS)
------------------------------------------------------- Appendix VII:2


      RESOLUTION TRUST
      CORPORATION:  ASSET POOLING
      AND MARKETING PRACTICES ADD
      MILLIONS TO CONTRACT COSTS
      (GAO/GGD-93-2, OCT.  7,
      1992). 
----------------------------------------------------- Appendix VII:2.1

  -- Ensure that adequate management controls are maintained over
     SAMDA contracts, particularly in view of the widespread asset
     and subcontractor locations that exist now. 


      RESOLUTION TRUST
      CORPORATION:  ANALYSIS OF
      SELECTED ASSET SALES AND
      FINANCIAL DATA
      (GAO/GGD-94-37,
      FEB.  1, 1994). 
----------------------------------------------------- Appendix VII:2.2

  -- Use the results of these analyses as one of many factors to
     better manage assets and direct disposition efforts in order to
     increase net recoveries. 


      RESOLUTION TRUST
      CORPORATION:  AFFORDABLE
      HOUSING DISPOSITION PROGRAM
      ACHIEVING MIXED RESULTS
      (GAO/GGD-94-202, SEPT.  28,
      1994). 
----------------------------------------------------- Appendix VII:2.3

  -- Establish specific time frames for each multifamily property to
     comply with occupancy requirements, although an exemption should
     be provided when the failure to comply is caused by the law that
     prohibits displacing existing tenants. 

  -- Ensure that complete information on the status of occupancy
     requirements is maintained. 

  -- Determine if stiffer penalties are warranted to encourage
     property owners to comply with occupancy requirements. 

  -- Ensure that all land use restriction agreements are accounted
     for, executed, and recorded. 

  -- RTC/FDIC Transition Task Force consider the issues identified in
     report, especially the weaknesses in RTC compliance monitoring
     program for multifamily properties. 


      RESOLUTION TRUST
      CORPORATION:  BETTER DATA
      COULD IMPROVE EFFECTIVENESS
      OF NONPERFORMING LOAN
      AUCTIONS (GAO/GGD-95-1, NOV. 
      14, 1994). 
----------------------------------------------------- Appendix VII:2.4

  -- Ensure that all loan servicing contracts require loan servicers
     to submit monthly loan status updates of data needed for
     marketing purposes to the CLD contractor. 

  -- Ensure that information provided to investors on loan data
     diskettes or in imaged loan files is valid, complete, well
     documented, and in a format that meets investors' needs. 


MAJOR CONTRIBUTORS TO THIS REPORT
======================================================== Appendix VIII

GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C. 

Anne M.  Hilleary, Evaluator-in-Charge
Hazel J.  Bailey
Tammy R.  Conquest
Leon H.  Green
Carolyn S.  Ikeda
Kenneth E.  John
Michael J.  Koury, Jr.
Katherine M.  Wheeler
Michael M.  Yacura

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Mary Ellen Chervenic
John J.  Reilly, Jr.
Christine A.  Robertson

OFFICE OF GENERAL COUNSEL,
WASHINGTON, D.C. 

Susan S.  Linder

ATLANTA REGIONAL OFFICE

Mario L.  Artesiano
Kevin C.  Handley
Fred Jimenez
Gary M.  Malavenda
Cynthia J.  Scott

DALLAS REGIONAL OFFICE

Patricia J.  Nichol

DENVER REGIONAL OFFICE

John C.  Furutani
Bennet E.  Severson

KANSAS CITY REGIONAL OFFICE

Janet M.  Chapman
Karl G.  Neybert
Marshall S.  Picow
Richard S.  Schupbach


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