WASHINGTON -- The Resolution Trust Corp. faces liability for as much as $40 million in contractors' fees that may not be justified, according to the General Accounting Office.
The GAO, a congressional investigative agency, said the RTC has paid at least $4.7 million in fees that were not rightfully earned by asset managers.
The RTC may also be liable to pay at least $35 million to managers of loans and real estate that were placed in pools to be sold in bulk, which do not require fee payments.
RTC Staff Doing the Work
While the thrift-cleanup agency is renegotiating its fees with those managers, the RTC has meanwhile paid $143,000 in fees for sales overseen by its own staff, the GAO said.
In the last year or so, the RTC has avoided using the asset managers, in favor of the pooled sales, because "we get better execution that way," an agency spokeswoman said.
Since its inception three years ago, the RTC has awarded 162 contracts to asset managers, who get paid to nurse bad S&L loans or repossessed real estate. They collect separate fees when an asset is sold.
$548 Million in Fees
Contractors including NationsBank Corp. of Charlotte, N.C., J.E. Robert Cos. of Alexandria, Va., Arthur Andersen & Co., Chicago, and Banc One Corp. of Columbus, Ohio, are expected to receive about $548 million in fees to manage failed savings and loans' assets originally valued at $31.5 billion.
One potential RTC liability cited by the GAO involved an Arizona resort that a failed S&L's staff contracted to sell for $5.4 million on March 13, 1991.
Before the sale closed, the property was turned over to an asset manager. The asset manager, which the GAO didn't name, received a $226,000 fee on the sale, even though it has been already in the works.
Separately, a federal judge in Manhattan voided a decision by the RTC to repudiate $2.9 billion of bonds, issued by a failed thrift. The court said the agency did not properly delegate authority to the official who made the decision.