The Resolution Trust Corporation (RTC) was a US federal agency established in 1989 to manage the closure and resolution of bankrupt thrifts, funded by the federal government and supervised by the FDIC. In 1995, its responsibilities were transferred to the Savings Association Insurance Fund, now the Deposit Insurance Fund, of the FDIC.
The RTC was funded by the federal government and supervised by the Federal Deposit Insurance Corporation (FDIC). Its primary mandate was to handle the disposition of assets from failed thrift institutions, which involved selling off real estate and loan assets, as well as managing the associated liabilities.
The RTC employed various financial models to value the assets of failed institutions. A simple discounted cash flow (DCF) model was often used:
Where:
The RTC played a crucial role in maintaining stability in the U.S. financial system during a period of significant upheaval. By managing and resolving the assets and liabilities of insolvent thrifts, it helped restore confidence in the financial sector and mitigated the economic impact of the savings and loan crisis.
While the RTC was a unique entity tailored to the specific circumstances of the savings and loan crisis, its operational strategies and framework have informed the design of other financial resolution mechanisms globally.