AN ANALYSIS OF RESOLUTION TRUST CORPORATION TRANSACTIONS - AUCTION MARKET PROCESS AND PRICING

This article describes the operations of the Resolution Trust Corporat ion (RTC), examines the procedures it employs to resolve distressed Sa vings and Loan scenarios and investigates the pricing of transactions undertaken by the RTC. The RTC has been criticized for allegedly trans ferring properties to acquirers at ''bargain'' prices. The transaction s involving publicly traded acquirers in RTC sales are examined from a n auction theory perspective. Overall, there is little evidence that w inning bidders experience stock price gains. There are, however, subse ts of bidders for which the outcomes are predominantly negative. The o nly category of transactions which provide statistically significant g ains to acquirers are Insured Deposit Transfers.