DEFINITION of 'Accelerated Resolution Program (ARP)'

A program designed to reduce the time and cost of resolving failed financial institutions. The Accelerated Resolution Program (ARP) is designed to sell the assets of failed institutions, often to other large institutions. The ARP is designed to pass the conservation stage of the insolvency resolution process.

BREAKING DOWN 'Accelerated Resolution Program (ARP)'

The Accelerated Resolution Program (ARP) came to prominence during the savings and loan crisis of the 1980s. In order to improve the speed at which the Resolution Trust Corporation (RTC) - a government organization tasked with managing insolvent financial institution - operated, the Office of Thrift Supervision (OTS) created the ARP.

The goal of the ARP was to sell the assets of a troubled institution – in this case a savings and loan (S&L) bank - before the institution became insolvent. The institutions participating in the program had been losing money, but were not in such bad shape that buyers would not be interested in their assets.

The ARP was designed to reduce taxpayer exposure to the costs associated with bailing out failed banks, but still required funding by Congress in order to purchase bad assets and assist interested financial institutions in the purchase of the good assets of failing banks. The government would only provide a relatively small amount of funds to cover losses, but could also take over bad assets, such as delinquent loans and real estate that were hard to sell. The cost of winding down the failing institutions through the ARP was lower than the government experienced when it managed and dismantled the banks on its own.

When a financial institution, such as a savings and loan bank, was sold by the government through the ARP, the transaction was considered an assisted transaction. Depositors were covered up to the federal limit on their accounts, but shareholders and bondholders were expected to lose some or all of the value of their investment in the financial institution.

RELATED TERMS
  1. Associate In Research And Planning ...

    Associate in research and planning (ARP) is a professional certification ...
  2. Assuming Institution

    Assuming institution is a healthy financial institution that ...
  3. Resolution Trust Corporation - ...

    Resolution Trust Corporation was a temporary federal agency created ...
  4. Asset Valuation Review (AVR)

    Asset valuation review is a process that establishes an estimate ...
  5. Institutional Fund

    An institutional fund is a fund with assets invested by institutional ...
  6. Assisted Merger

    Assisted merger is the bringing together of two or more financial ...
Related Articles
  1. Insurance

    From Booms To Bailouts: The Banking Crisis Of The 1980s

    The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis.
  2. Personal Finance

    3 Financial Resolutions You Can Stick to

    Many people fail to keep their New Year's resolutions because they are too vague. Use these three modified resolutions to get your finances back on track.
  3. Investing

    iShares Silver Trust ETF: Who Is Invested? (SLV)

    Discover the top institutional owners of the iShares Silver Trust exchange-traded fund (ETF), their exact ownership and their recent position adjustments.
  4. Investing

    Institutional Investors Are in Love With ETFs

    A study reveals the growing interest of institutional investors in adopting and using exchange traded funds.
  5. Investing

    Should You Buy Banks' "Toxic" Assets?

    The Public-Private Investment Progam is part of the government's effort to fix the failing financial sector. But is it a good investment?
  6. Small Business

    A New Plan To Prevent Future Bailouts

    This new and innovative plan by the FDIC could help the government avoid the next bailout.
  7. Personal Finance

    Financial Analyst Training & Designation Programs

    Find out how to upgrade your financial skills with a series of analyst designations that are flexible and adaptable to the ever-changing finance industry.
  8. Investing

    Financial Institutions: Stretched Too Thin?

    Find out how to evaluate a firm's loan portfolio to determine its financial health.
  9. Trading

    What is the Difference Between the two?

    The differences between retail and institutional traders lay in the size of the trade, level of sophistication, and the speed of transactions.
RELATED FAQS
  1. What are the 9 major financial institutions?

    There are nine major types of financial institutions. Understand the major types of financial institutions that exist and ... Read Answer >>
  2. Is savings and loan company different from commercial banks?

    Find out how a savings & loan (S&L) company, sometimes also known as a thrift or savings institution, focuses on different ... Read Answer >>
Trading Center