CONSIGNMENT


In real estate finance, consignment refers to the process in which the Federal Savings and Loan Insurance Corporation (FSLIC) replaces the management of an insolvent savings and loan association, but allows the association to continue operating.

Under the Southwest Plan, many savings and loan associations in Texas were placed under a consignment program, in which experienced managers from other S&Ls were recruited to run the associations under federal supervision.

In this process, the FSLIC takes over the management of the insolvent savings and loan association and replaces its board of directors with a new board. The new board is made up of experienced managers from other S&Ls who are recruited to run the association under federal supervision.

The goal of the consignment program is to stabilize the operations of the insolvent savings and loan association and to prevent it from failing. The FSLIC provides financial assistance to the association to help it meet its obligations and to keep it operating until it can be sold or merged with another institution.


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