What is an Accelerated Resolution Program?

An Accelerated Resolution Program (ARP) is a scheme or strategy through which assets of failed institutions are sold to large institutions. This is a program devised to resolve failed financial institutions by transferring their insolvency to stronger and solvent institutions. 

In most cases, failed financial institutions are bankrupt and in ruins, the ARP method achieves an easier process of resolving these failed institutions by promptly transferring or selling their assets to healthy institutions. ARP saves expenses and time attributable to insolvency resolution process of failed financial institutions.

How does an Accelerated Resolution Program Work?

ARP became popular during the savings and loans crisis in the 1980s. The savings and loans crisis was a period when 1,043 out of the 3,234 savings and loan (financial and thrift) organizations in the United States failed and became insolvent. The Accelerated Resolution Program (ARP) as a response to the need to resolve failed financial institutions promptly. ARP was designed as a program that hastens the resolve processes that RTC an OTS undertake. 

Basically, ARP transfer or sell the assets of these failed institutions to healthier ones which are often large institutions. Another important goal of ARP is to reduce the costs and time that taxpayers are exposed to when trying to resolve failed institutions. ARP requires little finding from the government, this finding will cover the purchase of bad assets and other losses before ARP is able to sell other good assets of the failed institutions to interested but healthy institutions. 

For example, delinquent loans are difficult to sell, funding from the government capver losses resulting from this type of loan. Any transaction that entails resolving a failed financial institutions done using ARP is regarded as an aided transaction.