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1996 Annual Report

Internal Operations

Building on the groundwork laid in the previous year, the FDIC in 1996 continued to focus on organizational and operational efficiency, making significant strides in preparing for the Corporation’s future. A strong banking industry and the projected continued decline in the FDIC’s workload dictated a realignment of key functional areas and further staff reductions throughout the Corporation.

Focus on Planning and Efficiency

Over the past two years, the Corporation has established a comprehensive, corporate-wide planning process to guide its major decisions and activities. The Board of Directors in 1995 approved a five-year strategic plan—the first in the Corporation’s history—that provides the foundation for this new corporate planning process. The plan provides a clear strategic vision for the FDIC, emphasizing its responsibility to identify and address potential problems within the financial industry that might cause losses to the insurance funds. An annual Corporate Operating Plan also was instituted in 1995 for senior management to define and monitor specific projects that contribute to the strategic plan. During the past two years, 189 Corporate Operating Plan projects were initiated (including 36 new projects in 1996), and 85 were completed. Among them were the design and implementation of new systems to increase the efficiency of the examination process (click here) and approval of a procedure to ensure that proposed regulations undergo a thorough cost-benefit analysis before they are issued (click here).

To complete the planning process, an annual Business Plan was initiated in April 1996. Together, the Business Plan and the Corporate Operating Plan provide the framework for the FDIC to carry out its mission, pursue its goals and objectives, and measure performance. A quarterly reporting mechanism will begin in 1997 to provide regular feedback to senior management on the Corporation’s performance against measurable performance indicators. During 1996, each FDIC division and office also developed annual plans for achieving division and office objectives, and the 1997 budget process for the first time was integrated with the business planning process.

Downsizing and Consolidation

The Corporation continued to shrink the size of its workforce substantially during 1996 because of reduced workload. Total FDIC staffing was reduced by approximately 23 percent, from 11,856 on December 31,1995 (including more than 2,000 RTC employees transferred to the FDIC on that date), to 9,151 on December 31, 1996. This was accomplished primarily through the expiration of term and temporary appointments, and the second phase of the highly successful buyout program. The program was open to almost 7,000 FDIC and RTC employees from November 1995 through January 1996. Approximately 300 employees applied for buyouts during the first phase and were required to leave the Corporation by December 31, 1995. About 600 employees applied during the second phase and most left the Corporation at various times during 1996. Both phases of the buyout program saved the Corporation an estimated $97.5 million in employee-related costs. Sylvia Sloan Sylvia Sloan chairs an agency-wide committee to help employees like Matthew Lipinski find new jobs (including through Internet searches) and learn new career skills.
Matthew Lipinski

On October 29, 1996, the Corporation announced plans for further downsizing, with a target of reducing total staffing to between 6,500 and 6,600 employees by December 31, 2000. This announcement was the culmination of a comprehensive six-month review that projected resolutions and asset liquidation workload will remain at historically low levels for at least the next several years. One related action was the Board’s decision in December of 1996 to merge the Division of Depositor and Asset Services and the Division of Resolutions into a new Division of Resolutions and Receiverships (DRR), and to consolidate DRR field operations by the end of 1999. DRR and related legal and other support activities in nine regional and field offices will be consolidated into the FDIC’s Dallas office over the next three years. DRR staffing nationwide will be reduced from 1,819 at year-end 1996 to approximately 500 by December 31, 2000. Legal Division staffing is also expected to decline dramatically, from 1,306 at year-end 1996 to about 600 by December 31, 2000.

Also, a new buyout program was offered to about 2,500 employees in November 1996 to minimize the number of employees who would have to be involuntarily separated as a result of staffing reductions in DRR, the Legal Division, and other divisions and offices. The new buyout program was specifically targeted to those organizations, occupations, and locations within the Corporation that are projected to have excess staffing. (The buyout application period closed on February 28, 1997, and more than 400 participating employees are expected to leave the Corporation over the ensuing six months). For more information on downsizing, click here.

The Corporation also initiated in late 1996 a number of job placement and training initiatives designed to cushion the impact of the DRR field consolidations. For example, a training program was established to help employees become bank examiners in the Division of Supervision or compliance examiners in the Division of Compliance and Consumer Affairs. The Corporation’s Career Transition and Outplacement Program was also expanded to include individualized job search assistance to help eligible employees find employment outside of the FDIC.

Number of Officials and Employees of the FDIC 1995-1996 (year-end)
Total Washington Regional/Field

1996 1995 1996 1995 1996 1995
Executive Officesl 137 96 137 96 0 0
Division of Supervision 2,572 3,055 154 149 2,418 2,906
Division of Compliance and Consumer Affairs 588 463 51 40 537 423
Division of Depositor and Asset Servicesn N/A 2,623 N/A 129 N/A 2,494
Division of Resolutionsn N/A 233 N/A 81 N/A 152
Division of Resolutions and Receivershipsn 1,819 N/A 211 N/A 1,608 N/A
Legal Division 1,306 1,298 518 435 788 863
Division of Finance 726 629 328 279 398 350
Division of Information Resources Management 552 499 434 352 118 147
Division of Research and Statistics 85 51 85 51 0 0
Division of Insurance% 41 1 28 1 13 0
Division of Administration 895 592 477 386 418 206
Office of Inspector General& 285 173 192 156 93 17
Office of Equal Opportunity 64 34 51 28 13 6
Office of the Ombudsman 65 66 23 3 42 63
Office of Internal Control Management 16 N/A 16 N/A 0 N/A
Subtotal-FDIC& 9,151 9,813 2,705 2,186 6,446 7,627
Resolution Trust Corporation& N/A 2,043 N/A 1,065 N/A 978

Total 9,151 11,856 2,705 3,251 6,446 8,605

l Includes the Offices of the Chairman, Vice Chairman, Director (Appointive), Chief Financial Officer, Chief Operating Officer, Deputy to the Chairman for Policy, Executive Secretary, Corporate Communications, Legislative Affairs, and Policy Development.
n In December 1996, the Division of Depositor and Asset Services and the Division of Resolutions were merged to create the new Division of Resolutions and Receiverships.
% The only employee in the Division of Insurance in 1995 was its director, named on October 30.
& Year-end staffing for 1995 has been revised from the figures shown in the 1995 Annual Report.
The year-end 1995 RTC staffing totals include employees who were organizationally transferred from the RTC to the FDIC in spring/summer 1995, but who continued to work exclusively on RTC functions throughout 1995. The RTC totals also include certain FDIC employees in Chicago who were dedicated to RTC functions early in 1995, and who worked exclusively on these RTC functions for the balance of 1995.

Audits, Investigations and Reviews

The Office of Inspector General (OIG) continued to perform independent audits, investigations and other activities related to corporate and receivership programs and operations. The OIG’s mission is to promote economy and efficiency and to detect and prevent fraud and abuse.

The FDIC’s first Presidentially appointed Inspector General, Gaston L. Gianni, Jr., took office in April 1996. The Inspector General Act, as amended by the RTC Completion Act of 1993, requires that the Inspector General be appointed by the President and confirmed by the Senate. The Inspector General keeps the FDIC Board of Directors and the Congress apprised of fraud and serious problems in corporate programs and operations.

For the 12-month period ending September 30, 1996 (the OIG’s reporting period to Congress), the office issued 153 audit and evaluation reports with questioned costs totaling more than $59 million and with various recommendations to improve corporate programs and operations. OIG investigative activities nationwide resulted in nearly $10 million in fines, restitutions and recoveries. Indictments or criminal charges were brought against 51 individuals, while 29 individuals were convicted and 25 individuals or entities were sentenced.

The OIG continued its program of contractor reviews—a joint initiative with FDIC management to properly close out contracts in a timely manner. Under the Inspector General Act, as amended, the OIG also implemented procedures to review all draft corporate directives, policies and procedural manuals, and proposed legislation and regulations before they are issued.

In May, the FDIC established the Office of Internal Control Management (OICM) to focus more closely on internal controls and audit resolution activities. This initiative supports the strategic goal of maintaining a strong, effective internal control program. OICM works with each division and office to ensure that internal control matters receive appropriate attention at the corporate level. The office is the Corporation’s liaison with the U.S. General Accounting Office, the OIG, and a new Audit Committee, which the Board of Directors established in 1996 to assist with oversight of the Corporation’s financial reporting, internal control and audit processes.

Using Technology to Improve Communication

The Corporation’s commitment to using technology to improve communication inside and outside the agency was evidenced by the Internet’s widespread use during 1996. Customers of FDIC Internet offerings included bankers, regulators, financial analysts, journalists, stockbrokers, scholars, consumers and others who want quick and easy access to the FDIC’s public information. The range of FDIC publications accessible through the Internet (www.fdic.gov) expanded considerably during 1996 to include FDIC “financial institution letters” (notices to the industry about proposed or new rules and procedures), press releases, speeches by the FDIC Chairman, congressional testimony, manuals, descriptions of banking laws, lists of asset information, and banking statistics.

FDIC/RTC Transition

Following the sunset of the RTC at the end of 1995, the FDIC in 1996 absorbed the remaining assets and other workload of the RTC, and made substantial progress in these areas. The FDIC disposed of approximately $3.3 billion (book value) of the $7.7 billion (book value) in RTC assets that were transferred to the FDIC. Over 2,000 RTC employees were also successfully integrated into the FDIC workforce. In addition, the FDIC largely completed implementing 50 RTC “best practices,” 21 RTC management goals and reforms, and 49 RTC automated systems, as recommended by an FDIC/RTC Transition Task Force that identified operational differencies between the two agencies. The remaining recommendations will be implemented in 1997.

Also based on the recommendations of the Task Force, the Corporation completed the development of a new automated general ledger system, the Financial Information Management System. This new system, implemented on January 1,1997, consolidates the general ledgers of the FDIC and the RTC, and greatly improves the Corporation’s financial management and analysis capabilities.


Last Updated 07/09/99 communications@fdic.gov