Effective Management of Strategic Resources
The FDIC recognizes that it must effectively manage its human, financial, and technological resources to successfully carry out its mission and meet the performance goals and targets set forth in its annual performance plan. The FDIC must align these strategic resources with its mission and goals and deploy them where they are most needed to enhance its operational effectiveness and minimize potential financial risks to the DIF. Major accomplishments in improving the FDIC’s operational efficiency and effectiveness during 2012 follow.
Human Capital Management
The FDIC’s human capital management programs are designed to recruit, develop, reward, and retain a highly skilled, cross-trained, diverse, and results-oriented workforce. In 2012, the FDIC stepped up workforce planning and development initiatives that emphasized hiring the additional skill sets needed to address requirements of the Dodd-Frank Act, especially as it related to the oversight of SIFIs. Workforce planning also addressed the need to start winding down bank closure activities in the next few years, based on the decrease in the number of financial institution failures and institutions in at-risk categories. The FDIC also deployed a number of strategies to more fully engage all employees in advancing its mission.
The FDIC provides its employees with comprehensive learning and development opportunities, including technical and general skills training, and leadership development. In addition to extensive internally developed and administered courses, the FDIC also offers its employees with funds and/or time to participate in external offerings in support of their career development. Through training and educational programs, the FDIC provides its employees with the knowledge and skills to successfully accomplish their work and to grow professionally. In 2012, the FDIC kicked-off several initiatives related to advanced or specialized training for mission critical areas. Such training is a critical part of workforce and succession planning as more experienced employees become eligible for retirement.
The FDIC also continues to expand leadership development opportunities to all employees. Its curriculum takes a holistic approach, aligning its core and elective curriculum with key leadership competencies. By developing employees across the span of their careers, the FDIC builds a culture of leadership and further promotes a leadership succession strategy. In 2012, the FDIC delivered 19 sessions of core leadership courses and 22 sessions of electives. It also supported participation in four external leadership development programs.
Strategic Workforce Planning and Readiness
The FDIC used various employment strategies in 2012 to meet the need for additional human resources resulting from the number of failed financial institutions and the volume of additional examinations. Among these strategies, the FDIC recruited complex financial institution specialists who had developed their skills in other public and private sector organizations, recruited loan review specialists and compliance analysts from the private sector, and redeployed current FDIC employees with the requisite skills from other parts of the Agency.
When the Office of Thrift Supervision (OTS) closed on July 21, 2011, the FDIC received 95 of its employees, all of whom were integrated into the FDIC with full FDIC benefits as of the one-year anniversary of the Dodd-Frank Act. Thirty-eight of the 95 employees were under the OTS’s Schedule A hiring authority, and therefore not in the competitive service. The FDIC determined that the equitable treatment provisions of the Dodd-Frank Act required that these employees be transferred to the competitive service; these transfers were effective May 9, 2012.
During 2012, the orderly closing of the FDIC’s temporary satellite offices began based on projections of a drop in the number of bank failures expected in 2013 and beyond. These offices had been established to bring resources to bear in especially hard-hit areas in 2009 and 2010, as the number of failed financial institutions increased. Almost all of the employees in these new offices were hired on a nonpermanent basis to handle the temporary increase in bank closing and asset management activities expected over several years, beginning in 2009. The use of nonpermanent appointments allows the FDIC staff to return to a normal size once the crisis is over without the disruptions that reductions in permanent staff would cause.
The West Coast Temporary Satellite Office, which opened in Irvine, California, in early spring of 2009, closed on January 13, 2012, with 265 employees. The East Coast Temporary Satellite Office, which opened in Jacksonville, Florida, in the fall of 2009, is slated to close in 2014. As of December 31, 2012, that office had 391 employees. The third satellite office, which opened for the Midwest in 2010 in Schaumburg, Illinois, closed on September 28, 2012, with 130 employees. During the financial crisis, the FDIC also increased resolutions and receiverships staff in the Dallas Regional Office. For all offices that closed, the FDIC provided transition services to the separated nonpermanent FDIC employees. In addition, a number of these employees were hired as permanent staff to complete the FDIC’s core staffing requirements.
The FDIC continued to build workforce flexibility and readiness by hiring through the Corporate Employee Program (CEP). The CEP is a multi-year development program designed to cross-train new employees in the FDIC’s major business lines. In 2012, 121 new business line employees entered this multi-discipline program (1,133 hired since program inception in 2005). The CEP continued to provide a foundation across the full spectrum of the FDIC’s business lines, allowing for greater flexibility to respond to changes in the financial services industry and to meet the FDIC’s human capital needs. As in years past, the program continued to provide the FDIC flexibility as program participants were called upon to assist with both bank examination and bank closing activities based on the skills they obtained through their program requirements and experiences. As anticipated, participants are also successfully earning their commissioned bank examiner and resolutions and receiverships credentials, having completed their three to four years of specialized training in field offices across the country. The FDIC had approximately 362 commissioned participants by the end of 2012. These individuals are well-prepared to lead examination and resolutions and receiverships activities on behalf of the FDIC.
In 2011, the FDIC piloted the Financial Management Scholars (FMS) Program, a ten week summer internship program for college students between their junior and senior years of college. The FMS was implemented in 2012 and is another recruiting strategy to bring talent into the FDIC and the CEP. The FMS participants completed a one-week orientation session, worked in the field in one of the three key business lines (Depositor and Consumer Protection, Resolutions and Receiverships, and Risk Management Supervision), completed a capstone program, and participated in mini-recruiting event assessments. In 2012, there were 50 FMS participants participating in 34 locations. The FDIC extended 36 job offers and received acceptances from 35 FMS participants. These successful FMS participants will join CEP classes in 2013 as Financial Institution Specialists.
Corporate Risk Management
In 2011, the FDIC Board authorized the creation of an Office of Corporate Risk Management (OCRM) and recruited a Chief Risk Officer (CRO) for the agency. During 2012, the CRO recruited a Deputy Director and a small staff made up of Senior Risk Officers to work with other Divisions and Offices to assess, manage, and mitigate risks to the FDIC in the following major areas:
- Open bank risks associated with the FDIC’s role as principal regulator of certain financial institutions and the provider of deposit insurance to all insured depository institutions;
- Closed bank risks associated with the FDIC management of risks associated with assets in receivership, including loss share arrangements and limited liability corporations;
- Systemically important financial institution risks associated with large complex institutions where the FDIC is not the primary federal regulator but would have responsibility in the event of failure;
- Economic and financial risks created for the FDIC and its insured institutions created by changes in the macroeconomic and financial environment;
- Policy and regulatory risks arising through legislative activities and those created by FDIC’s own policy initiatives;
- Internal structure and process risks associated with carrying out ongoing FDIC operations, including human resource management, internal controls, and audit work carried out by both OIG and GAO; and
- Reputational risks associated with all of the activities of the FDIC as they are perceived by a range of external factors.
In addition to completing an initial risk inventory for the FDIC, OCRM worked with the newly created Enterprise Risk Committee and Risk Analysis Committee to discuss external and internal risks facing the FDIC. These efforts supported the preparation of quarterly reports to the Board on the risk profile of the institution.
The FDIC continually evaluates its human capital programs and strategies to ensure that it remains an employer of choice and that all of its employees are fully engaged and aligned with the mission. The FDIC uses the Federal Employee Viewpoint Survey mandated by Congress to solicit information from employees and takes an agency-wide approach to address key issues identified in the survey. On December 13, 2012, the FDIC received an award from the Partnership for Public Service for being ranked number one among the mid-sized federal agencies on the Best Places to Work in the Federal Government® list. Effective leadership was the primary factor driving employee satisfaction and commitment in the federal workplace, according to a report by the Partnership for Public Service.
The Culture Change Initiative, 2008–2012, played an important role in helping the FDIC achieve this ranking. The new Workplace Excellence (WE) Program builds upon the success of the Culture Change Initiative by institutionalizing a National WE Steering Committee and separate Division/Office WE Councils. In addition to the WE Program, the new FDIC-NTEU Labor-Management Forum serves as a mechanism for the union and employees to have pre-decisional input on workplace matters. The WE Program and Labor Management Forum enhances communication, provides additional opportunities for employee input, and improves employee empowerment.
Employee Learning and Development
The FDIC has a strong commitment to the learning and development of all employees. Through its learning and development programs, the FDIC creates opportunity, enriches career development, and cultivates future leaders. New employees can more quickly and thoroughly assume their job functions and assist with examination and resolution activities through the use of innovative learning solutions. To prepare new and existing employees for the challenges ahead, the FDIC delivered just-in-time training to quickly address new business needs and completed comprehensive needs assessments to inform its long-term strategy.
In support of business requirements, the FDIC delivered various sessions of resolution-related training based on new responsibilities acquired under the Dodd-Frank Act. To prepare for the resolution of the most complex financial institutions, the FDIC also used facilitated discussions, table top exercises, and simulations with other federal agencies to share information, identify challenges, and build interagency relationships.
In addition to conducting just-in-time training and events to meet immediate needs, the FDIC is focused on assessing long-term needs and developing comprehensive curricula accordingly. Based on the results of needs assessments for the Office of Complex Financial Institutions, the Division of Resolutions and Receiverships, and the Division of Risk Management Supervision, the FDIC developed multi-year frameworks to supplement existing learning and development. The FDIC will implement the priority components of the business line curricula next year.
In support of knowledge and succession management, the FDIC is focused on capturing, maintaining, and documenting best practices and lessons learned from bank closing activity over the past two years. Capturing this information now is strategically important to ensure corporate readiness, while at the same time maintaining effectiveness as experienced employees retire and the temporary positions created to support the closing activity expire.
In 2012, the FDIC provided its employees with approximately 160 instructor-led courses and 1,800 web-based courses to support various mission requirements. There were approximately 9,292 completions of instructor-led courses and 36,570 completions of web-based courses.
Chairman Martin J. Gruenberg and Arleas Upton Kea, Director of the Division of Administration, accepting the award for the number one ranking among mid-sized federal agencies for Best Places to Work in the Federal Government.
In 2012, the FDIC was recognized as a LearningElite organization by Chief Learning Officer magazine. The LearningElite program is a robust peer-reviewed ranking and benchmarking program that recognizes those organizations that employ exemplary workforce development strategies to deliver significant business results.
Information Technology Management
The FDIC understands that information technology (IT) is a critical, transformative resource for the successful accomplishment of agency business objectives. The FDIC relies on the strategic capabilities that IT provides to ensure and enhance mission achievement. This year, introduction of new technologies coupled with changes to maintenance contracts have allowed the FDIC to identify $15 million in budget reductions in IT equipment and services areas from 2012 to 2013.
The FDIC has strengthened agency governance of IT investments and projects by adopting new guidelines for project scope, cost, schedule, and reporting. The FDIC also implemented the Office of Management and Budget’s Federal Chief Information Officer’s Tech Stat concept, a face-to-face, evidence-based review by agency executives of IT projects, identify issues affecting progress, and take the necessary corrective actions. The FDIC has also improved the risk management and cost estimation project disciplines, training project management staff across the organization. Also, in 2012, the FDIC worked on an update to the Business Technology Strategic Plan that highlights strategic initiatives for document management, research and analytics, and mobility.
Support for Regulatory Reform
Business application development and enhancement continued in 2012 to support implementation of the requirements of the Dodd-Frank Act. The FDIC implemented new applications to deliver full functionality required to comply with Section 165(d) of the Dodd-Frank Act. While not mandated by the statute, the FDIC has also implemented an enhanced tool to facilitate the electronic review of a bank’s loan portfolio and streamline the loan review process. The Examination Tool Suite-Automated Loan Examination Reporting Tool (ETS-ALERT), will be used by the FDIC, all 50 states banking supervision organizations, and the Federal Reserve.
The FDIC recognizes that cyber threats are one of the most serious security challenges facing the nation, and that collaboration with other federal agencies is vital to strengthening the FDIC’s security position. In 2012, the FDIC was actively involved with the Federal Chief Information Officer Council’s Privacy Committee, including serving as co-chair of the inter-agency Best Practices Subcommittee and as a member of three other subcommittees: Innovation and Technology, Development and Education, and International. In addition, the FDIC initiated the first Interagency Data Loss Prevention (DLP) Working Group, composed of representatives from 15 agencies, as a forum for discussions of DLP best practices, federal requirements, and lessons learned, as well as a platform for industry presentations on DLP techniques and tools.
The FDIC has undertaken several initiatives to augment external cyber resources. In 2012, the FDIC participated with the Office of the National Director of Intelligence in initiating the new Federal Senior Intelligence Coordinator Advisory Board and associated workgroups to gather additional counter-intelligence on new threats. The FDIC has established informal information-sharing relationships with the Federal Bureau of Investigation’s (FBI) cybercrime squads in the FBI’s Washington, DC office, where real-time cybercrime information is exchanged. The FDIC also serves as an active participant in industry information-sharing organizations, including the Financial Services - Information Sharing and Analysis Center, a financial services-focused association that gathers reliable and timely information from financial services providers; commercial security firms; federal, state, and local government agencies; law enforcement; and other trusted resources; to quickly disseminate physical and cyber threat alerts and other critical information to participating organizations.
Internally, the FDIC continued to focus on enhancing its security posture to combat the increased number and sophistication of cyber-attacks. The FDIC established a Security Operations Center that provides continuous event-monitoring and risk analysis to prevent and detect intrusion through use of an array of tools.
The FDIC has a well-established privacy program that works to maintain privacy awareness and promote transparency and public trust. During the last year, the FDIC conducted unannounced privacy assessments of various regional and field offices to ensure that confidential and proprietary documents and media are properly safeguarded, and that individual and agency privacy data are protected. These assessments provide the FDIC with its own internal mechanism to identify weaknesses and potential mitigating circumstances, and to track progress in correcting vulnerabilities.