Summary of 2008 Performance Results by Program
The FDIC successfully achieved 48 of the 50 annual performance targets established in its 2008 Annual Performance Plan. One performance target was not achieved. It involved maintaining the insurance fund reserve ratio at a certain level. One performance target was not applicable. It related to on-site examinations or off-site analyses on supervised banks intending to operate under Basel II but capital regulations were not implemented yet. There were no instances in which 2008 performance had a material adverse effect on successful achievement of the FDIC’s mission or its strategic goals and objectives regarding its major program responsibilities.
Key accomplishments by program are highlighted in the table below:
Adopted a Restoration Plan in October 2008 to restore the DIF reserve ratio to 1.15 percent within five years as required by the Federal Deposit Insurance Reform Act of 2005.
Issued an interim rule establishing the Temporary Liquidity Guarantee Program (TLGP) to avoid or mitigate serious adverse effects on economic conditions and financial stability.
Completed substantial modifications to the agency’s information systems in order to implement statutory and regulatory changes to risk-based premiums and to track insurance assessment credit use and availability for each insured institution.
Issued a Notice of Proposed Rulemaking (NPR) on Assessments proposing improvements to the risk-based pricing regulations that were adopted to implement deposit insurance reform legislation.
Proposed improvements included adding various financial ratios to the Large Bank method used to determine premium rates for large institutions and adjusting all institutions’ premium rates for unsecured debt and for significant reliance on brokered deposits or secured liabilities.
Completed reviews of the recent accuracy of the contingent loss reserves.
Developed a final rule to implement the dividend requirements of the Reform Act.
Researched and analyzed emerging risks and trends in the banking sector, financial markets, and the overall economy to identify issues affecting the banking industry and the deposit insurance fund.
Formed a consumer research section to analyze consumer-related issues, including but not limited to fair lending, credit access for consumers and small businesses, financial services, and home mortgage finance.
Completed risk assessments for all large insured depository institutions and followed up on all identified concerns through off-site review and analysis.
Conducted numerous outreach activities to bankers, trade groups, community groups, other regulators, and foreign visitors addressing economic and banking risk analysis.
Developed a proactive risk identification process to provide earlier identification of trends, practices, or products that may pose high risk to insured institutions.
Published economic and banking information and analyses through the FDIC Quarterly, FDIC Quarterly Banking Profile (QBP), and the Center for Financial Research Working Papers.
Championed the importance of financial education and highlighted the success of its Money Smart program as a means of promoting healthy economic and banking growth in the Americas.
Provided technical assistance to the central banks, bank supervisors and deposit insurers of six countries in 2008. A highlight of this year’s programs was an invitation by the government of El Salvador to have the FDIC help launch El Salvador’s national campaign on financial education.
Hosted 66 individual visits with a total of 497 foreign visitors from over 32 countries. Foreign visitors were increasingly interested in discussing U.S. banking conditions, the FDIC’s role in the current crisis, and measures that have been taken in response to the crisis. Lastly, 162 foreign students from 17 countries received training in examinations, financial institutions analysis, loan analysis, examination management, information technology examination, and anti-money laundering and counter-terrorism financing.
Supervision and Consumer Protection
Conducted 2,416 safety and soundness examinations, including required follow-up examinations of problem institutions, within prescribed time frames.
Conducted 1,826 compliance and Community Reinvestment Act examinations, including required follow-up examinations of problem institutions, within prescribed time frames.
Conducted 2,551 Bank Secrecy Act examinations, including required follow-up examinations and visitations.
Conducted 2,577 IT examinations of financial institutions and technology service providers.
Published Notice of Proposed Rulemaking for Basel II Standardized Approach and final guidance on the supervisory review process (Pillar 2) for banks using the advances approaches of Basel II. Staff continued other analytical and preparatory activities related to the implementation of these new capital regulations.
No FDIC-supervised institutions currently intend to operate under Basel II.
Among other releases, issued five Financial Institution Letters (FILs) providing guidance on (1) managing commercial real estate concentrations; (2) liquidity risk management; (3) managing third-party risk; (4) the importance of developing and implementing policies and procedures for acquiring, holding, and disposing of other real estate; and (5) reminding institutions that if, for risk management purposes, they decide to reduce or suspend home equity lines of credit, they must comply with certain legal requirements. In addition, 12 Disaster Guidance FILs were issued.
Reviewed outstanding Bank Secrecy Act/Anti-Money Laundering (BSA/AML) guidance and issued industry notification regarding the importance of an effective independent review of the BSA/AML compliance program. Concurrently, and as a complement to the industry notification, issued examiner guidance to clarify the BSA/AML examination planning and transaction testing processes. Also, issued examiner guidance relative to work paper documentation expectations.
Completed a review of the effectiveness of the 2007 instructions issued regarding the handling of repeat violations during the internal review and control audits.
Conducted over 400 outreach and technical assistance events for bankers and community groups to promote awareness of community investment opportunities, access to capital, knowledge-sharing between the public and private sectors, and wealth-building opportunities for families.
Continued to disseminate the award-winning Money Smart financial education curriculum in multiple languages, adding 202 Money Smart Alliance members; contacting over 500 schools, school systems and related entities regarding the availability of the curriculum; and reaching approximately 120,200 individuals through train-the-trainer sessions and the self-paced computer-based instruction.
Successfully closed 25 failed institutions and ensured customers had access to insured deposits within one business day.
Adopted a final rule requiring the largest insured depository institutions to adopt mechanisms that would, in the event of the institution’s failure: (1) provide the FDIC with standard deposit account and other customer information; and (2) allow the placement and release of holds on liability accounts, including deposits. This functionality is required to be in place no later than February 18, 2010.
Reached the 18-month mark in 2008 for one institution that failed in 2007. A decision was made to close 80 percent of the claims for all claims areas.