Receivership Management Activities
The FDIC, as receiver, manages the failed banks and their subsidiaries with the goal of expeditiously winding up their affairs. The oversight and prompt termination of receiverships help to preserve value for the uninsured depositors and other creditors by reducing overhead and other holding costs. Once the assets of a failed institution have been sold and the final distribution of any proceeds is made, the FDIC terminates the receivership estate. The FDIC terminated all 11 institutions for which all impediments were resolved within prescribed timeframes. In 2008, the number of receiverships under management increased by 40 percent due to the increase in failure activity.
The following chart shows overall receivership activity for the FDIC in 2008.
Active Receiverships as of 1/1/08
Active Receiverships as of 12/31/08
Protecting Insured Depositors
With the increase in failure activity in 2008, the FDIC’s focus on protecting deposits in institutions that fail was of critical importance. Confidence in the banking system hinges on deposit insurance and no depositor experienced a loss on their insured deposit in 2008.
The FDIC’s ability to attract healthy institutions to assume deposits and purchase assets of failed banks and savings associations at the time of failure minimizes the disruption to customers and allows some assets to be returned to the private sector immediately. Assets remaining after resolution are liquidated by the FDIC in an orderly manner and the proceeds are used to pay creditors, including depositors whose accounts exceeded the insurance limit. During 2008, the FDIC paid dividends of $302 million to depositors whose accounts exceeded the insured limit(s). Effective October 3, 2008, through December 31, 2009, the standard maximum deposit insurance amount increased from $100,000 to $250,000.
Professional Liability Recoveries
The FDIC staff works to identify potential claims against directors, officers, accountants, appraisers, attorneys and other professionals who may have contributed to the failure of an insured financial institution. Once a claim is deemed meritorious and cost effective to pursue, the FDIC initiates legal action against the appropriate parties. During the year, the FDIC recovered approximately $31 million from these professional liability claims/settlements. In addition, as part of the sentencing process for those convicted of criminal wrongdoing against institutions that later failed, a court may order a defendant to pay restitution or to forfeit funds or property to the receivership. The FDIC, working in conjunction with the U.S. Department of Justice, collected more than $1.3 million in criminal restitutions during the year. At the end of 2008, the FDIC’s caseload was comprised of 77 professional liability lawsuits (down from 84 at year-end 2007) and 248 open investigations (up from 34), At year-end, there were 638 active restitutions and forfeiture orders (down from 687). This includes 261 Resolution Trust Corporation orders that the FDIC inherited on January 1, 1996.
Effective Management of Strategic Resources
The FDIC recognizes that it must effectively manage its human, financial, and technological resources in order to successfully carry out its mission and meet the performance goals and targets set forth in its annual performance plan. The Corporation must align these strategic resources with its mission and goals and deploy them where they are most needed in order to enhance its operational effectiveness and minimize potential financial risks to the Deposit Insurance Fund. Major accomplishments in improving the Corporation’s operational efficiency and effectiveness during 2008 follow.
Human Capital Management
The FDIC’s human capital management programs are designed to attract, develop, reward and retain a highly skilled, cross-trained, diverse and results-oriented workforce. In 2008, the FDIC continued to implement workforce planning and development initiatives that emphasized hiring the additional skill sets needed to address the increased number of financial institution failures and institutions in at-risk categories. The Corporation also deployed a number of strategies to more fully engage all employees in advancing the FDIC’s mission.
Baseline leadership competencies and gaps were identified in 2006 and 2007 through review of an Office of Personnel Management (OPM) competency assessment tool. To address the identified gaps and ensure that there are corporate managers who are prepared to advance to executive level positions as they become vacant, the Corporation implemented a pilot Corporate Executive Development Program at the beginning of 2008. The program provides for 18 months of intensive classroom and on-the-job training to high-potential supervisors and senior technical specialists.
Additionally, in 2008, the FDIC began drafting a knowledge management strategic plan focused on the full spectrum of knowledge management techniques for leadership’s review and consideration.
Strategic Workforce Planning and Readiness
Over the past few years, the FDIC has been preparing for an increase in retirements among its aging workforce through increasing its entry-level hiring into the Corporate Employee Program (CEP). The CEP is a multi-year program designed to cross-train new employees in several of the FDIC’s major business lines. As of the end of 2008, 166 employees (530 since program inception) entered the multi-year, multi-disciplined program.
Also during 2008, the Corporation instituted an “over-hire” initiative to double encumber a number of critical positions. This program allows the FDIC to train replacements for a smooth transition before the incumbent retires. To address its more immediate staffing needs, the FDIC reemployed retired FDIC examiners, attorneys, and resolutions and receiverships specialists; hired employees of failed institutions in temporary positions; recruited mid-career examiners who had developed their skills in other agencies; recruited temporary loan review specialists from the private sector; and redeployed current FDIC employees with the requisite skills from other parts of the Corporation.
Employee Learning and Growth
To further enhance readiness and flexibility, the FDIC led the development of strategic readiness simulation events that allowed the FDIC’s senior leadership the opportunity to test and refine policy and decision tools related to large and complex institution failures. These exercises proved valuable and timely as the FDIC faced and addressed real financial industry stresses during the year. Significant technical and just-in-time training was provided in areas such as financial loan review, legal functions, and contract oversight.
Information Technology Management
Information technology (IT) resources are one of the most valuable assets available to the FDIC in fulfilling its corporate mission. The FDIC continued to improve its IT administration and management practices in 2008.
Am I Insured? Web site
In July 2008, the FDIC created an “Am I Insured?” Web application in response to the IndyMac bank closing. The “Am I Insured?” external Web site allowed customers of IndyMac, the first of several closed banks, to quickly check on whether or not their account with IndyMac was fully insured. This application simply informs the customers whether or not they are fully insured and provides a contact number to call for further information. No personal or sensitive data are stored or retrieved as a function of this new application and subsequent banks that closed after IndyMac have also had information added to allow customers to check on their accounts.
The FDIC’s public Web site, www.fdic.gov, is a key communication delivery method for the FDIC. Each of the three major business lines — insurance, supervision, and receivership management are supported by the Internet program. In 2008, the Brookings Institution ranked FDIC.gov 16th among government Web sites. This was by far the most active year for FDIC.gov — 57 percent more user sessions than 2007 and 86 percent more than 2006. Internet traffic to FDIC.gov increased significantly since the IndyMac closing. The third quarter was the busiest in the web site’s history with over 377 million total hits.
FDIC’s Web presence has evolved during 2008. The “FDICchannel” was created on “YouTube” and hosts 16 videos. YouTube is the leading video sharing web site. Video topics range from deposit insurance to 75th anniversary events. The FDICchannel has received more than 58,000 views and potentially provides outreach to younger consumers. The 75th anniversary site and MyFDICinsurance.gov were launched in 2008. In addition, the FDIC implemented FDICSeguro.gov to provide a Spanish language alternative to the deposit insurance information provided on MyFDICinsurance.gov. E-mail subscriptions to various FDIC.gov products have increased 81 percent during 2008. At year-end, the FDIC had over 440,000 subscriptions to its products, including Financial Institution Letters, Special Alerts and Supervisory Insights.
Securing the FDIC
The FDIC continued to enhance and expand its Privacy Program in 2008 with an emphasis on protecting personally identifiable information (PII) from unauthorized collection, use, access, and disclosure. Additionally, efforts to strengthen controls over FDIC’s information systems and web sites were continued to ensure that PII was adequately safeguarded and that users of FDIC applications were provided with adequate notice, choice, and access.
The FDIC’s Chief Information Security Officer received the 2008 Association for Federal Information Resources Management (AFFIRM) Outstanding Federal Executive Award for Leadership in Security and Privacy. AFFIRM recognizes outstanding leadership and management in Government. The FDIC is the first recipient of this new award, which recognizes the increasing importance of information security and privacy.