The FDIC continued to emphasize improving
organizational and operational efficiency in 1997. Key functional areas were realigned and
staff size further reduced as the banking industry remained strong and the FDICs
projected workload continued to decline.
Focusing on Planning and Efficiency
The FDIC in 1997 updated its Strategic Plan for submission to Congress and the Office of
Management and Budget, as required by the Government Performance and Results Act (GPRA).
The plan, originally approved in 1995 by the Board of Directors as a foundation for the
agencys corporate planning process, provided a clear strategic vision for the FDIC
and focuses on managing risk and minimizing the effect of institution failures.
Division of Finance employees Joseph Malloy and Gisele Jones helped monitor
the "buyout" used to shrink the FDIC workforce.
The GPRA also requires the FDIC to develop an Annual Performance Plan.
This plan, which combines the agencys corporate operating and business plans,
defines what will be accomplished during the year to achieve strategic goals and
objectives. The plan guides the allocation of FDIC resources to its three major
programsinsurance; supervision; and policy, regulation and outreachand
identifies annual goals for measuring performance. A quarterly reporting mechanism was
instituted during 1997 to provide senior FDIC management with regular feedback on the
Corporations actual performance against the measurable performance targets contained
in the Annual Performance Plan. The process allows management to evaluate performance and
to adjust strategic goals and resource allocations as needed.
One of the major initiatives for 1998 is to develop an automated
system that will assist the FDIC in linking its budget to the Strategic Plan and the
Annual Performance Plan, in accordance with GPRA requirements.
The FDIC's budget is the culmination of the Corporation's annual planning
process. Budget and staffing levels are based upon the Annual Performance Plans for each
division and office. In 1997, the FDIC continued to make considerable progress in
controlling expenses and reducing costs. Actual expenses for 1997 were $1.38 billion
22 percent less than 1996 spending and 15 percent below the approved 1997 budget. Actual
1997 spending was below budgeted levels primarily due to lower costs for asset
liquidation-related contracting and a more rapid pace of staff downsizing.
Employee compensation and benefits were the largest budgeted
expenses for 1997, constituting 54 percent of the budget. At the beginning of 1997, a
total of 9,151 employees were on the payroll, and targeted staffing for year-end was
8,361. By December 31,1997, the workforce had shrunk substantially below the authorized
level to 7,793, primarily due to the consolidation of field operations. As a result,
spending for employee compensation and benefits totaled $752 million--17 percent below
the $910 million spent for this purpose in 1996 and 13 percent below the approved 1997
budget of $868 million.
Outside services represented the second largest component of
total expenses in 1997. Although the FDIC budgeted $429 million for this category, actual
1997 expenses were $330 million, which is 23 percent less than the budgeted amount and 43
percent below the $581 million spent in 1996.
The continued consolidation of field operations also contributed
to reduced expenses for buildings and leased space. For 1997, $123 million was spent for
buildings, down significantly from the $129 million spent in 1996.
Downsizing and Consolidation
As noted previously, the Corporation continued to shrink the size of its workforce in 1997
due to a decline in workload. Total FDIC staffing in 1997 fell by approximately 15
percent. Staffing for the Division of Resolutions and Receiverships (DRR), which
liquidates the assets of failed institutions, fell by over 40 percent during the year.
DRR staffing reductions were accomplished primarily through the
expiration of term and temporary appointments and by consolidating field liquidation
operations. DRR operations and related Legal Division and other support activities in San
Francisco, New York, Chicago, Atlanta, and Franklin, MA, were consolidated into other
offices during the year. This was part of a phased, three-year consolidation plan
announced the previous year. DRR field operations are expected to be fully consolidated
into a single site in Dallas by year-end 1999. In addition, the Division of Finance's
field financial activities were consolidated in Dallas in 1997, and three Division of
Supervision (DOS) field offices and a Division of Compliance and Consumer Affairs (DCA)
satellite office were closed.
As a result of the buyout
programs initiated in 1995 and 1996, a total of 379 employees left the Corporation during
1997. Another 87 permanent employees elected buyouts in 1997 in lieu of being reassigned
to other areas of the country. In late 1997, the Corporation announced that new buyout and
early retirement opportunities would be available during 1998 for selected employees in
overstaffed divisions and offices.
To cushion the impact of the DRR field consolidation, the Corporation continued to provide job placement and
training opportunities to affected employees, and was successful in placing many employees
affected by downsizing in positions both inside and outside the Corporation. A total of
138 DRR and Legal Division employees accepted positions in the Dallas office, and more
than 200 employees (mostly from DRR) were selected for DOS or DCA examiner positions and
training. Many employees also took advantage of the FDIC's expanded Career Transition
and Outplacement Program in 1997, which provides job search assistance and resources to
employees affected by downsizing.
Compensation and Benefit Changes
Major changes to the Corporation's compensation and benefits program for 1997-1999
were negotiated with the National Treasury Employees Union. An agreement signed in
February 1997 covered changes in pay, employee benefits, and reimbursement of travel and
relocation expenses for bargaining-unit employees. The FDIC later applied these same
changes to executives and other nonbargaining-unit employees.
A key program change is the new pay-for-performance system.
Beginning in January 1998, the Corporation will move from a 19-step compensation program
to an open range salary structure, with a salary minimum and maximum for each grade. In
1999, the Corporation will discontinue across-the-board salary increases and will link
merit pay increases to employees' annual performance ratings.
During 1997, the FDIC strengthened its internal control program for ongoing operations and
management processes. Guidelines were issued to define the responsibilities of FDIC
employees in audits, surveys and reviews conducted by the Office of Inspector General and
the U.S. General Accounting Office (GAO). The FDIC&'s Office of Internal Control
Management also conducted a conference on successful risk management and internal control
programs to familiarize FDIC senior management and auditors with current best practices
for managing risks in the private sector. Two major internal control activities
were completed in 1997coordination of the GAO audit of the Corporations
Kevin Glueckert (top) and Andre Galeano of the Division of
Supervision display some of the more than 300 applications they reviewed for the
agency's "crossover" training program for examiner positions.
financial statements and preparation of the annual Chief Financial Officers Act
Report, which focused on the operations and internal control programs within each FDIC
division and office.
Year 2000 Computer Challenges
The FDIC is committed to ensuring that its computer hardware, software and communications
infrastructure will continue to function properly in the Year 2000, when many computer
systems will have trouble distinguishing the Year 2000 from 1900. To meet this goal, the
FDIC is following a proposal by the GAO calling for rigorous program management and a
In 1997, the FDIC distributed internal directives with policy and
guidance on Year 2000 issues and conducted a number of awareness briefings for its staff.
To identify specific areas needing change, the FDIC inventoried and assessed over 500 of
its application systems during the year. The agency also undertook an extensive Year 2000
compliance review of commercial software and other products purchased from vendors. For
information about the FDICs efforts to ensure Year 2000 compliance by banks