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A n n ual
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F E D E R A L

D E P O S I T

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C O R P O R A T I O N

Annual
Mission

Vision

The Federal Deposit Insurance
Corporation (FDIC) is an independent
agency created by the Congress to
maintain stability and public confidence
in the nation’s financial system by:

The FDIC is a recognized leader in
promoting sound public policies,
addressing risks in the nation’s financial
system, and carrying out its insurance,
supervisory, consumer protection, and
receivership management responsibilities.

´ insuring deposits;
´ examining and supervising financial
institutions for safety and soundness
and consumer protection; and,
´ managing receiverships.

Report 2008
Values*
The FDIC and its employees have a long and continuing tradition of distinguished public service. Six core
values guide FDIC employees as they strive to fulfill the Corporation’s mission and vision:
´ Integrity
We adhere to the highest ethical and professional standards.
´ Competence
We are a highly skilled, dedicated, and diverse workforce that is empowered to achieve outstanding results.
´ Teamwork
We communicate and collaborate effectively with one another and with other regulatory agencies.
´ Effectiveness
We respond quickly and successfully to risks in insured depository institutions and the financial system.
´ Accountability
We are accountable to each other and to our stakeholders to operate in a financially responsible and
operationally effective manner.
´ Fairness
We respect individual viewpoints and treat one another and our stakeholders with impartiality, dignity
and trust.

*Values have been updated for consistency with the FDIC’s 2008-2013 Strategic Plan.

Federal Deposit Insurance Corporation
550 17th Street, NW Washington, DC 20429

Office of the Chairman

June 4, 2009

Dear Sir/Madam,
In accordance with:
•
•
•
•
•

the provisions of section 17(a) of the Federal Deposit Insurance Act,
the Chief Financial Officers Act of 1990, Public Law 101-576,
the Government Performance and Results Act of 1993,
the provisions of Section 5 (as amended) of the Inspector General Act of 1978, and
the Reports Consolidation Act of 2000,

The Federal Deposit Insurance Corporation (FDIC) is pleased to submit its 2008 Annual Report
(also referred to as the Performance and Accountability Report), which includes the audited
financial statements of the Deposit Insurance Fund and the Federal Savings and Loan Insurance
Corporation Resolution Fund.
In accordance with the Reports Consolidation Act of 2000, the FDIC completed an assessment of
the reliability of the performance data contained in this report. No material inadequacies were
found and the data are considered to be complete and reliable.
Based on internal management evaluations, and in conjunction with the results of independent
financial statement audits, the FDIC can provide reasonable assurance that the objectives of
Section 2 (internal controls) and Section 4 (financial management systems) of the Federal
Managers’ Financial Integrity Act of 1982 have been achieved, and that the FDIC has no material
weaknesses. Additionally, the U.S. Government Accountability Office did not identify any
significant deficiencies in the FDIC’s internal controls for 2008. We are committed to maintaining
our effective internal controls corporate-wide in 2009.
Sincerely,
Sheila C Bair
C.
Chairman

The President of the United States
The President of the United States Senate
The Speaker of the United States House of Representatives

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TABLE OF CONTENTS
Message from the Chairman

5

Message from the Chief Financial Officer

8

FDIC Celebrates 75 Years as a Pillar of the American Banking System

11

1. Management’s Discussion and Analysis

25

The Year in Review

25

Insurance

25

Supervision and Consumer Protection

31

Resolutions and Receiverships

44

Effective Management of Strategic Resources

49

2. Financial Highlights

53

Deposit Insurance Fund Performance

53

Investment Spending

56

3. Performance Results Summary

57

Summary of 2008 Performance Results by Program

57

2008 Budget and Expenditures by Program

60

Performance Results by Program and Strategic Goal

61

Prior Years’ Performance Results

70

Program Evaluation

77

4. Financial Statements and Notes

79

Deposit Insurance Fund (DIF)

79

FSLIC Resolution Fund (FRF)

103

Government Accountability Office’s Audit Opinion

113

Management’s Response

120

Overview of the Industry

122

5. Management Control

125

Enterprise Risk Management

125

Material Weaknesses

126

Management Report on Final Actions

126

6. Appendices

127

A. Key Statistics

127

B. More About the FDIC

141

C. Office of Inspector General’s Assessment of the Management
and Performance Challenges Facing the FDIC

150

FED ER A L

D EP OSIT

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Insuring Deposits. Examining Institutions.
Managing Receiverships. Educating Consumers.

I

n its unique role as deposit insurer of banks and
savings associations, and in cooperation with
the other state and federal regulatory agencies,
the Federal Deposit Insurance Corporation (FDIC)
promotes the safety and soundness of the U.S.
financial system and the insured depository
institutions by identifying, monitoring and
addressing risks to the deposit insurance fund.

information and analyses. It minimizes disruptive
effects from the failure of financial institutions. It
assures fairness in the sale of financial products and
the provisions of financial services.
The FDIC’s long and continuing tradition of
excellence in public service is supported and
sustained by a highly skilled and diverse workforce
that continuously monitors and responds rapidly and
successfully to changes in the financial environment.

The FDIC promotes public understanding and the
development of sound public policy by providing
timely and accurate financial and economic

At FDIC, we are working together to be the best.

FDIC by the Numbers

0

Insured
Deposit
Dollars
Lost

25

4

Failed Banks
Resolved

250,000

1,800,000

75
4

	

7
90,000

Money smart
consumers reached

Years of Service

Public Service
Announcements
with Suze Orman

18,953

8,305

New Deposit Limit

New Bank Accounts opened through
Alliance for Economic inclusion

Specialists
Certification
Programs

Written deposit
insurance inquiries

Insured
Depository
Institutions

International
Association of
Deposit Insurers
Conferences

5,034
FDIC Employees

1,552,210

Electronic Deposit Insurance
Estimator User Sessions

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Message from the Chairman
Sheila C. Bair

A

s an agency created during the Great Depression, the FDIC has a unique
understanding of the importance of restoring public confidence during periods
of stress. Clearly, 2008 was no exception. Problems in the financial markets had

shaken the public’s confidence in financial institutions. By fall, these problems were affecting most segments of the economy. After resolving just a handful of bank failures
for several years, 25 insured institutions failed in 2008, the most since
the end of the last banking crisis in 1993. The number of banks on
the problem list rose to 252 at the end of last year, a sign that
2009 will be another challenging year for the banking industry
as well as the economy.
During 2008, the FDIC took a number of unprecedented steps in concert
with other federal agencies to bolster public confidence in our banking system. Difficult choices were necessary during difficult times to restore
confidence and stability to the financial markets. The FDIC played a
vital role by providing stability to our banking and financial system
through our unique responsibilities and perspectives as deposit
insurer, regulator, and receiver.

Higher deposit insurance limit
In early October, President Bush signed the Emergency Economic
Stabilization Act of 2008 (EESA), temporarily raising the basic limit
on deposit insurance from $100,000 to $250,000 per depositor
through December 31, 2009. This measure also created the $700
billion Troubled Asset Relief Program (TARP) to help strengthen
the financial sector.
The increased deposit insurance coverage provided vital
reassurance to depositors and needed liquidity to banks.
This helped make sure that otherwise viable institutions did not have to be closed because of runs on
uninsured deposits.
We moved quickly to implement the coverage increase.
We updated our Web site virtually overnight as well
as EDIE — our Electronic Deposit Insurance
Estimator — to reflect the changes. Our Call Center
handled tens of thousands of phone calls from
concerned consumers wanting to know whether
their money was safe. I commend our staff for
their hard work and quick response.

Sheila C. Bair, Chairman,
Federal Deposit Insurance Corporation
Daniel Rosenbaum/The New York Times/Redux

FED ER A L

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AFFORDABLE MORTGAGES
The FDIC was also at the forefront of efforts to address the cause of much of our economic distress —
unaffordable home mortgages. As the deposit insurer and receiver for failed insured institutions, the
FDIC has a special insight into the problems created for homeowners, banks, and our communities by
unaffordable mortgages. Throughout the year, the FDIC advocated streamlined and sustainable loan
modifications as a critical tool to arrest the growing number of foreclosures that continued to drive down
home prices in 2008.
Applying workout procedures for troubled loans is something the FDIC has been doing since the 1980s.
Our experience from resolving failing banks has been that performing loans yield greater returns than
non-performing loans. We applied this experience at IndyMac Federal Bank. After the FDIC was appointed
as conservator in July, we created a successful program to systematically help struggling homeowners
modify their mortgages to make them affordable.
Through the end of 2008, more than 33,000 loan modification offers were mailed to IndyMac borrowers.
These offers provided affordable payments to borrowers based on a streamlined protocol using a
combination of interest rate reductions, term or amortization extensions, and principal forbearance.
Through the end of the year, IndyMac had completed the requisite verification of income for more than
8,512 homeowners with thousands more in process. On average, their monthly payments were reduced
by more than $480.
Based on our work at IndyMac, we designed a “Loan-Mod-In-A-Box” program guide. It is a prototype for a
nationwide affordable loan program that we hope will be used to turn back the tide of foreclosures and keep
struggling borrowers in their homes, taking pressure off the housing market where prices are down an average of 25 percent from a mid-2006 peak.
Unfortunately, loan modifications by other servicers failed to keep pace with rising delinquencies. As a
result, the FDIC worked to encourage greater efforts to achieve modifications throughout 2008. Loan guarantees can be used as an incentive for servicers to modify loans — a move we have strongly encouraged for
some time. Throughout 2008, the FDIC advocated programs to achieve more loan modifications.

TEMPORARY LIQUIDITY GUARANTEE PROGRAM
In mid-October, we launched the Temporary Liquidity Guarantee Program (TLGP). We designed this voluntary program to provide liquidity to the wholesale lending market and to free up funding for banks to
make loans to creditworthy businesses and consumers. It has two key features. First, it guarantees certain
new, senior unsecured debt issued by banks or thrifts and bank holding companies, as well as most thrift
holding companies. Second, it provides a full guarantee of all deposits in noninterest-bearing transaction
accounts (primarily payment-processing accounts, such as for business payrolls).
All eligible entities (banks, thrifts, and qualifying holding companies) were automatically enrolled in the
program but had an opportunity to opt-out. Eighty-seven percent of insured depository institutions stayed
in the transaction account program, while 56 percent of eligible entities remained in the debt guarantee
program. At the end of the year, nearly $224 billion in debt had been issued under this program.
Fees for the debt guarantee program range from 50 to 100 basis points on an annualized basis, depending
on the term of the debt. Fees for the transaction account program are 10 basis points on covered deposits
that are not otherwise insured.
This program required the FDIC to use its statutory authority to take action to mitigate potential systemic
risks. The program was implemented after a recommendation from the FDIC Board of Directors and the
Board of Governors of the Federal Reserve System and a determination by the Secretary of the Treasury, in
consultation with the President. The TLGP is a fee-based program and does not rely upon the taxpayer or
the Deposit Insurance Fund (DIF).

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In my view, the TLGP was a major factor in the steady progress we saw by the end of the year in reducing
risk premiums in the interbank lending market. Given the success of the program, we put in place a limited
extension of the TLGP debt guarantee program in early 2009; however, we intend to end new debt issuances
under the program by October 31, 2009.

DIF RESTORATION PLAN AND OTHER MILESTONES
In other actions during the year, we adopted a restoration plan for the DIF. The plan increases the rates
banks pay for deposit insurance and makes new adjustments to better reflect the risk banks pose to the DIF.
The plan was necessary because a sharp increase in loss provisions lowered the reserve ratio below the
required statutory level.
We also simplified deposit insurance rules for revocable trust accounts. These reforms to the rules covering
so-called “payable-on-death” accounts and more formal revocable trust accounts, as well as for mortgage
servicing accounts should result in faster deposit insurance determinations for failed banks, a must for preserving public confidence in the banking system.
On top of these extraordinary measures, the FDIC faced the largest bank failure in American history —
Washington Mutual Bank (WaMu) with $300 billion in assets. All of WaMu’s deposits and substantially all
its liabilities were transferred to an acquirer at no cost to the insurance fund, no loss of depositor funds and
with little disruption to customers.

75 YEARS OF THE FDIC
In mid-June, the FDIC celebrated 75 years of service as the world’s oldest public deposit insurer. We marked
the date with a press conference, national advertisements promoting deposit insurance awareness and
launched a series of programs renewing public awareness of bank deposit insurance, which proved very
timely as the financial turmoil widened.
We held panel discussions across the country with local experts from industry, community groups and the
media to discuss methods for improving financial education for consumers and promote greater awareness
of the FDIC. We distributed nationally aired television, radio and print public service announcements reassuring the public about the safety of FDIC insured accounts. We created a public exhibit in our Washington
headquarters lobby tracing the FDIC’s history and explaining our role in the national economy.

FDIC COMES TOGETHER
Throughout 2008, the staff of the FDIC worked tirelessly to respond to the challenges facing the banking
system. It takes every employee, from every corner of the agency, to fulfill our critical mission. I am grateful
for their hard work and dedication and I am proud of their efforts to preserve confidence in the banking
industry and help stabilize our financial system.
Sincerely,

Sheila C. Bair
C

FED ER A L

D EP OSIT

I N SU R A N CE

CO RP O R ATI O N

7

MESSAGE FROM THE CHIEF
FINANCIAL OFFICER

I

am pleased to present the Federal Deposit
Insurance Corporation’s (FDIC) 2008 Annual
Report (also referred to as the Performance and

Accountability Report). The report provides our
stakeholders with meaningful financial and program
performance information and summarizes our
accomplishments. Our priority is to provide timely,
reliable and useful information.
The U.S. Government Accountability Office (GAO) issued unqualified audit opinions for the two funds
administered by the Corporation: the Deposit Insurance Fund (DIF) and the Federal Savings and Loan
Insurance Corporation (FSLIC) Resolution Fund (FRF). This marks the seventeenth consecutive year that
we have received unqualified audit opinions, and demonstrates our continued dedication to sound financial
management and the reliability of the financial data upon which we make critical decisions. I would like
to extend my sincere appreciation to the many individuals whose hard work allowed the FDIC to achieve
this milestone.
At the conclusion of 2008 and moving forward into 2009, DIF remains financially sound. However, the
financial statements for 2008 reflect the impact of a difficult banking environment, where 25 banks failed
in 2008, an amount equal to all the bank failures between 2001 and 2007, and the highest number since
1993 when 41 bank failures occurred.

THE FDIC’S FINANCIAL RESULTS FOR 2008 INCLUDE:
The DIF’s comprehensive loss totaled $35.1 billion for 2008 compared to comprehensive income of
$2.2 billion for the previous year. As a result, the DIF balance declined from $52.4 billion to $17.3 billion
as of December 31, 2008. The year-over-year decrease of $37.3 billion in comprehensive income was
primarily due to a $41.7 billion increase in the provision for insurance losses offset in part by a $2.3 billion
increase in assessment revenue; a $1.8 billion increase in the unrealized gain on available-for-sale securities;
and a $775 million increase in the realized gain on the sale of securities.
The provision for insurance losses was $41.8 billion in 2008. The total provision consists mainly of the provision for future failures ($23.9 billion) and the losses estimated at failure for the 25 resolutions occurring
during 2008 ($17.9 billion), the largest of which was the $10.7 billion estimated loss for the IndyMac resolution.
Assessment revenue was $3.0 billion for 2008 compared with $643 million for 2007. This increase of
$2.3 billion was mostly due to the reduction in the amount of one-time assessment credits available
for use. In 2008, $1.4 billion in one-time credits offset $4.4 billion in gross assessment premiums;
whereas in the previous year, $3.1 billion in one-time credits were applied against $3.7 billion in gross
assessment premiums.

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In accordance with the requirements of the Federal Managers’ Financial Integrity Act of 1982, the FDIC’s
management conducted its annual assessment and concluded that the system of internal controls, taken as a
whole, complies with internal control standards prescribed by the GAO and provides reasonable assurance
that the related objectives are being met.
During 2009, we will continue to work toward achieving the Corporation’s strategic goals and objectives.
These include identifying and addressing risks to the insurance funds, continuing work on U.S. government
initiatives to strengthen the financial system, and providing Congress, other regulatory agencies, insured
depository institutions, and the public with critical and timely information and analysis on the financial
condition of both the banking industry and the FDIC-managed funds.
Sincerely,
y,

Steven O. App
O

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FDIC
Ce l e b r at e s
75 years
as a Pillar of the
American Banking
System

F E D E R A L

D E P O S I T

I N S U R A N C E

C O R P O R A T I O N

Who is the

T

FDIC?

he Federal Deposit Insurance Corporation (FDIC) preserves and promotes
public confidence in the U.S. financial system by insuring deposits in banks
and thrift institutions for at least $250,000; by identifying, monitoring and

addressing risks to the deposit insurance funds; and by limiting the effect on the
economy and the financial system when a bank or thrift institution fails.
An independent agency of the federal
government, the FDIC was created in
1933 in response to the thousands
of bank failures that occurred in
the 1920s and early 1930s. Since
the start of FDIC insurance on
January 1, 1934, no depositor has
lost a single cent of insured funds as
a result of a failure.
The FDIC receives no
Congressional appropriations – it
is instead funded by premiums
that banks and thrift institutions
pay for deposit insurance coverage
and from earnings on investments
in U.S. Treasury securities. With
an insurance fund totaling $17.3
billion, the FDIC insures a total of
more than $4 trillion of deposits in
U.S. banks and thrifts – deposits in virtually
every bank and thrift in the country.
Savings, checking and other deposit accounts,
when combined, are generally insured to $250,000
per depositor in each bank or thrift the FDIC

12

insures. (On October 3, 2008, FDIC deposit
insurance temporarily increased from $100,000
to $250,000 per depositor through December
31, 2009.) Deposits held in different categories
of ownership – such as single or joint accounts –

75 years of
quality service

C H A P TE R 1 ★ M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

may be separately insured. Also, the FDIC generally
provides separate coverage for retirement accounts,
such as individual retirement accounts (IRAs)
and Keoghs, insured up to $250,000. The FDIC’s
Electronic Deposit Insurance Estimator can help
consumers determine whether they have adequate
deposit insurance for their accounts.

2006-Current

The FDIC insures deposits only. It does not
insure securities, mutual funds or similar types
of investments that banks and thrift institutions
may offer. (Insured and Uninsured Investments
distinguishes between what is and is not protected
by FDIC insurance.)

2001-04
1998-2000
1997

In addition to providing deposit insurance, the
FDIC directly examines and supervises about
5,098 banks and savings banks, more than half of
the institutions in the U.S. banking system. Banks
can be chartered either by any individual state or
by the federal government. Banks chartered by
states also have the choice of whether to join the
Federal Reserve System. The FDIC is the primary
federal regulator of state-chartered banks that are
not members of the Federal Reserve System. The
FDIC also serves as the back-up supervisor for the
remaining insured banks and thrift institutions.
To protect insured depositors, the FDIC responds
immediately when a bank or thrift institution
fails. Institutions generally are closed by their
chartering authority – the state regulator, the
Office of the Comptroller of the Currency, or
the Office of Thrift Supervision – which then in
turn appoints the FDIC as receiver for the failed
institution. The FDIC has several options for
resolving institution failures, but the one most
used is to sell deposits and loans of the failed
institution to another institution. Customers
of the failed institution automatically become
customers of the assuming institution. Most
of the time, the transition is seamless from the
customer’s point of view.
The FDIC employs about 5,034 people. It is
headquartered in Washington, DC, but conducts
much of its business in six regional offices and in
field offices around the country.
The FDIC is managed by a five-person Board
of Directors, all of whom are appointed by
the President and confirmed by the Senate,
with no more than three being from the same
political party.

Year

2005

1994-96
1992-93
1991
1985-91
1981-84
1978-80
1977
1976
1970-75
1964-69
1963
1960-62
1957-59
1952-56
1945-51
1934-44
1933-34

Chairman
Sheila C. Bair
75th Anniversary in 2008
Martin J. Gruenberg
(Acting)
Donald E. Powell
Donna Tanoue
Andrew C. Hove, Jr
(Acting)
Ricki Helfer
Andrew C. Hove, Jr
(Acting)
William Taylor
L. William Seidman
William M. Isaac
50th Anniversary in 1983
Irvine H. Sprague
George A. Lemaistre
Robert E. Barnett
Frank Wille
K. A. Randall
Joseph W. Barr
Erle Cocke, Sr.
Jesse P. Wolcott
25th Anniversary In 1958
H.e. Cook
Maple T. Harl
Leo T. Crowley
Walter J. Cummings
Congress created FDIC
in 1933

On June 16, 1933, at the height of the Great Depression and with more
than 4,000 bank failures already that year, President Franklin

Banking Act of 1933 establishing the
Federal Deposit Insurance Corporation as a temporary agency
Delano Roosevelt signs the

to raise the confidence of the U.S. public in the banking
system. ★ FDIC deposit insurance goes into effect on

January 1, 1934.

The deposit insurance level is $2,500.

Only nine banks failed during the first year that the
FDIC begins insuring banks. ★ On

July 1, 1934, FDIC

deposit insurance coverage is increased to $5,000. ★

Banking Act of 1935 provides for permanent deposit
insurance and maintains it at the $5,000 level. ★ In 1950,
The

deposit insurance coverage increases to $10,000. ★

1962 marks the first full year with no bank failure since the
FDIC’s creation – a milestone not repeated again until 2005

deposit insurance limit jumps to $15,000 in
1966; to $20,000 in 1969; to $40,000 in 1974; and to $100,000 in
1980. ★ Congress passes the Depository Institutions Deregulation and Monetary
Control Act of 1980 – the most sweeping banking reform package enacted since the
Banking Act of 1933. ★ Forty-eight insured banks, with $7 billion in assets, failed
in 1983. After 50 years, the FDIC still takes in more bank premiums than it loses
through failures. ★ In 1984, the FDIC – for the first time – spends more on resolving
and 2006. ★ The

failures than it receives in premiums, with 80 insured bank failures that year. ★
In 1988,

280 insured institutions failed

– the largest number in the history of the

FDIC. Over half of the banks are in Texas. ★ President George H. Bush signs the

Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

This act is the

beginning of statutory attempts to re-regulate the banking and saving and loans
industries. ★ The

14

Federal Deposit Insurance Corporation Improvement Act of 1991

(FDICIA) gives the FDIC the authority to borrow $30 billion from the Treasury
to help replenish the Bank Insurance Fund. It also requires the FDIC to
apply risk-based premiums by January 1, 1994, and to close banks
in the least-costly manner to the insurance fund. ★ The

Riegle-

Neal Interstate Banking and Branching Act of 1994 permits bank
holding companies to acquire banks in any state, interstate
branching among banks, and foreign banks to branch to

Gramm-Leach-Bliley
Act of 1999 repeals the last provision of the Glass-Steagall
Act of 1933 – which separated commercial and investment
banking. ★ June 25, 2004, to February 2, 2007, marks the
the same extent as U.S. banks. ★ The

longest period in the FDIC’s history without a single bank

February 8, 2006, President George W. Bush
signs the Federal Deposit Insurance Reform Act of 2005 into law,
failure. ★ On

providing for – among other things – an increase in insurance
coverage to $250,000 for certain retirement accounts. ★ The FDIC

75th Anniversary celebration on June 16, 2008 – exactly threecentury after it was created. ★ On October 5, 2008, the FDIC

launches its
quarters of a

implemented the temporary increase in the Standard Maximum Deposit Insurance
Amount from $100,000 to $250,000. This increase is in effect until the end of 2009.
★ On

October 13, 2008, the FDIC adopted the Temporary Liquidity Guarantee Program

due to disruptions in the credit market, particularly the interbank lending market,
which reduced banks’ liquidity and impaired their ability to lend. ★ During

2008,

25 FDIC-insured institutions failed. This was the largest number of failures since 1993
when 41 institutions failed. The 2008 total includes IndyMac Bank, FSB, Pasadena,
CA, which was the fourth largest failure in the FDIC’s history and Washington Mutual
Bank, Henderson, NV, which was the largest single failure in FDIC history.

FE D ERAL

D E P OSIT

INSURAN C E

C OR P ORATION 	

15

T

he year 2008 marks the 75th anniversary
of the FDIC. For 75 years, deposit insurance has given consumers peace of mind
that their insured money is safe. No depositor
has ever lost a penny of insured funds at an FDICinsured institution. FDIC has been and continues to
be the pillar of the American Banking System.
To celebrate its 75th anniversary and to demonstrate ongoing commitment to consumers,
Chairman Bair launched the Face Your Finances
road show. The initiative was announced on
June 16, 2008, at the anniversary launch in
Washington, DC. Chairman Bair traveled to
Chicago, San Francisco, Dallas, New York City,
and Kansas City, Missouri. In each city, Chairman
Bair met with community leaders to discuss deposit
insurance, what it means to be an FDIC-insured
institution, the costs and benefits of banking services, and the consumer protections resulting from
federal regulation of the banking industry. Panel
discussions were held, addressing bank services as
they relate to building assets and accessing mainstream credit services, including mortgage
loans. The discussions were intended to elicit
information that can be used in financial literacy initiatives and informational materials.
Additionally, the FDIC has on display at its
headquarters location, an exhibit that shows
FDIC’s history and explores how the FDIC and
the banking industry have changed over time.
The photographs, charts, cartoons, maps and
other images presented will take visitors from
inception through the banking and savings and
loan crisis to a typical week in the life of the FDIC
today. An audio-visual portion of the exhibit offers
excerpts from President Franklin D. Roosevelt’s first
fireside chat addressing the 1933 banking crisis,
as well as film clips on the creation of the agency
and more. Following are excerpts from the exhibit.

16

Background
and Creation
The first bank failure in
U.S. history occurred
in 1809, and many
more would follow.
For about the next hundred years,
the country’s recurring financial crises were often accompanied by
bank failures. Fourteen states
responded by creating bank obligation/deposit insurance systems
(none survived beyond 1930). Not
until the tremendous dislocation of
the Great Depression, though, was
federal deposit insurance enacted.
Its value became apparent immediately: the number of bank failures
declined sharply, and depositor
confidence returned.

(Above) This note was issued by the Farmer’s
Exchange Bank of Gloucester, Rhode Island, in
1808; the following year, Farmer’s Exchange
became the first bank in the U.S. to fail.
(Right) On August 5, 1931, depositors congregated outside the closed American Union Bank at
37th Street and 8th Avenue in New York City.
Courtesy of Corbis Images

C H A P TE R 1 ★ M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

FE D ERAL

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Creation of
the FDIC
The Banking Act of 1933 created
the FDIC as a temporary agency.
Despite Roosevelt’s reservations
about deposit insurance, popular
support for it was so strong that he
signed the Act into law. In January
1934, the FDIC began insuring
deposits, covering them up to
$2,500. The FDIC also became the
federal regulator of state
non-member banks*, the receiver
for failed national banks, and—
with state authorization—the
receiver for failed state banks.
*State-chartered banks that were not members
of the Federal Reserve System.

Y

ou have accomplished in these few

months with complete success a gigantic
task which the pessimists said could not
possibly be done before Jan. 1. That
97 per cent of the bank depositors of

IN THE BEGINNING
(Top) On June 16, 1933, President Roosevelt signed the act that
created the FDIC. He was surrounded by congressional
leaders, including Senator Carter
Glass and Representative Henry
Steagall, both of whom lent their
names to the law.
(Right) The first official emblem of
the FDIC, and a new symbol of
confidence for depositors.

the nation are insured will give
renewed faith…
—FDR in a letter to FDIC Chairman Cummings,
dated January 1, 1934

7,785
Number of state banks
examined under FDIC
auspices during the
last three months of
1933 to ensure that
they could apply for
deposit insurance.

C H A P TE R 1 ★ M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

Number of FDIC
employees at
year-end 1970.

Prosperity
and Growth

2,508

During the period c.1945-1970,
the banking industry was highly
regulated, with tight restrictions
on interest rates and on products
and services. Few banks failed,
so the FDIC faced few challenges
as a deposit insurer. In fact, by
1950 the insurance fund had
become large enough ($1.2
billion) for the FDIC to begin
giving rebates to banks on
their deposit insurance
assessments.

The Savings and
Loan Industry

Repaying the Treasury
(Right) In September 1947 FDIC Chairman Maple
,
Harl (right) presented a check for $139 million to
a representative of the Treasury Department, repaying almost half of the government’s initial
funding of the FDIC. The balance was paid the
following year.

$100,000

$40,000
$2,500

$5,000

$10,000

$15,000

$20,000

1933

1934

1950

1966

1969

1974

1980

Increased Protection
Congress increased FDIC insurance coverage levels six times between 1934 and 1980.

Savings and loan
associations
(S&Ls), or thrifts,
were depository
institutions that
made home mortgage loans at
relatively low fixed rates.
Starting in 1934, they were
insured by the Federal
Savings and Loan Insurance
Corporation (FSLIC). The S&L
industry grew rapidly during
this period and very few institions failed.

Consequences
of Failure

The Banking
Crisis
The banking crisis of the 1980s
and 1990s was the greatest challenge the FDIC had ever faced.
The crisis had four main causes.
Boom-and-bust economic activity
occurred in certain regions and
economic sectors. Legal restrictions on branching made banks
more vulnerable to regional and
sectoral recessions. Many banks
exhibited weak risk management. And inappropriate
government policies, such as
less-frequent bank examinations,
also played a role.

(Left) Oklahoma’s Penn
Square Bank speculated
heavily in oil and gas lending. The construction of its
new headquarters was halted by the bank’s failure
in 1982.
Image courtesy of the Oklahoma
Historical Society

Agriculture

Real Estate

A 1970s boom in farm
commodity prices and farm
real estate values was
followed by a downturn in
the early 1980s. Many
banks that concentrated in
agricultural lending failed.

Both the Northeast and
California had booming
economies in the 1980s.
But aggressive real estate
lending led to overbuilding
and inflated prices. When
recessions struck in the
early 1990s, banks in
both regions failed.

Energy
Soaring oil prices in the
1970s and early 1980s
generated a boom in the
Southwest. When energy
prices dropped sharply, the
region’s economy was
devastated and many
banks failed.

The S&L Crisis
Deregulation let S&Ls enter new
fields where they had little expertise. In addition, capital standards
were lax and supervision inadequate. Given government policy
and the FSLIC’s lack of resources,
many institutions that should have
been closed stayed open. By
1986, the industry was clearly in
crisis—672 S&Ls and the FSLIC
itself were insolvent.

$153 Billion

470

Cost to the taxpayers and the S&L industry of
resolving failures from 1986 through 1995.

$36 Billion

Losses to the FDIC’s insurance
fund as a result of the crisis.

180
Total

119
Total

Failures

22
Total

Failures

1980

40

Total
Failures

Failures

99

Total
Failures

106

Total
Failures

262

204

Total
Failures

Total
Failures

Total
Failures

Banking REFORM
(Left) In 1991, a new law
strengthened the insurance
funds and increased regulatory
supervision. Its provisions called
for insurance premiums based
on risk and annual on-site
examinations of most banks
and thrifts. Regulators also
were required to take “prompt
corrective action” against
weakening institutions and to
close critically undercapitalized
institutions at the least cost to
the FDIC.
Image courtesy of the National Archives

On August 9, 1989,
President George
H.W. Bush signed the
Financial Institutions
Reform, Recovery, and
Enforcement Act.
Image courtesy of the George Bush
Presidential Library and Museum

Resolving the S&L Crisis
The RTC, operating from 1989 to 1995, resolved 747
failed thrifts with assets of about $450 billion, successfully
ending the thrift crisis. FDIC personnel and expertise were
essential to the creation and operation of the RTC, and the
FDIC managed the RTC during its first two years.

534

Number of bank and S&L failures
from 1980 to 1994.
FSLIC Failures

382

Total
Failures

RTC Failures
FDIC Failures

S&L Reform
In 1989, a new law reformed the
S&L industry, imposing stricter capital
requirements and limiting investment and lending activities. The
industry’s regulatory structure was
overhauled. The FSLIC was abolished, and the FDIC became the
federal deposit insurer of thrifts.
S&Ls received a new federal
regulator, the Office of Thrift
Supervision, and the Resolution Trust
Corporation (RTC) was created to
dispose of the assets of failed thrifts.

(Above) Number of FDIC and RTC employees at year-end 1991.

271
Total

Failures

181

Total
Failures

50

Total
Failures

15

Total
Failures

1990

From 1980 through 1994, a
total of 1,618 banks failed.
The FDIC handled these failures
without the public losing confidence
in the banking system and without
the need for taxpayer funding. By
the early 1990s, favorable interest
rates and economic conditions
helped the industry rebound and
enter a period of unparalleled
growth and profitability.

22,586

Totalling the Failures

Total
Failures

Crisis and
Resolution

The FDIC Today
Events continue to
highlight the importance
of the FDIC.
In the decade following the crisis of
the 1980s and early 1990s, the business of banking became more
profitable but also more complex.
The industry consolidation that began
in the 1980s accelerated. Big
financial institutions got bigger.
Simultaneously, however, community banks found ways to
thrive and prosper.
The following panels will cover recent
FDIC history and describe how we
serve the American people today.

A Week in the
Life of the FDIC
Identifying risks and promoting
stability have been hallmarks of
the FDIC’s mission for 75 years.
But the FDIC’s job doesn’t end
there. Here is a behind-the-scenes
look at a typical “Week in the Life
of the FDIC.”

Managing the Deposit
Insurance Fund
The FDIC manages the deposit insurance fund,
which is supported by risk-based premiums paid
by insured banks and thrifts. On an ongoing basis, FDIC staff work to set appropriate deposit
insurance premiums and to structure the deposit
insurance fund’s portfolio of Treasury securities.

RESPONDING TO
QUESTIONS
The FDIC typically responds to more
than 5,000 inquiries each week from
consumers and financial professionals
about deposit insurance coverage.
The FDIC’s Web site, which contains
extensive information on deposit insurance, consumer protection, and
banking, is used by the public more
than 500,000 times a week.

Examining and
Supervising Banks
FDIC staff conduct off-site monitoring
and on-site examinations to assess risk
and promote prudent banking practices.
Examinations identify whether banks
operate in a safe and sound manner and
comply with consumer protection laws.
During any given week, the FDIC may be
examining more than 200 banks.

Unusual Holdings
When a bank fails, the FDIC often winds up acquiring
some of the institution’s assets. Through the years, the
FDIC has temporarily owned some highly unusual businesses and properties, typically the result of bad loans
or investments made by the failed banks. Take a look at
some of our oddest acquisitions.

Dallas Cowboys

Promoting Local Lending
The FDIC encourages banks to make mortgages and other
loans in low- and moderate-income neighborhoods. One
strategy involves conducting about 10 outreach meetings
weekly with bankers and community representatives.

The FDIC owned 12 percent of the team during the 1988 and
1989 seasons, after FirstRepublic Corporation of Dallas failed in 1988.

Citrus and Almond Tree Farms
Assets acquired by the FDIC often require significant upkeep. For example, FDIC asset managers had to purchase machinery to protect our citrus crops from freezing
weather and bought beehives for pollination of our almond trees.

Taxicabs
The FDIC owned fleets in California,
Arizona, and New York.

Ghosts and Ghouls
The FDIC acquired a house in Salem, Massachusetts, that was reputedly haunted by
the ghosts of the men and women who were sent to their deaths more than 300
years ago by the previous landowner, the town sheriff. The property was acquired
from the Bank of New England, which failed in 1991.

Abracadabra
The RTC acquired the Mulholland Library of Conjuring and the Allied Arts from the
failed First Network Savings in 1990. Magician David Copperfield made it disappear from the RTC’s asset portfolio by purchasing it for $2.2 million. The collection
included letters written by Harry Houdini and books dating back to the 16th century.

Grizzly 2: The Predator
The FDIC acquired this B-grade horror picture, filmed in 1983
with budding stars Charlie Sheen and George Clooney. The movie is about a grizzly bear that attacks patrons at a rock concert in
a national park.

From Oil Tankers to Shrimp Boats

4,532
Number of
FDIC employees
at year-end 2007.

Throughout the years, the FDIC has had
interests in oil tankers, shrimp boats, and tuna
boats, and consequently experienced many of the pitfalls facing the maritime industry. In one case, an oil tanker ran
aground. In another, a shrimp boat was blown onto the main street
of Aransas Pass, Texas, by a hurricane.

Race Horses
The FDIC temporarily owned more than 100 race
horses and breeding horses, most of which had been collateral for
loans made by the failed Penn Square Bank in Oklahoma.

Las Vegas Casinos
In 1993, the FDIC acquired the voting rights to a controlling share of
the stock in companies that owned casinos, including the Maxim and
the Dunes in Las Vegas.

F E D E R A L

D E P O S I T

I N S U R A N C E

C O R P O R A T I O N

CH
CHAPTER ONE
M
MANAGEMENT’S
DISCUSSION AND ANALYSIS
D

The Year in Review

Insurance

The year 2008 proved to be an extremely busy time
for the FDIC. In addition to the normal course of
business, the Corporation had a major role in
creating and implementing government initiatives
associated with the Temporary Liquidity Guarantee
Program (TLGP) and the Troubled Asset Relief
Program. Also, additional resources were needed in
response to the increased workload resulting from
resolving numerous bank failures. The FDIC
continued its work on high-profile policy issues and
published numerous Notices of Proposed
Rulemaking (NPRs) throughout the year, seeking
comment from the public. The Corporation also
continued to focus on a strong supervisory
program. The FDIC continued expansion of financial education programs with the creation of Money
Smart for young adults. The FDIC also sponsored
and co-sponsored major conferences and participated in local and global outreach initiatives.

The FDIC insures bank and savings association
deposits. As insurer, the FDIC must continually
evaluate and effectively manage how changes in the
economy, the financial markets and the banking
system affect the adequacy and the viability of the
Deposit Insurance Fund.

Highlighted in this section are the Corporation’s
2008 accomplishments in each of its three major
business lines – Insurance, Supervision and
Consumer protection, and Receivership Management – as well as its program support areas.

FE D E R A L

D E P O S I T

I N S U R A N C E

Temporary Liquidity
Guarantee Program
On October 13, 2008, the Secretary of the
Treasury, in consultation with the President and
acting upon the recommendations of the FDIC
Board of Directors and the Board of Governors of
the Federal Reserve System, made a systemic risk
determination under section 13(c)(4)(G) of the
Federal Deposit Insurance Act (FDIA). The next
day, the FDIC announced and implemented the
Temporary Liquidity Guarantee Program. The
TLGP consists of two components: an FDIC
guarantee of certain newly issued senior unsecured
debt (the debt guarantee program) and an FDIC
guarantee in full of non-interest bearing
transaction accounts (the transaction account
program). Coverage under both components of the
TLGP was provided without charge to all eligible
entities for the first 30 days.

CO R P O R AT I O N

25

After issuing an interim final rule on October 23,
2008, the FDIC received more than 700 comments.
Based on those comments, the FDIC made several
significant changes to the final rule, which the
FDIC adopted on November 21, 2008.
The final rule provided that, under the debt
guarantee program, the FDIC will guarantee in
full, through maturity or June 30, 2012, whichever
comes earlier, senior unsecured debt issued by a
participating entity between October 14, 2008, and
June 30, 2009, up to a maximum of 125 percent of
the par value of the entity’s senior unsecured debt
that was outstanding as of the close of business
September 30, 2008, and that was scheduled to
mature on or before June 30, 2009. Banks, thrifts,
bank holding companies, and certain thrift holding
companies were eligible to participate. In a change
from the original terms of the debt guarantee program, the final rule excluded, effective December 5,
2008, all debt with a term of 30 days or less from
the definition of senior unsecured debt. The FDIC
began charging institutions participating in the
debt guarantee program for debt issued on or after
November 13, 2008, a fee based on the amount and
term of the debt issued. Fees range from 50 to 100
basis points on an annualized basis, depending on
the term of the debt.
The final rule also provided that, under the transaction account program, the FDIC will guarantee
in full all domestic noninterest-bearing transaction
deposit accounts held at participating banks and
thrifts through December 31, 2009, regardless of
dollar amount. The guarantee also covers negotiable order of withdrawal accounts (NOW accounts)
at participating institutions – provided the
institution commits to maintaining interest rates
on the account at no more than 0.50 percent – and
Interest on Lawyers Trust Accounts (IOLTAs) and
functional equivalents. The FDIC will assess
participating institutions a 10 basis point annual
rate surcharge on covered accounts that are not
otherwise insured.
The final rule required all institutions to elect
whether or not to participate in one or both of
the two components of the TLGP by December 5,
2008. As of December 31, 2008, approximately
56 percent of all eligible entities had opted in
to the Debt Guarantee Program and 64 financial
entities – 39 insured depository institutions and
25 bank and thrift holding companies and non-

26

bank affiliates – had $224 billion in guaranteed
debt outstanding. Approximately 87 percent of
FDIC-insured institutions opted in to the
Transaction Account Guarantee Program, with
insured institutions reporting 522,862 noninterest-bearing transaction accounts over
$250,000. These accounts totaled $814 billion,
of which $684 billion in deposit accounts was
guaranteed under the program.
The TLGP does not rely on the taxpayer or the
Deposit Insurance Fund to achieve its goals.
Participants in the program must pay assessments
for coverage. If fees do not cover costs in the TLGP,
the FDIC will impose a special assessment under
the systemic risk provisions of the Federal Deposit
Insurance Act.

Restoration Plan and Rulemaking
on Assessments
Recent and anticipated bank failures significantly
increased Deposit Insurance Fund losses, resulting
in a decline in the reserve ratio. As of December 31,
2008, the reserve ratio stood at 0.36 percent, down
from 0.76 percent at September 30, 1.01 percent at
June 30, and 1.19 percent as of March 31. The
Federal Deposit Insurance Reform Act of 2005
(the Reform Act) requires that the FDIC’s Board of
Directors adopt a restoration plan when the Deposit
Insurance Fund’s reserve ratio falls below 1.15 percent or is expected to within six months.
On October 7, 2008, the FDIC Board adopted a
restoration plan to raise the reserve ratio to at least
1.15 percent within five years and a proposed rule
that would raise assessment rates beginning
January 1, 2009, and make other changes to the
assessment system effective April 1, 2009. The other
changes were primarily to ensure that riskier institutions will bear a greater share of the proposed
increase in assessments. On December 16, 2008, the
Board adopted a final rule raising assessment rates
for the first quarter of 2009. On February 27, 2009,
the Board amended the restoration plan to extend
its horizon from five years to seven years due to
extraordinary circumstances. It also adopted a final
rule setting rates beginning the second quarter of
2009 and making other changes to the risk-based
pricing system.

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CHAPTER 1

Rates for the First Quarter of 2009
On December 16, 2008, the FDIC adopted a final
rule raising risk-based assessment rates uniformly
by seven basis points for the first quarter 2009
assessment period. The higher revenue will be
reflected in the fund balance as of March 31, 2009.
Assessment rates for the first quarter of 2009 will
range from 12 to 50 basis points. Institutions in the
lowest risk category – Risk Category I – will pay
between 12 and 14 basis points.
Changes to Risk-Based Assessments
Effective the Second Quarter of 2009
Effective April 1, 2009, the final rule adopted on
February 27, 2009, widens the range of rates overall
and within Risk Category I. Initial base assessment
rates will range between 12 and 45 basis points –
12 to 16 basis points for Risk Category I. The
initial base rates for Risk Categories II, III, and IV
will be 22, 32 and 45 basis points, respectively. An
institution’s total base assessment rate may be less
than or greater than its initial base rate as a result
of additional adjustments (discussed below). For
Risk Category I, total base assessment rates may be
as low as seven basis points or as high as 24 basis

M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

points. A Risk Category IV institution could have
a total base assessment rate as high as 77.5 basis
points (see chart on page 29).
Large Risk Category I Institutions
Beginning in the second quarter of 2009, the
assessment rate for a large institution with a debt
rating will depend on (1) long-term debt ratings, (2)
the weighted average CAMELS1 component rating,
and (3) the rate determined from the financial
ratios method, the method used for smaller banks.
Each of the three components will receive a onethird weight. The maximum amount of the rate
adjustment for large banks based on additional
information about risks will be increased from 1⁄2
basis point to one basis point.
The FDIC anticipates that incorporating the
financial ratios method into the large bank method
assessment rate will result in a more accurate distribution of initial assessment rates and in timelier
assessment rate responses to changing risk profiles,
while retaining the market and supervisory perspectives that debt and CAMELS ratings provide.

DISTRIBUTION OF INSTITUTIONS AND DOMESTIC DEPOSITS AMONG
RISK CATEGORIES
QUARTER ENDING DECEMBER 31, 2008
Dollars in billions
Annual Rate in
Basis Points

Number of
Institutions

Percent of
Total
Institutions

Domestic
Deposits

Percent of
Total Domestic
Deposits

5

1,515

18.2%

$2,826

37.7%

5.01 – 6.00
6.01 – 6.99

2,069
1,521

24.9%
18.3%

1,562
783

20.8%
10.4%

I – Maximum

7

2,131

25.6%

860

11.5%

II

10

807

9.7%

1,338

17.8%

III

28

223

2.7%

101

1.3%

IV

43

48

0.6%

35

0.5%

Risk Category
I – Minimum
I – Middle
I – Middle

Note: Institutions are categorized based on supervisory ratings, debt ratings and financial data as of December 31, 2008. Rates do not reflect the
application of assessment credits. Percentages may not add to 100 percent due to rounding.

1

The CAMELS component ratings represent either the adequacy of Capital, the quality of Assets, the capability of Management, the quality and level of Earnings, the adequacy of Liquidity, and the
Sensitivity to market risk, and ranges from “1” (strongest) to “5” (weakest).

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CO R P O R AT I O N

27

Brokered Deposits
For institutions in Risk Category I, the financial
ratios method will include a new financial ratio
that may increase the rate of an institution relying
significantly on brokered deposits to fund rapid
asset growth. This will only apply to institutions
with brokered deposits (less reciprocal deposits)2 of
more than 10 percent of domestic deposits and
cumulative asset growth of more than 40 percent
over the last four years, adjusted for mergers and
acquisitions. Like the other financial ratios used to
determine rates in Risk Category I, a small change
in the value of the new ratio may lead to only a
small rate change, and it would not cause an
institution’s rate to fall outside of the 12-16 basis
point initial range. A number of costly institution
failures, including some recent failures, had experienced rapid asset growth before failure and had
funded this growth through brokered deposits.
For institutions in risk categories II, III, or IV, the
FDIC proposes to increase an institution’s assessment rate above its initial rate if its ratio of brokered
deposits to domestic deposits is greater than 10
percent, regardless of the rate of asset growth. Such
an increase would be capped at 10 basis points. As
an institution’s financial condition weakens, significant reliance on brokered deposits tends to increase
its risk profile. Insured institutions – particularly
weaker ones – typically pay higher rates of interest
on brokered deposits. When an institution becomes
noticeably weaker or its capital declines, the market
or statutory restrictions may limit its ability to
attract, renew or roll over these deposits, which can
create significant liquidity challenges. Also, significant reliance on brokered deposits tends to greatly
decrease the franchise value of a failed institution.
Secured Liabilities
For institutions in any risk category, assessment
rates will rise above initial rates for institutions
relying significantly on secured liabilities.
Assessment rates will increase for institutions with
a ratio of secured liabilities to domestic deposits of
greater than 25 percent, with a maximum increase
of 50 percent above the rate before such adjustment.
Secured liabilities generally include Federal Home

Loan Bank advances, repurchase agreements,
secured Federal Funds purchased, and other
secured borrowings.
The exclusion of secured liabilities can lead to
inequity. An institution with secured liabilities in
place of another’s deposits pays a smaller deposit
insurance assessment, even if both pose the same
risk of failure and would cause the same losses to
the FDIC in the event of failure. Substituting
secured liabilities for deposits can also lower an
institution’s franchise value in the event of a failure,
which increases the FDIC’s losses, all else equal.
Furthermore, substituting secured liabilities for
unsecured liabilities (including subordinated debt)
raises the FDIC’s loss in the event of failure without
providing increased assessment revenue.
Unsecured Debt and Tier I Capital
Institutions will receive a lower rate if they have
long-term unsecured debt, including senior
unsecured and subordinated debt with a remaining
maturity of one year or more. For a large institution, the rate reduction would be determined by
multiplying the institution’s long-term unsecured
debt as a percentage of domestic deposits by
40 basis points. The maximum allowable rate
reduction would be five basis points. For a small
institution (those with less than $10 billion in
assets), the unsecured debt adjustment would
also include a certain amount of Tier I capital.
The percentage of Tier I capital qualifying for
inclusion in the unsecured debt adjustment
gradually increases for greater amounts of Tier I
capital exceeding five percent Tier I leverage
ratio threshold.3
When an institution fails, holders of unsecured
claims, including subordinated debt, receive
distributions from the receivership estate only if all
secured claims, administrative claims and deposit
claims have been paid in full. Consequently, greater
amounts of long-term unsecured claims provide a
cushion that can reduce the FDIC’s loss in the event
of a failure.

2
3

28

Certain deposits that an insured depository institution receives through a deposit placement network on a reciprocal basis would be excluded from the adjusted brokered deposit ratio in Risk
category I. They would not be excluded, however, from the brokered deposit adjustment applicable to risk categories II, III, and IV.
For a Tier I leverage ratio between 5 percent and 6 percent, 10 percent of Tier I capital within this range would qualify for the unsecured debt adjustment; for a Tier I leverage ratio between 6
percent and 7 percent, 20 percent of Tier I capital within this range would qualify; for a Tier I leverage ratio between 7 percent and 8 percent, 30 percent of Tier I capital within this range would
qualify; and so forth. Thus, all Tier I capital above a 14 percent leverage ratio would qualify for inclusion in the unsecured debt adjustment.

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M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

Summary of Base Rate Determination

Center for Financial Research

For second quarter 2009, the minimum and maximum initial base assessment rates, range of possible
rate adjustments, and minimum and maximum
total base rates are as follows:

The Center for Financial Research (CFR) was
founded by the Corporation in 2004 to encourage
and support innovative research on topics that are
important to the FDIC’s role as deposit insurer and

Risk
Category I

Risk
Category II

Risk
Category III

Risk
Category IV

Initial Base Assessment Rate

12 – 16

22

32

45

Unsecured Debt Adjustment

-5 – 0

-5 – 0

-5 – 0

-5 – 0

Secured Liability Adjustment

0–8

0 – 11

0 – 16

0 – 22.5

0 – 10

0 – 10

0 – 10

17 – 43

27 – 58

40 – 77.5

Brokered Deposit Adjustment
7 – 24

Total Base Assessment Rate

Base Rates and Actual Rates
The rates adopted by the Board are both base rates
and actual rates. The FDIC would continue to have
the authority to adopt actual rates that were higher
or lower than total base assessment rates without
the necessity of further notice and comment
rulemaking, provided that: (1) the Board could not
increase or decrease rates from one quarter to the
next by more than three basis points without
further notice-and-comment rulemaking; and (2)
cumulative increases and decreases could not be
more than three basis points higher or lower than
the total base rates without further notice-andcomment rulemaking.

bank supervisor. During 2008, the CFR
co-sponsored three major research conferences.
The 18th Annual Derivatives Securities and Risk
Management Conference, which the FDIC
co-sponsored with Cornell University’s Johnson
Graduate School of Management and the University
of Houston’s Bauer College of Business, was held in
April 2008 at the FDIC’s Virginia Square facility.
The conference attracted over 100 researchers from
around the world. Conference presentations
focused on technical and mathematical aspects
of risk measurement and securities pricing, and
included several presentations on Basel II
related topics.
The CFR and The Journal for Financial Services
Research (JFSR) hosted the eighth Annual Bank
Research Conference in September with over 100
attendees. The conference included the presentation
of six papers and focused on issues in securitization
and credit risk transfer. Experts discussed analyses
on a range of topics, including liquidity issues,
lessons learned from the collapse of the auction rate
municipal bond market, the laying off of credit risk,
and the subprime credit crisis of 2007.

FE D E R A L

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29

The CFR and the Federal Reserve Bank of
Cleveland co-sponsored the “Identifying and
Resolving Financial Crises” conference in April
2008. Papers were presented and discussed on
topics including the theory and evidence on the
resolution of financial firms, identifying policies
that lead to contagion or correlated risk, and
contingency planning for crises.
The CFR hosted its annual Fall Workshop in
October, which included two all-day sessions with
research paper presentations and discussions. The
Workshop was attended by about 85 researchers
and policy makers. Twelve CFR working papers
were completed and published through November
2008 on topics dealing with deposit insurance, risk
measurement, credit contagion, and the global
syndicated loan market.

Consumer Research
The FDIC has pursued a research agenda that
explores consumer financing products and trends,
supports FDIC consumer policy initiatives and
supervisory objectives, and proactively uses FDIC
research results to identify and address major risks
in the consumer protection area. As part of this
agenda, the FDIC has prepared a series of articles
for the FDIC Quarterly on the unbanked, the
underserved, and alternative financial services.
During the year, two articles were completed
within this series. One article, “Building Assets,
Building Relationships: Bank Strategies for
Encouraging Lower-Income Households to Save”

was published in the fourth quarter 2007 FDIC
Quarterly (2008 Volume 2, Number 1). This article
describes some savings strategies and products that
banks have used to build profitable relationships
that also benefit lower-income consumers. Another
article, “An Introduction to the FDIC’s Small-Dollar
Loan Pilot Program,” was issued electronically on
August 10, 2008, and published in the second quarter 2008 FDIC Quarterly (2008, Volume 2, Number
3). The article summarizes the key parameters of
the pilot, the small-dollar loan program proposals
that participating banks described in their
applications, and the first quarter 2008 results.

International Outreach
Growing concerns surrounding the weakening
global economy made 2008 a significant and active
year for the FDIC’s international activities. The
failure of Northern Rock in the United Kingdom in
February 2008 began an upward trend in FDIC
consultations with foreign governments considering
developing, modernizing, or otherwise strengthening their deposit insurance systems. Efforts
included arranging and conducting training
sessions, technical assistance missions and foreign
visits, leadership roles in international organizations and participating in bilateral consultations
with foreign regulators.
With FDIC’s Vice Chairman as President of the
International Association of Deposit Insurers
(IADI) and Chair of the IADI Executive Council,
the FDIC had a critical role in fulfilling IADI’s
mission throughout the year. In October 2008, the
FDIC hosted the seventh annual IADI Conference

Participants in the International Association of Deposit Insurers conference.

30

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and Annual General Meeting. The conference
themes, Financial Stability and Economic Inclusion,
provided an excellent platform for over 250 distinguished presenters and guests from 60 countries to
discuss the issues facing global banking and the
economy and what steps can be taken by deposit
insurers to promote financial stability and inclusion
around the world. As Chair of the IADI Training
and Conference Standing Committee, the FDIC
developed and hosted an executive training
program designed to promote core principles and
best practices of resolutions management for 39
individuals from 25 countries. The Cross Border
Resolution Group (CBRG) of the Basel Committee
on Bank Supervision (BCBS), co-chaired by the
FDIC, continued its work analyzing national legal
and policy regimes for crisis management and resolution of cross-border banks, presenting an interim
report to the Basel Committee in December. A
subgroup of the CBRG, also co-chaired by the
FDIC, in collaboration with IADI and European
Forum of Deposit Insurers (EFDI) began work this
year to develop an internally agreed-upon set of
Recommended Core Principles for Effective
Deposit Insurance Systems.
As a member of the Association of Supervisors of
Banks in the Americas (ASBA) Board of Directors,
the FDIC 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.
The FDIC’s leadership within ASBA also included
providing technical training to ASBA members on
supervision of operational risk, bank supervision
and resolution. In 2008, the FDIC continued to
build its relationship with the EFDI and participated in a joint EFDI/FDIC conference in Dublin
on Financial Integration and the Safety Net.
The FDIC entered into a number of Memoranda of
Understanding (MOU) this year, three regarding
information sharing between bank supervisors of
Hong Kong, Mexico and Spain, as well as technical
assistance agreements with Colombia’s deposit
insurer, Fondo De Garantias De Instituciones
Financieras (FOGAFIN), and the United Kingdom’s
(UK) Financial Services Authority (FSA). The MOU
with the UK provides for formal information-sharing and contingency planning arrangements in
connection with cross-border banking activities in
the U.S. and the UK. The FDIC’s consultation with

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M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

the UK has included numerous discussions
to share detailed information on the FDIC’s
experience in resolution management and asset disposition and consultation on key components of
proposed legal changes to the resolution regime for
banks in the UK. In addition, the FDIC Chairman
met with the FSA Chairman, the Deputy to the
Exchequer of Her Majesty’s Treasury, the Governor
of the Bank of England and the CEO of the
Financial Services Compensation Scheme (FSCS) to
continue the dialogue and exchange of information.
In its continuing commitment to fostering sound
banking in China, the FDIC and the People’s Bank
of China co-sponsored a seminar on rural finance
held at the FDIC’s Dallas Regional Office. The seminar provided 55 participants from both countries,
including rural finance experts in banking, financial regulation, and academia, with an opportunity
to share experiences and engage each other in a
dialogue on the challenges, best practices, and
innovations in rural finance in their countries
today. The FDIC also traveled to China to participate in the U.S.-China Bilateral Bank Supervisors
meetings, hosted by the China Banking Regulatory
Commission (CBRC).

Supervision and
Consumer Protection
Supervision and consumer protection are
cornerstones of the FDIC’s efforts to ensure the
stability of and public confidence in the nation’s
financial system. The FDIC’s supervision program
promotes the safety and soundness of FDIC-supervised insured depository institutions, protects
consumers’ rights, and promotes community
investment initiatives.

Examination Program
The FDIC’s strong bank examination program is
the core of its supervisory program. As of
December 31, 2008, the Corporation was the
primary federal regulator for 5,116 FDIC-insured
state-chartered institutions that are not members of
the Federal Reserve System (generally referred to as
“state non-member” institutions). Through safety
and soundness, consumer compliance and
Community Reinvestment Act (CRA), and other
specialty examinations, the FDIC assesses an

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31

institution’s operating condition, management
practices and policies, and compliance with applicable laws and regulations. The FDIC also educates
bankers and consumers on matters of interest and
addresses consumer questions and concerns.
During 2008, the Corporation conducted 2,416
statutorily required safety and soundness
examinations, including a review of Bank Secrecy
Act compliance, and all required follow-up examinations for FDIC-supervised problem institutions
within prescribed time frames. The FDIC also
conducted 1,826 CRA/compliance examinations
(1,509 joint CRA/compliance examinations, 313
compliance-only examinations,4 and 4 CRA-only
examinations) and 3,028 specialty examinations.
All CRA/compliance examinations were also
conducted within the time frames established by
FDIC policy, including required follow-up examinations of problem institutions. The accompanying
table compares the number of examinations, by
type, conducted in 2006 – 2008.
y

As of December 31, 2008, there were 252 insured
institutions with total assets of $159.4 billion
designated as problem institutions for safety and
soundness purposes (defined as those institutions
having a composite CAMELS5 rating of “4” or “5”),
compared to the 77 problem institutions with total
assets of $22.2 billion on December 31, 2007. This
constituted a 227 percent year-over-year increase in
the number of problem institutions and a
618 percent increase in problem institution assets.
In 2008, 67 institutions with aggregate assets of
$383.3 billion were removed from the list of
problem financial institutions, while 243 institutions with aggregate assets of $532.6 billion were
added to the list of problem financial institutions.
Washington Mutual, the single largest failure in
history, with $307.0 billion in assets, was added to
the list and resolved in 2008. The FDIC is the
primary federal regulator for 170 of the 252
problem institutions.

FDIC EXAMINATIONS 2006 – 2008
2008

2007

2006

Safety and Soundness:
State Non-member Banks

2,225

2,039

2,184

186

213

201

Savings Associations

1

3

2

National Banks

2

0

0

State Member Banks

2

3

1

2,416

2,258

2,388

1,509

1,241

777

313

528

1,177

4

4

5

1,826

1,773

1,959

451

418

468

Data Processing Facilities

2,577

2,523

2,584

Subtotal-Specialty Examinations

3,028

2,941

3,052

Total

7,270

6,972

7,399

Savings Banks

Subtotal – Safety and Soundness Examinations
CRA/Compliance Examinations:
Compliance - Community Reinvestment Act
Compliance-only
CRA-only
Subtotal CRA/Compliance Examinations
Specialty Examinations:
Trust Departments

4

5

32

Compliance-only examinations are conducted for most institutions at or near the mid-point between joint compliance-CRA examinations under the Community Reinvestment Act of 1977, as
amended by the Gramm-Leach-Bliley Act of 1999. CRA examinations of financial institutions with aggregate assets of $250 million or less are subject to a CRA examination no more than once every
five years if they receive a CRA rating of “Outstanding” and no more than once every four years if they receive a CRA rating of “Satisfactory” on their most recent examination.
The CAMELS composite rating represents the adequacy of Capital, the quality of Assets, the capability of Management, the quality and level of Earnings, the adequacy of Liquidity, and the
Sensitivity to market risk, and ranges from “1” (strongest) to “5” (weakest).

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During 2008, the Corporation issued the following
formal and informal corrective actions to address
safety and soundness concerns: 83 Cease and Desist
Orders, one Temporary Cease and Desist Order,
and 210 Memoranda of Understanding. Of these
actions issued, 10 Cease and Desist Orders and 29
Memoranda of Understanding were issued based,
in part, on apparent violations of the Bank
Secrecy Act.
As of December 31, 2008, 140 FDIC-supervised
institutions were assigned a “4” rating for safety and
soundness and 30 institutions were assigned a
“5” rating.
Of the “4”-rated institutions, 126 were examined
in 2008, and formal or informal enforcement
actions are in process or have been finalized to
address the FDIC’s examination findings. Twenty
eight “5”-rated institutions were examined and the
remaining two were in the process of being examined in 2008 and completed in February 2009.
As of December 31, 2008, 16 FDIC-supervised
institutions were assigned a “4” rating for
compliance and no institutions were assigned a “5”
rating. In total, nine of the “4”-rated institutions
were examined in 2008; the remaining seven were
examined prior to 2008 and involved either appeals
or referrals to other agencies. These 16 institutions
are under informal enforcement actions (3) or
Cease and Desist Orders (six are final and six are in
process), with one in process of appealing the
examination. The Corporation has issued or is
pursuing enforcement actions to address the
examination findings for all 170 of the problem
institutions for which it is the primary federal regulator. These actions include 159 Cease and Desist
Orders and 11 Memoranda of Understanding.

The FDIC has worked with the Treasury
Department to process applications for the
Troubled Asset Relief Program’s (TARP) Capital
Purchase Program (CPP). The TARP CPP, funded
at $250 billion in 2008, is designed to strengthen
the capital of financial institutions and enhance
their ability to make credit available to consumers
and businesses. (An additional $100 billion was
forwarded to the AIG and auto industries.) All
U.S. bank holding companies, banks, and thrifts

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I N S U R A N C E

are eligible to participate in the CPP by making an
application to their primary federal regulator. The
FDIC has processed 1,600 CPP applications from
state non-member institutions. It is expected that
all TARP CPP capital infusions will be completed
by mid 2009.

Joint Examination Teams
The FDIC used joint compliance/risk management
examination teams (JETs) to assess risks associated
with new, nontraditional and/or high-risk products
being offered by FDIC-supervised institutions. The
JET approach recognizes that to fully understand
the potential risks inherent in certain products and
services, the expertise of both compliance and risk
management examiners is required. The JET
approach has three primary objectives:
´ To enhance the effectiveness of the FDIC’s
supervisory examinations in unique situations;
´ To leverage the skills of examiners who have
experience with emerging and alternative loan
and deposit products; and
´ To ensure that similar supervisory issues
identified in different areas of the country are
addressed consistently.
In 2008, the FDIC used JETs within institutions
involved in significant subprime or nontraditional
mortgage activities; institutions affiliated with or
utilizing third parties to conduct significant
consumer lending activities, especially in the credit
card area; institutions offering refund anticipation
loans (RAL) products; and institutions for which
the FDIC has received a high volume of consumer
complaints or complaints with serious allegations
of improper conduct by banks.

Large Complex Financial
Institution Program

Troubled Asset Relief Program’s
Capital Purchase Program

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The FDIC’s Large Complex Financial Institution
Program addresses the unique challenges associated
with the supervision, insurance and potential
resolution of large and complex financial institutions. With the challenges posed by economic and
market developments in 2008, large institutions
have been significantly affected. The FDIC’s ability
to analyze and respond to risks in these institutions
is of particular importance as they make up a
significant share of the banking industry’s assets.
The focus of the program is to ensure a consistent

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CHAPTER 1

approach to large-bank supervision and risk
analysis on a national basis and to provide a quick
response to risks that are identified in large
institutions. This is achieved through extensive
cooperation with the FDIC regional offices, other
FDIC divisions and offices, and the other banking
and thrift regulators.
In 2008, the Large Insured Depository Institution
(LIDI) Program implemented a comprehensive
process to standardize data capture and reporting.
Under this program, supervisory staff throughout
the nation performs comprehensive quantitative
and qualitative risk analysis of institutions with
assets over $10 billion, or under this threshold at
regional discretion. This information has been
instrumental in providing the basis for supervisory
actions, supporting insurance assessments and
resolution planning.
The LIDI Program continued to assess internal and
industry preparedness relative to Basel II capital
rules and was actively involved in domestic and
international discussions intended to ensure
effective implementation of the New Capital
Accord. This included participation in numerous
supervisory working group meetings with foreign
regulatory authorities to address Basel II
home-host issues.

Bank Secrecy Act/
Anti-Money Laundering
The FDIC pursued a number of Bank Secrecy Act
(BSA), Counter-Financing of Terrorism (CFT) and
Anti-Money Laundering (AML) initiatives in 2008.
International AML/CFT Initiatives
The FDIC conducted three training sessions in
2008 for 49 central bank representatives from
Jordan, Kuwait, Paraguay, Qatar, Saudi Arabia,
Senegal, Thailand, and the West Africa Central
Bank. The training focused on AML/CFT controls,
the AML examination process, customer due
diligence, suspicious activity monitoring and
foreign correspondent banking. The sessions also
included presentations from the Federal Bureau of
Investigation on combating terrorist financing, and
the Financial Crimes Enforcement Network
(FinCEN) on the role of financial intelligence units
in detecting and investigating illegal activities.

34

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In addition to hosting on-site AML/CFT instruction, the FDIC participated in the second annual
U.S.-Latin America Private Sector Dialogue in
Miami, Florida. The focus of this Treasury
Department initiative is to provide a forum for
discussing common issues related to money
laundering and terrorist financing. The FDIC also
participated in a seminar focusing on Islamic
Banking hosted by Perbadanan Insurans Deposit
Malaysia (PIDM) in Kuala Lumpur, Malaysia.
Additionally, the FDIC traveled to Uruguay to
provide instruction focused on AML/CFT
practices to approximately 40 regulators from the
Banco Central del Uruguay. Also presented was
an overview of the FDIC’s role as a supervisor
to approximately 100 bankers and
government officials.
Basel AML/CFT
The FDIC also participates on the Basel AML/CFT
committee. In 2008, the committee published views
on supervisory expectations relating to
transparency in payment messages, particularly in
anticipation of changes to technical standards for
cross-border wire transfers.

Money Services Business Project
As part of the FDIC’s Money Services Business
(MSB) Project, the FDIC continued to work on
establishing information-sharing agreements with
state authorities responsible for examining MSBs.
The agreements allow for the exchange of
information relating to MSB supervision and
provide for a formal information-sharing process.
The agreements were developed to limit regulatory
redundancies by providing relevant supervisory
information for MSB customers with banking relationships at FDIC-supervised financial institutions.
Additionally, the agreements provide assistance to
each agency in promoting opportunities to learn
from the other’s industry expertise.
Based on challenges faced by the MSB industry in
obtaining and maintaining banking services, the
FDIC partnered with several state MSB supervisors.
Information gained is intended to streamline the
BSA/AML examination process for financial
institutions serving the MSB industry. To date,
agreements have been signed with state representatives from New York, Pennsylvania and Texas.

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Minority Depository Institution
(MDI) Activities
The FDIC continues to seek avenues for improving
communication and interaction with MDIs, and
responding to concerns.
In July of 2008, the FDIC issued a Financial
Institution Letter (FIL) aimed at enhancing
procedures for providing technical assistance to
MDIs. Although the FDIC routinely contacts MDIs
to offer return visits and technical assistance
following the conclusion of each examination, the
FIL expanded the guidelines to encourage banks to
initiate contact to request technical assistance at
any time. The guidance specifically delineates that
the FDIC can assist in reviewing and offering
feedback and recommendations on a variety of
matters, including:
´ Proposed written policies for major operational
areas, such as the lending, investment, and funds
management functions;
´ Proposed strategic plans;
´ Proposed budgets;
´ Proposed applications or notices for new
branches and/or new activities; and
´ Any other operational matters where MDI bank
management would like FDIC input.
Also, as suggested by MDIs, the guidance provides
that the institutions can contact any region, regardless of its geographic location, to initiate discussions
for technical assistance.
During 2008, the FDIC provided technical
assistance to 54 MDIs on a broad range of topics,
including strategies for addressing BSA deficiencies, strengthening budget processes, and revising
and developing policies. The FDIC also held
discussions on the de novo application process with
prospective organizers of new minority banks.
In partnership with the Puerto Rico Bankers
Association, the FDIC hosted a Compliance
seminar in San Juan in December 2008. The
seminar focused on pertinent compliance-related
matters, including the Fair and Accurate Credit
Transaction Act implementation, unfair and
deceptive practices, and recent changes to the
FDIC’s examination procedures.

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M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

In response to comments provided by MDIs, the
FDIC launched a program for enhanced peer group
reviews and comparisons, specifically targeted for
MDIs. This custom peer report is designed to
facilitate comparison of an institution’s
performance with that of all MDIs that meet the
FDIC’s definition, as well as all FDIC-insured institutions. The custom peer report contains earnings,
capital, asset quality, and liquidity performance
measures, which should assist MDIs in comparing
performance against similar institutions.
In July of 2008, the FDIC hosted the third annual
Interagency Minority Depository Institution
National Conference in Chicago, Illinois. The
theme of the conference was “Know Your Business,
Grow Your Business.” The event drew over 250
attendees, representing an increase in participation
of 47 percent from the previous year. In addition to
presentations by senior officials from all federal
banking regulatory authorities, industry experts
and regulators, the program covered the state of the
economy as it relates to mortgage markets, the
current credit environment, and the process of
bidding on distressed banks. An MDI bankers’
panel discussed strategies for identifying opportunities for success in the current environment. The
program also included workshops on commercial
real estate trends and best practices, troubled debt
restructuring, the development of profitable lines of
business, SBA-guaranteed lending programs, and
the Community Development Financial Institution
Fund certification process. Feedback from the
attendees was overwhelmingly positive.
In the third quarter of 2008, the FDIC launched a
series of quarterly conference calls with FDICsupervised MDIs, covering relevant regulatory
topics. The initial call was held in September 2008,
and covered funding risks associated with banks’
dependence on brokered and above-market rate
deposits. The second call was held in November
2008, and covered the Temporary Liquidity
Guarantee Program and the Treasury Department’s
Capital Purchase Program. The third was held in
December 2008, and covered accounting issues.
The new conference call series has been well
received by the MDIs, with participation averaging
approximately 75 bankers for each event.

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Capital Standards

Guidance Issued

The FDIC continued to be actively involved in
domestic and international discussions intended to
ensure capital standards adequately support the
safe and sound operation of banks. This included
participation in a number of supervisory working
group meetings with foreign regulatory authorities.
On June 26, 2008, the FDIC Board and the Federal
Reserve Board of Governors approved the
publication of the Basel II Standardized Approach
Notice of Proposed Rulemaking (NPR). The NPR
was published in the Federal Register on July 29,
2008, with comments due October 27, 2008.
Because of the priority of dealing with the current
market turmoil and an unexpected delay in many
banks’ plans for implementing the advanced
approaches, the agencies deferred finalizing the
Standardized Framework NPR. Only one
institution began Basel II Parallel Run in 2008. The
FDIC will compile and analyze the information as
it becomes available through public and
supervisory sources.

During 2008, the FDIC issued and participated in
the issuance of guidance in several areas as
described below:

The FDIC is involved in Basel Committee work
teams to develop proposals that would strengthen
each of the three pillars of the Basel II framework.
The FDIC also is working with another subgroup of
the Basel Committee to develop a proposal to
strengthen the market risk capital requirements.
The FDIC worked with other U.S. financial regulators to complete final guidance on the supervisory
review process (Pillar 2) for banks using the
advanced approaches of Basel II. The final
guidance includes several refinements to the draft
guidance that are intended to address weaknesses
revealed by the market turmoil. This guidance was
published in the Federal Register on July 31, 2008.
The FDIC finalized the Goodwill Net of Associated
Deferred Tax Liability rule for regulatory capital on
December 16, 2008, and jointly issued the Final
Rule with the other federal banking agencies. This
Final Rule allows goodwill, which must be deducted
from Tier I capital, to be reduced by the amount of
any associated deferred tax liability. The new rule
continues to adhere to the statutory requirement
that all of a bank’s exposure to goodwill will be
deducted from capital. The final rule took effect
January 29, 2009. However, a bank may elect to
apply this final rule for regulatory capital reporting
purposes as of December 31, 2008. The federal
banking agencies decided not to extend similar
treatment to other intangible assets currently
required to be deducted fully from Tier I capital.

36

Commercial Real Estate Guidance
In response to deteriorating trends in construction
and development (C&D) lending and other commercial real estate (CRE) sectors, the FDIC issued
“Managing Commercial Real Estate Concentrations
in a Challenging Environment” on March 17, 2008.
The guidance re-emphasizes the importance of
strong capital and allowance for loan and lease loss
levels and robust credit risk management practices
for institutions with concentrated CRE exposures.
The guidance further encourages institutions to
continue making C&D and CRE credit available in
their communities using prudent lending standards.
Liquidity Risk Management
In 2008, disruptions in the credit and capital
markets exposed weaknesses in many banks’ liquidity risk measurement and management systems. To
address these concerns, the FDIC issued guidance
highlighting the importance of liquidity risk
management at FDIC-supervised institutions. This
guidance noted that institutions using wholesale
funding, securitizations, brokered deposits and
other high-rate funding strategies should measure
liquidity risk using pro forma cash flows/scenario
analysis and should have contingency funding plans
in place that address relevant bank-specific and
systemic stress events. The guidance further states
that institutions using volatile, credit sensitive, or
concentrated funding sources are generally
expected to hold capital above regulatory minimum
levels to compensate for the elevated levels of
liquidity risk present in their operations.
Third-Party Risk
On June 6, 2008, the FDIC issued “Guidance for
Managing Third-Party Risk” which identifies
sound practices that can help banks avoid
significant safety-and-soundness and compliance
problems that may be associated with some
third-party relationships. This guidance describes
potential risks arising from third-party relationships and outlines risk management principles that
financial institutions may tailor to suit the

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complexity and risk potential of their significant
third-party relationships. On November 7, 2008,
the FDIC issued “Guidance on Payment Processor
Relationships” which identifies potential risks and
recommended controls associated with
relationships with entities that process payments
for telemarketers and other merchant clients.
Trust
In 2008, the FDIC completed significant revisions
and additions to the FDIC Trust Examination
Manual. Most notably, substantial material was
added to the sections covering employee benefit
plans, the Employee Retirement Income Security
Act of 1974, the Gramm-Leach-Bliley Act, and
Regulation R exceptions and exemptions for banks
from the definition of “broker” in the Securities
Exchange Act of 1934.
Government-Sponsored Enterprises
The Federal Housing Finance Agency placed
Fannie Mae and Freddie Mac into conservatorship
on September 7, 2008. The FDIC believes these
government-sponsored enterprises are important to
the home mortgage market and, along with the
other federal banking agencies, issued a statement
on September 7, 2008, indicating that it will work
with institutions with significant holdings of
Fannie Mae or Freddie Mac common and preferred
shares in relation to their capital.

M A N AG E M E N T ’ S D I S C USS I O N A N D A N A LYS I S

Other Real Estate
Continued weakness in the housing market and the
rapid rise in foreclosures increased the potential for
higher levels of other real estate held by FDICsupervised institutions. Accordingly, on July 1,
2008, the FDIC issued “Other Real Estate:
Guidance on Other Real Estate” to remind bank
management of the importance of developing and
implementing policies and procedures for acquiring, holding, and disposing of other real estate.
Hope for Homeowners
As a member of the Board of Directors of the
HOPE for Homeowners Program, the FDIC joined
the Departments of Housing and Urban
Development, Treasury and the Federal Reserve in
establishing requirements and standards for the
Program that are not otherwise specified in the
legislation, and prescribing necessary regulations
and guidance to implement those requirements and
standards.
Regulatory Relief
In 2008, the FDIC issued 12 Financial Institution
Letters that provided guidance to help financial
institutions and facilitate recovery in areas
damaged by severe storms, tornadoes, flooding,
and other natural disasters. Areas within Alabama,
Arkansas, Florida, Indiana, Iowa, Louisiana,
Mississippi, Missouri, Nebraska, Tennessee, Texas,
and Wisconsin were affected.

Home Equity Lines of Credit
The FDIC completed an Issues Review of the
emerging practice of lenders suspending or
terminating home equity lines of credit due to
substantially decreased collateral values. Several
consumer protection regulations, including Truth
in Lending, and fair lending laws bear on this
practice. As a result, on June 26, 2008, the FDIC
issued “Home Equity Lines of Credit: Consumer
Protection and Risk Management Considerations
When Changing Credit Limits and Suggested Best
Practices” to remind FDIC-supervised financial
institutions that if, for risk management purposes,
they decide to reduce or suspend home equity lines
of credit, certain legal requirements designed to
protect consumers must be followed.

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Other Guidance Issued
The FDIC also contributed to the release of guidance on Subprime Mortgage Product Illustrations
and on Identity Theft Red Flags regulations and
examination procedures, and changes to the Truth
in Lending Act and the Home Mortgage Disclosure
Act regulations relating to higher-priced mortgages.

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Monitoring Potential Risks from New
Consumer Products and Developing a
Supervisory Response Program
The FDIC is revising the former Underwriting
Survey, completed by examiners at the conclusion
of each examination to aid in identifying new
products and emerging risks. This will provide
examiners the opportunity to submit information
to a central database at the conclusion of each
examination. Policy staff will monitor and analyze
this real-time examiner input and use the
information to formulate policy guidance to allow
supervisory strategies as appropriate.
The FDIC completed an Issues Review of reverse
mortgages that outlined the types of products and
features, as well as risks, from both a consumer and
safety-and-soundness perspective. The results of
this review will be used in the ongoing FFIEC
Consumer Compliance Task Force project on
reverse mortgages. As part of the Issues Review, the
FDIC also participated in an examination of a
specialized reverse mortgage lender.

Regulatory Reporting Revisions
The FDIC, jointly with the Office of the
Comptroller of the Currency and the Federal
Reserve Board, implemented revisions to the
Consolidated Reports of Condition and Income
(Call Report) in first quarter 2008. These revisions
included new data related to residential mortgages
(such as restructured troubled mortgages, mortgages in foreclosure, and mortgage repurchases and
indemnifications) and expanded data on trading
assets and liabilities and fair value measurements.
In September 2008, the three agencies requested
comment on proposed Call Report revisions that
would take effect on a phased-in basis in March,
June, and December 2009. Certain revisions
address areas in which the banking industry has
experienced heightened risk as a result of market
turmoil and illiquidity and weakening economic
and credit conditions. The reporting changes
include new data on real estate construction loans
with interest reserves, structured financial products
such as collateralized debt obligations, commercial
mortgage-backed securities, pledged loans, and

38

fiduciary assets and income. Selected institutions
would report additional data on recurring fair value
measurements, credit derivatives, and over-thecounter derivative exposures. The agencies made
limited modifications to the proposed changes in
response to comments received. In November 2008,
the FDIC and the other banking agencies obtained
emergency approval from the U.S. Office of
Management and Budget to collect data in the
regulatory reports for all insured institutions
beginning in December 2008 to support the
quarterly assessment process for the FDIC’s
Transaction Account Guarantee Program.

Promoting Economic Inclusion
The FDIC pursued a number of initiatives in 2008
to facilitate underserved populations using mainstream banking services rather than higher cost,
non-bank alternatives and to ensure protection of
consumers in the provision of these services.
Alliance for Economic Inclusion
The goal of the FDIC’s Alliance for Economic
Inclusion (AEI) initiative is to collaborate with
financial institutions, community organizations,
local, state and federal agencies, and other partners
in select markets to launch broad-based coalitions
to bring unbanked and underserved consumers
into the financial mainstream.
The FDIC expanded its AEI efforts during 2008 to
increase measurable results in the areas of new
bank accounts, small-dollar loan products,
remittance products, and delivery of financial
education to more underserved consumers. During
2008, over 200 banks and organizations joined AEI
nationwide, bringing the total number of AEI
members to 924. More than 56,000 new bank
accounts were opened during 2008, bringing the
total number of bank accounts opened through the
AEI to 90,000. During 2008 approximately 43,000
consumers received financial education through
the AEI, bringing the total number of consumers
educated to 73,000. Also, 53 banks were in the
process of offering or developing small-dollar loans
as part of the AEI and 34 banks were offering
remittance products at the end of 2008.

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The FDIC launched the tenth AEI initiative in
Rochester, New York, on May 15. The launch was
held in partnership with the New York State
Banking Superintendent, Mayor of Rochester, and
other partners. As a result of the FDIC’s leadership
and initial success with AEI in its ten primary
markets, the FDIC was asked to provide technical
assistance to several other cities that are launching
city-wide campaigns to increase access by the
underserved to mainstream financial services.
Two major national AEI partnerships were also
signed during 2008. The first, with the National
Association of Affordable Housing Lenders
(NAAHL), expanded the two organizations’
collaboration in furtherance of economic inclusion.
The second, with the United Way of America,
strengthened mutual efforts to serve the
underserved through the United Way of America’s
Financial Stability Partnership.
During 2008, the FDIC included a component of its
foreclosure prevention efforts within the AEI. The
FDIC sponsored or co-sponsored more than 164
local outreach and training events, many in
partnership with NeighborWorks® America and its
affiliates. These sessions were designed to educate
at-risk homeowners about the availability of
foreclosure prevention counseling services and
other resources. A new Web page was also launched
to provide resources, tools and technical assistance
to consumers and others at risk of foreclosure or
involved in foreclosure prevention efforts.
Forum on Mortgage Lending for
Low- and Moderate-Income (LMI) Households
On July 8, 2008, the FDIC held a “Forum on
Mortgage LMI Households.” The purpose of the
forum was to explore a framework for LMI
mortgage lending in the future, in light of current
problems in the mortgage market. The forum
examined ways to encourage profitable, responsible,
and sustainable mortgage lending to lower-income
households and strategies to rejuvenate the
secondary market for these loans. Speakers at the
forum included Treasury Secretary Henry M.
Paulson, Federal Reserve Chairman Ben S.
Bernanke, and JPMorgan Chase Chairman and
CEO James Dimon.

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On September 4, 2008, the FDIC issued a Financial
Institution Letter (FIL) for bankers and other
mortgage professionals to highlight best practices
discussed at the forum. These best practices
focused on the following:
´ Back-to-basics underwriting
´ Ensuring that incentives and compensation for
all parties to mortgage transactions are aligned
with the long-term outcome of the transactions
´ Improving mortgage transaction transparency
and due diligence
´ Expanding existing reasonable LMI mortgage
products and encouraging innovations
´ Fostering public/private partnerships
FDIC Advisory Committee on
Economic Inclusion
The FDIC’s Advisory Committee on Economic
Inclusion was established in 2006 and provides the
FDIC with advice and recommendations on
initiatives focused on expanding access to banking
services by underserved populations. This may
include reviewing basic retail financial services
such as check cashing, money orders, remittances,
stored value cards, short-term loans, savings
accounts, and other services that promote asset
accumulation and financial stability. Committee
members represent a cross-section of interests from
the banking industry, state regulatory authorities,
government, academia, consumer or public advocacy organizations and community-based groups.
The Advisory Committee met twice during 2008.
In March 2008, the meeting topic was “AssetBuilding Opportunities for Individuals and Banks.”
The meeting focused on policy approaches,
supervisory and regulatory strategies, and product
innovations to enhance household saving, particularly for LMI households. The Advisory Committee
also met after the LMI forum in July 2008, to
discuss the forum in general, and best practices
raised at the forum in particular that were later
issued in a FIL as discussed above. At that meeting,
the Chairman also announced the formation of an
FDIC working group to explore the feasibility of
prize-linked savings programs. Among other
things, this group is exploring whether the
operational, marketing, and distribution networks
of state lottery systems can be leveraged to
encourage saving.

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Affordable Small-Dollar Loan Guidelines
and Pilot Program
Many consumers, even those who have bank
accounts, turn to high-cost payday or other
non-bank lenders to quickly obtain small loans to
cover unforeseen circumstances. To help insured
institutions better serve an underserved and
potentially profitable market while enabling
consumers to transition away from reliance on
high-cost debt, the FDIC launched a two-year
small-dollar loan pilot project in February 2008.
The pilot is designed to review affordable and
responsible small-dollar loan programs offered by
insured financial institutions and assist the
banking industry by identifying and disseminating
information on replicable business models and best
practices for small-dollar loans, including ways to
offer small-dollar loan customers other mainstream
banking services.
The FDIC selected an initial group of 31 banks of
varied sizes and diverse locations and settings for
participation in the study. Banks in the pilot meet
the FDIC’s Small-Dollar Loan guidelines, and
several have already reported using the small-dollar
product as a cornerstone for profitable relationships.
After three quarters of data collection, participating
banks have also demonstrated innovative strategies
in areas such as underwriting, advertising and linking automatic savings features that could prove to
be replicable for other banks. These early results
provide some indication that banks can profitably
provide affordable alternatives to high-cost, shortterm credit. The FDIC will continue to explore
profitability and other noteworthy features of
participating bank programs as the pilot progresses.

FDIC Study of Bank
Overdraft Programs
In 2008, the FDIC completed a Study of Bank
Overdraft Programs, a two-part study that gathered
empirical data on the types, characteristics, and use
of overdraft programs operated by FDIC-supervised banks. The study was undertaken in response
to the growth in automated overdraft programs,
defined as programs in which the bank honors a
customer’s overdraft obligations using standardized
procedures to determine whether the non-sufficient

40

fund (NSF) transaction qualifies for overdraft
coverage. Data and information for the FDIC’s
study were gathered through a survey collection
representative of 1,171 FDIC-supervised institutions, and a separate data request of customer
account and transaction-level data from a smaller
set of 39 institutions.
The survey instrument was designed to obtain the
following types of information related to overdraft
programs: characteristics, features, and fees of
overdraft programs; transaction processing policies;
marketing and disclosure practices; internal
controls and monitoring practices; the role of
vendors and third parties in overdraft program
implementation; and NSF-related fee income and
growth. The customer account and transactionlevel data collection was designed to gather
information on the provision of overdraft services
on customer accounts, the occurrence of NSF
activity covered under automated overdraft
programs, and the characteristics of customer
accounts that tend to incur the highest volume of
overdraft fees. A final report was released in
February 2009. The FDIC believes that objective
information on these programs will help policymakers make better-informed policy decisions and
will help the public better understand the features
and costs related to automated overdraft programs.

National Survey of Banks’ Efforts
to Serve the Unbanked and
Underbanked
In 2008, the FDIC conducted the first of a series of
national surveys on banks’ efforts to serve the
unbanked and underbanked. For the purposes of
this survey effort, unbanked individuals and
families are those who rarely, if ever, held a
checking account, savings account, or other type of
transaction or check cashing account at an insured
depository institution in the conventional finance
system. Underbanked individuals and families are
those who have an account with an insured
depository institution but also rely on non-bank
alternative financial service providers for transaction services or high-cost credit products. The
survey was conducted in response to a mandate
under section 7 of the Federal Deposit Insurance
Reform Conforming Amendments Act of 2005
(Reform Act) which calls for the FDIC to conduct

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ongoing surveys on efforts by insured depository
institutions to bring unbanked individuals and
families into the conventional finance system. This
initial survey effort had three objectives:
´ Identify and quantify the extent to which insured
depositories undertake outreach efforts, serve,
and meet the banking needs of the unbanked
and underbanked;
´ Identify challenges affecting the ability of
insured depository institutions to serve the
unbanked and underbanked, including but not
limited to cultural, language, identification
issues, and spatial/location issues; and
´ Identify innovative efforts depositories use to
serve the unbanked and underbanked, including
community storefronts, small-dollar loans,
basic banking accounts, remittances, and other
low-cost products and services used by the
unbanked and underbanked.
The study involved a survey of insured depository
institutions and development of a limited number
of case studies. The survey was administered to a
sample that was representative of all FDIC-insured
commercial banks and savings institutions having
standard retail banking operations. In-depth case
studies were conducted of 16 surveyed institutions
that were identified as offering innovative
approaches to serving unbanked and underbanked
individuals. The report was transmitted to
Congress in early 2009.

Household Survey of the Unbanked
and Underbanked
In January 2009, the U.S. Bureau of the Census
conducted, on behalf of the FDIC, the first National
Household Survey of the Unbanked and
Underbanked. The survey was conducted as a
supplement to Census’ Current Population Survey.
In addition to collecting accurate estimates of the
number of unbanked and underbanked households
in the U.S., the survey was designed to provide
insights into their demographic characteristics and
reasons why the households are unbanked and/or
underbanked. This effort is being undertaken in
response to the Reform Act, which calls for the
FDIC to provide an estimate of the size of the U.S.
unbanked market and to identify issues that cause
individuals and families to be unbanked. The FDIC
plans to release survey results during 2009.

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Information Technology, Cyber Fraud
and Financial Crimes
The President’s Identity Theft Task Force, of which
the FDIC is a member, submitted its follow-up
report to the President in September 2008. The
report documents the efforts of the Task Force to
implement the 2007 Strategic Plan’s 31
recommendations concerning strengthening data
protection, improving consumer authentication,
assisting identity theft victims, and investigating,
prosecuting, and punishing identity thieves.
Other major accomplishments during 2008 in
combating identity theft included the following:
´ Assisted financial institutions in identifying and
shutting down approximately 1,223 “phishing”
Web sites. The term “phishing” – as in fishing for
confidential information – refers to a scam that
encompasses fraudulently obtaining and using
an individual’s personal or financial information.
´ Utilized a brand protection service provider
in taking down instances of abuse of the FDIC
name or logo. In 2008, 14 active sites were closed
(sites claiming to be FDIC or FDIC authorized).
´ Issued 219 Special Alerts to FDIC-supervised
institutions of reported cases of counterfeit or
fraudulent bank checks.
´ Issued, in conjunction with the other Federal
Financial Institution Examination Council
(FFIEC) agencies, examination procedures for
“Identity Theft Red Flags, Address Discrepancies, and Change of Address Regulations.” These
procedures are designed to assist financial institutions in complying with these new regulations
and to provide examiners with a consistent
methodology for assessing compliance. Examiners began reviewing bank compliance with the
new regulations on the mandatory compliance
date of November 1, 2008.
The FDIC conducts information technology
examinations at each safety and soundness
examination to ensure that institutions have
implemented adequate risk management practices
for the confidentiality, integrity, and availability of
the institution’s sensitive, material, and critical
information assets using the FFIEC Uniform
Rating System for Information Technology
(URSIT). The FDIC also participates in interagency examinations of significant technology

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service providers. In 2008, the FDIC conducted
2,577 information technology (IT) examinations at
financial institutions and technology service
providers. The FDIC also monitors significant
events such as data breaches and natural disasters
that may impact financial institution operations
or customers.
The FDIC updated its risk-focused IT examination
procedures for FDIC-supervised financial
institutions. The procedures include an updated IT
Officer’s Questionnaire which newly highlights risk
issues related to vendor management.
The FDIC and other FFIEC regulatory agencies
completed guidance concerning the risks associated with financial institutions’ use of remote
deposit capture technology. The guidance, which
discusses various risk mitigation techniques that
institutions should use, was issued in January 2009.
The FDIC, in conjunction with the other FFIEC
agencies issued guidance to financial institutions to
enhance business continuity planning. On February
6, 2008, the FDIC, with the other FFIEC agencies,
issued “Interagency Statement on Pandemic
Planning” identifying actions that financial
institutions should consider to minimize the
adverse effects of a pandemic event. The Business
Continuity Planning booklet, part of the FFIEC IT
Examination Handbook series, was updated in
March 2008 to address emerging threats such as
pandemic planning and lessons learned from
Hurricanes Katrina and Rita as well as additional
testing guidelines. The guidance provides an
enterprise-wide approach to a financial institution’s
business continuity planning. The FDIC also
participated in and hosted the Roundtable on
Pandemic Planning sponsored by the FFIEC and
the American Bankers Association with
approximately 170 participants.

complaints against state non-member institutions.
The FDIC responded to over 96 percent of these
complaints within timeliness standards established
by corporate policy. The FDIC also responded to
3,588 written inquiries, of which 502 involved state
non-member institutions. In addition, the FDIC
responded to 4,789 written inquiries, of which 595
involved state non-member institutions. The FDIC
also responded to 7,536 telephone calls from the
public and members of the banking community in
which 4,211 were regarding state non-member
institutions.

Deposit Insurance Education
An important part of the FDIC’s deposit insurance
mission is ensuring that bankers and consumers
have access to accurate information about the
FDIC’s rules for deposit insurance coverage. The
FDIC has an extensive deposit insurance education
program consisting of seminars for bankers,
electronic tools for estimating deposit insurance
coverage, and written and electronic information
targeted for both bankers and consumers. The FDIC
also responds to thousands of telephone and written
inquiries each year from consumers and bankers
regarding FDIC deposit insurance coverage.

Consumer Complaints and Inquiries
The FDIC investigates consumer complaints
concerning FDIC-supervised institutions and
answers inquiries from the public about consumer
protection laws and banking practices. As of
December 31, 2008, the FDIC had received 14,169
written complaints, of which 6,267 involved

42

Directing the Electronic Deposit Insurance Estimator and Public Service Announcements
(PSA) campaign (l to r): Kathy Nagle, Tibby Ford and Andrew Gray showcase material,
including television PSAs.

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Economic conditions in 2008 helped to spur a
significant interest by bank customers in learning
more about FDIC deposit insurance coverage. To
meet the increased public demand for deposit
insurance information, the FDIC implemented two
major initiatives to help raise public awareness of
the benefits and limitations of FDIC deposit
insurance coverage:
´ On June 16, 2008, in connection with the
observation of the FDIC’s 75th anniversary, the
FDIC embarked on a campaign to raise public
awareness regarding FDIC deposit insurance coverage. As part of this effort, the FDIC facilitated
a series of ads in selected national newspapers
and magazines encouraging consumers to learn
more about their FDIC insurance coverage. In
addition, the FDIC sent all insured institutions a
Portfolio of Deposit Insurance Coverage Resources
for Bankers, containing copies of several education tools and publications on deposit insurance
coverage; these products are designed to help
bank employees who answer depositor questions
about FDIC coverage.
´ In September 2008, the FDIC launched a second
major initiative to raise public awareness of the
benefits and limitations of federal deposit insurance. The goal of this campaign, which involves
a series of public service announcements for
television, radio and print media, is to encourage
bank customers to visit myFDICinsurance.gov,
where they can use “EDIE the Estimator.” “EDIE
the Estimator” is an online deposit insurance
calculator that has been available to the public for
a number of years but was simplified and made
more accessible as part of this campaign. The
public service announcements feature personal
finance expert Suze Orman, who donated her
time to this initiative. This campaign has been
highly successful and prompted the FDIC to
launch a Spanish language campaign, which also
includes an updated deposit insurance calculator,
in late 2008.
In addition to these significant public outreach
initiatives, the FDIC continued its efforts to educate
bankers who work with depositors about the rules
and requirements for FDIC insurance coverage. In
the summer of 2008, the FDIC conducted a series
of 12 nationwide telephone seminars for bankers on
deposit insurance coverage; these seminars were
very well received, with an estimated 66,000

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bankers participating at approximately 22,000 bank
locations throughout the country. The FDIC also
continued to work with industry trade groups to
provide training for bank employees.

Deposit Insurance Coverage Inquiries
During 2008, the FDIC received 18,953 written
deposit insurance inquiries from consumers and
bankers. Of these inquiries, 99 percent received
responses from the FDIC within the timeframes
required by policy. This activity represents a 360
percent increase over 2007, where the FDIC
received 4,125 written deposit insurance inquiries.
In addition to written deposit insurance inquiries,
the FDIC received and responded to 81,979
telephone inquiries from consumer and bankers
during 2008. In contrast, the FDIC replied to
15,899 deposit insurance telephone inquiries for the
entire year in 2007. The 2008 activity represents a
416 percent increase over 2007.

Financial Education and
Community Development
In 2001, the FDIC – recognizing the need for
enhanced financial education across the country –
inaugurated its award-winning Money Smart
curriculum, which is now available in six languages,
large print and Braille versions for individuals with
visual impairments and a computer-based instruction version. Since its inception, over 1.8 million
individuals (including approximately 235,000 in
2008) had participated in Money Smart classes and
self-paced computer-based instruction.
Approximately 300,000 of these participants
subsequently established new banking relationships.
The FDIC extended the Money Smart program to
the age 12-21 audience with the creation of a
complementary program, “Money Smart for Young
Adults.” All eight modules of the new curriculum
are aligned with state educational standards, as well
as Jump$tart national financial literacy standards
and the National Council on Economics Education
national economics standards. Through year-end
2008, the FDIC had received orders for more than
20,000 copies of the new curriculum since its
launch on April 14, 2008. Over 40 outreach
activities have taken place to specifically promote
the curriculum, ranging from presentations and
resource tables at events targeted at teachers,

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outreach activities to school district curriculum
directors, and train-the-trainer sessions. Two new
nationwide partnerships were also signed to
facilitate the delivery of the new curriculum, one
with Operation Hope and the other with Campfire
USA, in addition to 33 local/regional partnerships.
Additionally, the FDIC developed a portable audio
format version of Money Smart that will be ready
for launch near mid 2009.
During 2008, the FDIC also undertook over 400
community development, technical assistance and
outreach activities and events. These activities were
designed to promote awareness of investment
opportunities to financial institutions, access to
capital within communities, knowledge-sharing
among the public and private sector, and wealthbuilding opportunities for families. Representatives
throughout the financial industry and their
stakeholders collaborated with the FDIC on a broad
range of initiatives structured to meet local and
regional needs for financial products and services,
credit, asset-building, affordable housing, small
business and micro-enterprise development and
financial education.
In particular, the FDIC engaged in a number of
activities as part of an effort to raise consumer
awareness of the importance of personal savings
and responsible financial management. A new Web
page was launched to provide technical assistance
and other resources to financial institutions,
community-based organizations, and others to
encourage the promotion of savings. The FDIC also
undertook several speaking opportunities
specifically on asset-building and the importance of
personal savings. Additionally, the FDIC participated in 19 local savings campaigns during the
2008 America Saves week to encourage consumers
to build wealth. FDIC’s involvement included
providing technical assistance and training, participating in the launch of a new Saves initiative, and
facilitating participants in the Saves initiatives in
several markets receiving copies of Money Smart.

44

Resolutions and
Receiverships
The FDIC has the unique mission of protecting
depositors of insured banks and savings
associations. No depositor has ever experienced a
loss on the insured amount of his or her deposit in
an FDIC-insured institution due to a failure. Once
an institution is closed by its chartering authority –
the state for state-chartered institutions, the Office
of the Comptroller of the Currency (OCC) for
national banks and the Office of Thrift Supervision
(OTS) for federal savings associations – and the
FDIC is appointed receiver, it is responsible for
resolving the failed bank or savings association.
The FDIC has at its disposal and employs a variety
of business practices to resolve a failed institution.
These business practices typically fall under work
associated with the resolution process or the
receivership process. Depending on the characteristics of the institution, the FDIC may recommend
several of these practices to ensure prompt and
smooth payment of deposit insurance to insured
depositors, to minimize impact on the Deposit
Insurance Fund, and to speed dividend payments to
creditors of the failed institution.
The resolution process involves valuing a failing
institution, marketing it, soliciting and accepting
bids for the sale of the institution, determining
which bid is least costly to the insurance fund, and
working with the acquiring institution through the
closing process.
In order to minimize disruption to the local community, the resolution process must be performed
quickly and as smoothly as possible. There are two
basic resolution methods: purchase and assumption
transactions and deposit payoffs. A third resolution
option, open bank assistance transactions, generally
can only be used in the event the bank’s failure
would result in systemic risk.

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The purchase and assumption transaction (P&A) is
the most common resolution method used for
failing institutions. In a P&A, a healthy institution
assumes certain liabilities of the failed institution
and purchases certain assets of the failed institution.
Since each failing bank situation is different, P&A
transactions are structured to create the highest value
for the failed institution. Depending on the P&A
transaction, the acquirer may either acquire all or
only the insured portion of the deposits.
Deposit payoffs are only executed if a bid for a P&A
transaction is not the least costly to the fund or if
no bids are received, in which case the FDIC in its
corporate capacity as deposit insurer, makes sure
that the customers of the failed institution receive
the full amount of their insured deposits.
The receivership process involves performing the
closing functions at the failed institution, liquidating any remaining failed institution assets, and
distributing any proceeds of the liquidation to the
FDIC and other creditors of the receivership. In its
role as receiver, the FDIC has used a wide variety of
strategies and tools to manage and sell retained
assets. These include but are not limited to asset
sale and/or management agreements, partnership
agreements, and securitizations.

Financial Institution Failures
Due to the economic environment, the FDIC experienced a significant increase in the number and
size of institution failures as compared to previous
years. For the institutions that failed in 2008, the
FDIC successfully contacted all known qualified
and interested bidders to market these institutions.
Additionally, the FDIC marketed approximately
90 percent of the marketable assets of these institutions at the time of failure and made insured funds
available to all depositors within one business day
of the failure. There were no losses on insured
deposits and no appropriated funds were required
to pay insured deposits.

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The chart below provides a comparison of failure
activity over the last three years.

FAILURE ACTIVITY 2006 – 2008
Dollars in billions
2008

2007

2006

25

3

0

Total Assets of failed
Institutions*

$371.9

$2.6

$0

Total Deposits of failed
Institutions*

$234.3

$2.4

$0

$17.9

$0.2

$0

Total Institutions

Estimated loss to the DIF
*

Total Assets and Total Deposits data are based upon the last Call Report filed by the
institution prior to failure.

During 2008, 25 financial institutions failed. They
are discussed below.
Douglass National Bank, Kansas City, Missouri,
was closed by the Office of the Comptroller of the
Currency (OCC) on January 25, 2008. At the time
of closure, Douglass National had $52.8 million in
total assets and $50.2 million in total deposits.
Liberty Bank and Trust Company, New Orleans,
Louisiana, assumed all deposits of Douglass
National and purchased $50.0 million in assets.
The estimated loss to the DIF is approximately
$6.5 million.
Hume Bank, Hume, Missouri, was closed by the
Commissioner of Missouri’s Division of Finance on
March 7, 2008. At the time of closure, Hume Bank
had $18.7 million in total assets and $13.6 million in
total deposits. Security Bank, Rich Hill, Missouri,
assumed the insured deposits of Hume Bank and
purchased $3.4 million in assets. The estimated loss
to the DIF is approximately $4.0 million.
ANB Financial, National Association, Bentonville,
Arkansas, was closed by the OCC on May 9, 2008.
At the time of closure, ANB Financial had
approximately $1.9 billion in total assets and $1.8
billion in total deposits. Pulaski Bank and Trust
Company, Little Rock, Arkansas, assumed the
insured deposits of ANB Financial and purchased

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$228.5 million in assets. The estimated loss to the
DIF is approximately $819.4 million.
First Integrity, National Association, Staples,
Minnesota, was closed by the OCC on May 30,
2008. At the time of closure, First Integrity had
$52.9 million in total assets and $50.2 million in
total deposits. First International Bank and Trust,
Watford City, North Dakota, assumed all deposits
of First Integrity and purchased $34.9 million in
assets. The estimated loss to the DIF is approximately $10.1 million.
IndyMac Bank, F.S.B., Pasadena, California, was
closed by the Office of Thrift Supervision (OTS) on
July 11, 2008, and the FDIC was named
conservator. As conservator, the FDIC operated
IndyMac Bank as IndyMac Federal Bank, F.S.B. All
the insured deposits and substantially all the assets
of IndyMac Bank were transferred to IndyMac
Federal. At the time of closure, IndyMac Bank had

Nebraska, assumed all the deposits of both institutions and purchased $246.0 million in assets. The
estimated loss to the DIF for these two institutions
is approximately $739.2 million.
First Priority Bank, Bradenton, Florida, was closed
by the Commissioner of the Florida Office of
Financial Regulation on August 1, 2008. At the
time of closure, First Priority had $258.6 million in
total assets and $226.7 million in total deposits.
SunTrust Bank, Atlanta, Georgia, assumed the
insured deposits of First Priority and purchased
$47.2 million in assets. The estimated loss to the
DIF is approximately $81.1 million.
The Columbian Bank and Trust Company,
Topeka, Kansas, was closed by the Kansas Bank
Commissioner on August 22, 2008. At the time of
closure, The Columbian Bank and Trust Company
had $735.1 million in total assets and $620.3
million in total deposits. Citizens Bank and Trust,
Chillicothe, Missouri, assumed the insured deposits
of The Columbian Bank and Trust Company and
purchased $53.4 million in assets. The estimated
loss to the DIF is approximately $232.1 million.
Integrity Bank, Alpharetta, Georgia, was closed by
the Georgia Department of Banking and Finance
on August 29, 2008. At the time of closure,
Integrity Bank had $1.1 billion in total assets and
$962.4 million in total deposits. Regions Bank,
Birmingham, Alabama, assumed all the deposits of
Integrity Bank and purchased $58 million in assets.
The estimated loss to the DIF is approximately
$210.8 million.

IndyMac Federal CEO John Bovenzi at a press conference promoting “Home
Preservation Day.”

total assets of $30.7 billion and total deposits of
$18.9 billion. The estimated loss to the DIF is
approximately $10.7 billion.
First National Bank of Nevada, Reno, Nevada, and
First Heritage Bank, N.A., Newport Beach,
California, were closed by the OCC on July 25,
2008. At the time of closure, First National of
Nevada had $3.4 billion in total assets and $3.0
billion in total deposits. First Heritage Bank had
$255.4 million in total assets and $256.7 million in
total deposits. Mutual of Omaha Bank, Omaha,

46

Silver State Bank, Henderson, Nevada, was closed
by the Nevada Financial Institutions Division on
September 5, 2008. At the time of closure, Silver
State Bank had $1.9 billion in total assets and $1.7
billion in total deposits. Nevada State Bank, Las
Vegas, Nevada, assumed the insured deposits of
Silver State Bank and purchased $66.7 million in
assets. The estimated loss to the DIF is
approximately $553.1 million.
Ameribank, Inc., Northfork, West Virginia, was
closed by the OTS on September 19, 2008. At the
time of closure, Ameribank, Inc. had $103.9 million
in total assets and $100.9 million in total deposits.
Pioneer Community Bank, Inc., Iaeger, West

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Virginia, assumed all the deposits for five branches
located in West Virginia. The Citizens Savings
Bank, Martins Ferry, Ohio, assumed all deposits of
the three branches in Ohio. The acquiring institutions purchased $18.7 million in assets. The
estimated loss to the DIF is approximately $33.4
million.
Washington Mutual Bank, the largest failure in
history, was closed by the OTS on September 25,
2008. At the time of closure, Washington Mutual
Bank had $307.0 billion in total assets and $188.3
billion in total deposits. JPMorgan Chase acquired
the banking operations of Washington Mutual
Bank in a facilitated transaction that fully protected
all depositors and caused no loss to the DIF.
Main Street Bank, Northville, Michigan, was closed
by the Michigan Office of Financial and Insurance
Regulation on October 10, 2008. At the time of closure, Main Street Bank had $112.4 million in total
assets and $98.9 million in total deposits. Monroe
Bank & Trust, Monroe, Michigan, assumed all the
deposits of Main Street Bank and purchased $15.0
million in assets. The estimated loss to the DIF is
approximately $32.0 million.
Meridian Bank, Eldred, Illinois, was closed by the
Illinois Department of Financial Professional
Regulation-Division of Banking on October 10,
2008. At the time of closure, Meridian Bank had
$38.2 million in total assets and $36.1 million in
total deposits. National Bank, Hillsboro, Illinois,
assumed all the deposits of Meridian Bank and
purchased $7.2 million in assets. The estimated loss
to the DIF is approximately $14.5 million.
Alpha Bank and Trust, Alpharetta, Georgia, was
closed by the Georgia Department of Banking and
Finance on October 24, 2008. At the time of
closure, Alpha Bank had $351.4 million in total
assets and $344.2 million in total deposits. Stearns
Bank, National Association, St. Cloud, Minnesota,
assumed the insured deposits of Alpha Bank and
purchased $16.8 million in assets. The estimated
loss to the DIF is approximately $159.9 million.
Freedom Bank, Bradenton, Florida, was closed by
the Commissioner of the Florida Office of Financial
Regulation on October 31, 2008. As of October 31,
2008, Freedom Bank had $270.8 million in total
assets and $256.8 million in total deposits. Fifth
Third Bank, Grand Rapids, Michigan, assumed all
the deposits of Freedom Bank and purchased $36

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million in assets. The estimated loss to the DIF is
approximately $92.9 million.
Security Pacific Bank, Los Angeles, California,
was closed by the Commissioner of the California
Department of Financial Institutions on
November 7, 2008. At the time of closure, Security
Pacific had $528.0 million in total assets and
$456.5 million in total deposits. Pacific Western
Bank, Los Angeles, California, assumed all the
deposits of Security Pacific and purchased $36
million in assets. The estimated loss to the DIF is
approximately $175.5 million.
Franklin Bank, S.S.B., Houston, Texas, was closed
by the Texas Department of Savings and Mortgage
Lending on November 7, 2008. At the time of
closure, Franklin Bank had $5.1 billion in total
assets and $3.7 billion in total deposits. Prosperity
Bank, El Campo, Texas, assumed all the deposits of
Franklin Bank and purchased $724.3 million in
assets. The estimated loss to the DIF is approximately $1.4 billion.
The Community Bank, Loganville, Georgia, was
closed by the Georgia Department of Banking and
Finance on November 21, 2008. At the time of
closure, The Community Bank had $634.9 million
in total assets and $603.7 million in total deposits.
Bank of Essex, Tappahannock, Virginia, assumed
all the deposits of The Community Bank and
purchased $87.5 million in assets. The estimated
loss to the DIF is approximately $247.3 million.
Downey Savings and Loan Association, F.A.,
Newport Beach, California, was closed by the OTS
on November 21, 2008. At the time of closure,
Downey Savings and Loan had $12.8 billion in total
assets and $9.6 billion in total deposits. U.S. Bank,
National Association, Minneapolis, MN, assumed
all the deposits and purchased $12.3 billion in
assets. The estimated loss to the DIF is
approximately $1.4 billion.
PFF Bank & Trust, Pomona, California, was closed
by the OTS on November 21, 2008. At the time of
closure, PFF Bank had $3.7 billion in total assets
and $2.4 billion in total deposits. U.S. Bank,
National Association, Minneapolis, MN, assumed

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all the deposits and purchased $3.5 billion in assets.
The estimated loss to the DIF is approximately
$729.6 million.
First Georgia Community Bank, Jackson, Georgia,
was closed by the Georgia Department of Banking
and Finance on December 5, 2008. At the time of
closure, First Georgia Community Bank had
$256.3 million in total assets and $215.3 million in
total deposits. United Bank, Zebulon, Georgia,
assumed all the deposits of First Georgia
Community Bank and purchased $37.3 million in
assets. The estimated loss to the DIF is approximately $52.0 million.
Sanderson State Bank, Sanderson, Texas, was
closed by the Texas Department of Banking on
December 12, 2008. At the time of closure,
Sanderson State Bank had $38.2 million in total
assets and $32.0 million in total deposits. Pecos
County State Bank, Fort Stockton, Texas assumed
all deposits and purchased $13.0 million in assets.
The estimated loss to the DIF is approximately
$9.6 million.
Haven Trust Bank, Duluth, Georgia, was closed
by the Georgia Department of Banking and
Finance on December 12, 2008. At the time of
closure, Haven Trust had $559.6 million in total
assets and $498.7 million in total deposits. Branch
Banking & Trust (BB&T), Winston-Salem, NC,
assumed all deposits and purchased $69.0 million
in assets. The estimated loss to the DIF is
approximately $208.0 million.

Asset Management and Sales
As part of its resolution process, the FDIC makes
every effort to sell as many assets as possible to an
assuming institution and is generally successful.
Assets that do remain in the receivership are
evaluated and those that are determined to be
marketable are marketed to be sold within 90 days
of an institution’s failure.

48

In 2008, the book value of assets under management increased from $907.0 million to $15.1 billion.
The following chart shows beginning and ending
balances of assets by asset type.

ASSETS IN INVENTORY BY ASSET TYPE
(Dollars in millions)
Assets in
Inventory
1/1/08

Asset Type

Assets in
Inventory
12/31/08

Securities

$54

$467

Consumer Loans

29

204

Commercial Loans

18

2,985

Real Estate Mortgages

226

9,808

Other Assets/Judgments

530

703

Owned Assets

20

832

Net Investments in
Subsidiaries

30

108

$907

$15,107

Total

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

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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.

RECEIVERSHIP ACTIVITY
Active Receiverships as of 1/1/08

35

New Receiverships

25

Receiverships Inactivated

11

Active Receiverships as of 12/31/08

49

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

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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 resultsoriented 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.
Succession Management
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

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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.
The CEP provides a foundation across the full
spectrum of the Corporation’s business lines,
allowing for greater flexibility to respond to
changes in the financial services industry and in
meeting the Corporation’s staffing needs. In 2008,
the program successfully provided the FDIC those
flexibilities, as program participants were called
upon to assist with increased bank examination
activities, bank closing activities and deposit insurance claims efforts. In support of the Corporation’s
focus on consumer protection, the FDIC continued
delivery of the Advanced Compliance Examination
School (ACES) for commissioned compliance
examiners, to address current and complex
consumer compliance issues.
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

50

review specialists from the private sector; and
redeployed current FDIC employees with the
requisite skills from other parts of the Corporation.
Employee Engagement
The FDIC continually evaluates its human capital
programs and strategies to ensure that the
Corporation remains an employer of choice and all
of its employees are fully engaged and aligned with
the mission. The FDIC’s annual employee survey
incorporates and expands on the Federal Human
Capital Survey mandated by Congress. The 2007
survey found that while FDIC employees enjoy their
work, believe in the mission of the Corporation
and its importance, and are satisfied with their pay,
benefits, training and work environment, they
perceived problems with internal communications,
leadership, trust and employee empowerment.
To address these concerns, Chairman Bair
announced a corporate culture change initiative to
be driven by committees of employees, managers,
and employee representatives. The initiative
includes an overall steering committee that
provides direction and three teams that are
focusing on leadership, communications and
employee empowerment. The council and teams are
using input from employees and managers to
determine where the problems lie and how to
resolve them. In addition, the Chairman has held
quarterly call-in question and answer sessions for

Chairman Bair discusses the Culture Change Initiative at an October 7th meeting (next to her
are Acting COO Art Murton and Chief of Staff Jesse Villarreal).

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all employees and maintains an anonymous e-mail
box for questions of concern to employees. The
2008 employee survey results will be used to mark
progress and further refine the goals of the culture
change initiative.
The Corporation has also negotiated interim
changes in its pay-for-performance (PFP) program
with the National Treasury Employees Union for
the 2008 performance period and is continuing to
negotiate and develop PFP and performance
management programs for 2009 and beyond.
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.
The FDIC greatly enhanced its ability to effectively
manage IT projects, programs, and portfolios by
implementing the Enterprise Project Management
Project Server (EPMPS) system. EPMPS stores and
maintains IT project plans and associated project
data in a central repository and has established a
foundation for improving project and resource
management practice. EPMPS provides a
division-wide view of all portfolio project plans
down to the task level, providing transparency and
accountability to assist in identifying and isolating
problem areas and resource bottlenecks.

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Enterprise Architecture
During 2008, the IT program continued to build on
the foundation that had been laid for a target
enterprise architecture, which is both economical
and supports effective portfolio management as
well as security and privacy programs. The overall
vision of the FDIC’s enterprise architecture is to
“provide an efficient, agile, flexible and cost-effective environment that optimally supports the
corporate strategic goals and objectives for all of
FDIC and its customers.” In 2008, the logical design
of the modernized infrastructure was completed
and guidelines were developed to provide for a
consistent look and feel for new applications.
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.
Internet Program
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.

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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.

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.

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 Privacy Program also
executed a successful Privacy Awareness Week that
increased employee awareness of privacy responsibilities and issues, such as preventing identity theft
and limiting the use and disclosure of PII whenever
possible. Also, the FDIC Privacy Program
coordinated and implemented FDIC’s first
Corporate-wide Privacy Clean-Up Day, which
resulted in FDIC Field Offices and Headquarters
discarding a combined total of approximately 61⁄2
tons of paper. The FDIC Privacy Program also
conducted several physical Privacy Assessments/
Inspections of FDIC Regional and Area Offices
which resulted in the issuance of detailed reports to
management, identifying issues related to the security and protection of privacy information in public
office spaces. Of special note this year, the OIG
rated the agency’s privacy impact assessment
process “excellent” in its 2008 FISMA Report on
FDIC’s Information Security.

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C
CHAPTER TWO
F
FINANCIAL HIGHLIGHTS

the DIF. (See the accompanying tables on FDICDIF Insured Deposits and Deposit Insurance Fund
Reserve Ratios on the following page.)

Deposit Insurance
Fund Performance
The FDIC administers the Deposit Insurance Fund
(DIF) and the FSLIC Resolution Fund (FRF), which
fulfills the obligations of the former Federal
Savings and Loan Insurance Corporation (FSLIC)
and the former Resolution Trust Corporation
(RTC). The following summarizes the condition of

The DIF’s comprehensive loss totaled $35.1 billion
for 2008 compared to comprehensive income of
$2.2 billion for the previous year. As a result, the
DIF balance declined from $52.4 billion to $17.3
billion as of December 31, 2008. The year-over-year
decrease of $37.3 billion in comprehensive income

FDIC-DIF INSURED DEPOSITS (ESTIMATED 1970-2008)
(Dollars in billions)
1970
$

1980

1990

2000

2008

4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
From 1989 through 2005, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts.
Source: Commercial Bank Call and Thrift Financial Reports

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was primarily due to a $41.7 billion increase in the
provision for insurance losses offset in part by a
$2.3 billion increase in assessment revenue; a $1.8
billion increase in the unrealized gain on availablefor-sale securities; and a $775 million increase in
the realized gain on the sale of securities.
The provision for insurance losses was $41.8 billion
in 2008. The total provision consists mainly of the
provision for future failures ($23.9 billion) and the
losses estimated at failure for the 25 resolutions
occurring during 2008 ($17.9 billion), the largest of
which was the $10.7 billion estimated loss for the
IndyMac resolution.
Assessment revenue was $3.0 billion for 2008 compared with $643 million for 2007. This increase of
$2.3 billion was mostly due to the reduction in the
amount of one-time assessment credits available for
use. In 2008, $1.4 billion in one-time credits offset
$4.4 billion in gross assessment premiums; whereas
in the previous year, $3.1 billion in one-time credits
were applied against $3.7 billion in gross
assessment premiums.

Corporate Operating Budget
The FDIC segregates its corporate operating budget
and expenses into two discrete components —
ongoing operations and receivership funding. The
receivership funding component represents expenses
resulting from financial institution failures and is,
therefore, largely driven by external forces, while the
ongoing operations component accounts for all other
operating expenses and tends to be more controllable
and estimable. Corporate Operating Expenses totaled
$1.205 billion in 2008, including $1.055 billion in
ongoing operations and $150 million for receivership
funding. This represented approximately 99 percent
of the approved budget for ongoing operations and
100 percent of the approved budget for receivership
funding for the year. The numbers above will not tie
to the DIF and FRF Financials due to differences on
how certain items, such as capital expenditures and
depreciation, are classified.

DEPOSIT INSURANCE FUND RESERVE RATIOS
(Fund Balances as a Percent of Estimated Insured Deposits)
1.4
1.2
1
0.8
0.6
0.4
0.2
0
6/05

9/05

12/05

3/06

6/06

9/06

12/06

3/07

6/07

9/07

12/07

3/08

6/08

9/08

12/08

Prior to 2006, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts.

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FI N A N C I A L H I G H L I G H T S

SELECTED STATISTICS – DEPOSIT INSURANCE FUND
(Dollars in millions)
For the years ended December 31
2008

2007

2006

Financial Results
Revenue

$7,306

$3,196

$2,644

1,033

993

951

43,306

98

(46)

Net (Loss) Income

(37,033)

2,105

1,739

Comprehensive (Loss) Income

(35,137)

2,248

1,569

Insurance Fund Balance

$17,276

$52,413

$50,165

0.36%

1.22%

1.21%

8,305

8,534

8,680

Operating Expenses
Insurance and Other Expenses (includes provision for loss)

Fund as a Percentage of Insured Deposits (reserve ratio)
Selected Statistics
Total DIF-Member Institutions*
Problem Institutions

252

Total Assets of Failed Institutions in Year

3

0

$2,615

$0

41

Number of Active Failed Institution Receiverships

$8,265

$371,945

♦

50

$22,189

25

Institution Failures

77

$159,405

Total Assets of Problem Institutions

22

25

* Commercial banks and savings institutions. Does not include U.S. branches of foreign banks.
♦ Total Assets data are based upon the last Call Report filed by the institution prior to failure.

Given the recent challenges facing the industry, as
evidenced in the overall CAMELS deterioration
and an up-tick in financial institution failure
activity, the FDIC is determined to ensure that it is
adequately prepared to effectively fulfill its mission
in 2009. Consequently, in December 2008, the
Board of Directors approved a 2009 Corporate
Operating Budget of approximately $2.24 billion,
consisting of $1.24 billion for ongoing operations
and $1.0 billion for receivership funding. The level
of approved ongoing operations budget is
approximately $189 million (17.9 percent) higher
than actual 2008 ongoing operations expenses,
while the approved receivership funding budget is
$850 million (564.6 percent) higher than the
$150 million of actual 2008 receivership
funding expenses.
As in prior years, the 2009 budget was formulated
primarily on the basis of an analysis of projected

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workload for each of the Corporation’s three major
business lines and its major program support
functions. The most significant factor contributing
to the proposed increase in the ongoing operations
component is the projected increase in the
Corporation’s supervisory workload in 2009 and
the planned staffing increases to address that
workload. The 2009 ongoing operations budget also
includes increased funds for additional resolutions
staff, travel, office space, and equipment for these
additional staff. Under this budget, the Corporation
will focus largely on its core mission responsibilities
in 2009 and will not devote significant resources to
non-core discretionary activities. In addition, the
2009 receivership funding budget allows for substantially increased resources for contractor support
as well as non-permanent increases in authorized
staffing for resolutions and receiverships, legal, and
other organizations should workload requirements
in these areas require an immediate response.

CO R P O R AT I O N

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Investment Spending
The FDIC instituted a separate Investment Budget
in 2003. It has a disciplined process for reviewing
proposed new investment projects and managing
the construction and implementation of approved
projects. All of the projects in the current
investment portfolio are major IT system
initiatives. Proposed IT projects are carefully
reviewed to ensure that they are consistent with the
Corporation’s enterprise architecture. The project
approval and monitoring processes also enable the
FDIC to be aware of risks to the major capital
investment projects and facilitate appropriate,
timely intervention to address these risks
throughout the development process. An investment portfolio performance review is provided to
the FDIC’s Board of Directors quarterly.

The Corporation undertook significant capital
investments during the 2003-2008 period, the
largest of which was the expansion of its Virginia
Square office facility. All others involved the
development and implementation of major IT
systems. Investment spending totaled $260 million
during this period, peaking at $108 million in 2004.
Spending for investment projects in 2008 totaled
approximately $26 million. In 2009, investment
spending is estimated to total $4 million.

INVESTMENT SPENDING 2003 – 2008
Dollars in millions

$120

100

80

60

40

20

0
2003
$27

56

2004
108

2005
62

2006
25

2007
12

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2008
26

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3

CHAPTER THREE
PERFORMANCE RESULTS
SUMMARY

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:

Program Area

Performance Results
• 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.

Insurance

• 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.

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Program Area
Insurance (continued)

Performance Results (continued)
• 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.

58

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Program Area
Supervision and
Consumer Protection

PER F O R M A N C E R E SU LT S SU M M A RY

Performance Results (continued)
• 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.

Receivership
Management

• 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.

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2008 Budget and Expenditures by Program
(Excluding Investments)

The FDIC budget for 2008 totaled $1.217 billion. Excluding $170 million for Corporate General and
Administrative expenditures, budget amounts were allocated to corporate programs and related goals
as follows: $173 million, or 14.2 percent, to the Insurance program; $683 million, or 56.1 percent, to the
Supervision and Consumer Protection program; and $191 million, or 15.7 percent, to the Receivership
Management program.
Actual expenditures for the year totaled $1.205 billion. Excluding $129 million for Corporate General and
Administrative expenditures, actual expenditures were allocated to programs as follows: $186 million, or
15.4 percent, to the Insurance program; $644 million, or 53.4 percent, to the Supervision and Consumer
Protection program; and $246 million, or 20.4 percent, to the Receivership Management program.

2008 BUDGET AND EXPENDITURES (SUPPORT ALLOCATED)
Dollars in millions
$ 800
700
600
500
400
300
200
100
0
Insurance Program

Supervision and Consumer
Protection Program

Budget

60

Receivership Management
Program

General and
Administrative

Expenditures

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PER F O R M A N C E R E SU LT S SU M M A RY

Performance Results by Program and Strategic Goal
2008 INSURANCE PROGRAM RESULTS
Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding.
#

Annual
Performance Goal

FE D E R A L

D E P O S I T

Results

Number of business days
after an institution failure that
depositors have access to
insured funds either through
transfer of deposits to the
successor insured depository
institution or depositor
payout.

Depositors have access to
insured funds within one
business day if the failure
occurs on a Friday.

Achieved.
See pg. 45.

Depositors have access to
insured funds within two
business days if the failure
occurs on any other day of
the week.

Achieved.
See pg. 45.

There are no depositor losses
on insured deposits.

Achieved.
See pg. 45.

No appropriated funds are
required to pay insured
depositors.

Achieved.
See pg. 45.

Enhancement of FDIC
capabilities to make a deposit
insurance determination for a
large-bank failure.

Respond promptly to all
financial institution closings
and emerging issues.

Target

Insured depositor losses
resulting from a financial
institution failure.

1

Indicator

Complete rulemaking on
Large-Bank Deposit Insurance
Determination Modernization.

Achieved.
See pg. 59.

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2008 INSURANCE PROGRAM RESULTS (continued)
#

Annual
Performance Goal

62

Assess the insurance risks
in all insured depository
institutions and adopt
appropriate strategies.

Achieved.
See pg. 58.

Identify and follow up on all
material issues raised through
off-site review and analysis.

Achieved.
See pg. 58.

Identify and analyze existing
and emerging areas of risk,
including non-traditional and
subprime mortgage lending,
declines in housing market
values, mortgage-related
derivatives/collateralized debt
obligations (CDOs), hedge
fund ownership of insured
institutions, commercial real
estate lending, international
risk, and other financial
innovations.

Achieved.
See pgs.
36-37, 58.

Achieved.
See pg. 31.

Disseminate results of research
and analyses in a timely
manner through regular
publications, ad hoc reports
and other means.

Achieved.
See pg. 58.

Undertake industry outreach
activities to inform bankers
and other stakeholders about
current trends, concerns and
other available FDIC resources.

Disseminate data and analyses
on issues and risks affecting
the financial services industry
to bankers, supervisors, the
public and other stakeholders.

Insurance risks posed by
insured depository institutions.

Address potential risks from
cross-border banking instability through coordinated review
of critical issues and, where
appropriate, negotiate agreements with key authorities.
3

Results

Emerging risks to the DIF.

Identify and address risks
to the Deposit Insurance
Fund (DIF).

Target

Concerns referred for
examination or other action.

2

Indicator

Achieved.
See pg. 58.

Scope and timeliness of
information dissemination
on identified or potential
issues and risks.

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PER F O R M A N C E R E SU LT S SU M M A RY

2008 INSURANCE PROGRAM RESULTS (continued)
Target

Results

Maintain and improve the
deposit insurance system.

Implementation of deposit
insurance reform.

Review the effectiveness of the
new pricing regulations that
were adopted to implement
the reform legislation.

Achieved.
See pg. 57.

Achieved.
See pg. 27.

Achieved.
See pg. 58.

Loss reserves.

Ensure the effectiveness of the
reserving methodology by
applying sophisticated
analytical techniques to review
variances between projected
losses and actual losses, and
by adjusting the methodology
accordingly.

Achieved.
See pg. 57.

Fund adequacy.

Set assessment rates to
maintain the insurance fund
reserve ratio between 1.15 and
1.50 percent of estimated
insured deposits.

Not
Achieved.
See pg. 26.

Timeliness of responses to
insurance coverage inquiries.

Respond to 90 percent of
inquiries from consumers and
bankers about FDIC deposit
insurance coverage within
time frames established by
policy.

Achieved.
See pg. 43.

Educational initiatives and
outreach events for consumers
and bankers.

Conduct at least three sets of
Deposit Insurance Seminar
Series for bankers.

Achieved.
See pg. 43.

Assess the feasibility of (and,
if feasible, define the requirements for) a consolidated
Electronic Deposit Insurance
Estimator (EDIE) application for
bankers and consumers (to be
developed in 2009).

Achieved.
See pg. 43.

Conduct outreach events and
activities to support a deposit
insurance education program
that features FDIC 75th
anniversary theme.

5

Indicator

Develop a final rule on a
permanent dividend system.

4

Annual
Performance Goal

Enhance the additional risk
measures used to adjust
assessment rates for large
institutions.

#

Achieved.
See pg. 43.

Provide educational
information to insured
depository institutions and
their customers to help them
understand the rules for
determining the amount of
insurance coverage on
deposit accounts.

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2008 INSURANCE PROGRAM RESULTS (continued)
#
6

64

Annual
Performance Goal
Expand and strengthen the
FDIC’s participaton and leadership role in providing technical
guidance, training, consulting
services and information to
international governmental
banking and deposit insurance
organizations.

Indicator

Target

Results

Scope of information sharing
and assistance available to
international governmental
bank regulatory and deposit
insurance entities.

Undertake outreach activities
to inform and train foreign
bank regulators and deposit
insurers.

Achieved.
See pg. 58.

Foster strong relationships
with international banking
regulators and associations
that promote sound banking
supervision and regulation,
failure resolution and deposit
insurance practices.

Achieved.
See pgs.
30-31.

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PER F O R M A N C E R E SU LT S SU M M A RY

2008 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS
Strategic Goal: FDIC-supervised institutions are safe and sound.
#

Annual
Performance Goal

Indicator

Target

Results

1

Conduct on-site risk
management examinations to
assess the overall financial
condition, management
practices and policies, and
compliance with applicable
laws and regulations of FDICsupervised depository
institutions.

Percentage of required
examinations conducted in
accordance with statutory
requirements and FDIC policy.

One hundred percent of
required risk management
examinations are conducted
on schedule.

Achieved.
See pg. 32.

2

Take prompt and effective
supervisory action to address
problems identified during
the FDIC examination of FDICsupervised institutions that
receive a composite Uniform
Financial Institutions Rating of
“4” or “5” (problem institution).
Monitor FDIC-supervised
insured depository institutions’ compliance with formal
and informal enforcement
actions.

Percentage of follow-up
examinations of problem
institutions conducted within
required time frames.

One hundred percent of
follow-up examinations are
conducted within 12 months
of completion of the prior
examination.

Achieved.
See pg. 32.

3

Assist in protecting the
infrastructure of the U.S.
banking system against
terrorist financing, money
laundering and other financial
crimes.

Percentage of required
examinations conducted in
accordance with statutory
requirements and FDIC policy.

One hundred percent of
required Bank Secrecy Act
examinations are conducted
on schedule.

Achieved.
See pg. 32.

4

More closely align regulatory
capital with risk in large or
multinational banks while
maintaining capital at
prudential levels.

Preliminary results of Basel II
Parallel Run.

Conduct analyses of early
results of the new capital
regime as information
becomes available.

Achieved.
See pg. 36.

Changes to Basel II Capital
Framework.

Develop options for refining
Basel II that are responsive to
lessons learned from the
2007-2008 market turmoil.

Achieved.
See pg. 36.

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2008 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)
#

Annual
Performance Goal

Indicator

Target

Results

5

More closely align regulatory
capital with risk in banks not
subject to Basel II capital rules
while maintaining capital at
prudential levels.

Development of a revised
capital framework proposal for
institutions not subject to
Basel II.

Finalize a regulatory capital
framework based on the Basel
II “Standardized Approach” as
an option for U.S. banks not
required to use the new
advanced approaches.

Achieved
See pg. 36.

6

Ensure that FDIC-supervised
institutions that plan to
operate under the new Basel II
Capital Accord are well
positioned to respond to new
capital requirements.

Percentage of on-site
examinations or off-site
analyses performed.

Performed on-site examinations or off-site analyses of all
FDIC-supervised banks that
have indicated a possible
intention to operate under
Basel II to ensure that they
are effectively working toward
meeting required qualification
standards.

Not
Applicable.
See pg. 59.

7

Reduce regulatory burden
on the banking industry while
maintaining appropriate
consumer protection and
safety and soundness
safeguards.

Completion of analysis of
regulatory burden associated
with the BSA/AML
examination process.

Complete and evaluate
options for refining the
current risk-focused approach
used in the conduct of BSA/
AML examinations to reduce
the burden they impose on
FDIC-supervised institutions.

Achieved.
See pg. 34.

Strategic Goal: Consumers’ rights are protected and FDIC-supervised institutions invest in their communities.
8

Percentage of examinations
conducted in accordance with
required time frames.

One hundred percent of
required examinations are
conducted within time frames
established by FDIC policy.

Achieved.
See pg. 32.

9

Take prompt and effective
supervisory action to monitor
and address problems identified during compliance examinations of FDIC-supervised
institutions that receive a “4”
or “5” rating for compliance
with consumer protection and
fair lending laws.

Percentage of follow-up
examinations or related
activities conducted within
required time frames.

One hundred percent
of follow-up examinations
or related activities are
conducted within 12 months
from the date of a formal
enforcement action to confirm
that the institution is in
compliance with the
enforcement action.

Achieved.
See pg. 32.

10

66

Conduct CRA and compliance
examinations in accordance
with the FDIC’s examination
frequency policy.

Determine the need for
changes in current FDIC
practices for following up
on significant violations of
consumer compliance laws
and regulations identified
during examinations of banks
for compliance with
consumer protection and fair
lending laws.

Implementation review of new
practices instituted in 2007.

Complete a review of the
effectiveness of the 2007
instructions issued on the
handling of repeat instances
of significant violations
identified during compliance
examinations.

Achieved.
See pg. 59.

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PER F O R M A N C E R E SU LT S SU M M A RY

2008 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)
#

Annual
Performance Goal

Indicator

Target

Results

Scrutinize evolving consumer
products, analyze their current
or potential impact on
consumers and identify
potentially harmful or illegal
practices. Promptly institute a
supervisory response program
across FDIC-supervised
institutions when such
practices are identified.

Establishment of supervisory
response programs to address
potential risks posed by new
consumer products.

Revise the FDIC’s system for
identifying, reviewing and
addressing potentially harmful
or illegal practices associated
with evolving consumer
products.

Achieved.
See pg. 38.

Develop and implement
new supervisory response
programs across all FDICsupervised institutions to
address potential risks posed
by new consumer products.

Achieved.
See pg. 38.

12

Effectively investigate and
respond to consumer
complaints about FDICsupervised financial
institutions.

Timely responses to written
complaints and inquiries.

Responses are provided to 90
percent of written complaints
and inquiries within time
frames established by policy.

Achieved.
See pg. 43.

13

Provide effective outreach
related to CRA, fair lending,
and community development.

Number of outreach activities
conducted, including
technical assistance activities.

Conduct 125 technical
assistance (examination
support) efforts or banker/
community outreach activities
related to CRA, fair lending,
and community development.

Achieved.
See pg. 59.

Expanded access to high
quality financial education
through the Money Smart
curriculum.

Release a “Young Adult”
version of the Money Smart
curriculum.

Achieved.
See pgs.
43-44.

Distribute at least 10,000
copies of the “Young Adult”
version of Money Smart.

Achieved.
See pg. 43.

Scope and timeliness of
dissemination of the results
of the unbanked survey.

Analysis of survey results is
disseminated within six
months of completion of the
survey through regular
publications, ad hoc reports
and other means.

Achieved.
See pgs.
40-41.

Support for expanded
foreclosure prevention efforts
for consumers at risk of
foreclosure (in partnership
with NeighborWorks® America
and other organizations).

Provide technical assistance,
support and consumer
outreach activities in all six
FDIC regions to at least eight
local NeighborWorks® America
affiliates or local coalitions
that are providing foreclosure
mitigation counseling in high
need areas.

Achieved.
See pg. 39.

11

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2008 SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)
#

Annual
Performance Goal

68

Results

Results of pilot small-dollar
lending program conducted
by participating financial
institutions.

Analyze quarterly data
submitted by participating
institutions to identify early
trends and potential best
practices.

Achieved.
See pg. 40.

Degree of success achieved in
bringing the unbanked/
underserved into the financial
mainstream through the
Alliance for Economic
Inclusion.

Open 27,000 new bank
accounts.

Achieved.
See pg. 38.

Initiate new small-dollar loan
products in 32 financial
institutions.

Achieved.
See pg. 38.
Achieved.
See pg. 38.

Reach 18,000 consumers
through financial education
initiatives.

Continue to expand the
FDIC’s national leadership
role in development and
implementation of programs
and strategies to encourage
and promote broader
economic inclusion within
the nation’s banking system.

Target

Initiate remittance products in
32 financial institutions.

14

Indicator

Achieved.
See pg. 38.

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2008 RECEIVERSHIP MANAGEMENT PROGRAM RESULTS
Strategic Goal: Recovery to creditors of receiverships is achieved.
#

Annual
Performance Goal

Indicator

Target

Results

1

Market failing institutions to
all known qualified and
interested potential bidders.

Scope of qualified and
interested bidders solicited.

Contact all known qualified
and interested bidders.

Achieved.
See pg. 45.

2

Value, manage, and market
assets of failed institutions
and their subsidiaries in a
timely manner to maximize
net return.

Percentage of failed
institution’s assets marketed.

Ninety percent of the book
value of a failed institution’s
marketable assets are
marketed within 90 days of
failure.

Achieved.
See pg. 45.

3

Manage the receivership
estate and its subsidiaries
toward an orderly termination.

Timely termination of new
receiverships.

Terminate all receiverships
within 90 days of the
resolution of all impediments.

Achieved.
See pg. 48.

4

Conduct investigations into all
potential professional liability
claim areas for all failed insured
depository institutions and
decide as promptly as possible
to close or pursue each claim,
considering the size and
complexity of the institution.

Percentage of investigated
claim areas for which a
decision has been made to
close or pursue the claim.

For 80 percent of all claim
areas, a decision is made to
close or pursue claims within
18 months of the failure date.

Achieved.
See pg. 59.

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Prior Years’ Performance Results
Refer to the respective full Annual Report of prior years for more information on performance results for those
years. (Shaded area indicates no such target existed for that respective year.)

INSURANCE PROGRAM RESULTS
Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding.
Annual Performance Goals and Targets

2007

2006

2005

1. Respond promptly to all financial institution closings and emerging issues.
• Provide access to insured funds in one business day if
the failure occurs on a Friday.

Achieved.

Not Applicable.
No Failures.

Not Applicable.
No Failures.

• Provide access to insured funds in two business days if
the failure occurs on any other day of the week.

Achieved.

Not Applicable.
No Failures.

Not Applicable.
No Failures.

• Review comments received in response to the
Advance Notice of Proposed Rulemaking on LargeBank Deposit Insurance Determination Modernization.

Achieved.

Achieved.

• Assess the insurance risks in 100 percent of insured
depository institutions and adopt appropriate
strategies.

Achieved.

Achieved.

• Identify and follow up on 100 percent of material
issues raised through off-site review and analysis.

Achieved.

Achieved.

• Identify and review the emerging areas of risk,
including mortgage lending, hedge funds, commercial
real estate lending, derivatives, money laundering,
illicit financial transactions and the international
operations of insured depository institutions.

Achieved.

• Address potential risks from cross-border banking
instability through coordinated review of critical
issues and, where appropriate, agreements with key
authorities.

Achieved.

2. Identify and address risks to the Deposit Insurance Fund.

• Identify and follow up on 100 percent of referrals.

Achieved.

Achieved.

3. Maintain sufficient and reliable information on insured depository institutions.
• Implement a modernized Call Reporting process
during the second Call Reporting period in 2005.

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Not Achieved.

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PER F O R M A N C E R E SU LT S SU M M A RY

INSURANCE PROGRAM RESULTS (continued)
Annual Performance Goals and Targets

2007

2006

2005

4. Disseminate data and analyses on issues and risks affecting the financial services industry to bankers,
supervisors, the public and other stakeholders.
• Results of research and analyses are disseminated in a
timely manner through regular publications, ad hoc
reports and other means.

Achieved.

Achieved.

Achieved.

• Industry outreach activities are undertaken to inform
bankers and other stakeholders about current trends,
concerns and other available FDIC resources.

Achieved.

Achieved.

Achieved.

5. Maintain and improve the deposit insurance system.
• Implement the new deposit insurance pricing system.

Achieved.

• Complete and issue guidance on the pricing of
deposit insurance for large banks.

Achieved.

• Publish an ANPR seeking comment on a permanent
dividend system.

Achieved.

• Develop and implement an assessment credit and
dividends system and a new deposit insurance pricing
system.

Achieved.

• Implement deposit insurance reform legislation in
accordance with statutorily prescribed time frames.

Achieved.

Not Applicable.
Legislation
enacted Feb. 8,
2006.

• Provide information and analysis to Congressional
committees in support of deposit insurance reform
legislation.

Achieved.

• Obtain legislative support for a proposed assessment
credit and rebate system and a new deposit insurance
pricing system.

Achieved.

• Enhance the effectiveness of the reserving
methodology by applying sophisticated analytical
techniques to review variances between projected
losses and actual losses, and by adjusting the
methodology accordingly.

Achieved.

Achieved.

• Set assessment rates to maintain the insurance fund
reserve ratio between 1.15 and 1.50 percent of
estimated insured deposits.

Achieved.

Achieved.

Achieved.

• Set assessment rates to maintain the insurance funds
at the designated reserve ratio (DRR), or return them
to the DRR if they fall below it, as required by statute.

Achieved.

• When deposit insurance reform legislation is enacted,
promulgate rules and regulations establishing criteria
for replenishing the Deposit Insurance Fund when it
falls below the low end of the range.

Not Applicable.
Legislation
enacted Feb. 8,
2006.

• Enhance the working prototype of the integrated fund
model for financial risk management.

Achieved.

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INSURANCE PROGRAM RESULTS (continued)
Annual Performance Goals and Targets

2007

2006

2005

6. Provide educational information to insured depository institutions and their customers to help them understand
the rules for determining the amount of insurance coverage on deposit accounts.
• Publish a comprehensive and authoritative resource
guide for bankers, attorneys, financial advisors and
similar professionals on the FDIC’s rules and
requirements for deposit insurance coverage of
revocable and irrevocable trust accounts.

Achieved.

• Conduct a series of national teleconferences for
insured financial institutions to address current
questions and issues relating to FDIC insurance
coverage of deposit accounts.

Achieved.

• Update Insuring Your Deposits (basic deposit
insurance brochure for consumers), Your Insured
Deposit (comprehensive deposit insurance brochure),
and EDIE (Electronic Deposit Insurance Estimator) on
the FDIC Web site to reflect changes resulting from
enactment of deposit insurance legislation.

Achieved.

• Update the consumer version of EDIE (Electronic
Deposit Insurance Estimator) located on the FDIC’s
Web site.

Achieved.

• Develop and make available to the public an updated
Spanish language version of EDIE reflecting deposit
insurance reform.

Achieved.

• Develop and make available to the public a Spanish
language version of the FDIC’s 30-minute video on
deposit insurance coverage.

Achieved.

• Respond to 90 percent of inquiries from consumers
and bankers about FDIC deposit insurance coverage
within time frames established by policy.

Achieved.

• Respond to 90 percent of written inquiries within time
frames established by policy.

Achieved.

Achieved.

7. Expand and strengthen the FDIC’s leadership role in providing technical guidance, training, consulting services
and information to international governmental banking and deposit insurance organizations.
• Undertake global outreach activities to inform and
train foreign bank regulators and deposit insurers.
• Foster strong relationships with international banking
regulators and associations that promote sound
banking policies in order to provide leadership and
guidance in global banking supervision and
regulations, failure resolution and deposit insurance.

72

Achieved.
Achieved.

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PER F O R M A N C E R E SU LT S SU M M A RY

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS
Strategic Goal: FDIC-supervised institutions are safe and sound.
Annual Performance Goals and Targets

2007

2006

2005

1. Conduct on-site risk management examinations to assess the overall financial condition, management practices
and policies, and compliance with applicable laws and regulations of FDIC-supervised depository institutions.
• One hundred percent of required risk management
examinations (including reviews of information
technology (IT) and Bank Secrecy Act (BSA)
compliance) are conducted on schedule.

Achieved.

Achieved.

Achieved.

2. Take prompt and effective supervisory action to address issues identified during the FDIC examination of FDICsupervised institutions that receive a composite Uniform Financial Institutions Rating of “4” or “5” (problem
institution). Monitor FDIC-supervised insured depository institutions’ compliance with formal and informal
enforcement actions.
• One hundred percent of follow-up examinations are
conducted within 12 months of completion of the
prior examination.

Achieved.

Achieved.

Achieved.

3. Increase regulatory knowledge to keep abreast of current issues related to money laundering and
terrorist financing.
• An additional 10 percent (at least 10 percent for year
2006) of BSA/AML subject-matter experts nationwide
are certified under the Association of Certified AntiMoney Laundering Specialists certification program.

Achieved.

Achieved.

4. Increase industry and regulatory awareness of emerging/high-risk areas.
• The number of trained BSA/AML subject-matter
experts increased to 300.

Achieved.

• Advanced training is completed for all BSA/AML
subject-matter experts.

Achieved.

• At least one outreach session per region.

Achieved.

5. More closely align regulatory capital with risk in large or multinational banks while maintaining capital at
prudential levels.
• Further develop the Basel II framework to ensure that
it does not result in a substantial reduction in riskbased capital requirements or significant competitive
inequities among different classes of banks. Consider
alternative approaches for implementing the Basel
Capital Accord.

Achieved.

• Participate in the continuing analysis of the projected
results of the new capital regime.

Achieved.

• Promote international cooperation on the adoption of
supplemental capital measures in countries that will
be operating under Basel II.

Achieved.

• Publish a Notice of Proposed Rulemaking (NPR).

Achieved.

• Participate in the continuing analysis of the projected
results of the new capital regime.

Achieved.

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SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)
Annual Performance Goals and Targets

2007

2006

2005

• Notice of Proposed Rulemaking (NPR) and associated
examination guidance for implementing the new
Basel Capital Accord are published for comment.

Achieved.

• Quantitative Impact Study 4 is completed.

Achieved.

6. More closely align regulatory capital with risk in banks not subject to Basel II capital rules while maintaining
capital at prudential levels.
• Complete rulemaking on Basel IA.

Not Applicable.

• Develop a Notice of Proposed Rulemaking (NPR) for
public issuance.

Achieved.

7. Ensure that FDIC-supervised institutions that plan to operate under the new Basel II Capital Accord are well
positioned to respond to the new capital requirements.
• On-site examinations or off-site analyses are
performed for all FDIC-supervised banks that intend
to operate under Basel II to ensure that they are
effectively working toward meeting required
qualification standards.

Achieved.

Achieved.

Achieved.

8. Reduce regulatory burden on the banking industry while maintaining appropriate consumer protection and
safety and soundness safeguards.
• Applicable provisions of the Financial Services
Regulatory Relief Act of 2006 (FSRRA) are
implemented in accordance with statutory
requirements.

Partially
Achieved.

• Support is provided to the Government Accountability
Office (GAO), as requested, for studies required under
FSRRA.

Achieved.

• State AML assessments of MSBs are incorporated into
FDIC risk management examinations in states where
MSB AML regulatory programs are consistent with
FDIC risk management standards.

Partially
Achieved.

Strategic Goal: Consumers’ rights are protected and FDIC-supervised institutions invest in their communities.
1. Conduct CRA and compliance examinations in accordance with the FDIC’s examination frequency policy.
• One hundred percent of required examinations are
conducted within time frames established by
FDIC policy.

Achieved.

Achieved.

Achieved.

2. Take prompt and effective supervisory action to monitor and address problems identified during compliance
examinations of FDIC-supervised institutions that received a “4” or “5” rating for compliance with consumer
protection and fair lending laws.
• One hundred percent of follow-up examinations or
related activities are conducted within 12 months
from the date of a formal enforcement action to
confirm that the institution is in compliance with the
enforcement action.

74

Achieved.

Achieved.

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PER F O R M A N C E R E SU LT S SU M M A RY

SUPERVISION AND CONSUMER PROTECTION PROGRAM RESULTS (continued)
Annual Performance Goals and Targets

2007

2006

2005

3. Determine the need for changes in current FDIC practices for following up on actions on significant violations
of consumer compliance laws and regulations identified during examinations of banks for compliance with
consumer protection and fair lending laws.
An analysis is completed for all institutions on the
prevalence and scope of repeat instances of
significant violations from the previous compliance
examination.

Achieved.

A determination is made regarding the need for
changes to current FDIC and FFIEC guidance on
follow-up supervisory action on significant
violations identified during compliance
examinations based on the substance and level of
risk posed to consumers by these repeat violations.

Achieved.

4. Provide effective outreach and technical assistance on topics related to the CRA, fair lending, and
community development.
• 200,000 additional individuals are taught using the
Money Smart curriculum.

Achieved.

• 120 school systems and government entities are
contacted to make them aware of the availability of
Money Smart as a tool to teach financial education to
high school students.

Achieved.

• A review of existing risk management and
compliance/CRA examination guidelines and practices
is completed to ensure that they encourage and
support the efforts of insured financial institutions to
foster economic inclusion, consistent with safe and
sound banking practices.

Achieved.

• A pilot project is conducted with banks near military
installations to provide small-dollar loan alternatives
to high-cost payday lending.

Not Achieved.

• Strategies are developed and implemented to
encourage FDIC-supervised institutions to offer smalldenomination loan programs.

Achieved.

• Research is conducted and findings disseminated on
programs and strategies to encourage and promote
broader economic inclusion within the nation’s
banking system.

Achieved.

• 125 technical assistance (examination support) efforts
or banker/community outreach activities are
conducted related to CRA, fair lending, or community
development.

Achieved.

Achieved.

Achieved.

Achieved.

Achieved.

• 200 additional members are added to the Money
Smart Alliance.

Achieved.

• 20,000 additional copies of the Money Smart curricula
are distributed.

Achieved.

5. Effectively meet the statutory mandate to investigate and respond to consumer complaints about FDICsupervised financial institutions.
• Responses are provided to 90 percent of written
complaints within time frames established by policy.
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Achieved.

CO R P O R AT I O N

Achieved.

Achieved.

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RECEIVERSHIP MANAGEMENT PROGRAM RESULTS
Strategic Goal: Recovery to creditors of receivership is achieved.
Annual Performance Goals and Targets

2007

2006

2005

1. Market failing institutions to all known qualified and interested potential bidders.
• Contact all known qualified and interested bidders.

Achieved.

Not Applicable.
No Failures.

Not Applicable.
No Failures.

2. Value, manage, and market assets of failed institutions and their subsidiaries in a timely manner to maximize
net return.
• Ninety percent of the book value of a failed
institution’s marketable assets are marketed within
90 days of failure.

Achieved.

Not Applicable.
No Failures.

Not Applicable.
No Failures.

3. Manage the receivership estate and its subsidiaries toward an orderly termination.
• Terminate all receiverships within 90 days of the
resolution of all impediments.

Achieved.

Achieved.

• Inactivate 75 percent of receiverships managed
through the Receivership Oversight Program within
three years of the failure date.

Not Achieved.

4. Conduct investigations into all potential professional liability claim areas in all failed insured depository
institutions and decide as promptly as possible to close or pursue each claim, considering the size and
complexity of the institution.
• For 80 percent of all claim areas, a decision is made
to close or pursue claims within 18 months of the
failure date.

76

Not Applicable.
No claims within
the 18-month
period.

Not Applicable.
No Failures.

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efforts of the FDIC will be geared toward further
defining operations and controls, management
reporting and administration of this new program.

Program Evaluation
Program evaluations are designed to improve the
operational effectiveness of the FDIC’s programs
and ensure that objectives are met. These evaluations are often led by the Office of Enterprise Risk
Management and are generally interdivisional,
collaborative efforts involving management and
staff from the affected program(s).
The Corporation’s 2008 Annual Performance Plan
contained several objectives aimed at ensuring that
the FDIC would continue to address key corporate
issues, including the upgrade of the FDIC’s New
Financial Environment (NFE), privacy, shared
folders access and security, and asset management.
The following are the results of the Corporation’s
program evaluation activities for 2008.
The FDIC is in the process of both upgrading NFE ,
its state-of-the-art financial management system,
and changing the system platform on which it sits.
The upgrade of the PeopleSoft products to release
9.0 and the change from the IBM mainframe structure with DB2 database to an individual application
server structure with the Oracle database will allow
the FDIC certain advances within the financial
management and reporting arena. With the newer
version of the PeopleSoft products, the FDIC will
see increased business functionality and extended
software support. Additionally, the change in
platform will bring less system downtime,
increased data scalability and a more sustainable
environment for future enhancements and
upgrades. The NFE software upgrade and platform
change are expected to be completed by mid-2009.
In 2008, FDIC developed an Operational Review
Program for the post-closing asset management
function. Guidance was also developed for asset
managers on participation loans and home equity
lines of credit. This guidance ensures consistency
in post-closing activities.
During 2008, the FDIC organized operations and
support for major initiatives of the Temporary
Liquidity Guarantee Program. The results of these
initiatives were meant to strengthen market stability, improve the strength of financial institutions
and enhance market liquidity. Going forward,

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The shared folders access and security initiative,
started in 2008, is a corporate-wide effort to reduce
the inventory of electronic folders and improve
security management of the remaining folders
necessary for the Corporation’s ongoing work. This
effort will continue in 2009.
The Corporation enhanced its methodology in
2008 to compare IT development projects
objectively for those projects spending operating
funds. This methodology identified preliminary
business value, benefits expected from the project,
and risk recognition. The Chief Information Office
Council (CIO Council) used this methodology
successfully for its 2009 selection process. Use of
this common methodology at the CIO Council level
in conjunction with what is done at the Capital
Investment Review Committee level enhances the
Corporation’s capital planning and investment
management maturity and enables the Corporation
to more strategically select its IT investments.
In 2008, the FDIC, being concerned about the
safety of FDIC-managed receivership and subsidiary funds, researched alternatives for its banking
and investment needs for receivership-related
matters. After careful review, the FDIC obtained
banking services from the Federal Home Loan
Bank of New York, which is able to handle critical
accounts and services needed by the FDIC.
During 2008, two Post Project Reviews (PPRs) were
conducted to improve the Corporation’s future
systems development efforts by reviewing recently
implemented projects. Among the several significant reviews completed in 2008 were reviews of the
Central Data Repository (CDR) and the Corporate
Human Resources Information System (CHRIS)
Time and Attendance project. Most significant is
that the lessons learned and best practices
identified in conducting the PPRs were rolled back
into front end processes and requirements for
future projects.
Program evaluation activities in 2009 will focus on
key corporate issues, including continuing work on
the Temporary Liquidity Guarantee Program and
issues relating to contract management oversight
and staff analysis.

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4

CHAPTER FOUR
FINANCIAL STATEMENTS
AND NOTES

Deposit Insurance Fund (DIF)
DEPOSIT INSURANCE FUND BALANCE SHEET AT DECEMBER 31
Dollars in Thousands
2008
Assets
Cash and cash equivalents – unrestricted
Cash and cash equivalents – restricted – systemic risk (Note 14)

2007

Liabilities
Accounts payable and other liabilities
Liabilities due to resolutions (Note 6)
Guarantee obligations – systemic risk (Note 14)
Postretirement benefit liability (Note 11)
Contingent liabilities for: (Note 7)
Anticipated failure of insured institutions
Systemic risk (Note 14)
Litigation losses
Total Liabilities
Commitments and off-balance-sheet exposure (Note 12)
Fund Balance
Accumulated net income
Unrealized gain on available-for-sale securities, net (Note 3)
Unrealized postretirement benefit gain (Note 11)
Total Fund Balance
Total Liabilities and Fund Balance

$4,244,547
0

0
27,859,080
1,018,486
1,138,132
405,453
15,765,465
368,761
$49,944,194

38,015,174
8,572,800
244,581
0
768,292
808,072
351,861
$53,005,327

$185,079
4,671,980
2,077,880
114,124

Investment in U.S. Treasury obligations, net: (Note 3)
Held-to-maturity securities
Available-for-sale securities
Assessments receivable, net (Note 8)
Receivable – systemic risk (Note 14)
Interest receivable on investments and other assets, net
Receivables from resolutions, net (Note 4)
Property and equipment, net (Note 5)
Total Assets

$1,011,430
2,377,387

$151,857
0
0
116,158

23,981,204
1,437,638
200,000
32,667,905

124,276
0
200,000
592,291

15,001,272
2,250,052
24,965
17,276,289
$49,944,194

52,034,503
358,908
19,625
52,413,036
$53,005,327

The accompanying notes are an integral part of these financial statements.

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DEPOSIT INSURANCE FUND STATEMENT OF INCOME AND FUND BALANCE
FOR THE YEARS ENDED DECEMBER 31
Dollars in Thousands
2008

2007

Revenue
Interest on U.S. Treasury obligations

$2,072,317

$2,540,061

Assessments (Note 8)

2,964,518

642,928

Systemic risk revenue (Note 14)

1,463,537

0

Realized gain on sale of securities

774,935

0

Other revenue

31,017

13,244

Total Revenue

7,306,324

3,196,233

1,033,490

992,570

Expenses and Losses
Operating expenses (Note 9)
Systemic risk expenses (Note 14)
Provision for insurance losses (Note 10)

1,463,537

0

41,838,835

95,016

3,693

3,370

44,339,555

1,090,956

(37,033,231)

2,105,277

1,891,144

125,086

5,340

17,366

(35,136,747)

2,247,729

52,413,036

50,165,307

$17,276,289

$52,413,036

Insurance and other expenses
Total Expenses and Losses
Net (Loss) Income
Unrealized gain on available-for-sale securities, net (Note 3)
Unrealized postretirement benefit gain (Note 11)
Comprehensive (Loss) Income
Fund Balance – Beginning
Fund Balance – Ending
The accompanying notes are an integral part of these financial statements.

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FI N A N C I A L S TAT E M E N T S A N D N OT E S

DEPOSIT INSURANCE FUND STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
Dollars in Thousands
2008

2007

Operating Activities
$(37,033,231)

Net (Loss) Income:

$2,105,277

Adjustments to reconcile net income to net cash provided by
operating activities:
457,289

571,267

Treasury inflation-protected securities (TIPS) inflation adjustment

Amortization of U.S. Treasury obligations

(271,623)

(313,836)

Gain on sale of U.S. Treasury obligations

(774,935)

0

55,434

63,115

447

153

41,838,835

95,016

5,340

17,366

(2,352)

0

(773,905)

(244,581)

Depreciation on property and equipment
Loss on retirement of property and equipment
Provision for insurance losses
Unrealized gain on postretirement benefits
Systemic risk expenses
Change In Operating Assets and Liabilities:
(Increase) in assessments receivable, net
Decrease/(Increase) in interest receivable and other assets

402,225

(20,442)

(28,283,491)

(350,309)

(Increase) in receivable – systemic risk

(21,285)

0

(Decrease) in accounts payable and other liabilities

(34,667)

(39,580)

(2,034)

(13,748)

(Increase) in receivables from resolutions

(Decrease) in postretirement benefit liability
Increase in guarantee obligations – systemic risk

2,377,387

0

(22,060,566)

1,869,698

3,304,350

6,401,000

3,930,226

1,225,000

13,974,732

Net Cash (Used by) Provided by Operating Activities

0

Investing Activities
Provided by:
Maturity of U.S. Treasury obligations, held-to-maturity
Maturity of U.S. Treasury obligations, available-for-sale
Sale of U.S. Treasury obligations
Used by:
Purchase of property and equipment

(4,472)

Purchase of U.S. Treasury obligations, held-to-maturity
Purchase of U.S. Treasury obligations, available-for-sale

(1,607)

0

(7,706,117)

0

(497,422)

21,204,836

(579,146)

Net (Decrease)/Increase in Cash and Cash Equivalents

(855,730)

1,290,552

Cash and Cash Equivalents - Beginning

4,244,547

2,953,995

Unrestricted Cash and Cash Equivalents – Ending

1,011,430

4,244,547

Restricted Cash and Cash Equivalents –Ending

2,377,387

0

$3,388,817

$4,244,547

Net Cash Provided by (Used by) Investing Activities

Cash and Cash Equivalents - Ending
The accompanying notes are an integral part of these financial statements.

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1. Legislation and
Operations of the
Deposit Insurance Fund
Overview
The Federal Deposit Insurance Corporation (FDIC)
is the independent deposit insurance agency
created by Congress in 1933 to maintain stability
and public confidence in the nation’s banking
system. Provisions that govern the operations of the
FDIC are generally found in the Federal Deposit
Insurance (FDI) Act, as amended, (12 U.S.C. 1811,
et seq.) In carrying out the purposes of the FDI
Act, as amended, the FDIC insures the deposits of
banks and savings associations (insured depository
institutions), and in cooperation with other federal
and state agencies promotes the safety and
soundness of insured depository institutions by
identifying, monitoring and addressing risks to the
deposit insurance fund. An active institution’s
primary federal supervisor is generally determined
by the institution’s charter type. Commercial and
savings banks are supervised by the FDIC, the
Office of the Comptroller of the Currency, or the
Federal Reserve Board, while thrifts are supervised
by the Office of Thrift Supervision.
The FDIC is the administrator of the Deposit
Insurance Fund (DIF). The DIF is responsible for
protecting insured bank and thrift depositors from
loss due to institution failures. The FDIC is
required by 12 U.S.C. 1823(c) to resolve troubled
institutions in a manner that will result in the least
possible cost to the deposit insurance fund unless a
systemic risk determination is made that
compliance with the least-cost test would have
serious adverse effects on economic conditions or
financial stability and any action or assistance
taken under the systemic risk determination would
avoid or mitigate such adverse effects. The systemic
risk provision requires the FDIC to recover any
related losses to the DIF through one or more
emergency special assessments from all insured
depository institutions. See Note 14 for a detailed
explanation of 2008 systemic risk transactions.
The FDIC is also the administrator of the FSLIC
Resolution Fund (FRF). The FRF is a resolution
fund responsible for the sale of remaining assets
and satisfaction of liabilities associated with the

82

former Federal Savings and Loan Insurance
Corporation (FSLIC) and the Resolution Trust
Corporation. The DIF and the FRF are maintained
separately to carry out their respective mandates.

Recent Legislation
The Emergency Economic Stabilization Act of 2008
(EESA), legislation to help stabilize the financial
markets, was enacted on October 3, 2008, and
significantly affects the FDIC. The legislation
requires that the FDIC participate, through a consultation role, in the establishment of the troubled
asset relief program (known as TARP) and provides
that the FDIC is eligible to act as an asset manager
for residential mortgage loans and residential mortgage-backed securities on a reimbursable basis.
In addition, the legislation identifies the FDIC as a
Federal property manager with respect to mortgage
loans and mortgage-backed securities held by any
bridge depository institution pursuant to section
11(n) of the FDI Act. As a Federal property manager, the FDIC is responsible for implementing a
plan that maximizes assistance for homeowners and
encourages servicers to take advantage of programs
to minimize foreclosures for the affected assets.
The legislation also directly affects the FDIC as
deposit insurer by providing for 1) a temporary
increase in FDIC deposit insurance coverage from
$100,000 to $250,000 from the date of enactment of
the legislation through December 31, 2009 and 2) a
temporary removal of limitations on borrowing in
sections 14(a) and 15(c) of the FDI Act for purposes
of carrying out the increase in the maximum
deposit insurance amount for the duration of the
increased coverage. EESA expressly provides that
the temporary deposit insurance increase is not to
be taken into account by the FDIC in setting
assessments under section 7(b) of the FDI Act. (See
Note 15, Subsequent Events – Legislative Update.)
The Federal Deposit Insurance Reform Act of 2005
(Title II, Subtitle B of Public Law 109-171, 120 Stat.
9) and the Federal Deposit Insurance Reform
Conforming Amendments Act of 2005 (Public Law
109-173, 119 Stat. 3601) were enacted in February
2006. Pursuant to this legislation (collectively, the
Reform Act), the Bank Insurance Fund and the
Savings Association Insurance Fund were merged
into the DIF, and the FDIC permanently increased
coverage for certain retirement accounts to

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$250,000. Additionally, the Reform Act: 1) provides
the FDIC with greater discretion to charge insurance assessments and to impose more sensitive
risk-based pricing; 2) annually permits the
designated reserve ratio (DRR) to vary between
1.15 and 1.50 percent of estimated insured deposits;
3) generally requires the declaration and payment
of dividends from the DIF if the reserve ratio of the
DIF equals or exceeds 1.35 percent of estimated
insured deposits at the end of a calendar year; 4)
grants a one-time assessment credit for each
eligible insured depository institution or its
successor based on an institution’s proportionate
share of the aggregate assessment base of all eligible
institutions at December 31, 1996; and 5) allows the
FDIC to increase all deposit insurance coverage,
under certain circumstances, to reflect inflation
every five years beginning January 1, 2011. See
Note 8 for additional discussion on the reforms
related to assessments. (See Note 15, Subsequent
Events – Legislative Update.)

Operations of the DIF
The primary purpose of the DIF is to: 1) insure the
deposits and protect the depositors of DIF-insured
institutions and 2) resolve DIF-insured failed institutions upon appointment of FDIC as receiver in a
manner that will result in the least possible cost to
the DIF.
The DIF is primarily funded from: 1) interest
earned on investments in U.S. Treasury obligations
and 2) deposit insurance assessments. Additional
funding sources, if necessary, are borrowings from
the U.S. Treasury, Federal Financing Bank (FFB),
Federal Home Loan Banks, and insured depository
institutions. The FDIC has borrowing authority
from the U.S. Treasury up to $30 billion and a Note
Purchase Agreement with the FFB not to exceed
$100 billion to enhance DIF’s ability to fund deposit
insurance obligations. (See Note 15, Subsequent
Events – Legislative Update.)
A statutory formula, known as the Maximum
Obligation Limitation (MOL), limits the amount of
obligations the DIF can incur to the sum of its cash,
90 percent of the fair market value of other assets,
and the amount authorized to be borrowed from
the U.S. Treasury. The MOL for the DIF was $69.0
billion and $83.6 billion as of December 31, 2008
and 2007, respectively. The EESA of 2008 provides
that, in connection with the new, temporary

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increase in the basic deposit insurance coverage
limit from $100,000 to $250,000, the FDIC may
borrow from the U.S. Treasury to carry out the
increase in the maximum deposit insurance
amount without regard to the MOL or the
$30 billion limit.

Receivership and Conservatorship
Operations
The FDIC is responsible for managing and
disposing of the assets of failed institutions in an
orderly and efficient manner. The assets held by
receivership and conservatorship entities, and the
claims against them, are accounted for separately
from DIF assets and liabilities to ensure that
receivership and conservatorship proceeds are
distributed in accordance with applicable laws and
regulations. Accordingly, income and expenses
attributable to receiverships and conservatorships
are accounted for as transactions of those entities.
Both are billed by the FDIC for services provided
on their behalf.

2. Summary of Significant
Accounting Policies
General
These financial statements pertain to the financial
position, results of operations, and cash flows of the
DIF and are presented in conformity with U.S.
generally accepted accounting principles (GAAP).
These statements do not include reporting for
assets and liabilities of closed banks and thrifts for
which the FDIC acts as receiver or conservator.
Periodic and final accountability reports of the
FDIC’s activities as receiver or conservator are
furnished to courts, supervisory authorities, and
others as required.

Use of Estimates
Management makes estimates and assumptions
that affect the amounts reported in the financial
statements and accompanying notes. Actual results
could differ from these estimates. Where it is
reasonably possible that changes in estimates will
cause a material change in the financial statements
in the near term, the nature and extent of such
changes in estimates have been disclosed. The more

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significant estimates include the assessments
receivable and associated revenue, the allowance for
loss on receivables from resolutions, the estimated
losses for anticipated failures, systemic risk and
litigation, and the postretirement benefit obligation.

Cash Equivalents
Cash equivalents are short-term, highly liquid
investments consisting primarily of U.S. Treasury
Overnight Certificates.

Investment in U.S. Treasury
Obligations
DIF funds are required to be invested in obligations
of the United States or in obligations guaranteed as
to principal and interest by the United States; the
Secretary of the U.S. Treasury must approve all
such investments in excess of $100,000. The
Secretary has granted approval to invest DIF funds
only in U.S. Treasury obligations that are purchased
or sold exclusively through the Bureau of the Public
Debt’s Government Account Series (GAS) program.
DIF’s investments in U.S. Treasury obligations are
classified as available-for-sale. Securities designated
as available-for-sale are shown at market value,
which approximates fair value. Unrealized gains
and losses are reported as other comprehensive
income. Realized gains and losses are included in
the Statement of Income and Fund Balance as
components of Net Income. Income on securities is
calculated and recorded on a daily basis using the
effective interest method.
Prior to 2008, DIF’s investments in U.S. Treasury
obligations were classified as either held-to-maturity or available-for-sale based on the FDIC’s
assessment of funding needs. Securities designated
as held-to-maturity were shown at amortized cost.
Amortized cost is the face value of securities plus
the unamortized premium or less the unamortized
discount. Amortizations were computed on a daily
basis from the date of acquisition to the date of
maturity, except for callable U.S. Treasury securities, which were amortized to the first call date.
See Note 3 for an explanation of the transfer of
DIF’s held-to-maturity securities to the availablefor-sale category.

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Revenue Recognition for Assessments
The FDIC collects deposit insurance premiums
from each insured depository institution at the end
of the quarter following the period of insurance
coverage. As a result, assessment revenue for the
insured period is recognized based on an estimate.
The estimate is derived from an institution’s riskbased assessment rate and assessment base for the
prior quarter; adjusted for the current quarter’s
available assessment credits, any changes in
supervisory examination and debt issuer ratings for
larger institutions, and a modest deposit insurance
growth factor.
The estimated revenue amounts are adjusted when
actual premiums are collected at quarter end. Total
assessment income recognized for the year includes
estimated revenue for the October-December
assessment period. See Note 8 for additional
information on assessments.

Capital Assets and Depreciation
The FDIC buildings are depreciated on a straightline basis over a 35 to 50 year estimated life.
Leasehold improvements are capitalized and
depreciated over the lesser of the remaining life of
the lease or the estimated useful life of the
improvements, if determined to be material.
Capital assets depreciated on a straight-line basis
over a five-year estimated life include mainframe
equipment; furniture, fixtures, and general
equipment; and internal-use software. Personal
computer equipment is depreciated on a
straight-line basis over a three-year estimated life.

Disclosure about Recent Accounting
Pronouncements
Effective as of January 1, 2008, DIF adopted
Statement of Financial Accounting Standards
(SFAS) No. 157, Fair Value Measurements, on a
prospective basis. The Statement defines fair value,
establishes a framework for measuring fair value,
outlines a fair value hierarchy based on the inputs
to valuation techniques used to measure fair value,
and expands financial statement disclosures about
fair value measurements.
SFAS No. 157 defines fair value as the price that
would be received to sell an asset or paid to transfer
a liability (an exit price) in an orderly transaction

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between market participants at the measurement
date. In measuring fair value, the Standard requires
the use of fair value valuation techniques consistent
with the market, income, and/or cost approach. The
Statement establishes a three-level hierarchy for
inputs used in measuring fair value that maximizes
the use of observable inputs and minimizes the use
of unobservable inputs. Assets and liabilities are
classified within this hierarchy in their entirety
based on the lowest level of any input that is significant to the fair value measurement. See Note 13 for
specifics regarding fair value measurements.
In February 2007, the Financial Accounting
Standards Board issued SFAS No. 159, The Fair
Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB
Statement No. 115. SFAS No. 159 creates a fair value
option allowing, but not requiring, an entity to
irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial
assets and financial liabilities with changes in fair
value recognized in earnings as they occur. The
Statement requires entities to separately display the
fair value of those assets and liabilities for which
the entity has chosen to use fair value on the face of
the balance sheet. As of December 31, 2008, the
FDIC has currently chosen not to elect the fair
value option for any items that are not already
required to be measured at fair value in accordance
with GAAP.

Related Parties
The nature of related parties and a description of
related party transactions are discussed in Note 1
and disclosed throughout the financial statements
and footnotes.

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3. Investment in
U.S. Treasury
Obligations, Net
As of December 31, 2008 and 2007, investments in
U.S. Treasury obligations, net, were $27.9 billion
and $46.6 billion, respectively. As of December 31,
2008, the DIF held $2.7 billion of Treasury
inflation-protected securities (TIPS). These
securities are indexed to increases or decreases in
the Consumer Price Index for All Urban
Consumers (CPI-U). Additionally, the fair value of
callable U.S. Treasury bonds held at December 31,
2008 is $3.0 billion. Callable U.S. Treasury bonds
may be called five years prior to the respective
bonds’ stated maturity on their semi-annual
coupon payment dates upon 120 days notice.
In June 2008, the Corporation transferred all of
DIF’s held-to-maturity investments to the availablefor-sale category. Management determined that it
no longer had the positive intent and ability to hold
its investment in securities classified as held-tomaturity for an indefinite period of time because of
significant actual and potential resolution-related
outlays for DIF-insured institutions. The securities
transferred had a total amortized cost of $34.5
billion, fair value of $36.1 billion, and unrealized
gains of $1.6 billion, which were recorded as other
comprehensive income at the time of transfer.
For the year ended December 31, 2008, availablefor-sale securities were sold for total proceeds
of $14.1 billion. The gross realized gains on these
sales totaled $775 million. To determine gross
realized gains, the cost of securities sold is based on
specific identification. Net unrealized holding gains
on available-for-sale securities of $1.9 billion are
included in other comprehensive income.

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U.S. TREASURY OBLIGATIONS AT DECEMBER 31, 2008
Dollars in Thousands
Yield at
Purchase (b)

Maturity (a)

Face Value

Net
Carrying
Amount

Unrealized
Holding
Gains

Unrealized
Holding
Losses (c)

$6,350,921

$130,365

$0

$6,481,286

Fair Value

Available-for-Sale
U.S. Treasury notes and bonds
Within 1 year

4.25%

$6,192,000

After 1 year through 5 years

4.72%

9,503,000

9,451,649

1,030,931

0

10,482,580

After 5 years through 10 years

4.79%

6,130,000

7,090,289

1,142,753

0

8,233,042

U.S. Treasury inflation-protected securities
Within 1 year

3.82%

726,550

726,561

0

(5,627)

720,934

After 1 year through 5 years

3.14%

1,973,057

1,989,608

0

(48,370)

1,941,238

$(53,997)

$27,859,080

Total Investment in U.S. Treasury Obligations, Net
Total

$24,524,607

$25,609,028

$2,304,049

(a) For purposes of this table, all callable securities are assumed to mature on their first call dates. Their yields at purchase are reported as their
yield to first call date.
(b) For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective yields on TIPS include a
long-term annual inflation assumption as measured by the CPI-U. The long-term CPI-U consensus forecast is 2.2 percent, based on figures
issued by the Congressional Budget Office and Blue Chip Economic Indicators in early 2008.
(c) The unrealized losses on the U.S. Treasury inflation-protected securities (TIPS) is attributable to the two month delay in adjusting TIPS’
principal for changes in the November and December Consumer Price Index for all Urban Consumers. As the losses occurred over a period
less than a year and the December 31, 2008 unrealized losses converted to unrealized gains by February 28, 2009, the FDIC does not
consider these securities to be other than temporarily impaired at December 31, 2008.

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U.S. TREASURY OBLIGATIONS AT DECEMBER 31, 2007
Dollars in Thousands
Yield at
Purchase (b)

Maturity (a)

Face Value

Net
Carrying
Amount

Unrealized
Holding
Gains

Unrealized
Holding
Losses (c)

$30,313

$(469)

$5,681,543

Market
Value

Held-to-Maturity
U.S. Treasury notes and bonds
Within 1 year

4.49%

$5,600,000

After 1 year through 5 years

4.50%

12,920,000

13,310,856

416,031

0

13,726,887

After 5 years through 10 years

4.81%

11,550,000

12,856,888

764,723

0

13,621,611

After 10 years

5.02%

3,500,000

4,626,945

286,889

0

4,913,834

258,638

258,620

349

0

258,969

1,288,950

1,310,166

52,927

0

1,363,093

$35,117,588 $ 38,015,174

$1,551,232

$5,651,699

U.S. Treasury inflation-protected securities
Within 1 year

3.86%

After 1 year through 5 years

3.16%

Total

$(469) $39,565,937

Available-for-Sale
U.S. Treasury notes and bonds
After 1 year through 5 years

4.79%

$500,000

$498,260

$10,100

$0

$508,360

U.S. Treasury inflation-protected securities
Within 1 year

3.92%

1,700,545

1,700,397

2,325

0

1,702,722

After 1 year through 5 years

3.75%

6,004,277

6,015,235

346,483

0

6,361,718

$8,204,822

$8,213,892

$358,908

$0

$8,572,800

Total

Total Investment in U.S. Treasury Obligations, Net
Total

$43,322,410 $46,229,066

$1,910,140

$(469) $48,138,737

(a) For purposes of this table, all callable securities are assumed to mature on their first call dates. Their yields at purchase are reported as their
yield to first call date.
(b) For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective yields on TIPS include a
long-term annual inflation assumption as measured by the CPI-U. The long-term CPI-U consensus forecast is 2.2 percent, based on figures
issued by the Congressional Budget Office and Blue Chip Economic Indicators in early 2007.
(c) All unrealized losses occurred as a result of changes in market interest rates. FDIC had the ability and intent to hold the related securities
until maturity. As a result, all unrealized losses are considered temporary. However, all of the $469 thousand reported as total unrealized
losses is recognized as unrealized losses occuring over a period of 12 months or longer with a market value of $1.1 billion applied to the
affected securities.

As of December 31, 2008 and 2007, the unamortized premium, net of the unamortized discount, was $1.1
billion and $2.9 billion, respectively.

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to derive the allowance for losses were based on a
sampling of receivership assets in liquidation.
Sampled assets were generally valued by estimating
future cash recoveries, net of applicable liquidation
cost estimates, and then discounted using current
market-based risk factors applicable to a given
asset’s type and quality. Resultant recovery
estimates were extrapolated to the non-sampled
assets in order to derive the allowance for loss on
the receivable.

4. Receivables From
Resolutions, Net
RECEIVABLES FROM RESOLUTIONS,
NET AT DECEMBER 31
Dollars in Thousands
2008

2007

Receivables from
closed banks

$27,389,467

$4,991,003

Receivables from
operating banks

9,406,278

0

(21,030,280)

(4,182,931)

$15,765,465

$808,072

Allowances for losses
Total

The receivables from resolutions include payments
made by the DIF to cover obligations to insured
depositors, advances to receiverships and conservatorships for working capital, and administrative
expenses paid on behalf of receiverships and
conservatorships. Any related allowance for loss
represents the difference between the funds
advanced and/or obligations incurred and the
expected repayment. Assets held by DIF
receiverships and conservatorships are the main
source of repayment of the DIF’s receivables from
resolutions. As of December 31, 2008, there were 41
active receiverships, including 25 from institution
failures that occurred in the current year, and one
active conservatorship resulting from the IndyMac
Bank resolution.
As of December 31, 2008 and 2007, DIF receiverships and conservatorships held assets with a book
value of $45.8 billion and $1.2 billion, respectively
(including cash, investments, and miscellaneous
receivables of $5.1 billion and $363 million,
respectively). The large increase in DIF receivership
and conservatorship assets is due to the 2008
failures. These comprised $40.2 billion or 99% of
the current $40.7 billion in assets in liquidation
book values. Due to the sudden increase of
receivership and conservatorship assets since May
2008, the FDIC modified its process of computing
the allowance for loss.
For those receiverships established prior to May
2008, the estimated cash recoveries from the
management and disposition of assets that are used

88

Estimated cash recoveries on those receiverships
and conservatorships established since May 2008
are based on asset recovery rates derived from
several sources including: actual or pending
institution-specific asset liquidation data; failed
institution-specific asset valuation data; aggregate
asset valuation data on several recently failed or
troubled institutions; and empirical asset recovery
data based on failures as far back as 1990. The
resulting estimated cash recoveries are then used to
derive the allowance for loss on the receivables
from these resolutions. Ninety-nine percent of total
receivership assets in liquidation were valued by
this methodology.
Estimated asset recoveries are regularly evaluated,
but remain subject to uncertainties because of
potential changes in economic and market conditions. Recent economic uncertainties could cause
the DIF’s actual recoveries to vary significantly
from current estimates.
Financial instruments that potentially subject the
DIF to concentrations of credit risk are receivables
from resolutions. The main source of repayment of
DIF’s receivables from resolutions are assets held by
DIF receiverships. Excluding the assets of the
IndyMac Bank resolution (see below), the majority
of the $15.0 billion in assets in liquidation are concentrated in commercial loans ($2.8 billion),
commercial real estate ($6.2 billion), and residential
loans ($2.6 billion), which were primarily retained
from institutions that failed in 2008. Eighty-six
percent of the assets in these three asset types were
retained from failed banks located in Nevada ($4.0
billion), Texas ($2.9 billion), Georgia ($2.2 billion),
and Arkansas ($.9 billion). The assets of the
IndyMac Federal Bank, FSB conservatorship are
excluded from this analysis since the FDIC signed a
letter of intent at year-end 2008 to sell the banking
operations of IndyMac Federal Bank to a thrift
holding company (see below).

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IndyMac Federal Bank
On July 11, 2008, IndyMac Bank, FSB, Pasadena,
CA was closed by the Office of Thrift Supervision,
with the FDIC named receiver. IndyMac Bank was
the third largest insolvency in FDIC history with
$28.0 billion in total assets at failure. The FDIC
transferred the insured deposits and substantially
all the assets of the failed bank to IndyMac Federal
Bank, FSB, a newly-chartered federal institution
that the FDIC operated as a conservator to maximize the value of the institution for a future sale.
Through December 31, 2008, the DIF disbursed
$5.8 billion to fund the obligations to insured
depositors of IndyMac Bank and $9.4 billion to the
conservatorship to fund its operations under a $12
billion line of credit. These amounts are included in
the chart above in the receivables from closed banks
and operating banks, respectively. Additionally, DIF
recorded a $10.7 billion allowance for loss against
these receivables.
On December 31, 2008, the FDIC signed a letter of
intent to sell the banking operations of IndyMac
Federal Bank to a thrift holding company
controlled by IMB Management Holdings LP, a
limited partnership, for $13.9 billion. On March 19,
2009, the FDIC completed the sale of IndyMac
Federal Bank, FSB, to One West Bank, FSB (One
West), a newly formed Pasadena, California-based
federal savings bank organized by IMB HoldCo
LLC. One West purchased all deposits and
approximately $20.7 billion in assets at a discount
of $4.7 billion. The FDIC retained the remaining
assets for later disposition.
The sale includes a provision wherein the IndyMac
receiver will share losses on a $13 billion portfolio
of whole mortgage loans with the buyer fully
assuming the first 20 percent of losses after which
the receiver will share 80 percent for the next 10
percent of losses and 95 percent thereafter, with the
buyer responsible for the remainder. The shared
loss agreement will expire on the earlier of: 1) 10
years, 2) the date the buyer liquidates the portfolio,
or 3) when the remaining outstanding balance
reaches 10 percent of the closing date balances. The
liability for loss sharing is accounted for by the
IndyMac receiver and is considered in the determination of the DIF’s allowance for loss of $10.7
billion against the corporate receivable from this
resolution. The FDIC will also retain an 80 percent

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interest of cash flows in a separate $2.4 billion portfolio of mostly construction loans.
In addition, the FDIC offered representations and
warranties on loan sales from the conservatorship.
The total amount of loans sold subject to representations and warranties was $3.2 billion. No
contingent liabilities associated with these representations and warranties were recorded at December
31, 2008. However, future losses could be incurred
through the expiration date of the contracts offering the representations and warranties, some as late
as 2048. Furthermore, because of the uncertainties
surrounding the timing of when claims may be
asserted, the FDIC is unable to reasonably estimate
a range of loss to the DIF from outstanding
contracts with unasserted representation and
warranty claims. The FDIC believes it is possible
that additional losses may be incurred by the DIF
from the universe of outstanding contracts with
unasserted representation and warranty claims.

5. Property and
Equipment, Net
PROPERTY AND EQUIPMENT,
NET AT DECEMBER 31
Dollars in Thousands
2008

2007

Land

$37,352

$37,352

Buildings (including
leasehold
improvements)

281,401

276,626

Application
software (includes
work-in-process)

173,872

145,693

Furniture, fixtures,
and equipment

84,574

71,138

Accumulated
depreciation

(208,438)

(178,948)

Total

$368,761

$351,861

The depreciation expense was $55 million and
$63 million for December 31, 2008 and 2007,
respectively.

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6. Liabilities Due
to Resolutions
As of December 31, 2008, DIF recorded liabilities
totaling $4.7 billion to three receiverships
(IndyMac Bank, Downey Savings & Loan, and PFF
Bank & Trust) representing the value of assets
transferred from the receiverships to the acquirer/
conservator for use in funding the deposits
assumed by the acquirer/conservator.

7. Contingent Liabilities for:
Anticipated Failure of Insured
Institutions
The DIF records a contingent liability and a loss
provision for DIF-insured institutions that are
likely to fail within one year of the reporting date,
absent some favorable event such as obtaining
additional capital or merging, when the liability
becomes probable and reasonably estimable.
The contingent liability is derived by applying
expected failure rates and loss rates to institutions
based on supervisory ratings, balance sheet characteristics, and projected capital levels. In addition,
institution-specific analysis is performed on those
institutions where failure is imminent absent institution management resolution of existing problems,
or where additional information is available that
may affect the estimate of losses. Due to the rapid
deterioration in industry conditions, the FDIC
modified the process of establishing the loss reserve
by identifying vulnerable institutions deemed likely
to have failure risks similar to those on the problem
bank list based on certain financial ratios and other
risk measures. The FDIC also increased loss rates
for institutions included in the reserve to reflect the
results of recent valuations of loan portfolios of
imminent failures and current year resolutions. As
of December 31, 2008 and 2007, the contingent liabilities for anticipated failure of insured institutions
were $24.0 billion and $124.3 million, respectively.
In addition to these recorded contingent liabilities,
the FDIC has identified risk in the financial
services industry that could result in an additional
loss to the DIF should potentially vulnerable
insured institutions ultimately fail. As a result of

90

these risks, the FDIC believes that it is reasonably
possible that the DIF could incur additional
estimated losses up to approximately $25.1 billion.
The actual losses, if any, will largely depend on
future economic and market conditions and could
differ materially from this estimate.
During 2008, financial market disruptions evolved
into a crisis that challenged the soundness and
profitability of some FDIC-insured institutions.
Declining housing and equity prices, financial
market turmoil, and deteriorating economic
conditions exerted significant stress on banking
industry performance and threatened the viability
of some institutions, particularly those that had
significant exposure to higher risk residential
mortgages or residential construction loans. In
2008, 25 banks with combined assets of about $361
billion failed. It is uncertain how long and how
deep this downturn will be. Supervisory and market data suggest that the banking industry will
continue to experience elevated levels of stress over
the coming year. The FDIC continues to evaluate
the ongoing risks to affected institutions in light of
the deterioration in economic and financial conditions, and the effect of such risks will continue to
put stress on the resources of the insurance fund.

Litigation Losses
The DIF records an estimated loss for unresolved
legal cases to the extent that those losses are
considered probable and reasonably estimable. The
FDIC recorded a probable litigation loss of $200
million and has determined that there are no
reasonably possible losses from unresolved cases.

Other Contingencies
Representations and Warranties
As part of the FDIC’s efforts to maximize the
return from the sale of assets from bank and thrift
resolutions, representations and warranties, and
guarantees were offered on certain loan sales. In
general, the guarantees, representations, and warranties on loans sold relate to the completeness and
accuracy of loan documentation, the quality of the
underwriting standards used, the accuracy of the
delinquency status when sold, and the conformity
of the loans with characteristics of the pool in
which they were sold. With the exception of the
IndyMac resolution described in Note 4, there were

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no loans sold subject to representations and
warranties, and guarantees during 2008. As of
December 31, 2008, the total amount of loans sold
subject to unexpired representations and
warranties, and guarantees was $8.1 billion. There
were no contingent liabilities from any of the
outstanding claims asserted in connection with
representations and warranties at December 31,
2008 and 2007, respectively.
In addition, future losses could be incurred until
the contracts offering the representations and
warranties, and guarantees have expired, some as
late as 2032. Consequently, the FDIC believes it is
possible that additional losses may be incurred by
the DIF from the universe of outstanding contracts
with unasserted representation and warranty
claims. However, because of the uncertainties
surrounding the timing of when claims may be
asserted, the FDIC is unable to reasonably estimate
a range of loss to the DIF from outstanding
contracts with unasserted representation and
warranty claims.

Purchase and Assumption
Indemnification
In connection with Purchase and Assumption
agreements for resolutions in 2008 and 2007, FDIC
in its receivership capacity generally indemnifies
the purchaser of a failed institution’s assets and
liabilities in the event a third party asserts a claim
against the purchaser unrelated to the explicit
assets purchased or liabilities assumed at the time
of failure. The FDIC in its Corporate capacity is a
secondary guarantor if and when a receiver is
unable to pay. These indemnifications generally
extend for a term of six years after the date of
institution failure. The FDIC is unable to estimate
the maximum potential liability for these types of
guarantees as the agreements do not specify a maximum amount and any payments are dependent
upon the outcome of future contingent events, the
nature and likelihood of which cannot be
determined at this time. During 2008 and 2007, the
FDIC in its Corporate capacity has not made any
indemnification payments under such agreements
and no amount has been accrued in the accompanying financial statements with respect to these
indemnification guarantees (see Note 15).

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8. Assessments
Effective January 1, 2007, the Reform Act requires
payment of assessments by all insured depository
institutions and continues to require a risk-based
assessment system. The Act allows the FDIC discretion in defining risk and, by regulation, the FDIC
has established several assessment risk categories
based upon supervisory and capital evaluations.
Other significant changes mandated by the Reform
Act and the implementing regulations included:
´ granting a one-time assessment credit of
approximately $4.7 billion to certain eligible
insured depository institutions (or their successors) based on the assessment base of the
institution as of December 31, 1996, as compared
to the combined aggregate assessment base of all
eligible institutions;
´ establishing a range for the DRR from 1.15 to
1.50 percent of estimated insured deposits. The
FDIC is required to annually publish the DRR
and has set the DRR at 1.25 percent for 2009. As
of December 31, 2008, the DIF reserve ratio was
0.36 percent of estimated insured deposits;
´ requiring the FDIC to adopt a DIF restoration
plan to return the reserve ratio to 1.15 percent generally within five years, if the reserve
ratio falls below 1.15 percent or is expected
to fall below 1.15 percent within six months.
On October 7, 2008, the FDIC established a
Restoration Plan for the DIF (see Note 15);
´ requiring the FDIC to annually determine if a
dividend should be paid, based on the statutory
requirement generally to declare dividends if the
reserve ratio exceeds 1.35 percent at the end of a
calendar year. The Reform Act permits dividends
for one-half of the amount required to maintain
the reserve ratio at 1.35 percent when the reserve
ratio is between 1.35 and 1.50 percent and all
amounts required to maintain the reserve ratio at
1.50 percent when the reserve ratio exceeds 1.50
percent. On December 2, 2008, the FDIC issued
a final rule specifying that the FDIC Board will
declare any dividend on or before May 10th of
the year following the calendar year-end trigger,
subject to statutory factors limiting or suspending the dividend. Dividends declared will be
offset against the June 30th assessment payment
and any remaining dividend amount will result
in a payment to the depository institution.

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The assessment rate averaged approximately 4.18
cents and .93 cents per $100 of assessable deposits
for 2008 and 2007, respectively. At December 31,
2008, the “Assessments Receivable, net” line item of
$1.02 billion represents the estimated gross premiums due from insured depository institutions for
the fourth quarter of the year, net of $144 million in
estimated one-time assessment credits. The actual
deposit insurance assessments for the fourth
quarter was billed and collected at the end of the
first quarter of 2009. During 2008 and 2007, $2.96
billion and $643 million, respectively, were
recognized as assessment income from institutions.

DIF ASSESSMENTS REVENUE FOR THE
YEARS ENDED DECEMBER 31
Dollars in Thousands
2008

2007

Gross assessments

$4,410,455

$3,730,886

Less: One-time
assessment credits
applied

(1,445,937)

(3,087,958)

$2,964,518

$642,928

Assessment
Revenue

Of the $4.7 billion in one-time assessment credits
granted, $200 million (4.3 percent) remained as of
December 31, 2008. The use of assessment credits is
limited to no more than 90 percent of the gross
assessments for assessment periods that provide
deposit insurance coverage through 2010. Credits
are restricted for institutions that are not adequately
capitalized or exhibit financial, operational or
compliance weaknesses. The credits can only be
used to offset future deposit insurance assessments
and, therefore, do not represent a liability to the
DIF. They are transferable among institutions, do
not expire, and cannot be used to offset Financing
Corporation (FICO) payments.

Assessments continue to be levied on institutions
for payments of the interest on obligations issued
by the FICO. The FICO was established as a mixedownership government corporation to function
solely as a financing vehicle for the FSLIC. The
annual FICO interest obligation of approximately
$790 million is paid on a pro rata basis using the
same rate for banks and thrifts. The FICO
assessment has no financial impact on the DIF and
is separate from deposit insurance assessments. The
FDIC, as administrator of the DIF, acts solely as a
collection agent for the FICO. During 2008 and
2007, $785 million each year was collected and
remitted to the FICO.

9. Operating Expenses
Operating expenses were $1 billion for 2008,
compared to $993 million for 2007. The chart below
lists the major components of operating expenses.

OPERATING EXPENSES FOR THE
YEARS ENDED DECEMBER 31
Dollars in Thousands
2008
Salaries and benefits
Outside services

2007

$702,040

$640,294

159,170

137,812

Travel

67,592

55,281

Buildings and
leased space

53,630

61,377

Software/Hardware
maintenance

29,312

28,542

Depreciation of
property and
equipment

55,434

63,115

Other

32,198

23,640

Services billed to
receiverships

(59,608)

(17,491)

Services billed to
conservatorships

(6,278)

0

$1,033,490

$992,570

Total

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10. Provision for
Insurance Losses
Provision for insurance losses was $41.8 billion for
2008 and $95 million for 2007. The following chart
lists the major components of the provision for
insurance losses.

PROVISION FOR INSURANCE LOSSES
FOR THE YEARS ENDED DECEMBER 31
2007

Dollars in Thousands

Valuation Adjustments

2008

Closed banks
and thrifts

$17,974,530

$81,229

7,377

286

Other assets
Total Valuation
Adjustments

Anticipated failure of
insured institutions

$81,515

23,856,928

Total Contingent
Liabilities
Adjustments

13,501

Civil Service
Retirement System

$6,204

$6,698

Federal Employees
Retirement System
(Basic Benefit)

44,073

40,850

21,786

21,008

Federal Thrift
Savings Plan

16,659

15,938

Severance Pay
23,856,928

13,501

$41,838,835

$95,016

11. Employee Benefits
Pension Benefits and Savings Plans
Eligible FDIC employees (permanent and term
employees with appointments exceeding one year)
are covered by the federal government retirement
plans, either the Civil Service Retirement System
(CSRS) or the Federal Employees Retirement
System (FERS). Although the DIF contributes a
portion of pension benefits for eligible employees, it
does not account for the assets of either retirement
system. The DIF also does not have actuarial data
for accumulated plan benefits or the unfunded
liability relative to eligible employees. These
amounts are reported on and accounted for by the
U.S. Office of Personnel Management (OPM).

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2007

FDIC Savings Plan

$17,981,907

Contingent Liabilities Adjustments

Total

Eligible FDIC employees also may participate in a
FDIC-sponsored tax-deferred 401(k) savings plan
with matching contributions up to five percent.
Under the Federal Thrift Savings Plan (TSP), FDIC
provides FERS employees with an automatic
contribution of 1 percent of pay and an additional
matching contribution up to 4 percent of pay. CSRS
employees also can contribute to the TSP. However,
CSRS employees do not receive agency matching
contributions.

PENSION BENEFITS AND SAVINGS
PLANS EXPENSES FOR THE YEARS
ENDED DECEMBER 31

Dollars in Thousands
2008

FI N A N C I A L S TAT E M E N T S A N D N OT E S

I N S U R A N C E

Total

0

59

$88,722

$84,553

Postretirement Benefits
Other Than Pensions
The DIF has no postretirement health insurance
liability, since all eligible retirees are covered by the
Federal Employees Health Benefit (FEHB) program.
FEHB is administered and accounted for by the
OPM. In addition, OPM pays the employer share of
the retiree’s health insurance premiums.
The FDIC provides certain life and dental insurance coverage for its eligible retirees, the retirees’
beneficiaries, and covered dependents. Retirees
eligible for life and dental insurance coverage are
those who have qualified due to: 1) immediate
enrollment upon appointment or five years of
participation in the plan and 2) eligibility for an
immediate annuity. The life insurance program
provides basic coverage at no cost to retirees and
allows converting optional coverages to direct-pay
plans. For the dental coverage, retirees are
responsible for a portion of the dental premium.

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The FDIC has elected not to fund the postretirement life and dental benefit liabilities. As a result,
the DIF recognized the underfunded status (difference between the accumulated postretirement
benefit obligation and the plan assets at fair value)
as a liability. Since there are no plan assets, the
plan’s benefit liability is equal to the accumulated
postretirement benefit obligation. At December 31,
2008 and 2007, the liability was $114.1 million and
$116.2 million, respectively, which is recognized in
the “Postretirement benefit liability” line item on
the Balance Sheet. The cumulative actuarial gains/
losses (changes in assumptions and plan experience) and prior service costs/credits (changes to
plan provisions that increase or decrease benefits)
were $25.0 million and $19.6 million at December
31, 2008 and 2007, respectively. These amounts are
reported as accumulated other comprehensive
income in the “Unrealized postretirement benefit
gain” line item on the Balance Sheet.
The DIF’s expenses for postretirement benefits for
2008 and 2007 were $7.7 million and $7.2 million,
respectively, which are included in the current and
prior year’s operating expenses on the Statement of
Income and Fund Balance. The changes in the
actuarial gains/losses and prior service costs/credits
for 2008 and 2007 of $5.3 million and $17.4 million,
respectively, are reported as other comprehensive
income in the “Unrealized postretirement benefit
gain” line item. Key actuarial assumptions used in
the accounting for the plan include the discount
rate of 6.5 percent, the rate of compensation
increase of 4.10 percent, and the dental coverage
trend rate of 7.0 percent. The discount rate of
6.5 percent is based upon rates of return on
high-quality fixed income investments whose cash
flows match the timing and amount of expected
benefit payments.

94

12. Commitments and
Off-Balance-Sheet
Exposure
Commitments:
Leased Space
The FDIC’s lease commitments total $130 million
for future years. The lease agreements contain
escalation clauses resulting in adjustments, usually
on an annual basis. The DIF recognized leased
space expense of $21 million and $22 million for
the years ended December 31, 2008 and 2007,
respectively.

LEASED SPACE COMMITMENTS
Dollars in Thousands
2009

2010

2011

2012

2013

2014/
Thereafter

$24,608

$52,251

$21,750

$14,975

$9,195

$7,037

Off-Balance-Sheet Exposure:
Deposit Insurance
As of December 31, 2008, the estimated insured
deposits for DIF were $4.8 trillion. This estimate is
derived primarily from quarterly financial data
submitted by insured depository institutions to the
FDIC. This estimate represents the accounting loss
that would be realized if all insured depository
institutions were to fail and the acquired assets
provided no recoveries.

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13. Disclosures About the Fair Value of Financial Instruments
Financial assets recognized and measured at fair value on a recurring basis at each reporting date include
cash equivalents (Note 2) and the investment in U.S. Treasury obligations (Note 3). The following table
presents the DIF’s financial assets measured at fair value as of December 31, 2008.

ASSETS MEASURED AT FAIR VALUE AT DECEMBER 31, 2008
Dollars in Thousands
Fair Value Measurements Using
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs (Level 3)

$1,011,430

$0

$0

Total Assets at
Fair Value

Assets
Cash equivalents
(Special U.S. Treasuries)1
Investment in U.S. Treasury Obligations
(Available-for- Sale)2

$1,011,430

27,859,080

0

0

27,859,080

$28,870,510

Total Assets

$0

$0

$28,870,510

(1) Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest
rates established by the U.S. Bureau of Public Debt.
(2) The investment in U.S. Treasury obligations is measured based on prevailing market yields for federal
government entities.

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Some of the DIF’s financial assets and liabilities are
not recognized at fair value but are recorded at
amounts that approximate fair value due to their
short maturities and/or comparability with current
interest rates. Such items include interest receivable
on investments, assessment receivables, other
short-term receivables, and accounts payable and
other liabilities.
The net receivables from resolutions primarily
include the DIF’s subrogated claim arising from
payments to insured depositors. The receivership
and conservatorship assets that will ultimately be
used to pay the corporate subrogated claim are
valued using discount rates that include consideration of market risk. These discounts ultimately
affect the DIF’s allowance for loss against the net
receivables from resolutions. Therefore, the corporate subrogated claim indirectly includes the effect
of discounting and should not be viewed as being
stated in terms of nominal cash flows.
Although the value of the corporate subrogated
claim is influenced by valuation of receivership and
conservatorship assets (see Note 4), such valuation
is not equivalent to the valuation of the corporate
claim. Since the corporate claim is unique, not
intended for sale to the private sector, and has no
established market, it is not practicable to estimate
a fair value.
The FDIC believes that a sale to the private sector
of the corporate claim would require indeterminate, but substantial, discounts for an interested
party to profit from these assets because of credit
and other risks. In addition, the timing of
receivership and conservatorship payments to the
DIF on the subrogated claim does not necessarily
correspond with the timing of collections on
receivership and conservatorship assets. Therefore,
the effect of discounting used by receiverships and
conservatorships should not necessarily be viewed
as producing an estimate of fair value for the net
receivables from resolutions.
There is no readily available market for assets and
liabilities associated with systemic risk transactions
(see Note 14).

96

14. Systemic Risk
Transactions
The FDIC resolves troubled institutions in the least
costly manner to the DIF as required by 12 U.S.C.
1823 (c) unless a systemic risk determination is
made that compliance with the least-cost test would
have serious adverse effects on economic conditions
or financial stability and any action or assistance
taken under the systemic risk determination would
avoid or mitigate such adverse effects. A systemic
risk determination can only be invoked by the
Secretary of the U.S. Treasury, in consultation with
the President, and upon the written recommendation of two-thirds of the FDIC Board of Directors
and two-thirds of the Board of Governors of the
Federal Reserve System.
Any loss incurred by the DIF as a result of actions
taken or assistance provided pursuant to a systemic
risk determination must be recovered from all
insured depository institutions through one or
more emergency special assessments. The special
assessment will be based on the amount of each
insured depository institution’s average total assets
during the assessment period, minus the sum of the
amount of the institution’s average total tangible
equity and the amount of the institution’s average
total subordinated debt.
Pursuant to a systemic risk determination invoked
during 2008, the FDIC established the Temporary
Liquidity Guarantee Program (TLGP) for insured
depository institutions and certain holding
companies. The FDIC received consideration in
exchange for guarantees issued under the TLGP.
The DIF has recognized a liability for the noncontingent fair value of the obligation the FDIC
has undertaken to stand ready to perform over the
term of the guarantees in accordance with FASB
Interpretation No. 45, Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others
(FIN 45). Pursuant to FIN 45, at inception, the fair
value of the non-contingent obligation is measured
at the amount of consideration received in exchange
for issuing the guarantee. This liability is reported
as “Guarantee obligations-systemic risk” and any
related asset received as consideration is designated
for systemic risk on the balance sheet. As guarantee

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expenses are incurred (including contingent
liabilities), the DIF will reduce the recorded
non-contingent liability and recognize an offsetting
amount as revenue. Revenue recognition will also
occur during the term of the guarantee if a supportable and documented analysis has determined that
the consideration and any related interest/dividend
income received exceeds the projected systemic risk
losses. Any remaining consideration at the end of
the term of the guarantee will be recognized as
income to the DIF.

Temporary Liquidity
Guarantee Program
The FDIC established the TLGP on October 14,
2008 in an effort to counter the system-wide crisis
in the nation’s financial sector. The TLGP consists
of two components: (1) the Debt Guarantee
Program, and (2) the Transaction Account
Guarantee Program. Eligible entities were permitted to irrevocably opt out of the TLGP entirely or
either component no later than December 5, 2008.
The final rule for the program was published in the
Federal Register on November 26, 2008 and codified in part 370 of title 12 of the Code of Federal
Regulations (12 CFR Part 370).
Debt Guarantee Program
The Debt Guarantee Program (DGP) guarantees
newly-issued senior unsecured debt up to
prescribed limits issued by insured depository
institutions and certain holding companies between
October 14, 2008 and June 30, 2009, with the guarantee expiring on or before June 30, 2012. (See Note
15, “Subsequent Events – TGLP” for extensions and
other modification of the DGP.) Generally with
specified exceptions, the maximum amount of outstanding debt guaranteed under the debt guarantee
program is limited to 125 percent of the par value
of an entity’s senior unsecured debt on September
30, 2008 or, if applicable, two percent of its consolidated total liabilities as of September 30, 2008.
Fees for participation in the DGP depend on the
maturity of debt issued. The cost of the guarantee
to insured depository institutions is 50 basis points
for debt with maturities of 180 days or less, 75 basis
points for debt with maturities of 181 days to 364
days, and 100 basis points for debt with maturities
365 days or greater. Other eligible entities are
required to pay an additional 10 basis points if, as

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of September 30, 2008, the combined assets of all
insured depository institutions affiliated with such
entity represent less than 50 percent of consolidated
holding company assets.
The FDIC’s payment obligation under the DGP will
be triggered by a payment default. In the event of
default, the FDIC will continue to make scheduled
principal and interest payments under the terms of
the debt instrument through its maturity. The debtholder or representative must assign to the FDIC
the right to receive any and all distributions on the
guaranteed debt from any insolvency proceeding,
including the proceeds of any receivership or bankruptcy estate, to the extent of payments made under
the guarantee.
Debt guarantee fees collected during 2008 of $2.2
billion are included in the “Cash and cash equivalents – restricted – systemic risk” line item and
recognized as “Guarantee obligations-systemic
risk” on the Balance Sheet. As of December 31,
2008, the total amount of guaranteed debt outstanding is $224 billion. If all eligible entities issued
debt up to the program’s allowable limit, the maximum exposure would be $940 billion. At this time,
the program has been operating for a relatively
short time and no losses have yet been incurred.
The FDIC continuously evaluates the financial
condition and prospects of eligible entities through
its supervisory process. The program is adjusted as
appropriate based on each institution’s profile.
Upon notification to the FDIC no later than
December 5, 2008, a participating entity could elect
to issue senior unsecured non-guaranteed debt with
maturities beyond June 30, 2012, at any time, in any
amount, and without regard to the guarantee limit.
This election required a nonrefundable fee equal to
37.5 basis points applied to the outstanding amount
of the entity’s eligible senior unsecured debt as of
September 30, 2008 with a maturity date on or
before June 30, 2009. As of December 31, 2008, the
FDIC collected nonrefundable fees of $195 million
and reflected a receivable of $974 million in the
“Receivable – systemic risk” line item. The
nonrefundable fees are designated for TLGP
expected losses and payments.
Transaction Account Guarantee Program
The Transaction Account Guarantee Program
(TAG) provides unlimited coverage for non-interest

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bearing transaction accounts held by insured
depository institutions until December 31, 2009.
Beginning November 13, 2008, each participating
entity will pay an annualized 10 basis point TAG
fee on all deposit amounts exceeding the fully
insured limit (generally $250,000). The TAG fees
will be collected along with a participating entity’s

quarterly deposit insurance payment and will be
earmarked for TLGP expected losses and payments.
Upon the failure of a participating insured depository institution, the FDIC will pay the guaranteed
claims of depositors for funds in a non-interest
bearing transaction account as soon as possible in
accordance with regulations governing the payment

SYSTEMIC RISK ACTIVITY AT DECEMBER 31, 2008
Dollars in Thousands
Cash and cash
equivalents Restricted Systemic Risk
Debt guarantee fees
collected
Non-guaranteed debt fees
collected

Receivable Systemic Risk

Guarantee
obligations Systemic Risk

$ 2,229,875

Systemic Risk Revenue/
Expenses

$ (2,229,875)

194,695

Contingent
Liability Systemic Risk

(194,695)

Debt guarantee fees
receivable

53,336

(53,336)

Receivable for fees on
senior unsecured nonguaranteed debt

973,534

(973,534)

Receivable for TAG fees

89,977

(89,977)

Receivable for non-interest
bearing transaction
accounts of failures in 2008

(44,831)

Estimated losses for noninterest bearing transaction
accounts of failures in 2008

44,831

(23,546)

Contingent liability for
non-interest bearing
transaction accounts for
anticipated failures
Reimbursement to DIF for
TLGP operating expenses
incurred
Totals

23,546

23,546

1,437,638

(2,352)
$ 2,377,387

(1,437,638)

2,352
$ 1,138,132

$ (2,077,881)a

1,437,638

2,352
$ (1,437,638)

$ 1,463,536a

a) The total does not equal the line item due to rounding.

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of insured deposits. Upon payment of such claims,
the FDIC will be subrogated to the claims of
depositors against the failed entity.
At December 31, 2008, the “Receivable – systemic
risk” line item includes $90 million of estimated
TAG fees due from insured depository institutions.
This receivable was collected at the end of the first
quarter of 2009. At December 31, 2008, the TLGP
contingent liability associated with non-interest
bearing transaction accounts for the anticipated
failure of insured institutions participating in the
TAG is $1.4 billion. During 2008, the DIF recorded
estimated losses of $23.5 million for non-interest
bearing transaction accounts of the 2008 failures.
Both amounts are recorded as “Systemic risk
expenses” and a corresponding amount of guarantee fees was recognized as “Systemic risk revenue.”
As of December 31, 2008, the maximum estimated
exposure under the TAG is $680 billion.

15. Subsequent Events
Amendment to FDIC Restoration Plan
Due to the extraordinary circumstances of the
current enormous strains on banks and the
financial system as well as the likelihood of a
prolonged and severe economic recession, a Notice
of FDIC Amended Restoration Plan was issued on
March 4, 2009, amending its Restoration Plan
initially adopted on October 7, 2008 (see Note 8 for
additional discussion on establishing a DIF
restoration plan). The period of the Plan is extended
to seven years (December 31, 2015) and the FDIC is
adopting assessment rates that will reflect this
extended period accordingly. At least semiannually
the FDIC will adjust assessment rates, if needed to
ensure that the fund reserve ratio reaches 1.15 percent within the seven-year period.

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Risk-Based Assessments
On February 27, 2009, the Board approved for issuance a final rule on Assessments amending the
risk-based assessment system to: 1) make it fairer
and more sensitive to risk, 2) improve the way the
risk-based assessment system differentiates risk
among insured institutions, 3) increase deposit
insurance assessment rates (initial base assessment
rates at 12 to 45 basis points) to raise assessment
revenue to help meet the requirements of the
Restoration Plan, and 4) make technical and other
changes to the rules governing the risk-based
assessment system.

Emergency Special Assessment
On March 3, 2009, an interim rule was issued that
imposes an emergency special assessment equal to
20 basis points of an institution’s assessment base
on June 30, 2009, with collection on September 30,
2009, in order to raise assessment revenue to help
meet the requirements of the Restoration Plan.
FDIC projects that the combination of regular
quarterly assessments and the 20 basis points special assessment will prevent the fund reserve ratio
from falling to a level that would adversely affect
public confidence or to a level close to zero or negative. However, the FDIC and the Congress
simultaneously pursued an increase in FDIC’s
borrowing authority with the U.S. Treasury
(currently $30 billion), which could allow the FDIC
to substantially reduce the special assessment below
the proposed rate of 20 basis points (see Legislative
Update below).
FDIC recognizes that there is considerable
uncertainty about its projections for losses and
insured deposit growth, and, therefore, of future
fund reserve ratios. To further ensure that the fund
reserve ratio does not decline to a level that could
undermine public confidence in federal deposit
insurance, the interim rule would also permit the
Board to impose an emergency special assessment
of up to 10 basis points on all insured depository
institutions whenever, after June 30, 2009, the
reserve ratio of the DIF is estimated to fall to a level
that the Board believes would adversely affect
public confidence or to a level which shall be close
to zero or negative. The earliest possible date for
such a special assessment is September 30, 2009,
with collection on December 31, 2009.

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Systemic Risk Transactions
Assistance to Citigroup
On January 15, 2009, the U.S. Treasury, the FDIC
and the Federal Reserve executed a final agreement to provide guarantees, liquidity access, and
capital to Citigroup. Under the agreement, the
U.S. Treasury will invest $20 billion in Citigroup
from the Troubled Asset Relief Program. In addition, the Treasury and the FDIC will provide
protection against the possibility of unusually
large losses on an asset pool of loans and securities backed by residential and commercial real
estate and other such assets that would remain on
the balance sheet of Citigroup.
The asset pool amount that is included in the lossshare agreement is $300.8 billion. Citigroup is
solely responsible for the first $39.5 billion of
losses incurred on the covered asset pool. Asset
pool losses exceeding $39.5 billion will be split
with 10 percent to Citigroup and 90 percent to the
Treasury up to the first $5 billion, and 10 percent
to Citigroup and 90 percent to the FDIC for the
next $10 billion. If losses exceed the maximum
amounts provided by Treasury and the FDIC,
Citigroup can request borrowing from the Federal
Reserve Bank of New York for 90 percent of the
remaining values of the pool of assets through a
non-recourse loan. The term of the loss-share
guarantee is 10 years for residential assets and 5
years for non-residential assets.
In consideration for its portion of the loss-share
guarantee, the FDIC received 3,025 shares of
Citigroup’s designated cumulative perpetual preferred stock (Series G), with a liquidation
preference of $1,000,000 per share, for a total of
$3.025 billion. Quarterly dividends are payable to
the FDIC at a rate of 8 percent annually.
Assistance to Bank of America
On January 16, 2009, the U.S. Treasury, the FDIC
and the Federal Reserve reached agreement in
principle to provide guarantees, liquidity access,
and capital to Bank of America. It was announced
that the U.S. Treasury would purchase $20 billion
in Bank of America preferred stock under the
Troubled Asset Relief Program. In addition, the

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Treasury and the FDIC would provide protection
against the possibility of unusually large losses on
an asset pool of approximately $118 billion of loans
and securities backed by residential and commercial real estate and other such assets that would
remain on the balance sheet of Bank of America.
For additional losses not covered by Treasury or the
FDIC, Bank of America could receive funding
through a non-recourse loan from the Federal
Reserve Bank of New York.
Bank of America will be solely responsible for the
first $10 billion of losses incurred on the covered
asset pool. Asset pool losses exceeding $10 billion
will be split with 10 percent to Bank of America
and 90 percent to the Treasury and FDIC. The
Treasury and the FDIC will cover their share of
losses pro rata in proportions of 75 percent for
Treasury and 25 percent for the FDIC. The FDIC
exposure to loss is capped at $2.5 billion and the
Treasury exposure is capped at $7.5 billion. If losses
exceed the maximum amounts provided by the
FDIC and the Treasury, Bank of America can
request borrowing from the Federal Reserve Bank
of New York for 90 percent of additional loss
amounts incurred on the pool of assets. The term
of the loss-share guarantee is 10 years for residential assets and 5 years for non-residential assets.
In consideration for its portion of the loss-share
guarantee, the FDIC will receive a projected liquidation preference amount of $1 billion in Bank of
America preferred stock and warrants. The preferred stock will have an 8 percent dividend rate.
Temporary Liquidity Guarantee Program
Mandatory Convertible Debt
On February 27, 2009, the FDIC issued an interim
rule with request for comments to modify the debt
guarantee component of the TLGP to include
certain issuances of mandatory convertible debt
(MCD). (See Note 14 for further details on the
TLGP.) Currently, the TLGP regulation, at Section
370.2(e)(5) of Title 12 of the Code of Federal
Regulations, precludes a FDIC guarantee for any
“convertible debt.” The amendment provides for the
FDIC to guarantee newly issued senior unsecured
debt with a feature that mandates conversion of the
debt into common shares of the issuing entity at a
specified date no later than the expiration date of
the FDIC’s guarantee. The MCD must be newly

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issued on or after February 27, 2009, and must
provide for the mandatory conversion of the debt
instrument into common shares of the issuing
entity on a specified date that is on or before June
30, 2012. The amount of the guarantee fee for the
FDIC’s guarantee of MCD is based on the time
period from issuance of the MCD until its
mandatory conversion date.
Amendment of the TLGP to Extend the Debt
Guarantee Program (DGP) and to Impose
Surcharges on Assessments for Certain Debt
Issued on or after April 1, 2009
An Interim Rule with request for comments, issued
on March 23, 2009, amends the TLGP by providing
a limited four-month extension of the DGP for
insured depository institutions participating in the
DGP as well as other participating entities (bank
and certain savings and loan holding companies
and certain FDIC-approved affiliates). The interim
rule permits entities that participate in the
extended DGP to issue FDIC-guaranteed debt from
June 30, 2009 through October 31, 2009 and
extends the FDIC guarantee, set to expire no later
than June 30, 2012 under the existing program, to
no later than December 31, 2012 for debt issued on
or after April 1, 2009.
The interim rule also imposes surcharges on
assessments for certain FDIC-guaranteed debt
issued on or after April 1, 2009. The limited
extension, coupled with the surcharge provisions, is
intended to facilitate an orderly transition period
for participating institutions to return to the nonguaranteed debt market and to reduce the potential
for market disruption when the TLGP ends.

Legacy Loans Program
On March 23, 2009, the FDIC and the U.S.
Treasury announced the creation of the Legacy
Loans Program (LLP) as part of the Public-Private
Investment Program (a program to address the
challenge of legacy (distressed or troubled) assets).
Legacy assets are comprised of real estate loans held
directly on the books of insured banks and thrifts.
The assets have created uncertainty on the balance
sheets of insured banks and thrifts, compromising
their ability to raise capital and their willingness to
increase lending.

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To cleanse insured banks and thrifts balance sheets
of troubled legacy loans and reduce the overhang of
uncertainty associated with these assets, the LLP
attempts to attract private capital to purchase eligible legacy loans from participating insured banks
and thrifts through the provision of FDIC debt
guarantees and Treasury equity co-investment.
Thus, the program is intended to boost private
demand for distressed assets that are currently held
by insured banks and thrifts and facilitate
market-priced sales of troubled assets.
The FDIC will provide oversight for the formation,
funding, and operation of a number of PublicPrivate Investment Funds (PPIFs) that will
purchase assets from insured banks and thrifts.
The Treasury and private investors will invest
equity capital in Legacy Loans PPIFs and the FDIC
will provide a guarantee for debt financing issued
by the PPIFs to fund asset purchases. The FDIC’s
guarantee will be collateralized by the purchased
assets and the FDIC will receive a fee in return for
its guarantee. On March 26, 2009, the FDIC
requested comments from interested parties on the
critical aspects of the proposed LLP.

Supervisory Capital Assessment
Program
As part of U.S. Treasury’s Capital Assistance
Program, the federal bank regulatory agencies have
conducted forward-looking economic assessments
of the 19 largest U.S. bank holding companies
(assets greater than $100 billion). These assessments
are known as the Supervisory Capital Assessment
Program (SCAP). The agencies worked with the
institutions to estimate the range of possible future
losses and the resources to absorb such losses over a
two-year period.
On May 7, 2009, a detailed summary of the results
of the SCAP was released in which the supervisory
agencies identified the potential losses, resources
available to absorb losses, and resulting capital
buffer needed for the 19 participating bank holding
companies. Any institution needing to augment its
capital buffer will have until June 8, 2009 to
develop a detailed capital plan and until November
9, 2009 to implement that capital plan.

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Financial Stability Plan
In an effort to address the foreclosure problems, the
Administration developed the Homeowner
Affordability and Stability Plan (HASP) as part of
the President’s broad strategy to move the economy
back on track. The three key elements of the plan
are: 1) allowing 4 million to 5 million homeowners
with little equity in their homes to refinance into
less expensive mortgages; 2) a $75 billion program
to keep 3 million to 4 million homeowners out of
foreclosure; and 3) a doubling of the government’s
commitment to Fannie Mae and Freddie Mac to
$400 billion.

Legislative Update
Helping Families Save Their Homes Act of 2009, was
enacted on May 20, 2009. This legislation provides
for: extending the FDIC’s deposit insurance coverage at $250,000 until 2013, extending the generally
applicable time limit from 5 years to 8 years for an
FDIC Restoration Plan to rebuild the reserve ratio
of the DIF, permanently increasing the FDIC’s
authority to borrow from the U.S. Treasury from
$30 billion to $100 billion, and if necessary, up to
$500 billion through 2010, and allowing FDIC to
charge systemic risk special assessments by rulemaking on both insured depository institutions
and depository institution holding companies
(see Note 1).

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Purchase and Assumption
Indemnification
In late March 2009, the FDIC was named in a lawsuit in its corporate and receivership capacities
and could be subject to potential losses of approximately $4 billion as a result of an indemnification
clause in a purchase and assumption agreement
associated with the resolution of Washington
Mutual Bank on September 25, 2008. The
Washington Mutual Receiver currently has
approximately $1.9 billion and the remaining
exposure of $2.1 billion would be borne by the
DIF. As of December 31, 2008, the DIF has not
recorded a provision for this matter as the
ultimate outcome of this litigation cannot
presently be determined (see Note 7).

2009 Failures Through May 20, 2009
Through May 20, 2009, 33 insured institutions
failed with total losses to the DIF estimated to be
$4.5 billion. These estimated losses were included
in the December 31, 2008, contingent liability for
anticipated failures.

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FI N A N C I A L S TAT E M E N T S A N D N OT E S

FSLIC Resolution Fund (FRF)
FSLIC RESOLUTION FUND BALANCE SHEET AT DECEMBER 31
Dollars in Thousands
2008

2007

Assets
Cash and cash equivalents

$3,467,227

Receivables from thrift resolutions and other assets, net (Note 3)
Receivables from U.S. Treasury for goodwill judgments (Note 4)

$3,617,133

34,952

34,812

142,305

35,350

$3,644,484

Total Assets

$3,687,295

Liabilities
Accounts payable and other liabilities

$8,066

Total Liabilities

$4,276

142,305

35,350

150,371

Contingent liabilities for litigation losses and other (Note 4)

39,626

Resolution Equity (Note 5)
Contributed capital

127,442,179

127,417,582

Accumulated deficit

(123,948,066)

(123,769,913)

3,494,113

3,647,669

$3,644,484

$3,687,295

Total Resolution Equity
Total Liabilities and Resolution Equity
The accompanying notes are an integral part of these financial statements.

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FSLIC RESOLUTION FUND STATEMENT OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEARS ENDED DECEMBER 31
Dollars in Thousands
2008

2007

Revenue
Interest on U.S. Treasury obligations

$56,128

$156,034

Other revenue

7,040

31,558

Total Revenue

63,168

187,592

Operating expenses

3,188

3,364

Provision for losses

(891)

(10,135)

Expenses and Losses

Goodwill/Guarini litigation expenses (Note 4)

254,247

195,939

Recovery of tax benefits

(26,846)

(68,217)

11,623

2,757

241,321

123,708

(178,153)

63,884

(123,769,913)

(123,833,797)

$(123,948,066)

$(123,769,913)

Other expenses
Total Expenses and Losses
Net (Loss)/Income
Accumulated Deficit - Beginning
Accumulated Deficit - Ending
The accompanying notes are an integral part of these financial statements.

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FI N A N C I A L S TAT E M E N T S A N D N OT E S

FSLIC RESOLUTION FUND STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
Dollars in Thousands
2008

2007

Operating Activities
Net (Loss)/Income

$(178,153)

$63,884

(891)

(10,135)

751

12,053

3,791

(1,221)

106,954

(243,977)

(67,548)

(179,396)

142,642

405,063

(225,000)

(225,000)

(82,358)

180,063

Net (Decrease)/Increase in Cash and Cash Equivalents

(149,906)

667

Cash and Cash Equivalents - Beginning

3,617,133

3,616,466

$3,467,227

$3,617,133

Adjustments to reconcile net (loss)/income to net cash
used by operating activities:
Provision for losses
Change in Operating Assets and Liabilities
Decrease in receivables from thrift resolutions and other assets
Increase/(Decrease) in accounts payable and other liabilities
Increase/(Decrease) in contingent liabilities for litigation losses and other
Net Cash Used by Operating Activities
Financing Activities
Provided by:
U.S. Treasury payments for goodwill litigation (Note 4)
Used by:
Payments to Resolution Funding Corporation (Note 5)
Net Cash (Used)/Provided by Financing Activities

Cash and Cash Equivalents - Ending
The accompanying notes are an integral part of these financial statements.

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1. Legislative History
and Operations/
Dissolution of the
FSLIC Resolution Fund
Legislative History
The Federal Deposit Insurance Corporation (FDIC)
is the independent deposit insurance agency created by Congress in 1933 to maintain stability
and public confidence in the nation’s banking system. Provisions that govern the operations of the
FDIC are generally found in the Federal Deposit
Insurance (FDI) Act, as amended, (12 U.S.C. 1811,
et seq). In carrying out the purposes of the FDI Act,
as amended, the FDIC insures the deposits of banks
and savings associations, and in cooperation with
other federal and state agencies promotes the safety
and soundness of insured depository institutions
by identifying, monitoring and addressing risks to
the deposit insurance fund established in the FDI
Act, as amended. In addition, FDIC is charged
with responsibility for the sale of remaining assets
and satisfaction of liabilities associated with the
former Federal Savings and Loan Insurance
Corporation (FSLIC) and the Resolution Trust
Corporation (RTC).
The U.S. Congress created the FSLIC through the
enactment of the National Housing Act of 1934.
The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) abolished the
insolvent FSLIC, created the FSLIC Resolution
Fund (FRF), and transferred the assets and liabilities of the FSLIC to the FRF-except those assets
and liabilities transferred to the RTC-effective on
August 9, 1989. Further, the FIRREA established
the Resolution Funding Corporation (REFCORP)
to provide part of the initial funds used by the
RTC for thrift resolutions.
The RTC Completion Act of 1993 (RTC Completion Act) terminated the RTC as of December 31,
1995. All remaining assets and liabilities of the
RTC were transferred to the FRF on January 1,
1996. Today, the FRF consists of two distinct pools
of assets and liabilities: one composed of the assets
and liabilities of the FSLIC transferred to the FRF
upon the dissolution of the FSLIC (FRF-FSLIC),

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and the other composed of the RTC assets and liabilities (FRF-RTC). The assets of one pool are not
available to satisfy obligations of the other.
The FDIC is the administrator of the FRF and the
Deposit Insurance Fund. These funds are maintained separately to carry out their respective
mandates.

Operations/Dissolution of the FRF
The FRF will continue operations until all of its
assets are sold or otherwise liquidated and all of
its liabilities are satisfied. Any funds remaining in
the FRF-FSLIC will be paid to the U.S. Treasury.
Any remaining funds of the FRF-RTC will be distributed to the REFCORP to pay the interest on
the REFCORP bonds. In addition, the FRF-FSLIC
has available until expended $602.2 million in
appropriations to facilitate, if required, efforts to
wind up the resolution activity of the FRF-FSLIC.
The FDIC has conducted an extensive review and
cataloging of FRF’s remaining assets and liabilities
and is continuing to explore approaches for concluding FRF’s activities. Some of the issues and
items that remain open in FRF are: 1) criminal
restitution orders (generally have from 4 to 9 years
remaining to enforce); 2) collections of settlements
and judgments obtained against officers and directors and other professionals responsible for causing
or contributing to thrift losses (generally have up to
11 years remaining to enforce); 3) numerous assistance agreements entered into by the former FSLIC
(FRF could continue to receive tax-sharing benefits
through year 2013); 4) goodwill litigation (no final
date for resolution has been established; see Note
4); and 5) affordable housing program monitoring
(requirements can exceed 25 years). The FRF could
potentially realize substantial recoveries from the
tax-sharing benefits of up to $320 million; however,
any associated recoveries are not reflected in FRF’s
financial statements given the significant uncertainties surrounding the ultimate outcome.

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FI N A N C I A L S TAT E M E N T S A N D N OT E S

Receivership Operations

Provision for Losses

The FDIC is responsible for managing and disposing of the assets of failed institutions in an orderly
and efficient manner. The assets held by receivership entities, and the claims against them, are
accounted for separately from FRF assets and
liabilities to ensure that receivership proceeds are
distributed in accordance with applicable laws
and regulations. Also, the income and expenses
attributable to receiverships are accounted for as
transactions of those receiverships. Receiverships
are billed by the FDIC for services provided on
their behalf.

The provision for losses represents the change in
the valuation of the receivables from thrift resolutions and other assets.

2. Summary of Significant
Accounting Policies
General
These financial statements pertain to the financial
position, results of operations, and cash flows of
the FRF and are presented in conformity with U.S.
generally accepted accounting principles (GAAP).
These statements do not include reporting for
assets and liabilities of closed thrift institutions
for which the FDIC acts as receiver. Periodic and
final accountability reports of the FDIC’s activities
as receiver are furnished to courts, supervisory
authorities, and others as required.

Disclosure about Recent
Accounting Pronouncements
1) The Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 157, Fair Value
Measurements, in September 2006. SFAS No. 157
defines fair value, establishes a framework for
measuring fair value in GAAP, and expands
disclosures about fair value measurements.
2) In February 2007, the Financial Accounting
Standards Board issued SFAS No. 159, The Fair
Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB
Statement No. 115. SFAS No. 159 creates a fair
value option allowing, but not requiring, an entity
to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial
assets and financial liabilities with changes in fair
value recognized in earnings as they occur.
Management has chosen not to elect the fair
value option for any items that are not already
required to be measured at fair value in accordance
with GAAP.

Related Parties
Use of Estimates
Management makes estimates and assumptions
that affect the amounts reported in the financial
statements and accompanying notes. Actual results
could differ from these estimates. Where it is reasonably possible that changes in estimates will
cause a material change in the financial statements
in the near term, the nature and extent of such
changes in estimates have been disclosed. The
more significant estimates include allowance for
losses on receivables from thrift resolutions and
the estimated losses for litigation.

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The nature of related parties and a description of
related party transactions are discussed in Note 1
and disclosed throughout the financial statements
and footnotes.

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3. Receivables From
Thrift Resolutions
and Other Assets, Net
Receivables From Thrift Resolutions
The receivables from thrift resolutions include
payments made by the FRF to cover obligations to
insured depositors, advances to receiverships for
working capital, and administrative expenses paid
on behalf of receiverships. Any related allowance
for loss represents the difference between the
funds advanced and/or obligations incurred and
the expected repayment. Assets held by the FDIC
in its receivership capacity for the former RTC are a
significant source of repayment of the FRF’s receivables from thrift resolutions. As of December 31,
2008, 8 of the 850 FRF receiverships remain active
primarily due to unresolved litigation, including
goodwill matters.
As of December 31, 2008 and 2007, FRF receiverships held assets with a book value of $20 million
and $22 million, respectively (including cash,
investments, and miscellaneous receivables of
$17 million and $18 million at December 31, 2008
and 2007, respectively). The estimated cash recoveries from the management and disposition of these
assets are used to derive the allowance for losses.
The FRF receivership assets are valued by discounting projected cash flows, net of liquidation costs
using current market-based risk factors applicable
to a given asset’s type and quality. These estimated
asset recoveries are regularly evaluated, but
remain subject to uncertainties because of potential changes in economic and market conditions.
Such uncertainties could cause the FRF’s actual
recoveries to vary from current estimates.

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Other Assets
Other assets primarily include credit enhancement
reserves valued at $21.2 million and $20.2 million
as of December 31, 2008 and 2007, respectively. The
credit enhancement reserves resulted from swap
transactions where the former RTC received mortgage-backed securities in exchange for single-family
mortgage loans. The RTC supplied credit enhancement reserves for the mortgage loans in the form of
cash collateral to cover future credit losses over the
remaining life of the loans. These reserves may
cover future credit losses through 2020.

RECEIVABLES FROM THRIFT
RESOLUTIONS AND OTHER ASSETS,
NET AT DECEMBER 31
Dollars in Thousands
2008

2007

Receivables from
closed thrifts

$5,725,450

$8,367,078

Allowance for losses

(5,717,740)

(8,359,347)

Receivables from
Thrift Resolutions, Net

7,710

7,731

Other assets

27,242

27,081

$34,952

$34,812

Total

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4. Contingent
Liabilities for:
Litigation Losses
The FRF records an estimated loss for unresolved
legal cases to the extent those losses are considered
probable and reasonably estimable. As of December
31, 2008 and 2007, respectively, $142.3 million and
$35.4 million were recorded as probable losses.
Additionally, at December 31, 2008, the FDIC has
determined that there are no losses from unresolved
legal cases considered to be reasonably possible.
In December 2008, FDIC concluded a 13 1⁄2 year
old legal case (FDIC v. Hurwitz) arising from the
December 30, 1988 failure of United Savings
Association of Texas. In August 2005, the District
Court ordered sanctions against the FDIC in the
amount of $72 million. However, in August 2008,
the Fifth Circuit Court of Appeals reversed $57
million of the sanctions, but remanded the remaining $15 million to the District Court to determine
what portion should be paid. Subsequently, in
November 2008, an agreement was reached
between the parties, whereas the FDIC would
pay $10 million to settle the case. On December 17,
2008, the settlement agreement was fully executed
and the settlement funds were paid. The $10 million payment is recognized in the “Other expenses”
line item.

Additional Contingency

FI N A N C I A L S TAT E M E N T S A N D N OT E S

On July 22, 1998, the Department of Justice’s
(DOJ’s) Office of Legal Counsel (OLC) concluded
that the FRF is legally available to satisfy all judgments and settlements in the goodwill litigation
involving supervisory action or assistance agreements. OLC determined that nonperformance
of these agreements was a contingent liability that
was transferred to the FRF on August 9, 1989, upon
the dissolution of the FSLIC. On July 23, 1998, the
U.S. Treasury determined, based on OLC’s opinion,
that the FRF is the appropriate source of funds for
payments of any such judgments and settlements.
The FDIC General Counsel concluded that, as
liabilities transferred on August 9, 1989, these
contingent liabilities for future nonperformance
of prior agreements with respect to supervisory
goodwill were transferred to the FRF-FSLIC,
which is that portion of the FRF encompassing the
obligations of the former FSLIC. The FRF-RTC,
which encompasses the obligations of the former
RTC and was created upon the termination of the
RTC on December 31, 1995, is not available to pay
any settlements or judgments arising out of the
goodwill litigation.
The goodwill lawsuits are against the United States
and as such are defended by the DOJ. On December
16, 2008, the DOJ again informed the FDIC that it
is “unable at this time to provide a reasonable estimate of the likely aggregate contingent liability
resulting from the Winstar-related cases.” This
uncertainty arises, in part, from the existence of
significant unresolved issues pending at the appellate or trial court level, as well as the unique
circumstances of each case.

Goodwill Litigation
In United States v. Winstar Corp., 518 U.S. 839
(1996), the Supreme Court held that when it
became impossible following the enactment of
FIRREA in 1989 for the federal government to
perform certain agreements to count goodwill
toward regulatory capital, the plaintiffs were entitled to recover damages from the United States.
Approximately 13 remaining cases are pending
against the United States based on alleged breaches
of these agreements.

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The FDIC believes that it is probable that additional
amounts, possibly substantial, may be paid from
the FRF-FSLIC as a result of judgments and
settlements in the goodwill litigation. Based on
representations from the DOJ, the FDIC is unable
to estimate a range of loss to the FRF-FSLIC from
the goodwill litigation. However, the FRF can draw
from an appropriation provided by Section 110 of
the Department of Justice Appropriations Act, 2000
(Public Law 106-113, Appendix A, Title I, 113 Stat.
1501A-3, 1501A-20) such sums as may be necessary
for the payment of judgments and compromise
settlements in the goodwill litigation. This appropriation is to remain available until expended.
Because an appropriation is available to pay such
judgments and settlements, any liability for goodwill litigation should have a corresponding
receivable from the U.S. Treasury and therefore
have no net impact on the financial condition of
the FRF-FSLIC.
The FRF paid $142.6 million as a result of judgments and settlements in four goodwill cases for
the year ended December 31, 2008, compared to
$405.1 million for six goodwill cases for the year
ended December 31, 2007. As described above, the
FRF received appropriations from the U.S. Treasury
to fund these payments. At December 31, 2008, the
FRF accrued a $142.3 million contingent liability
and offsetting receivable from the U.S. Treasury for
judgments in three additional cases that were fully
adjudicated as of year end.
In addition, the FRF-FSLIC pays the goodwill
litigation expenses incurred by DOJ based on a
Memorandum of Understanding (MOU) dated
October 2, 1998, between the FDIC and DOJ.
Under the terms of the MOU, the FRF-FSLIC paid
$4.3 million and $11.4 million to DOJ for fiscal
years (FY) 2009 and 2008, respectively. As in prior
years, DOJ carried over and applied all unused
funds toward current FY charges. At September 30,
2008, DOJ had an additional $5.3 million in unused
FY 2008 funds that were applied against FY 2009
charges of $9.6 million.

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Guarini Litigation
Paralleling the goodwill cases are similar cases
alleging that the government breached agreements
regarding tax benefits associated with certain
FSLIC-assisted acquisitions. These agreements
allegedly contained the promise of tax deductions
for losses incurred on the sale of certain thrift
assets purchased by plaintiffs from the FSLIC,
even though the FSLIC provided the plaintiffs
with tax-exempt reimbursement. A provision in
the Omnibus Budget Reconciliation Act of 1993
(popularly referred to as the “Guarini legislation”)
eliminated the tax deductions for these losses.
The last of the original eight Guarini cases concluded in 2007 with a settlement of $23 million
being paid. Additionally, a case settled in 2006 further obligates the FRF-FSLIC as a guarantor for all
tax liabilities in the event the settlement amount is
determined by tax authorities to be taxable. The
maximum potential exposure under this guarantee
is approximately $81 million. However, the FDIC
believes that it is very unlikely the settlement will
be subject to taxation. More definitive information
may be available during late 2009 or early 2010,
after the IRS completes its Large Case Program
audit on the institution’s 2006 returns. Therefore,
the FRF is not expected to fund any payment under
this guarantee and no liability has been recorded.

Representations and Warranties
As part of the RTC’s efforts to maximize the return
from the sale of assets from thrift resolutions, representations and warranties, and guarantees were
offered on certain loan sales. The majority of loans
subject to these agreements have been paid off, refinanced, or the period for filing claims has expired.
The FDIC’s estimate of maximum potential exposure to the FRF is $18.7 million. No claims in
connection with representations and warranties
have been asserted since 1998 on the remaining
open agreements. Because of the age of the remaining portfolio and lack of claim activity, the FDIC
does not expect new claims to be asserted in the
future. Consequently, the financial statements at
December 31, 2008 and 2007, do not include a liability for these agreements.

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5. Resolution Equity
As stated in the Legislative History section of
Note 1, the FRF is comprised of two distinct pools:
the FRF-FSLIC and the FRF-RTC. The FRF-FSLIC
consists of the assets and liabilities of the former
FSLIC. The FRF-RTC consists of the assets and
liabilities of the former RTC. Pursuant to legal
restrictions, the two pools are maintained separately and the assets of one pool are not available
to satisfy obligations of the other.
The following table shows the contributed capital,
accumulated deficit, and resulting resolution equity
for each pool.

FI N A N C I A L S TAT E M E N T S A N D N OT E S

FRF-FSLIC received $142.6 million in U.S.
Treasury payments for goodwill litigation in 2008.
Furthermore, $142.3 million and $35.4 million
were accrued for as receivables at year-end 2008
and 2007, respectively. The effect of this activity
was an increase in contributed capital of $249.6
million in 2008.

Accumulated Deficit
The accumulated deficit represents the cumulative
excess of expenses over revenue for activity
related to the FRF-FSLIC and the FRF-RTC.
Approximately $29.8 billion and $87.9 billion
were brought forward from the former FSLIC and
the former RTC on August 9, 1989, and January 1,

RESOLUTION EQUITY AT DECEMBER 31, 2008
Dollars in Thousands
FRF-FSLIC
Contributed capital - beginning

$45,443,245

Add: U.S. Treasury payments/receivable for goodwill litigation

FRF
Consolidated

FRF-RTC
$81,974,337

$127,417,582

249,597

0

249,597

0

(225,000)

(225,000)

Contributed capital - ending

45,692,842

81,749,337

127,442,179

Accumulated deficit

(42,367,645)

(81,580,421)

(123,948,066)

Total

$3,325,197

$168,916

$3,494,113

Less: REFCORP payments

Contributed Capital
The FRF-FSLIC and the former RTC received $43.5
billion and $60.1 billion from the U.S. Treasury,
respectively, to fund losses from thrift resolutions
prior to July 1, 1995. Additionally, the FRF-FSLIC
issued $670 million in capital certificates to the
Financing Corporation (a mixed-ownership government corporation established to function solely
as a financing vehicle for the FSLIC) and the RTC
issued $31.3 billion of these instruments to the
REFCORP. FIRREA prohibited the payment of dividends on any of these capital certificates. Through
December 31, 2008, the FRF-RTC has returned
$4.556 billion to the U.S. Treasury and made payments of $5.022 billion to the REFCORP. These
actions serve to reduce contributed capital.

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1996, respectively. The FRF-FSLIC accumulated
deficit has increased by $12.5 billion, whereas the
FRF-RTC accumulated deficit has decreased by
$6.3 billion, since their dissolution dates.

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6. Employee Benefits

7. Disclosures About the
Fair Value of Financial
Instruments

Pension Benefits
Eligible FDIC employees (permanent and term
employees with appointments exceeding one year)
are covered by the federal government retirement
plans, either the Civil Service Retirement System
(CSRS) or the Federal Employees Retirement
System (FERS). Although the FRF contributes a
portion of pension benefits for eligible employees,
it does not account for the assets of either retirement system. The FRF also does not have actuarial
data for accumulated plan benefits or the unfunded
liability relative to eligible employees. These
amounts are reported on and accounted for by the
U.S. Office of Personnel Management. The FRF’s
pension-related expenses were $169 thousand and
$252 thousand for 2008 and 2007, respectively.

Postretirement Benefits Other
Than Pensions
The FRF no longer records a liability for the
postretirement benefits of life and dental insurance
(a long-term liability), due to the expected dissolution of the FRF. The liability is recorded by the
DIF. However, the FRF does continue to pay its
proportionate share of the yearly claim expenses
associated with these benefits.

The financial asset recognized and measured at fair
value on a recurring basis at each reporting date is
cash equivalents. The following table presents the
FRF’s financial asset measured at fair value as of
December 31, 2008.
Some of the FRF’s financial assets and liabilities
are not recognized at fair value but are recorded at
amounts that approximate fair value due to their
short maturities and/or comparability with current interest rates. Such items include other
short-term receivables and accounts payable and
other liabilities.
The net receivable from thrift resolutions is influenced by the underlying valuation of receivership
assets. This corporate receivable is unique and the
estimate presented is not necessarily indicative of
the amount that could be realized in a sale to the
private sector. Such a sale would require indeterminate, but substantial, discounts for an interested
party to profit from these assets because of credit
and other risks. Consequently, it is not practicable
to estimate its fair value.
Other assets primarily consist of credit enhancement reserves, which are valued by performing
projected cash flow analyses using market-based
assumptions (see Note 3).

ASSETS MEASURED AT FAIR VALUE AT DECEMBER 31, 2008
Dollars in Thousands
Fair Value Measurement Using
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs (Level 3)

$ 3,467,227

$0

$0

Total Assets at
Fair Value

Assets
Cash equivalents (Special U.S. Treasuries)1

$ 3,467,227

(1) Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest rates established by the U.S. Bureau of
Public Debt.

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FI N A N C I A L S TAT E M E N T S A N D N OT E S

GOVERNMENT ACCOUNTABILITY OFFICE’S AUDIT OPINION

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MANAGEMENT’S RESPONSE

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Overview of the Industry
The 8,305 FDIC-insured commercial banks and
savings institutions that reported financial results
at the end of 2008 had total net income of $10.2
billion, a decline of $89.8 billion (89.8 percent)
from the $100 billion that the industry earned
in 2007. This is the smallest annual net income
total for the industry since 1989. The primary
cause of the decline in earnings was increased provisions for loan losses, which were $105.2 billion
(152 percent) higher than in 2007. Insured institutions set aside $174.4 billion for losses in 2008, up
from $69.2 billion a year earlier. Loss provisions
absorbed 30.9 percent of the industry’s net
operating revenue (net interest income plus total
noninterest income) in 2008, compared to only
11.8 percent in 2007. Almost three out of every
four insured institutions (73.9 percent) reported
increased loss provisions in 2008.
Failures and merger transactions had a significant
effect on the industry’s income and expense totals
for 2008. Sizable losses incurred by a number of
large institutions that failed or were acquired before
the end of 2008 were not carried forward to fullyear results. If these losses had been included in
the industry’s results for the year, the industry
would have reported a net loss in 2008.
The average return on assets (ROA) for 2008 was
0.08 percent, considerably below the 0.81 percent
average of a year earlier. More than two-thirds of
all institutions (68 percent) reported year-over-year
ROA declines. Only 37 percent of institutions
reported higher net income, and 23.6 percent
reported net losses for the year. During 2007,
only 12.1 percent were unprofitable.
In addition to the higher expenses for loan-loss
provisions, industry earnings in 2008 were held
down by reduced noninterest income, which was
$25.6 billion (11 percent) lower than in 2007. The
largest contributors to the decline in noninterest
income were a negative $5.8-billion swing in trading
revenues, from a positive $4.1 billion in 2007 to a
negative $1.8 billion in 2008, and a $5.8-billion
(27.4-percent) decline in securitization income.
Most of the decline in trading revenue and
securitization occurred at a few large institutions.
A majority of insured institutions (59 percent)
reported increased noninterest income in 2008.

122

Net income was also negatively affected by realized losses on securities and other assets, which
totaled $15.0 billion, compared to net losses of
$1.4 billion a year ago. Finally, expenses for goodwill impairment and other intangible asset
charges were $12.6 billion (67.8 percent) greater
than a year earlier.
One of the few positive trends in industry earnings
was net interest income, which increased by $5 billion (1.4 percent). The average net interest margin
(NIM) in 2008 was 3.18 percent, below the 3.29
percent average of a year earlier; this is the lowest
full-year NIM for the industry since 1984. A majority of institutions – 57.4 percent – reported lower
NIMs in 2008. The improvement in net interest
income was attributable to a 4.1-percent increase in
the industry’s interest-bearing assets during 2008.
Asset quality indicators worsened in 2008. The
amount of loans and leases that were noncurrent
(90 days or more past due or in nonaccrual status)
increased by $120.1 billion (108.5 percent); at the
end of the year, the percent of the industry’s total
loans and leases that were noncurrent stood at 2.93
percent, the highest level since 1992. Noncurrent 14 family residential mortgage loans increased by
$48.4 billion in 2008, while noncurrent real estate
construction and development loans rose by $30.2
billion. Noncurrent levels increased in all other
major loan categories as well.
Net charge-offs of loans and leases totaled
$99.5 billion, more than double the $44.1 billion
that insured institutions charged off during 2007.
Residential real estate loans and construction and
development loans led the rise in charge-offs. Net
charge-offs of home equity lines of credit were
$6.9 billion higher than in 2007, while charge-offs
of other loans secured by 1-4 family residential
properties increased by $12 billion. Net charge-offs
of real estate construction and development loans
were up by $13.7 billion. While loans secured by
real estate led the rise in charge-off activity, all of
the other major loan categories had higher chargeoffs as well. The net charge-off rate for the industry
in 2008 was 1.28 percent, the highest annual rate
since 1991.

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Asset growth slowed in 2008. Total assets of
insured institutions increased by $813.2 billion
(6.2 percent), led by a $499.3-billion increase in
balances due from Federal Reserve banks. The
total amount of loan and lease balances declined by
$31.3 billion in 2008, the first time since 1993 that
reported balances have had a 12-month decline.
Closed-end real estate loans secured by 1-4 family
residential properties declined by $196.6 billion
(8.8 percent) during the 12-month period, while
real estate construction and development loans fell
by $39.3 billion (6.2 percent). Most other loan categories posted moderate increases. Only 57.1 percent
of the increase in industry assets ($464.0 billion)
consisted of interest-earning assets.
Total deposits increased by $620.3 billion (7.4 percent), with interest-bearing deposits in domestic
offices rising by $351.9 billion (6.2 percent), and
domestic noninterest-bearing deposits growing by
$231.6 billion (19.4 percent). Deposits in foreign
offices increased by $36.7 billion (2.4 percent) during
this period. Nondeposit liabilities were up by
$244.1 billion (7.5 percent).
The number of insured commercial banks and
savings institutions on the FDIC’s “Problem List”
rose from 76 institutions with $22 billion in assets
to 252 institutions with $159 billion in assets in
2008. This is the largest number of “problem” institutions since the middle of 1995, and the largest
amount of assets since the end of 1993. At the end
of 2008, more than 97 percent of all FDIC-insured
institutions, representing more than 98 percent of
all insured institution assets, met or exceeded the
highest federal regulatory capital standards.

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5

CHAPTER FIVE
MANAGEMENT
CONTROL

Enterprise Risk Management
The Office of Enterprise Risk Management, under
the auspices of the Chief Financial Officer organization, is responsible for corporate oversight of
internal control and enterprise risk management
(ERM). This includes ensuring that the FDIC’s
operations and programs are effective and efficient
and that internal controls are sufficient to minimize
exposure to waste and mismanagement. The FDIC
recognizes the importance of a strong risk management and internal control program and has adopted
a more proactive and enterprise-wide approach to
managing risk. This approach focuses on the
identification and mitigation of risk consistently
and effectively throughout the Corporation, with
emphasis on those areas/issues most directly related
to the FDIC’s overall mission. As an independent
government corporation, the FDIC has different
requirements than appropriated federal government
agencies; nevertheless, its ERM program seeks to
comply with the spirit of the following standards,
among others:

´ Federal Managers’ Financial Integrity Act
(FMFIA);
´ Chief Financial Officers Act (CFO Act);
´ Government Performance and Results Act
(GPRA);
´ Federal Information Security Management Act
(FISMA); and
´ OMB Circular A-123.
The CFO Act extends to the FDIC the FMFIA
requirements for establishing, evaluating and
reporting on internal controls. The FMFIA requires
agencies to annually provide a statement of assurance regarding the effectiveness of management,
administrative and accounting controls, and
financial management systems.
The FDIC has developed and implemented management, administrative and financial systems
controls that reasonably ensure that:
´ Programs are efficiently and effectively carried
out in accordance with applicable laws and
management policies;
´ Programs and resources are safeguarded against
waste, fraud and mismanagement;
´ Obligations and costs comply with applicable
laws; and
´ Reliable, complete, and timely data are maintained for decision-making and reporting
purposes.

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The FDIC’s control standards incorporate the
Government Accountability Office’s (GAO)
Standards for Internal Control in the Federal
Government. Good internal control systems are
essential for ensuring the proper conduct of FDIC
business and the accomplishment of management
objectives by serving as checks and balances against
undesirable actions or outcomes.
As part of the Corporation’s continued commitment
to establish and maintain effective and efficient
internal controls, FDIC management routinely
conducts reviews of internal control systems. The
results of these reviews, as well as consideration of
the results of audits, evaluations and reviews
conducted by the GAO, the Office of Inspector
General (OIG) and other outside entities, are used
as a basis for the FDIC’s reporting on the condition
of the Corporation’s internal control activities.

Material Weaknesses

Management Report on
Final Actions
As required under amended Section 5 of the
Inspector General Act of 1978, the FDIC must
report information on final action taken by
management on certain audit reports. For the
federal fiscal year period October 1, 2007, through
September 30, 2008, there were no audit reports in
the following categories:
1. Management Report on Final Action on Audits
with Disallowed Costs;
2. Management Report on Final Action on Audits
with Recommendations to Put Funds to Better
Use; and
3. Audit Reports without Final Actions but with
Management Decisions over One Year Old.

Material weaknesses are control shortcomings in
operations or systems that, among other things,
severely impair or threaten the organization’s
ability to accomplish its mission or to prepare
timely, accurate financial statements or reports.
Such shortcomings are of sufficient magnitude that
the Corporation is obliged to report them to
external stakeholders.
To determine the existence of material weaknesses,
the FDIC has assessed the results of management
evaluations and external audits of the Corporation’s
risk management and internal control systems
conducted in 2008, as well as management actions
taken to address issues identified in these audits
and evaluations. Based on this assessment and
application of other criteria, the FDIC concludes
that no material weaknesses existed within the
Corporation’s operations for 2008. This is the
eleventh consecutive year that the FDIC has not
had a material weakness; however, FDIC management will continue to focus on high priority areas,
including the Temporary Liquidity Guarantee
Program, IT systems security, resolution of bank
failures, and privacy, among others. The FDIC will
also address all control issues raised by GAO
related to its 2008 financial statement audits.

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6

CHAPTER SIX
APPENDICES

A. Key Statistics
FDIC EXPENDITURES 1998-2008
Dollars in millions
$1,400
1,200
1,000
800
600
400
200
0
1998

1999

2000

2001

2002

FDIC

2003

2004

2005

2006

2007

2008

RTC

The FDIC’s Strategic Plan and Annual Performance Plan provide the basis for annual planning and budgeting for needed resources. The 2008 aggregate budget (for corporate, receivership and investment spending)
was $1.25 billion, while actual expenditures for the year were $1.23 billion, about $217 million more than
2007 expenditures.
Over the past ten years, the FDIC’s expenditures have varied in response to workload. During the past
decade, expenditures generally declined due to decreasing resolution and receivership activity. Total
expenditures increased in 2002 and 2008 due to an increase in receivership-related expenses.

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ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND,
DECEMBER 31, 1934, THROUGH DECEMBER 31, 20081
Dollars in MIllions
Deposits in Insured
Institutions

Year

Insurance
Coverage2

Total
Domestic
Deposits

Est. Insured
Deposits3

Insurance Fund as a
Percentage of
Percentage
of Insured
Deposits

Deposit
Insurance
Fund

Total
Domestic
Deposits

Est. Insured
Deposits

2008

$100,000

$7,505,360

$4,756,809

63.4

$17,276.3

0.23

0.36

2007

100,000

6,921,686

4,292,163

62.0

52,413.0

0.76

1.22

2006

100,000

6,640,105

4,153,786

62.6

50,165.3

0.76

1.21

2005

100,000

6,229,764

3,890,941

62.5

48,596.6

0.78

1.25

2004

100,000

5,724,621

3,622,059

63.3

47,506.8

0.83

1.31

2003

100,000

5,223,922

3,452,497

66.1

46,022.3

0.88

1.33

2002

100,000

4,916,078

3,383,598

68.8

43,797.0

0.89

1.29

2001

100,000

4,564,064

3,215,581

70.5

41,373.8

0.91

1.29

2000

100,000

4,211,895

3,055,108

72.5

41,733.8

0.99

1.37

1999

100,000

3,885,826

2,869,208

73.8

39,694.9

1.02

1.38

1998

100,000

3,817,150

2,850,452

74.7

39,452.1

1.03

1.38

1997

100,000

3,602,189

2,746,477

76.2

37,660.8

1.05

1.37

1996

100,000

3,454,556

2,690,439

77.9

35,742.8

1.03

1.33

1995

100,000

3,318,595

2,663,873

80.3

28,811.5

0.87

1.08

1994

100,000

3,184,410

2,588,619

81.3

23,784.5

0.75

0.92

1993

100,000

3,220,302

2,602,781

80.8

14,277.3

0.44

0.55

1992

100,000

3,275,530

2,677,709

81.7

178.4

0.01

0.01

1991

100,000

3,331,312

2,733,387

82.1

(6,934.0)

(0.21)

(0.25)

1990

100,000

3,415,464

2,784,838

81.5

4,062.7

0.12

0.15

1989

3,412,503

2,755,471

80.7

13,209.5

0.39

0.48

100,000

2,337,080

1,756,771

75.2

14,061.1

0.60

0.80

1987

100,000

2,198,648

1,657,291

75.4

18,301.8

0.83

1.10

1986

100,000

2,162,687

1,636,915

75.7

18,253.3

0.84

1.12

1985

100,000

1,975,030

1,510,496

76.5

17,956.9

0.91

1.19

1984

100,000

1,805,334

1,393,421

77.2

16,529.4

0.92

1.19

1983

100,000

1,690,576

1,268,332

75.0

15,429.1

0.91

1.22

1982

100,000

1,544,697

1,134,221

73.4

13,770.9

0.89

1.21

1981

100,000

1,409,322

988,898

70.2

12,246.1

0.87

1.24

1980

128

100,000

1988

100,000

1,324,463

948,717

71.6

11,019.5

0.83

1.16

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A PPE N D I C E S

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND,
DECEMBER 31, 1934, THROUGH DECEMBER 31, 20081 (continued)
Dollars in MIllions
Deposits in Insured
Institutions

Year

Insurance
Coverage2

Total
Domestic
Deposits

Est. Insured
Deposits3

Insurance Fund as a
Percentage of
Percentage
of Insured
Deposits

Deposit
Insurance
Fund

Total
Domestic
Deposits

Est. Insured
Deposits

1979

40,000

1,226,943

808,555

65.9

9,792.7

0.80

1.21

1978

40,000

1,145,835

760,706

66.4

8,796.0

0.77

1.16

1977

40,000

1,050,435

692,533

65.9

7,992.8

0.76

1.15

1976

40,000

941,923

628,263

66.7

7,268.8

0.77

1.16

1975

40,000

875,985

569,101

65.0

6,716.0

0.77

1.18

1974

40,000

833,277

520,309

62.4

6,124.2

0.73

1.18

1973

20,000

766,509

465,600

60.7

5,615.3

0.73

1.21

1972

20,000

697,480

419,756

60.2

5,158.7

0.74

1.23

1971

20,000

610,685

374,568

61.3

4,739.9

0.78

1.27

1970

20,000

545,198

349,581

64.1

4,379.6

0.80

1.25

1969

20,000

495,858

313,085

63.1

4,051.1

0.82

1.29

1968

15,000

491,513

296,701

60.4

3,749.2

0.76

1.26

1967

15,000

448,709

261,149

58.2

3,485.5

0.78

1.33

1966

15,000

401,096

234,150

58.4

3,252.0

0.81

1.39

1965

10,000

377,400

209,690

55.6

3,036.3

0.80

1.45

1964

10,000

348,981

191,787

55.0

2,844.7

0.82

1.48

1963

10,000

313,304

177,381

56.6

2,667.9

0.85

1.50

1962

10,000

297,548

170,210

57.2

2,502.0

0.84

1.47

1961

10,000

281,304

160,309

57.0

2,353.8

0.84

1.47

1960

10,000

260,495

149,684

57.5

2,222.2

0.85

1.48

1959

10,000

247,589

142,131

57.4

2,089.8

0.84

1.47

1958

10,000

242,445

137,698

56.8

1,965.4

0.81

1.43

1957

10,000

225,507

127,055

56.3

1,850.5

0.82

1.46

1956

10,000

219,393

121,008

55.2

1,742.1

0.79

1.44

1955

10,000

212,226

116,380

54.8

1,639.6

0.77

1.41

1954

10,000

203,195

110,973

54.6

1,542.7

0.76

1.39

1953

10,000

193,466

105,610

54.6

1,450.7

0.75

1.37

1952

10,000

188,142

101,841

54.1

1,363.5

0.72

1.34

1951

10,000

178,540

96,713

54.2

1,282.2

0.72

1.33

1950

10,000

167,818

91,359

54.4

1,243.9

0.74

1.36

1949

5,000

156,786

76,589

48.8

1,203.9

0.77

1.57

1948

5,000

153,454

75,320

49.1

1,065.9

0.69

1.42

1947

5,000

154,096

76,254

49.5

1,006.1

0.65

1.32

FE D E R A L

D E P O S I T

I N S U R A N C E

CO R P O R AT I O N

129

ESTIMATED INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND,
DECEMBER 31, 1934, THROUGH DECEMBER 31, 20081 (continued)
Dollars in MIllions
Deposits in Insured
Institutions

Year

Insurance
Coverage2

Total
Domestic
Deposits

Est. Insured
Deposits3

Insurance Fund as a
Percentage of
Percentage
of Insured
Deposits

Deposit
Insurance
Fund

Total
Domestic
Deposits

Est. Insured
Deposits

1946

5,000

148,458

73,759

49.7

1,058.5

0.71

1.44

1945

5,000

157,174

67,021

42.6

929.2

0.59

1.39

1944

5,000

134,662

56,398

41.9

804.3

0.60

1.43

1943

5,000

111,650

48,440

43.4

703.1

0.63

1.45

1942

5,000

89,869

32,837

36.5

616.9

0.69

1.88

1941

5,000

71,209

28,249

39.7

553.5

0.78

1.96

1940

5,000

65,288

26,638

40.8

496.0

0.76

1.86

1939

5,000

57,485

24,650

42.9

452.7

0.79

1.84

1938

5,000

50,791

23,121

45.5

420.5

0.83

1.82

1937

5,000

48,228

22,557

46.8

383.1

0.79

1.70

1936

5,000

50,281

22,330

44.4

343.4

0.68

1.54

1935

5,000

45,125

20,158

44.7

306.0

0.68

1.52

1934

5,000

40,060

18,075

45.1

291.7

0.73

1.61

1 Prior to 1989, figures are for BIF only and exclude insured branches of foreign banks. For 1989 to 2005, figures represent sum of BIF and SAIF amounts;
for 2006 to 2008, figures are for DIF. Amounts from 1989 - 2008 include insured branches of foreign banks.
2 Coverage for certain retirement accounts increased to $250,000 in 2006. Coverage limits do not reflect temporary increases authorized by the
Emergency Economic Stabilization Act of 2008. Initial coverage limit was $2,500 from January 1 to June 30, 1934.
3 Prior to year-end 1991, insured deposits were estimated using percentages determined from June Call and Thrift Financial reports.

130

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CHAPTER 6

A PPE N D I C E S

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF
OPERATIONS, SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2008
Dollars in Millions
Income

Year

Total

Assessment
Income

Expenses and Losses

Assessment
Credits

Investment and
Other
Sources

Effective
Assessment
Rate1

Total

Provision
for
Losses

Admin.
and Oper.
Expenses2

Interest &
Other Ins.
Expenses

Funding
Transfer
from the
FSLIC
Resolution Fund

Net
Income
(Loss)

Total

$117,690.2

$70,403.2

$11,243.0

$59,118.8

$103,555.5

$78,030.6

$16,867.8

$8,663.1

$139.5

$14,274.2

2008

7,306.3

4,410.4

1,445.9

4,341.8

0.0418%

44,339.5

41,838.8

1,033.5

1,467.2

0

(37,033.2)

2007

3,196.2

3,730.9

3,088.0

2,553.3

0.0093%

1,090.9

95.0

992.6

3.3

0

2,105.3
1,739.2

2006

2,643.5

31.9

0.0

2,611.6

0.0005%

904.3

(52.1)

950.6

5.8

0

2005

2,420.5

60.9

0.0

2,359.6

0.0010%

809.3

(160.2)

965.7

3.8

0

1,611.2

2004

2,240.3

104.2

0.0

2,136.1

0.0019%

607.6

(353.4)

941.3

19.7

0

1,632.7

2003

2,173.6

94.8

0.0

2,078.8

0.0019%

(67.7)

(1,010.5)

935.5

7.3

0

2,241.3

2002

1,795.9

107.8

0.0

2,276.9

0.0023%

719.6

(243.0)

945.1

17.5

0

1,076.3

2001

2,730.1

83.2

0.0

2,646.9

0.0019%

3,123.4

2,199.3

887.9

36.2

0

(393.3)
1,624.9

2000

2,570.1

64.3

0.0

2,505.8

0.0016%

945.2

28.0

883.9

33.3

0

1999

2,416.7

48.4

0.0

2,368.3

0.0013%

2,047.0

1,199.7

823.4

23.9

0

369.7

1998

2,584.6

37.0

0.0

2,547.6

0.0010%

817.5

(5.7)

782.6

40.6

0

1,767.1

1997

2,165.5

38.6

0.0

2,126.9

0.0011%

247.3

(505.7)

677.2

75.8

0

1,918.2

1996

7,156.8

5,294.2

0.0

1,862.6

0.1622%

353.6

(417.2)

568.3

202.5

0

6,803.2

1995

5,229.2

3,877.0

0.0

1,352.2

0.1238%

202.2

(354.2)

510.6

45.8

0

5,027.0

1994

7,682.1

6,722.7

0.0

959.4

0.2192%

(1,825.1)

(2,459.4)

443.2

191.1

0

9,507.2
14,098.9

1993

7,354.5

6,682.0

0.0

672.5

0.2157%

(6,744.4)

(7,660.4)

418.5

497.5

0

1992

6,479.3

5,758.6

0.0

720.7

0.1815%

(596.8)

(2,274.7)

614.83

1,063.1

35.4

7,111.5

1991

5,886.5

5,254.0

0.0

632.5

0.1613%

16,925.3

15,496.2

326.1

1,103.0

42.4

(10,996.4)

1990

3,855.3

2,872.3

0.0

983.0

0.0868%

13,059.3

12,133.1

275.6

650.6

56.1

(9,147.9)

1989

3,496.6

1,885.0

0.0

1,611.6

0.0816%

4,352.2

3,811.3

219.9

321.0

5.6

(850.0)

1988

3,347.7

1,773.0

0.0

1,574.7

0.0825%

7,588.4

6,298.3

223.9

1,066.2

0

(4,240.7)

1987

3,319.4

1,696.0

0.0

1,623.4

0.0833%

3,270.9

2,996.9

204.9

69.1

0

48.5

1986

3,260.1

1,516.9

0.0

1,743.2

0.0787%

2,963.7

2,827.7

180.3

(44.3)

0

296.4

1985

3,385.5

1,433.5

0.0

1,952.0

0.0815%

1,957.9

1,569.0

179.2

209.7

0

1,427.6

1984

3,099.5

1,321.5

0.0

1,778.0

0.0800%

1,999.2

1,633.4

151.2

214.6

0

1,100.3

1983

2,628.1

1,214.9

164.0

1,577.2

0.0714%

969.9

675.1

135.7

159.1

0

1,658.2

1982

2,524.6

1,108.9

96.2

1,511.9

0.0769%

999.8

126.4

129.9

743.5

0

1,524.8

1981

2,074.7

1,039.0

117.1

1,152.8

0.0714%

848.1

320.4

127.2

400.5

0

1,226.6

1980

1,310.4

951.9

521.1

879.6

0.0370%

83.6

(38.1)

118.2

3.5

0

1,226.8

FE D E R A L

D E P O S I T

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CO R P O R AT I O N

131

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS,
SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2008 (continued)
Dollars in Millions
Income

Year

Total

1979

1,090.4

1978
1977

Assessment
Income

Assessment
Credits

Expenses and Losses

Investment and
Other
Sources

Effective
Assessment
Rate1

734.0

0.0333%

Provision
for
Losses

Admin.
and Oper.
Expenses2

Interest &
Other Ins.
Expenses

Funding
Transfer
from the
FSLIC
Resolution Fund

93.7

(17.2)

106.8

4.1

0

996.7
803.2

Total

Net
Income
(Loss)

881.0

524.6

952.1

810.1

443.1

585.1

0.0385%

148.9

36.5

103.3

9.1

0

837.8

731.3

411.9

518.4

0.0370%

113.6

20.8

89.3

3.5

0

724.2

1976

764.9

676.1

379.6

468.4

0.0370%

212.3

28.0

180.4 4

3.9

0

552.6

1975

689.3

641.3

362.4

410.4

0.0357%

97.5

27.6

67.7

2.2

0

591.8

1974

668.1

587.4

285.4

366.1

0.0435%

159.2

97.9

59.2

2.1

0

508.9

1973

561.0

529.4

283.4

315.0

0.0385%

108.2

52.5

54.4

1.3

0

452.8

5

1972

467.0

468.8

280.3

278.5

0.0333%

59.7

10.1

49.6

0

407.3

1971

415.3

417.2

241.4

239.5

0.0345%

60.3

13.4

46.9

0.0

0

355.0

1970

382.7

369.3

210.0

223.4

0.0357%

46.0

3.8

42.2

0.0

0

336.7

1969

335.8

364.2

220.2

191.8

0.0333%

34.5

1.0

33.5

0.0

0

301.3

1968

295.0

334.5

202.1

162.6

0.0333%

29.1

0.1

29.0

0.0

0

265.9

6.0

1967

263.0

303.1

182.4

142.3

0.0333%

27.3

2.9

24.4

0.0

0

235.7

1966

241.0

284.3

172.6

129.3

0.0323%

19.9

0.1

19.8

0.0

0

221.1

1965

214.6

260.5

158.3

112.4

0.0323%

22.9

5.2

17.7

0.0

0

191.7

1964

197.1

238.2

145.2

104.1

0.0323%

18.4

2.9

15.5

0.0

0

178.7

1963

181.9

220.6

136.4

97.7

0.0313%

15.1

0.7

14.4

0.0

0

166.8

1962

161.1

203.4

126.9

84.6

0.0313%

13.8

0.1

13.7

0.0

0

147.3

1961

147.3

188.9

115.5

73.9

0.0323%

14.8

1.6

13.2

0.0

0

132.5

1960

144.6

180.4

100.8

65.0

0.0370%

12.5

0.1

12.4

0.0

0

132.1

1959

136.5

178.2

99.6

57.9

0.0370%

12.1

0.2

11.9

0.0

0

124.4

1958

126.8

166.8

93.0

53.0

0.0370%

11.6

0.0

11.6

0.0

0

115.2

1957

117.3

159.3

90.2

48.2

0.0357%

9.7

0.1

9.6

0.0

0

107.6

1956

111.9

155.5

87.3

43.7

0.0370%

9.4

0.3

9.1

0.0

0

102.5

1955

105.8

151.5

85.4

39.7

0.0370%

9.0

0.3

8.7

0.0

0

96.8

1954

99.7

144.2

81.8

37.3

0.0357%

7.8

0.1

7.7

0.0

0

91.9

1953

94.2

138.7

78.5

34.0

0.0357%

7.3

0.1

7.2

0.0

0

86.9

1952

88.6

131.0

73.7

31.3

0.0370%

7.8

0.8

7.0

0.0

0

80.8

1951

83.5

124.3

70.0

29.2

0.0370%

6.6

0.0

6.6

0.0

0

76.9

1950

84.8

122.9

68.7

30.6

0.0370%

7.8

1.4

6.4

0.0

0

77.0

132

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CHAPTER 6

A PPE N D I C E S

INCOME AND EXPENSES, DEPOSIT INSURANCE FUND, FROM BEGINNING OF OPERATIONS,
SEPTEMBER 11, 1933, THROUGH DECEMBER 31, 2008 (continued)
Dollars in Millions
Income

Year
1949

Assessment
Income

Total
151.1

122.7

Assessment
Credits
0.0

Expenses and Losses

Investment and
Other
Sources

Effective
Assessment
Rate1

28.4

0.0833%

Total
6.4

Provision
for
Losses

Admin.
and Oper.
Expenses2

Interest &
Other Ins.
Expenses

Funding
Transfer
from the
FSLIC
Resolution Fund

0.3

6.1

0.0

0

144.7

6

138.6

Net
Income
(Loss)

1948

145.6

119.3

0.0

26.3

0.0833%

7.0

0.7

0.0

0

1947

157.5

114.4

0.0

43.1

0.0833%

9.9

0.1

9.8

0.0

0

147.6

1946

130.7

107.0

0.0

23.7

0.0833%

10.0

0.1

9.9

0.0

0

120.7

1945

121.0

93.7

0.0

27.3

0.0833%

9.4

0.1

9.3

0.0

0

111.6

1944

99.3

80.9

0.0

18.4

0.0833%

9.3

0.1

9.2

0.0

0

90.0

1943

86.6

70.0

0.0

16.6

0.0833%

9.8

0.2

9.6

0.0

0

76.8
59.0

6.3

1942

69.1

56.5

0.0

12.6

0.0833%

10.1

0.5

9.6

0.0

0

1941

62.0

51.4

0.0

10.6

0.0833%

10.1

0.6

9.5

0.0

0

51.9

1940

55.9

46.2

0.0

9.7

0.0833%

12.9

3.5

9.4

0.0

0

43.0

1939

51.2

40.7

0.0

10.5

0.0833%

16.4

7.2

9.2

0.0

0

34.8

1938

47.7

38.3

0.0

9.4

0.0833%

11.3

2.5

8.8

0.0

0

36.4

1937

48.2

38.8

0.0

9.4

0.0833%

12.2

3.7

8.5

0.0

0

36.0

1936

43.8

35.6

0.0

8.2

0.0833%

10.9

2.6

8.3

0.0

0

32.9

1935

20.8

11.5

0.0

9.3

0.0833%

11.3

2.8

8.5

0.0

0

9.5

1933
-34

7.0

0.0

0.0

7.0

N/A

10.0

0.2

9.8

0.0

0

(3.0)

1 Figures represent only BIF insured institutions prior to 1990, BIF and SAIF insured institutions from 1990 through 2005, and DIF insured institutions beginning in
2006. After 1995, all thrift closings became the responsibility of the FDIC and amounts are reflected in the SAIF. The effective assessment rate is calculated from
annual assessment income (net of assessment credits) excluding transfers to the Financing Corporation (FICO), Resolution Funding Corporation (REFCORP) and
the FSLIC Resolution Fund, divided by the four quarter average assessment base. The effective rates from 1950 through 1984 varied from the statutory rate of
0.0833 percent due to assessment credits provided in those years. The statutory rate increased to 0.12 percent in 1990 and to a minimum of 0.15 percent in 1991.
The effective rates in 1991 and 1992 varied because the FDIC exercised new authority to increase assessments above the statutory minimum rate when needed.
Beginning in 1993, the effective rate was based on a risk-related premium system under which institutions paid assessments in the range of 0.23 percent to 0.31
percent. In May 1995, the BIF reached the mandatory recapitalization level of 1.25 percent. As a result, BIF assessment rates were reduced to a range of 0.04 percent to 0.31 percent of assessable deposits, effective June 1995, and assessments totaling $1.5 billion were refunded in September 1995. Assessment rates for BIF
were lowered again to a range of 0 to 0.27 percent of assessable deposits, effective the start of 1996. In 1996, the SAIF collected a one-time special assessment of
$4.5 billion. Subsequently, assessment rates for SAIF were lowered to the same range as BIF, effective October 1996. This range of rates remained unchanged for
both funds through 2006. As part of the implementation of the Federal Deposit Insurance Reform Act of 2005, assessment rates were increased to a range of 0.05
percent to 0.43 percent of assessable deposits effective at the start of 2007, but many institutions received a one-time assessment credit ($4.7 billion in total) to
offset the new assessments.
2 These expenses, which are presented as operating expenses in the Statements of Income and Fund Balance, pertain to the FDIC in its corporate capacity only
and do not include costs that are charged to the failed bank receiverships that are managed by the FDIC. The receivership expenses are presented as part of the
“Receivables from Bank Resolutions, net” line on the Balance Sheets. The narrative and graph presented in the “Corporate Planning and Budget” section of this
report (next page) show the aggregate (corporate and receivership) expenditures of the FDIC.
3 Includes $210 million for the cumulative effect of an accounting change for certain postretirement benefits.
4 Includes $105.6 million net loss on government securities.
5 This amount represents interest and other insurance expenses from 1933 to 1972.
6 Includes the aggregate amount of $80.6 million of interest paid on capital stock between 1933 and 1948.

FE D E R A L

D E P O S I T

I N S U R A N C E

CO R P O R AT I O N

133

NUMBER, ASSETS, DEPOSITS, LOSSES, AND LOSS TO FUNDS OF INSURED
THRIFTS TAKEN OVER OR CLOSED BECAUSE OF FINANCIAL DIFFICULTIES,
1989 THROUGH 19951
Dollars in Thousands
Year

Total

Assets

Deposits

Estimated
Receivership Loss2

Loss to Funds3

Total

747

$393,986,274

$317,499,876

$75,315,668

$81,580,421

1995

2

423,819

414,692

28,192

27,750

1994

2

136,815

127,508

11,472

14,599

1993

9

6,147,962

4,881,461

267,595

65,212

1992

59

44,196,946

34,773,224

3,234,947

3,780,184

1991

144

78,898,704

65,173,122

8,624,447

9,122,686

213

129,662,398

98,963,960

16,063,923

19,258,817

318

134,519,630

113,165,909

47,085,092

49,311,173

1990
1989

4

1 Beginning in 1989 through July 1, 1995, all thrift closings were the responsibility of the Resolution Trust Corporation (RTC). Since the RTC was
terminated on December 31, 1995, and all assets and liabilities transferred to the FSLIC Resolution Fund (FRF), all the results of the thrift closing
activity from 1989 through 1995 are now reflected on FRF’s books. Year is the year of failure, not the year of resolution.
2 The estimated losses represent the projected loss at the fund level from receiverships for unreimbursed subrogated claims of the FRF and unpaid
advances to receiverships from the FRF.
3 The Loss to Funds represents the total resolution cost of the failed thrifts in the FRF-RTC fund, which includes corporate revenue and expense items
such as interest expense on Federal Financing Bank debt, interest expense on escrowed funds, and interest revenue on advances to receiverships, in
addition to the estimated losses for receiverships.
4 Total for 1989 excludes nine failures of the former FSLIC.

134

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CHAPTER 6

A PPE N D I C E S

FDIC- INSURED INSTITUTIONS CLOSED DURING 2008
Dollars in Thousands

Name and Location

Bank
Class

No. of
Deposit
Accounts

Total
Assets2

Total
Deposits2

FDIC
Disbursements3

Estimated
Loss1

Date of
Closing or
Acquisition

Receiver/Assuming Bank
and Location

Purchase and Assumption – Insured Deposits
Hume Bank,
Hume, MO

NM

1,330

$18,682

$13,566

$13,794

$4,324

03/07/08

Security Bank,
Rich Hill, MO

ANB Financial
Bentonville, AR

N

20,904

$1,895,545

$1,815,691

$1,745,038

$819,436

05/09/08

Pulaski Bank and Trust
Company, Little Rock, AR

IndyMac Bank, FSB,
Pasadena, CA

SA

281,930

$30,698,512

$18,941,727

$15,314,602

$10,724,595

07/11/08

Federal Deposit Insurance
Corporation

First Priority Bank,
Bradenton, FL

NM

6,326

$258,610

$226,698

$201,988

$81,196

08/01/08

SunTrust Bank, Atlanta, GA

The Columbian Bank and
Trust Company, Topeka, KS

NM

10,273

$735,071

$620,354

$586,285

$232,127

08/22/08

Citizens Bank, and Trust,
Chillicothe, MO

Silver State Bank,
Henderson, NV

NM

20,014

$1,957,120

$1,733,091

$1,460,245

$553,095

09/05/08

Nevada State Bank,
Las Vegas, NV

Alpha Bank & Trust,
Alpharetta, GA

NM

7,589

$354,090

$344,231

$331,163

$159,914

10/24/08

Sterns Bank, National
Association, St. Cloud, MN

First Georgia Community
Bank, Jackson, GA

SM

9,051

$256,371

$215,287

$187,065

$52,015

12/05/08

United Bank,
Zebulon, GA

Sanderson State Bank,
Sanderson, TX

NM

855

$38,217

$32,012

$27,225

$9,646

12/12/08

The Pecos County State
Bank, Fort Stockton, TX

Haven Trust Bank,
Duluth, GA

NM

10,041

$559,551

$489,692

$506,700

$207,957

12/12/08

Branch Bankings & Trust,
Winston-Salem, NC

Whole Bank Purchase and Assumption – All Deposits
Douglass National Bank,
Kansas City, MO

N

4,904

$52,824

$50,250

$10,400

$6,544

01/25/08

Liberty Bank and Trust
Company, New Orleans, LA

First Integrity Bank,
Staples, MN

N

5,372

$52,916

$50,178

$49,710

$10,108

05/30/08

First International Bank
and Trust, Watford City, ND

Washington Mutual Bank,
Henderson, NV

SA

20,933,279

$307,021,614

$188,260,793

$0

$0

09/25/08

JPMorgan Chase

Downey Savings & Loan
Assoc., Newport Beach, CA

SA

605,841

$12,779,371

$9,653,169

$0

$1,374,607

11/21/08

U.S. Bank, National
Association, Minneapolis, MN

PFF Bank & Trust,
Pomona, CA

SA

143,421

$3,715,433

$2,393,845

$0

$729,561

11/21/08

U.S. Bank, National
Association, Minneapolis, MN

FE D E R A L

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FDIC-INSURED INSTITUTIONS CLOSED DURING 2008 (continued)
Dollars in Thousands

Name and Location

Bank
Class

No. of
Deposit
Accounts

Total
Assets2

Total
Deposits2

FDIC
Disbursements3

Estimated
Loss1

Date of
Closing or
Acquisition

Receiver/Assuming Bank
and Location

Purchase and Assumption – All Deposits
First National Bank of
Nevada, Reno, NV

N

81,758

$3,411,145

$3,038,053

$2,806,600

$706,119

07/25/08

Mutual of Omaha Bank,
Omaha, NE

First Heritage Bank,
Newport Beach, CA

N

4,572

$255,376

$234,812

$256,700

$33,125

07/25/08

Mutual of Omaha Bank,
Omaha, NE

Integrity Bank,
Alpharetta, GA

NM

22,767

$1,107,514

$962,456

$933,932

$210,779

08/29/08

Regions Bank,
Birmingham, AL

Ameribank, Inc.,
Northfork, WV

SA

13,052

$103,965

$100,901

$90,789

$33,413

09/19/08

Pioneer Community Bank,
Inc., Iaeger, WV
The Citizens Savings Bank,
Martins Ferry, OH

Meridian Bank,
Eldred, IL

NM

4,252

$38,223

$36,090

$36,100

$14,482

10/10/08

National Bank,
Hillsboro, IL

Main Street Bank,
Northville, MI

NM

2,395

$112,368

$98,934

$85,686

$32,058

10/10/08

Monroe Bank & Trust,
Monroe, MI

Freedom Bank,
Bradenton, FL

NM

6,698

$270,842

$256,793

$256,618

$92,853

10/31/08

Fifth Third Bank, Grand
Rapids, MI

Security Pacific Bank,
Los Angeles, CA

NM

5,417

$527,959

$456,472

$478,800

$175,478

11/07/08

Pacific Western Bank,
Los Angeles, CA

Franklin Bank, SSB,
Houston, TX

SB

111,394

$5,089,260

$3,692,887

$4,288,427

$1,361,570

11/07/08

Prosperity Bank,
El Campo, TX

The Community Bank,
Loganville, GA

NM

13,391

$634,901

$603,733

$619,550

$247,275

11/21/08

Bank of Essex,
Tappahannock, VA

Codes for Bank Class:

NM =

State-chartered bank that is not a member of the Federal Reserve System

N=

National Bank

SB =

Savings Bank

SM =

State-chartered bank that is a member of the Federal Reserve System

SA =

Savings Association

1 Estimated losses are as of 12/31/08. Estimated losses are routinely adjusted with updated information from new appraisals and asset sales, which ultimately
affect the asset values and projected recoveries.
2 Total Assets and Total Deposits data are based upon the last Call Report filed by the institution prior to failure.
3 Represents corporate cash disbursements.

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Recoveries and Losses by the Deposit Insurance Fund on
Disbursements for the Protection of Depositors, 1934-2008

BANK AND THRIFT FAILURES3
Dollars in Thousands

Year1

Number of
Banks/
Thrifts

Total Assets

Total
Deposits

Disbursements

Recoveries

Estimated
Additional
Recoveries

Estimated
Losses

2,120

$617,286,408

$437,381,931

$299,321,807

$241,801,868

$6,507,981

$51,011,958

2008

25

371,945,480

234,321,715

194,052,076

170,329,549

5,850,250

17,872,277

2007

3

2,614,928

2,424,187

1,909,549

1,315,770

399,758

194,021

2006

0

0

0

0

0

0

0

2005

0

0

0

0

0

0

0

2004

4

170,099

156,733

138,895

134,978

0

3,917

2003

3

947,317

901,978

883,772

812,933

8,189

62,650

2002

11

2,872,720

2,512,834

2,068,519

1,628,771

70,338

369,410

2001

4

1,821,760

1,661,214

1,605,147

1,113,270

159,823

332,054

2000

7

410,160

342,584

297,313

265,175

0

32,138

1999

8

1,592,189

1,320,573

1,307,045

685,154

6,641

615,250

1998

3

290,238

260,675

286,678

52,248

9,134

225,296

1997

1

27,923

27,511

25,546

20,520

0

5,026

1996

6

232,634

230,390

201,533

140,918

0

60,615

1995

6

802,124

776,387

609,043

524,571

0

84,472

1994

13

1,463,874

1,397,018

1,224,769

1,045,718

0

179,051

1993

41

3,828,939

3,509,341

3,841,658

3,209,012

0

632,646

1992

120

45,357,237

39,921,310

14,173,886

10,499,873

0

3,674,013

1991

124

64,556,512

52,972,034

21,190,376

15,194,417

3,848

5,992,111

1990

168

16,923,462

15,124,454

10,812,484

8,041,033

0

2,771,451

1989

206

28,930,572

24,152,468

11,443,281

5,247,995

0

6,195,286

1988

200

38,402,475

26,524,014

10,432,655

5,055,157

0

5,377,498

1987

184

6,928,889

6,599,180

4,876,994

3,014,502

0

1,862,492

1986

138

7,356,544

6,638,903

4,632,121

2,949,583

0

1,682,538

1985

116

3,090,897

2,889,801

2,154,955

1,506,776

0

648,179

1984

78

2,962,179

2,665,797

2,165,036

1,641,157

0

523,879

1983

44

3,580,132

2,832,184

3,042,392

1,973,037

0

1,069,355

1982

32

1,213,316

1,056,483

545,612

419,825

0

125,787

1981

7

108,749

100,154

114,944

105,956

0

8,988

1980

10

239,316

219,890

152,355

121,675

0

30,680

1934 1979

558

8,615,743

5,842,119

5,133,173

4,752,295

0

380,878

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137

RECOVERIES AND LOSSES BY THE DEPOSIT INSURANCE FUND ON DISBURSEMENTS
FOR THE PROTECTION OF DEPOSITORS, 1934-2008 (continued)
ASSISTANCE TRANSACTIONS
Dollars in Thousands
Number of
Banks/
Thrifts

Disbursements

Estimated
Additional
Recoveries

Total Assets

Total
Deposits

146

$1,399,617,070

$351,855,135

$11,630,356

$6,199,875

$0

$5,430,481

2008

5

1,306,041,994

280,806,966

0

0

0

0

2007

0

0

0

0

0

0

0

2006

0

0

0

0

0

0

0

2005

0

0

0

0

0

0

0

2004

0

0

0

0

0

0

0

2003

0

0

0

0

0

0

0

2002

0

0

0

0

0

0

0

2001

0

0

0

0

0

0

0

Year1
2

Recoveries

Estimated
Losses

2000

0

0

0

0

0

0

0

1999

0

0

0

0

0

0

0

1998

0

0

0

0

0

0

0

1997

0

0

0

0

0

0

0

1996

0

0

0

0

0

0

0

1995

0

0

0

0

0

0

0

1994

0

0

0

0

0

0

0

1993

0

0

0

0

0

0

0

1992

2

33,831

33,117

1,486

1,236

0

250

1991

3

78,524

75,720

6,117

3,093

0

3,024

1990

1

14,206

14,628

4,935

2,597

0

2,338

1989

1

4,438

6,396

2,548

252

0

2,296

1988

80

15,493,939

11,793,702

1,730,351

189,709

0

1,540,642

1987

19

2,478,124

2,275,642

160,877

713

0

160,164

1986

7

712,558

585,248

158,848

65,669

0

93,179

1985

4

5,886,381

5,580,359

765,732

406,676

0

359,056

1984

2

40,470,332

29,088,247

5,531,179

4,414,904

0

1,116,275

1983

4

3,611,549

3,011,406

764,690

427,007

0

337,683

1982

10

10,509,286

9,118,382

1,729,538

686,754

0

1,042,784

1981

3

4,838,612

3,914,268

774,055

1,265

0

772,790

1980

1

7,953,042

5,001,755

0

0

0

0

1934 1979

4

1,490,254

549,299

0

0

0

0

1
2

Includes institutions where assistance was provided under a systemic risk determination. Any costs that exceed the amounts estimated under the least cost resolution requirement would be
recovered through a special assessment on all FDIC-insured institutions.

3

138

For 1990 through 2005, amounts represent the sum of BIF and SAIF failures (excluding those handled by the RTC); prior to 1990, figures are only for BIF. After 1995, all thrift closings became the
responsibility of the FDIC and amounts are reflected in the SAIF. For 2006 to 2008, figures are for DIF. Assets and deposit data are based on the last call or TFR Report filed before failure.

Institutions closed by the FDIC, including deposit payoff, insured deposit transfer, and deposit assumption cases.

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A PPE N D I C E S

FDIC ACTIONS ON FINANCIAL INSTITUTIONS APPLICATIONS 2006 – 2008
2008

2007

2006

123

215

142

123

215

142

0

0

0

New Branches

1,012

1,480

1,257

Approved

1,012

1,480

1,257

0

0

0

275

306

229

275

306

229

0

0

0

Deposit Insurance
Approved
Denied

Denied
Mergers
Approved
Denied
Requests for Consent to Serve1

283

177

138

283

177

138

Section 19

8

24

11

Section 32

275

153

127

0

0

0

Section 19

0

0

0

Section 32

0

0

0

28

17

3

Letters of Intent Not to Disapprove

28

15

2

Disapproved

0

2

1

Approved

Denied

Notices of Change in Control

Broker Deposit Waivers

38

22

26

Approved

38

22

26

Denied

0

0

0

Savings Association Activities2

45

54

33

Approved

45

54

33

Denied

0

0

0

11

21

14

Approved

11

21

14

Denied

0

0

0

10

10

9

Non-Objection

10

10

9

Objection

0

0

0

State Bank Activities/Investments3

Conversion of Mutual Institutions

1

Under Section 19 of the Federal Deposit Insurance (FDI) Act, an insured institution must receive FDIC approval before employing a person convicted of dishonesty or breach of trust. Under Section
32, the FDIC must approve any change of directors or senior executive officers at a state non-member bank that is not in compliance with capital requirements or is otherwise in troubled condition.

2

Amendments to Part 303 of the FDIC Rules and Regulations changed FDIC oversight responsibility in October 1998. In 1998, Part 303 changed the Delegations of Authority to act upon applications.

3

Section 24 of the FDI Act, in general, precludes a federally-insured state bank from engaging in an activity not permissible for a national bank and requires notices to be filed with the FDIC.

FE D E R A L

D E P O S I T

I N S U R A N C E

CO R P O R AT I O N

139

COMPLIANCE, ENFORCEMENT AND OTHER RELATED LEGAL ACTIONS 2006-2008
2008

2007

2006

273

205

244

0

0

0

Sec. 8a By Order Upon Request

1

0

1

Sec. 8p No Deposits

2

2

2

Sec. 8q Deposits Assumed

1

4

3

Notices of Charges Issued*

21

3

0

Consent Orders

97

48

29

Notices of Intention to Remove/Prohibit

4

1

3

Consent Orders

62

40

89

0

0

0

Sec. 7a Call Report Penalties

0

0

0

Sec. 8i Civil Money Penalties

98

96

93

Sec. 10c Orders of Investigation

2

7

17

Sec. 19 Denials of Service After Criminal Conviction

0

0

0

Sec. 32 Notices Disapproving Officer/Director’s
Request for Review

0

0

0

Total Number of Actions Initiated by the FDIC
Termination of Insurance
Involuntary Termination
Sec. 8a For Violations, Unsafe/Unsound Practices or Conditions
Voluntary Termination

Sec. 8b Cease-and-Desist Actions

Sec. 8e Removal/Prohibition of Director or Officer

Sec. 8g Suspension/Removal When Charged With Crime
Civil Money Penalties Issued

Truth-in-Lending Act Reimbursement Actions
Denials of Requests for Relief

1

0

0

Grants of Relief

0

0

2

Banks Making Reimbursement*

94

91

110

133,153

137,548

119,384

5

7

5

Suspicious Activity Reports (Open and closed institutions)*
Other Actions Not Listed**
*

These actions do not constitute the initiation of a formal enforcement action and, therefore, are not included in the total number of actions initiated.

** Other Actions Not Listed includes two Section 19 Waiver grants and three Other Formal Actions.

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CHAPTER 6

As FDIC Chairman, Ms. Bair has presided over a
tumultuous period in the nation’s financial sector.
Her innovations have transformed the agency with
programs that provide temporary liquidity
guarantees, increases in deposit insurance limits,
and systematic loan modifications to troubled
borrowers. Ms. Bair’s work at the FDIC has also
focused on consumer protection and economic
inclusion. She has championed the creation of
an Advisory Committee on Economic
Inclusion, seminal research on small-dollar
loan programs, and the formation of broadbased alliances in nine regional markets to
bring underserved populations into the
financial mainstream.

B. More About the FDIC
FDIC Board of Directors

Martin J. Gruenberg, Sheila C. Bair, Chairman (seated), John C. Dugan, Thomas J. Curry,
and John M. Reich (standing, left to right)

Sheila C. Bair
Sheila C. Bair was sworn in as the 19th Chairman
of the Federal Deposit Insurance Corporation
(FDIC) on June 26, 2006. She was appointed
Chairman for a five-year term, and as a member of
the FDIC Board of Directors through July 2013.
Chairman Bair has an extensive background in
banking and finance in a career that has taken her
from Capitol Hill, to academia, to the highest levels
of government. Before joining the FDIC in 2006, she
was the Dean’s Professor of Financial Regulatory
Policy for the Isenberg School of Management at the
University of Massachusetts-Amherst since 2002.
While there, she also served on the FDIC’s Advisory
Committee on Banking Policy.
Other career experience includes serving as
Assistant Secretary for Financial Institutions at the
U.S. Department of the Treasury (2001 to 2002),
Senior Vice President for Government Relations of
the New York Stock Exchange (1995 to 2000), a
Commissioner and Acting Chairman of the
Commodity Futures Trading Commission (1991 to
1995), and Research Director, Deputy Counsel and
Counsel to Senate Majority Leader Robert Dole
(1981 to 1988).

FE D E R A L

D E P O S I T

I N S U R A N C E

A PPE N D I C E S

Since becoming FDIC Chairman, Ms. Bair has
received a number of prestigious honors.
Among them, in 2009 she was named one of
Time Magazine’s “Time 100” most influential
people; awarded the John F. Kennedy Profile in
Courage Award; and received the Hubert H.
Humphrey Civil Rights Award. In 2008,
Chairman Bair topped The Wall Street Journal’s
annual 50 “Women to Watch List.” That same year,
Forbes Magazine named Ms. Bair as the second
most powerful woman in the world after Germany’s
Chancellor Angela Merkel.
Chairman Bair has also received several honors for
her published work on financial issues, including
her educational writings on money and finance for
children, and for professional achievement. Among
the honors she has received are: Distinguished
Achievement Award, Association of Education
Publishers (2005); Personal Service Feature of the
Year, and Author of the Month Awards, Highlights
Magazine for Children (2002, 2003 and 2004); and
The Treasury Medal (2002). Her first children’s
book – Rock, Brock and the Savings Shock, was
published in 2006 and her second, Isabel’s Car
Wash, in 2008.
Chairman Bair received a bachelor’s degree from
Kansas University and a J.D. from Kansas
University School of Law. She is married to Scott P.
Cooper and has two children.

CO R P O R AT I O N

141

Martin J. Gruenberg

Thomas J. Curry

Martin J. Gruenberg was sworn in as Vice
Chairman of the FDIC Board of Directors on
August 22, 2005. Upon the resignation of
Chairman Donald Powell, he served as Acting
Chairman from November 15, 2005, to June 26,
2006. On November 2, 2007, Mr. Gruenberg was
named Chairman of the Executive Council and
President of the International Association of
Deposit Insurers (IADI).

Thomas J. Curry took office on January 12, 2004,
as a member of the Board of Directors of the
Federal Deposit Insurance Corporation for a
six-year term. Mr. Curry serves as Chairman of the
FDIC’s Assessment Appeals Committee and Case
Review Committee.

Mr. Gruenberg joined the FDIC Board after broad
congressional experience in the financial services
and regulatory areas. He served as Senior Counsel
to Senator Paul S. Sarbanes (D-MD) on the staff of
the Senate Committee on Banking, Housing, and
Urban Affairs from 1993 to 2005. Mr. Gruenberg
advised the Senator on issues of domestic and
international financial regulation, monetary policy
and trade. He also served as Staff Director of the
Banking Committee’s Subcommittee on
International Finance and Monetary Policy from
1987 to 1992. Major legislation in which Mr.
Gruenberg played an active role during his service
on the Committee includes the Financial
Institutions Reform, Recovery, and Enforcement Act
of 1989 (FIRREA), the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA),
the Gramm-Leach-Bliley Act, and the SarbanesOxley Act of 2002.
Mr. Gruenberg holds a J.D. from Case Western
Reserve Law School and an A.B. from Princeton
University, Woodrow Wilson School of Public and
International Affairs.

Mr. Curry also serves as the Chairman of the
NeighborWorks® America Board of Directors.
NeighborWorks® America is a national nonprofit
organization chartered by Congress to provide
financial support, technical assistance, and
training for community-based neighborhood
revitalization efforts.
Further, Mr. Curry serves on the Board of Directors
of the HOPE for Homeowners Program. The HOPE
for Homeowners Program is a temporary Federal
Housing Administration mortgage insurance
program created by the Housing and Economic
Recovery Act of 2008.
Prior to joining the FDIC’s Board of Directors,
Mr. Curry served five Massachusetts Governors as
the Commonwealth’s Commissioner of Banks from
1990 to 1991 and from 1995 to 2003. He served as
Acting Commissioner from February 1994 to
June 1995. He previously served as First Deputy
Commissioner and Assistant General Counsel
within the Massachusetts Division of Banks. He
entered state government in 1982 as an attorney
with the Massachusetts Secretary of State’s Office.
Director Curry served as the Chairman of the
Conference of State Bank Supervisors from 2000 to
2001. He served two terms on the State Liaison
Committee of the Federal Financial Institutions
Examination Council, including a term as
Committee chairman.
He is a graduate of Manhattan College (summa
cum laude), where he was elected to Phi Beta
Kappa. He received his law degree from the
New England School of Law.

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A PPE N D I C E S

John C. Dugan

John M. Reich

John C. Dugan was sworn in as the 29th Comptroller
of the Currency on August 4, 2005. In addition to
serving as a director of the FDIC, Comptroller Dugan
also serves as chairman of the Joint Forum, a group of
senior financial sector regulators from the United
States, Canada, Europe, Japan, and Australia, and as a
director of the Federal Financial Institutions Examination Council and NeighborWorks® America.

John M. Reich was sworn in August 9, 2005, as
Director of the Office of Thrift Supervision (OTS).
The President nominated Mr. Reich to be OTS
Director on June 7, 2005, and the Senate confirmed
his nomination on July 29, 2005. In this capacity,
Mr. Reich also served as a member of the Board of
Directors of the Federal Deposit Insurance
Corporation (FDIC) until his retirement on
February 27, 2009.

Prior to his appointment as Comptroller, Mr.
Dugan was a partner at the law firm of Covington
& Burling, where he chaired the firm’s Financial
Institutions Group. He specialized in banking and
financial institution regulation. He also served as
outside counsel to the ABA Securities Association.
He served at the Department of Treasury from 1989
to 1993 and was appointed assistant secretary for
domestic finance in 1992. In 1991, he oversaw a
comprehensive study of the banking industry that
formed the basis for the financial modernization
legislation proposed by the administration of the
first President Bush. From 1985 to 1989, Mr. Dugan
was minority counsel and minority general counsel
for the U.S. Senate Committee on Banking,
Housing, and Urban Affairs.
Among his professional and volunteer activities
before becoming Comptroller, he served as a
director of Minbanc, a charitable organization
whose mission is to enhance professional and
educational opportunities for minorities in the
banking industry. He was also a member of the
American Bar Association’s committee on banking
law, the Federal Bar Association’s section of
financial institutions and the economy, and the
District of Columbia Bar Association’s section of
corporations, finance, and securities laws.
A graduate of the University of Michigan in 1977
with an A.B. in English literature, Mr. Dugan also
earned his J.D. from Harvard Law School in 1981.

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Prior to joining OTS, Mr. Reich served as Vice
Chairman of the Board of Directors of the FDIC
since November 2002. He has been a member of the
FDIC Board since January 2001. He also served as
Acting Chairman of the FDIC from July to
August 2001.
Prior to coming to Washington, DC, Mr. Reich
spent 23 years as a community banker in Illinois
and Florida, including ten years as President
and CEO of the National Bank of Sarasota, in
Sarasota, Florida.
Mr. Reich also served 12 years on the staff of U.S.
Senator Connie Mack (R-FL), before joining the
FDIC. From 1998 through 2000, he was Senator
Mack’s Chief of Staff, directing and overseeing all
of the Senator’s offices and committee activities,
including those at the Senate Banking Committee.
Mr. Reich’s community service includes serving as
Chairman of the Board of Trustees of a public
hospital facility in Ft. Myers, FL, and Chairman of
the Board of Directors of the Sarasota Family
YMCA. He has also served as a Board member for a
number of civic organizations, and was active for
many years in youth baseball programs.
Mr. Reich holds a B.S. degree from Southern
Illinois University and an M.B.A. from the
University of South Florida. He is also a graduate of
Louisiana State University’s School of Banking of
the South.

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FDIC Organization Chart/Officials
as of December 31, 2008
Board of Directors
Sheila C. Bair
Martin J. Gruenberg
Thomas J. Curry
John C. Dugan
John M. Reich

Office of the Chairman

Vice Chairman

Sheila C. Bair
Chairman

Martin J. Gruenberg

Office of Inspector General
Jon T. Rymer
Inspector General

Chief Information Officer
and Chief Privacy Officer
Michael E. Bartell

Chief of Staff

Office of Public Affairs

Jesse O. Villarreal, Jr.

Andrew Gray
Director

Deputy to the Chairman
and Chief Financial Officer

Deputy to the Chairman
and Chief Operating Officer

Steven O. App

Deputy to the Chairman

General Counsel

Jason C. Cave

John V. Thomas
Acting General Counsel

Legal Division

John F. Bovenzi

Division of Finance

Division of Supervision and
Consumer Protection

Division of Insurance
and Research

Office of
Legislative Affairs

Sandra L. Thompson
Director

Arthur J. Murton
Director

Eric J. Spitler
Director

Office of Enterprise
Risk Management

Division of Information
Technology

Division of Resolutions
and Receiverships

James H. Angel, Jr.
Director

Michael E. Bartell
Director

Mitchell L. Glassman
Director

Office of Diversity and
Economic Opportunity

Division of Administration

Bret D. Edwards
Director

D. Michael Collins
Director

John V. Thomas
Acting General Counsel

Arleas Upton Kea
Director

Office of the Ombudsman

Corporate University

Cottrell L. Webster
Ombudsman

Thom H. Terwilliger
Chief Learning Officer

Office of
International Affairs
Fred S. Carns
Director

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A PPE N D I C E S

Corporate Staffing
STAFFING TRENDS 1998-2008

9,000

6,000

3,000

0
1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008*

* 2008 staffing totals reflect year-end full time equivalents, prior year totals reflect year-end on-board head counts.

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NUMBER OF EMPLOYEES OF THE FDIC BY DIVISION/OFFICE 2007-2008 (YEAR-END)
TOTAL
2008
FTEs2
Division of
Supervision and
Consumer Protection

WASHINGTON

2008
2007
Staffing Staffing

2008
FTEs2

REGIONAL/FIELD

2008
2007
Staffing Staffing

2008
FTEs2

2008
2007
Staffing Staffing

2,733

2,770

2,557

207

207

183

2,526

2,563

2,374

Legal Division

472

475

398

275

276

252

197

199

146

Division of Resolutions
and Receiverships

391

391

218

60

60

56

331

331

162

Division of
Administration

316

317

310

209

210

208

107

107

102

Division of
Information
Technology

283

284

276

221

222

213

62

62

63

Corporate University

240

240

214

47

47

52

193

193

162

Division of Insurance
and Research

182

184

177

145

147

145

36

37

32

Division of Finance

159

160

167

148

149

155

11

11

12

Office of Inspector
General

111

111

114

81

81

81

30

30

33

Executive Offices1

48

48

46

48

48

46

0

0

0

Office of Diversity and
Economic Opportunity

31

31

31

31

31

31

0

0

0

Office of Enterprise
Risk Management

12

12

12

12

12

12

0

0

0

Office of the
Ombudsman

11

11

12

8

8

12

3

3

0

4,988

5,034

4,532

Total

1,493

1,498

1,446

3,496

3,536

3,086

1

2

146

Includes the Offices of the Chairman, Vice Chairman, Director (Appointive), Chief Operating Officer, Chief Financial Officer, Legislative
Affairs, Public Affairs and International Affairs.
FTEs are based on the work schedules of on-board employees at year-end. Totals may not foot due to rounding.

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Sources of Information
Home Page on the Internet

Public Information Center

www.fdic.gov

3501 Fairfax Drive
Room E-1005
Arlington, VA 22226

A wide range of banking, consumer and financial
information is available on the FDIC’s Internet
home page. This includes the FDIC’s Electronic
Deposit Insurance Estimator (EDIE), which estimates an individual’s deposit insurance coverage;
the Institution Directory – financial profiles of
FDIC-insured institutions; Community Reinvestment Act evaluations and ratings for institutions
supervised by the FDIC; Call Reports – banks’
reports of condition and income; and Money Smart,
a training program to help individuals outside the
financial mainstream enhance their money
management skills and create positive banking
relationships. Readers also can access a variety of
consumer pamphlets, FDIC press releases, speeches
and other updates on the agency’s activities, as well
as corporate databases and customized reports of
FDIC and banking industry information.
FDIC Call Center
Phone:
Hearing
Impaired:

800-925-4618

D E P O S I T

I N S U R A N C E

Fax:
E-mail:

877-275-3342 (877-ASK FDIC), or
703-562-2200
703-562-2296
publicinfo@fdic.gov

FDIC publications, press releases, speeches and
congressional testimony, directives to financial
institutions, policy manuals and other documents
are available on request or by subscription through
the Public Information Center. These documents
include the Quarterly Banking Profile, FDIC
Consumer News and a variety of deposit insurance
and consumer pamphlets.
Office of the Ombudsman
3501 Fairfax Drive
Room E-2022
Arlington, VA 22226
Phone:
Fax:
E-mail:

877-275-3342 (877-ASK FDIC)
703-562-2222

The FDIC Call Center in Washington, DC, is the
primary telephone point of contact for general
questions from the banking community, the public
and FDIC employees. The Call Center directly, or
in concert with other FDIC subject-matter experts,
responds to questions about deposit insurance and
other consumer issues and concerns, as well as
questions about FDIC programs and activities. The
Call Center also makes referrals to other federal
and state agencies as needed. Hours of operation
are 7:00 a.m. to 8:00 p.m., Eastern Time
Monday – Friday; 8:00 a.m. to 8:00 p.m.,
Saturday - Sunday. Information is also available in
Spanish. Recorded information about deposit
insurance and other topics is available 24 hours a
day at the same telephone number.

FE D E R A L

Phone:

877-275-3342 (877-ASK FDIC)
703-562-6057
ombudsman@fdic.gov

The Office of the Ombudsman (OO) is an independent, neutral and confidential resource and liaison
for the banking industry and the general public.
The OO responds to inquiries about the FDIC in a
fair, impartial and timely manner. It researches
questions and complaints primarily from bankers.
The OO also recommends ways to improve FDIC
operations, regulations and customer service.

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Regional and Area Offices

Atlanta Regional Office

Kansas City Regional Office

10 Tenth Street, NE
Suite 800
Atlanta, GA 30309

2345 Grand Boulevard
Suite 1200
Kansas City, MO 64108

678-916-2200

816-234-8000

´ Alabama

´ Iowa

´ Florida

´ Kansas

´ Georgia

´ Minnesota

´ North Carolina

´ Missouri

´ South Carolina

´ Nebraska

´ Virginia

´ North Dakota

´ West Virginia

´ South Dakota

Dallas Regional Office

San Francisco Regional Office

1601 Bryan Street
Dallas, TX 75201

25 Jesse Street at Ecker Square
Suite 2300
San Francisco, CA 94105

214-754-0098
´ Colorado
´ New Mexico
´ Oklahoma

415-546-0160
´ Alaska
´ Arizona

´ Texas

´ California

Memphis Area Office

´ Hawaii

5100 Poplar Avenue
Suite 1900
Memphis, TN 38137
901-685-1603
´ Arkansas
´ Louisiana
´ Mississippi

´ Guam
´ Idaho
´ Montana
´ Nevada
´ Oregon
´ Utah
´ Washington
´ Wyoming

´ Tennessee

148	

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Regional and Area Offices (continued)

Chicago Regional Office

New York Regional Office

500 West Monroe Street
Suite 3500
Chicago, IL 60661

20 Exchange Place
4th Floor
New York, NY 10005

312-382-6000

917-320-2500

´ Illinois

´ Delaware

´ Indiana

´ District of Columbia

´ Kentucky

´ Maryland

´ Michigan

´ New Jersey

´ Ohio

´ New York

´ Wisconsin

´ Pennsylvania
´ Puerto Rico
´ Virgin Islands

Boston Area Office
15 Braintree Hill Office Park
Suite 100
Braintree, MS 02184
781-794-5500
´ Connecticut
´ Maine
´ Massachusetts
´ New Hampshire
´ Rhode Island
´ Vermont

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149

C. Office of Inspector
General’s Assessment
of the Management and
Performance Challenges
Facing the FDIC
2009 Management and
Performance Challenges
Unprecedented events and turmoil in the economy
and financial services industry have impacted every
facet of the FDIC’s mission and operations. In
looking at the current environment and anticipating to the extent possible what the future holds, the
Office of Inspector General (OIG) believes the
FDIC faces challenges in the areas listed below. We
would also point out that the Administration and
the Congress continue to broadly consider a
number of new programs to restore stability in the
financial system and strengthen the economy. If the
FDIC were to be made responsible for any or
certain aspects of such programs, it could also be
faced with a set of corresponding new challenges.
While the Corporation’s most pressing priority may
be on efforts to restore and maintain public confidence and stability, as outlined below, challenges
will persist in the other areas described as the
Corporation carries out its mounting resolution
and receivership workload, meets its deposit
insurance responsibilities, continues its supervision
of financial institutions, protects consumers, and
manages its internal workforce and other corporate
resources in the months ahead. The Corporation
will face daunting challenges as it carries out its
longstanding mission, responds to new demands,
and plays a key part in shaping the future of
bank regulation.
Restoring and Maintaining Public Confidence
and Stability in the Financial System
The FDIC is participating with other regulators, the
Congress, banks, and other stakeholders in
multiple new and changing initiatives, each with its
unique challenges and risks, to address current
crises. The initiatives have been formed in response
to crisis conditions, are very large in scale, and the
FDIC’s corresponding governance and supervisory
controls, in many cases, are still under development. Among the initiatives are the following:

150

´ Temporarily increasing basic deposit insurance
coverage limits from $100,000 to $250,000 per
depositor through December 31, 2009. There
is also a possibility of making this increase
permanent to help restore public confidence
and stability.
´ Implementing the Temporary Liquidity
Guarantee Program. Designed to free up funding for banks to make loans to creditworthy
businesses and borrowers, this program is
entirely funded by industry fees that totaled
$3.4 billion as of year-end. This program (1)
guarantees senior unsecured debt of insured
depository institutions and most depository
institution holding companies and (2) guarantees
noninterest bearing transaction deposit accounts
in excess of deposit insurance limits. The guarantees can go out as many as 3 years under the
current program, and we understand that the
Corporation has proposed the guarantees be
extended to 10 years if they are collateralized by
new loans. At the end of December 2008,
$224 billion in FDIC-guaranteed debt was
outstanding, and more than half a million deposit
accounts received over $680 billion in additional
FDIC coverage through the transaction account
guarantee.
´ Engaging in loan modification programs at
IndyMac Federal Bank, for example, intended
to achieve affordable and sustainable mortgage
payments for borrowers and increase the value
of distressed mortgages by rehabilitating them
into performing loans. In the case of IndyMac, as of the end of 2008, the FDIC had sent
approximately 30,000 proposals to borrowers and
about 8,500 had accepted. Other institutions
have agreed to implement loan modification
programs as part of their financial stability
agreements with the FDIC and other financial
regulatory agencies.
´ Processing applications for those FDIC-supervised institutions applying to the Department
of the Treasury’s Troubled Asset Relief Program
(TARP) Capital Purchase Program (CPP). This
program authorizes the Treasury to purchase up
to $250 billion of senior preferred shares from
qualifying insured depository institutions. As
of January 15, 2009, the FDIC had received over
1,600 applications requesting nearly $34 billion
in TARP funding.

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´ Participating with the other federal bank
regulatory agencies in conducting stress testing
and a capital program to ensure that the largest
institutions have sufficient capital to perform
their role in the financial system on an on-going
basis and can support economic recovery, even in
more severe economic environments.
´ Participating in the government’s plan to remove
toxic assets from banks by creating investment
partnerships with private investors.
With so many new initiatives now set in motion to
restore confidence and stability, multiple and
sometimes interrelated new risks will present themselves, and demands will likely be placed on FDIC
systems, processes, policies, and human resources
to successfully manage and carry out the initiatives
and achieve intended results. In that connection,
the FDIC needs to ensure that institutions
themselves carefully track the use of funds made
available through federal programs and provide
appropriate information on the use of such funds to
the FDIC, the Congress, and the public. Such
efforts will require vigilant oversight and effective
controls to ensure transparency, accountability, and
successful outcomes. The Treasury Secretary’s
February 10, 2009, announcement of the Administration’s Financial Stability Plan also suggests that,
in the months ahead, the FDIC may be further
involved in new activities to restart the flow of
credit, strengthen the financial system, and provide
aid for homeowners and small businesses.
Additionally, continuous coordination and
cooperation with the other federal regulators and
parties throughout the banking and financial
services industries will be critical in the months
ahead. Given recent attention on the financial
regulatory system in the United States and its
ability to keep pace with major developments and
risks in financial markets and products, the FDIC,
along with other regulators, will likely be subject to
increased scrutiny and possible corresponding
regulatory reform proposals that may have a
substantial impact on the regulatory entities.

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Resolving Failed Institutions
A key aspect of the FDIC mission is to plan and
efficiently handle the resolutions of failing
FDIC-insured institutions and to provide prompt,
responsive, and efficient administration of failing
and failed financial institutions in order to
maintain confidence and stability in our financial
system. The resolution process involves valuing a
failing federally insured depository institution,
marketing it, soliciting and accepting bids for the
sale of the institution, considering the least costly
resolution method, determining which bid to
accept, and working with the acquiring institution
through the closing process. The receivership process involves performing the closing function at the
failed bank; liquidating any remaining assets; and
distributing any proceeds to the FDIC, the bank
customers, general creditors, and those with
approved claims. Challenges include the following:
´ Twenty-five financial institutions failed during 2008, with total assets at failure of $371.9
billion and total estimated losses to the Deposit
Insurance Fund of approximately $17.9 billion.
´ Large, complex failures and facilitated
transactions, such as IndyMac Bank, F.S.B.
(estimated $10.7 billion loss to the insurance
fund) and Washington Mutual Bank ($307 billion in assets) are challenging to resolve.
´ The FDIC’s problem institution list grew—from
171 to 252 during the fourth quarter of 2008—
and total assets of problem institutions increased
from $115.6 billion to $159 billion, indicating
a probability of more failures to come and an
increased asset disposition workload.
´ A reliable, accurate claims determination system
is essential to resolving failures in the most
cost-effective and least disruptive manner, and
the Corporation is in the process of developing
such a system.
´ The Corporation needs to ensure that receivership and resolution processes, negotiations, and
decisions made related to the future status of
the failed or failing institutions are marked by
fairness, transparency, and integrity.

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´ The FDIC is retaining large volumes of assets
as part of purchase and assumption agreements with institutions that are assuming the
insured deposits of failed institutions. The FDIC
will be responsible for disposing of the assets
over an extended period of time. The Division of Resolutions and Receiverships’ assets in
inventory totaled about $15 billion as of the end
of 2008.
´ Some FDIC-facilitated resolution and asset
disposition agreements include loss-share provisions that involve pools of assets worth billions
of dollars and extend up to 10 years. Citigroup,
for example, involves $306 billion in loans and
securities protected by loss-share provisions.
Ensuring the Viability of the Deposit
Insurance Fund (DIF)
Federal deposit insurance remains at the core of the
FDIC’s commitment to maintain stability and
public confidence in the Nation’s financial system.
A priority for the FDIC is to ensure that the DIF
remains viable to protect insured depositors in the
event of an institution’s failure. To maintain sufficient DIF balances, the FDIC collects risk-based
insurance premiums from insured institutions and
invests deposit insurance funds. A number of
important factors have affected and will continue
to affect the solvency of the fund, as follows:
´ A higher level of losses for actual and anticipated
failures caused the DIF balance to decrease
during the fourth quarter 2008 by $16 billion to
$19 billion (unaudited) as of December 31, 2008.
´ Communication and coordination with other
federal regulators is vital to the FDIC as deposit
insurer in its efforts to protect and administer
the DIF.
´ Off-site monitoring systems and processes must
be effective and efficient to mitigate risks to the
funds to the fullest extent possible.
´ The FDIC relies to varying degrees on call report
data for monitoring the financial institutions
it insures, assessing premiums for insurance,
determining guarantees it provides for deposits
and debt, and processing institution applications
under the TARP’s CPP. The Corporation needs
to ensure the reliability and accuracy of call
report data reflecting an institution’s financial condition in the interest of making good
decisions associated with risk at institutions and
preventing potential losses to the DIF.

152

´ In February 2009, the FDIC Board took action
to ensure the continued strength of the DIF
by imposing a one-time emergency special
assessment on institutions of 20 basis points—or
20 cents on every $100 of domestic deposits, to
be paid on September 30, 2009. The Chairman
subsequently considered lowering the assessment
to 10 basis points, while seeking to expand the
Corporation’s line of credit with the Treasury
Department from its current $30 billion. The
Congress is considering a permanent increase
to $100 billion, and authority for the FDIC to
request a temporary increase up to $500 billion
with required approval from the Federal Reserve,
the Treasury Department, and the President. The
Board also set assessment rates that generally
increase the amount that institutions pay each
quarter for insurance and made adjustments that
improve how the assessment system differentiates for risk. The FDIC will need to carefully
manage these changes to the assessment process.
´ The Corporation adopted a restoration plan in
October 2008 to increase the reserve ratio to the
1.15 percent threshold within 5 years. The ratio
declined from 0.76 percent at September 30, 2008
to 0.40 percent at year-end. In February 2009, the
Board invoked the “extenuating circumstances”
provision in the Federal Deposit Insurance Act
and voted to extend the restoration plan horizon
to 7 years.
´ The Corporation will be continuing to play a
leadership role in its work with global partners on
such matters as Basel II to ensure strong regulatory capital standards to protect the international
financial system from problems that might arise
when a major bank or series of banks fail.
Ensuring Institution Safety and Soundness
Through an Effective Examination and
Supervision Program
The Corporation’s bank supervision program promotes the safety and soundness of FDIC-supervised
insured depository institutions. As of December 31,
2008, the FDIC was the primary federal regulator
for 5,116 FDIC-insured, state-chartered institutions
that were not members of the Federal Reserve
System (generally referred to as “state non-member”
institutions). The Department of the Treasury (the
Office of the Comptroller of the Currency and the
Office of Thrift Supervision) or the Federal Reserve

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Board supervise other banks and thrifts, depending
on the institution’s charter.
The examination of the banks that it regulates is a
core FDIC supervisory function. The Corporation
also has back-up examination authority to protect
the interests of the Deposit Insurance Fund for
about 3,200 national banks, state-chartered banks
that are members of the Federal Reserve System,
and savings associations. In the current
environment, efforts to continue to ensure safety
and soundness and carry out the examination
function will be challenging in a number of ways.
´ The Corporation needs to ensure it has sufficient
resources to keep pace with its rigorous examination schedule and the needed expertise to
address complex transactions and new financial
instruments that may affect an institution’s
safety and soundness.
´ In light of the many and varied new programs
that financial institutions may engage in, the
FDIC’s examination workforce will be reviewing and commenting on a number of new issues
when they assign examination ratings—both
in terms of risk management and compliance
examinations. For example, they will need to
analyze banks’ compliance with TARP CPP
securities purchase agreements, use of TARP
funding, and use of capital subscriptions to
promote lending to creditworthy borrowers and
encourage foreclosure prevention efforts.
´ The FDIC’s follow-up processes must be effective
to ensure institutions are promptly complying
with any supervisory enforcement actions
resulting from the FDIC’s risk-management
examination process.
´ The FDIC must seek to minimize the extent to
which the institutions it supervises are involved
in or victims of financial crimes and other
abuse. The rapid changes in the banking industry, increase in electronic and on-line banking,
growing sophistication of fraud schemes, and the
mere complexity of financial transactions and
financial instruments all create potential risks
at FDIC-insured institutions and their service
providers. These risks could negatively impact
the FDIC and the integrity of the U.S. financial
system and contribute to institution failures
if existing checks and balances falter or are
intentionally bypassed. FDIC examiners need to
be alert to the possibility of fraudulent activity

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in financial institutions, and make good use of
reports, information, and other resources available to them to help detect such fraud.
Protecting and Educating Consumers and
Ensuring an Effective Compliance Program
The FDIC’s efforts to ensure that banks serve their
communities and treat consumers fairly continue
to be a priority. The FDIC carries out its role by
educating consumers, providing them with access
to information about their rights and disclosures
that are required by federal laws and regulations,
and examining the banks where the FDIC is the
primary federal regulator to determine the
institutions’ compliance with laws and regulations
governing consumer protection, fair lending, and
community investment. It has challenging
initiatives underway in these areas.
´ The FDIC’s compliance program, including
examinations, visitations, and follow-up
supervisory attention on violations and other
program deficiencies, is critical to ensuring that
consumers and businesses obtain the benefits
and protections afforded them by law.
´ The FDIC will continue to conduct Community Reinvestment Act (CRA) examinations in
accordance with the CRA, a 1977 law intended to
encourage insured banks and thrifts to help meet
the credit needs of the communities in which
they are chartered to do business, including
low- and moderate-income neighborhoods,
consistent with safe and sound operations.
´ As part of the FDIC’s 75th anniversary year, the
Corporation conducted a nationwide financial
education program to promote the importance of
personal savings and responsible financial management and launched a nationwide campaign
to help consumers learn about the benefits and
limitations of deposit insurance. It will continue
such endeavors to disseminate updated information to all consumers, including the unbanked
and underbanked, going forward. To protect
consumer privacy, the FDIC also conducts
periodic examinations to verify that institutions
comply with laws designed to protect personal
information. The FDIC evaluates the adequacy
of financial institutions’ programs for securing customer data and may pursue informal or
formal supervisory action if it finds a deficiency.

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153

Effectively Managing the FDIC Workforce
and Other Corporate Resources
The FDIC must effectively manage and utilize a
number of critical strategic resources in order to
carry out its mission successfully, particularly its
human, financial, information technology, and
physical resources. The FDIC will face challenges as
it carries out activities to promote sound
governance and effective stewardship of its core
business processes and resources.
´ The FDIC continues work to ensure it has a
sufficient, engaged, skilled, flexible workforce
to handle its increased and changing workload.
The Board approved an authorized FDIC staffing level of 6,269, reflecting an increase of 1,459
positions from the staffing level authorized
at the beginning of 2008. These staff—mostly
temporary—will perform bank examinations
and other supervisory activities to address bank
failures, including managing and selling assets
retained by the FDIC when a failed bank is sold.
The Board also approved opening a temporary
West Coast Satellite Office for resolving failed
financial institutions and managing the resulting
receiverships. Rapidly hiring and training so
many new staff along with expanded contracting
activity will place heavy demands on the Corporation’s human resources staff and operations.
´ The FDIC’s numerous enterprise risk
management activities need to consistently
identify, analyze, and mitigate operational risks
on an integrated, corporate-wide basis. Such
risks need to be communicated throughout the
Corporation and the relationship between internal and external risks and related risk mitigation
activities should be understood by all involved.
´ With a new Administration and anticipated
retirements in the executive ranks of the FDIC,
Board make-up and composition of the FDIC’s
senior leadership team could be altered at
a tumultuous time when significant policy,
operational, and other issues warrant the highlevel focus and attention of the Board members
and reliance on the institutional and historical
knowledge of senior FDIC management.

154

´ The Deposit Insurance Fund totaled $19 billion
at the end of the fourth quarter 2008, compared
to $52 billion at year-end 2007. FDIC investment
policies and controls must ensure that these
funds be invested in accordance with applicable
requirements and sound investment strategies.
´ The Board approved a $2.24 billion 2009
Corporate Operating Budget, approximately
$1.03 billion higher than for 2008. The FDIC’s
operating expenses are largely paid from the
insurance fund, and consistent with sound corporate governance principles, the Corporation
must continuously seek to be efficient and
cost-conscious.
´ Ensuring the integrity, availability, and appropriate confidentiality of bank data, personally
identifiable information, and other sensitive
information in an environment of increasingly
sophisticated security threats and global
connectivity can pose challenges. Protecting the information that the FDIC possesses
in its supervisory, resolution, and receivership
capacities requires a strong records management
program, a correspondingly effective enterprisewide information security program, and
continued attention to ensuring physical security
for all FDIC resources.
´ The FDIC awarded approximately $500 million
in contracts during 2008 as of September 30.
Effective and efficient processes and related
controls for identifying needed goods and
services, acquiring them, and monitoring
contractors after the contract award must be in
place and operate well.
´ With increased resolution and receivership
workload, the level of FDIC contracting for
activities such as property management and
marketing, loan servicing, due diligence,
subsidiary management, financial advisory
services, and legal services will increase
significantly, and effective controls must be in
place and operational. According to the Division
of Resolutions and Receiverships, as of October 1,
2008, it had awarded $225.9 million in contracts
during 2008, compared to $37.9 million in 2007.

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CHAPTER 6

A PPE N D I C E S

The FDIC OIG is committed to its mission of
assisting and augmenting the FDIC’s contribution
to stability and public confidence in the nation’s
financial system. Now more than ever, we have a
crucial role to play to help ensure economy,
efficiency, effectiveness, integrity, and transparency
of programs and associated activities, and to
protect against fraud, waste, and abuse that can
undermine the FDIC’s success. Our management
and performance challenges evaluation is based
primarily on the FDIC operating environment as of
the end of 2008, unless otherwise noted. We will
continue to communicate and coordinate closely
with the Corporation, the Congress, and other
financial regulatory OIGs as we address these
issues and challenges. Results of OIG work will be
posted at www.fdicig.gov.

FE D E R A L

D E P O S I T

I N S U R A N C E

CO R P O R AT I O N

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2008

Federal Deposit Insurance Corporation
This Annual Report was produced by talented and dedicated staff. To these individuals,
we would like to offer our sincere thanks and appreciation. Special recognition is given
to the following individuals for their contributions.
´ Jannie F. Eaddy
´ Pearline Crosland
´ Barbara Glasby
´ Mia Jordan
´ Robert Nolan
´ Sam Collicchio
´ Patricia Hughes

Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429-9990

FDIC  003  2009