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CSBS
IHE Fa s t C h a n g i n g e n v i r o n m e n t of b a n k S u p e r v i s i o n
GOOD AFTERNOON.
REMARKS.
THANK YOU, MR. MADSEN, FOR YOUR KIND INTRODUCTORY
I AM PLEASED AND HONORED TO HAVE THIS OPPORTUNITY TO SPEAK
WITH YOU TODAY.
MY SUBJECT TODAY - THE FAST CHANGING ENVIRONMENT OF BANK SUPERVISION.
SOON WE WILL BEGIN A NEW YEAR, BUT IF HISTORY IS A RELIABLE GUIDE WE
WILL CONTINUE TO SEE DEVELOPMENTS IN THE BANKING INDUSTRY OUTPACE
OUR ABILITY TO KEEP ABREAST OF THE MARKETPLACE.
CONGRESS ONCE AGAIN WILL HAVE THE OPPORTUNITY TO DEBATE THE ISSUES
CONFRONTING THE FINANCIAL SERVICES INDUSTRY: INTERSTATE BANKING, THE
EVOLUTION OF THE LIMITED SERVICES BANK, AND THE QUESTION OF WHETHER
TRADITIONAL FINANCIAL INSTITUTIONS SHOULD BE PERMITTED TO ENGAGE IN
NEW, FINANCIALLY-RELATED ACTIVITIES.
1.
CHANGES IN THE ENVIRONMENT
I'M HOPEFUL THAT WE WILL SEE SOME ACTION FROM CONGRESS.
PERHAPS
THEY WILL PROVIDE NEW ASSET POWERS FOR THE BANKING INDUSTRY, OR IN
THE AREA OF DEPOSIT INSURANCE, SOME CHANGES SO THAT THE FDIC CAN
EFFECTIVELY DEAL WITH A RELATIVELY LARGE NUMBER OF BANK FAILURES
THAT APPEAR TO BE IN THE CARDS IN THE YEARS AHEAD.
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ITS EVEN POSSIBLE WE MAY SEE FUNDAMENTAL REFORM IN THE DEPOSIT
TKNIIRANCF SYSTFM— SUCH AS THE ABILITY TO ESTABLISH A RISK-SENSITIVE
PREMIUM STRUCTURE.
AS A REGULATOR AND INSURER. I THINK IT WOULD BE
DESIRABLE TO HAVE THE DEPOSIT INSURANCE SYSTEM FUNCTION AS NEARLY AS
POSSIBLE AS A MARKET-DRIVEN INSURER WOULD.
A RISK BASED SYSTEM
WOULD REQUIRE THE FDIC IDENTIFY AND MONITOR THOSE INSTITUTIONS THAT
EXPOSE THE INSURANCE FUND TO ABOVE AVERAGE LOSSES.
JUST AS
IMPORTANTLY, IT WOULD BE A WAY TO LET BANK MANAGEMENT KNOW THEIR
INSTITUTION’S LOSS EXPOSURE EXCEEDS THAT OF THEIR PEERS.
WHETHER
THEY RESPOND OR NOT IS ANOTHER QUESTION, BUT THE RED FLAG IS
IMPORTANT THESE DAYS NOW THAT THE SUPPLY OF DIRECTOR AND OFFICER
LIABILITY INSURANCE IS VANISHING.
CERTAINLY WE WILL SEE THE EFFECTS OF THE SUPREME COURT DECISION
ALLOWING REGIONAL BANKING COMPACTS BY THE STATES.
THE ENVIRONMENT
FOR SUPERVISION WILL BE CHANGED IN LARGE MEASURE BY THE ADVENT OF
LARGE REGIONAL BANKS OPERATING IN A NUMBER OF STATES.
Bank s u p e r v i s i o n w i l l n e v e r b e t h e s a m e a s i n t e r s t a t e b a n k i n g a n d
NEW BANKING ACTIVITIES TAKE HOLD NATIONALLY.
SOME OF YOU MAY KNOW THAT BEFORE JOINING THE FDIC A FEW MONTHS AGO I
HAD THE PRIVILEGE OF WORKING WITH GOVERNOR BRUCE BABBIT AND THE
LEGISLATORS IN ARIZONA ON THE QUESTION OF INTERSTATE BANKING.
LIKE
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MANY OF YOU HERE FROM STATE LEGISLATURES, WE GREW WEARY WATCHING
CONGRESS AGONIZE OVER INTERSTATE BANKING.
A NATIONWIDE BANKING
MARKETPLACE IS ALREADY HERE.
IN ARIZONA, WE DECIDED THAT FULL INTERSTATE BANKING IS GOOD FOR
ARIZONA.
AND I THINK THAT APPROACH IS PREFERABLE TO CONGRESS
DECIDING WHAT IS GOOD FOR A SPECIFIC STATE.
NOW THAT THE LEGALITY
OF REGIONAL BANKING HAS BEEN UPHELD BY THE SUPREME COURT, MANY
STATES ARE MAKING DECISIONS ON WHERE THEY WANT TO BE POSITIONED IN
THE FINANCIAL MARKETPLACE.
SOME ARE OPTING FOR FULL INTERSTATE
BANKING, WHILE OTHERS ARE DECIDING TO JOIN REGIONAL COMPACTS.
I
THINK THE DIRECTION WE AS A NATION ARE MOVING IS APPROPRIATE.
EACH
STATE IS EXERCISING ITS RIGHT TO MAKE ITS OWN DECISIONS.
AND THE
PROCESS IS GIVING US AS GOOD A RESULT AS WE COULD HOPE FOR.
I THINK YOU CAN SAFELY SAY I FAVOR THE COMPETITION STATE
DETERMINATION IS BRINGING TO OUR BANKING SYSTEM, WITH REGARD TO BOTH
GEOGRAPHIC EXPANSION AND ASSET DEREGULATION, BUT IT WILL GREATLY
CHANGE THE DUAL BANKING SYSTEM AND BANK SUPERVISION WITH RESPECT TO
NEW BUSINESS ACTIVITIES BY BANKS, MANY QUESTION WHETHER THE FDIC
WILL IN THE FUTURE ATTEMPT TO RESTRICT BANKS THAT ARE AUTHORIZED BY
THEIR CHARTERING STATES TO ENGAGE IN A BROAD ARRAY OF FINANCIAL
ACTIVITIES.
WE SHOULD PERMIT BANKS TO OFFER A FULL RANGE OF
SERVICES SO THEY CAN COMPETE WITH LESS REGULATED PARTICIPANTS IN THE
FINANCIAL SERVICES MARKETPLACE.
DON'T EXPECT ROADBLOCKS FROM THE
FDIC TO COUNTER EFFORTS BY THE STATES TO ENACT POWERS THAT WILL HELP
BANKS TO IMPROVE THEIR PROFITABILITY.
BUT DO EXPECT THAT WE WILL
ATTEMPT TO KEEP SUCH ACTIVITIES FROM JEOPARDIZING THE SOUNDNESS AND
STABILITY OF A DEPOSITORY INSTITUTION.
AS AN INSURER, I WANT A PROFITABLE INDUSTRY.
HOWEVER, THE FDIC WILL
EXPECT NEW ACTIVITIES TO BE CONDUCTED IN A SAFE AND SOUND MANNER.
SOME ACTIVITIES— SUCH AS SECURITIES UNDERWRITING— REPRESENT
SUFFICIENT RISK TO MERIT REQUIRING BANKS TO ESTABLISH SEPARATE
SUBSIDIARIES.
NECESSARY.
EXPECT THE FDIC TO TAKE THAT APPROACH WHEN
BUT VIEW IT AS AN ATTEMPT BY AN INSURER TO MINIMIZE RISK
EXPOSURE, NOT AS AN EFFORT BY A FEDERAL REGULATOR TO CURTAIL STATE
AUTHORIZED ACTIVITIES.
2.
NEED FOR SUPER SUPERVISION
THE CHANGED BANKING ENVIROMENT, THE EVOLUTION OF REGIONAL BANKING
AND THE EXPANSION OF BANK POWERS HIGHLIGHTS THE. .NEED FOR SOUND AND .
IMPROVED SUPERVISION OF OUR BANKING SYSTEM. AT THE STATE LEVEL, THE
INTEREST IN ENHANCING THE COMPETITIVENESS OF FINANCIAL „-INSTITUTIONS
REQUIRES A CORRESPONDING INCREASE IN THE STATES' COMMITMENT TO
ADEQUATELY SUPERVISE.
CSBS HAS INITIATED AN OUTSTANDING PROGRAM FOR
IMPROVING THE QUALITY OF STATE REGULATION, AND WE AT THE FDIC WOULD
LIKE TO VIEW THE STATES AS OUR PARTNERS.
IT IS IMPORTANT THAT STATE
LEGISLATORS PROVIDE THEIR BANKING DEPARTMENTS WITH ADEQUATE
MANPOWER, SALARIES, AND SUPERVISORY TOOLS AS PART OF THE BANK
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deregulation e f f o r t .
SUPERVISION.
Sa f e t y a n d s o u n d n e s s is m o l d e d b y
AND SUPERVISION IS ONE AREA WHERE THE NEEDS INCREASE
WITH DEREGULATION.
AS A FEDERAL REGULATOR. I BELIEVE THE NEED FOR GOOD COMMUNICATION
AND COOPERATION WITH STATE BANKING AUTHORITIES IS MORE IMPORTANT
THAN EVER BEFORE.
NOT ONLY TO ASSURE THAT OUR VALUABLE AND LIMJIED
PERSONNEL RESOURCES ARE UTILIZED IN THE MOST -EFFICIENT MANNER
POSSIBLE BUT ALSO TO ASSURE THAT A SAFE AND SOUND BANKING SYSTEM IS
MAINTAINED.
WHAT PEOPLE DO NOT REALIZE IS THAT THE CHANGES BROUGHT
ON IN THE MARKETPLACE ARE ALSO CREATING NEW CHALLENGES FOR BANK
REGULATORS IN EFFECTIVELY SUPERVISING INSTITUTIONS IN THIS
DEREGULATED ENVIRONMENT.
3.
FDIC - STATE COOPERATIVE EFFORTS
from a p o l i c y s t a n d p o i n t , w e h a v e t a k e n a n u m b e r of s t e p s t o a s s i s t
State d e p a r t m e n t s in f u l f i l l i n g t h e i r s u p e r v i s o r y r o l e s . T he
STATF-Fmc fPOPFRATIVE EFFORT. WHICH BEGAN IN 1974 UNDER FORMER
Ch a i r m a n f r a n k w i l l e a n d w a s e x p a n d e d in 1980 u n d e r f o r m e r
Ch a i r m a n Ir v i n e S p r a g u e , p r e s e n t l y h a s 32 s t a t e s p a r t i c i p a t i n g w i t h
THE FDIC, 30 OF WHICH HAVE FORMAL WRITTEN AGREEMENTS WITH US.
THE
FRAMEWORK OF THE FDIC-STATE COOPERATIVE EFFORT CONSISTS OF SEVEN
PROGRAMS: DIVIDED EXAMINATIONS. STATE EXAMINER TRAINING, LEGAL
ASSISTANCE. JOINT ENFORCEMENT ACTIONS. COMMON APPLICATION FORMS,
COMMON EXAMINATION FORMS AND ACCESS TO THE FDIC COMPUTERIZED
DATABASF.
I WOULD LIKE TO BRIEFLY DISCUSS EACH OF THESE AREAS WITH
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YOU SINCE A NUMBER OF CHANGES HAVE OCCURRED THE PAST COUPLE OF YEARS
WHICH HAVE AFFECTED THESE PROGRAMS TO ONE DEGREE OR ANOTHER ALSO, I
SHOULD EXPLAIN WAYS IN WHICH WE CAN FURTHER STRENGTHEN OUR LINES OF
COMMUNICATION AND SUPERVISION.
DIVIDED EXAMINATION PROGRAM
THE DIVIDED EXAMINATION PROGRAM ESSENTIALLY INVOLVES DIVIDING
WELL-RUN BANKS INTO TWO GROUPS.
THE FDIC EXAMINES BANKS IN ONE
GROUP AND A STATE EXAMINES BANK IN THE OTHER GROUP.
REGULATORS SWITCH GROUPS.
THE PROGRAM.
EACH YEAR THE
ONLY THE HIGHEST RATED BANKS QUALIFY FOR
THOSE BANKS RATED 3, 4 OR 5 UNDER THE UNIFORM
FINANCIAL INSTITUTIONS RATING SYSTEM CONTINUE TO BE SUPERVISED BY
BOTH AGENCIES AS IN THE PAST.
ALL BANKS CONTINUE TO BE SUBJECT TO
REVIEW UNDER THE FDIC'S OFFSITE MONITORING SYSTEMS, INCLUDING AN
ANNUAL ASSESSMENT OF THEIR FINANCIAL CONDITION.
IN THIS WAY, A
BANK'S OPERATIONS CAN BE SCRUTINIZED EVEN WHEN EXAMINERS ARE NOT IN
THE BANKS.
EACH AGENCY RETAINS ITS PREROGATIVE OF EXAMINING ANY
BANK AT ANY TIME.
the d i v i d e d e x a m i n a t i o n p r o g r a m
9*
is h e l p f u l
TIMING OF FDIC-STATE EXAMINATIONS.
in c o o r d i n a t i n g the
AND IT IS HELPING US AVOID
FULL-SCOPE EXAMINATIONS OF WELL-RUN BANKS EVERY 12 MONTHS.
ARE A NUMBER OF REASONS WHY THIS IS IMPORTANT!
THERE
(1) THE NUMBER OF
PROBLEM BANKS HAS INCREASED DRAMATICALLY SINCE 1980! (2) THE FDIC
HELD THE LINE ON INCREASING ITS EXAMINATION STAFF OVER THIS PERIOD
IN RESPONSE TO GOVERNMENTWIDE BUDGET CUTTING MEASURES! AND (3) ME.
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HAVE REFOCUSED OUR ATTENTION TOWARD THOSE FDIC INSURED INSTITUTIONS.
REGARDLESS OF THEIR CHARTER. WHICH POSE THE GREATEST THREAT TO THE
TNSURANCE FUND. UNFORTUNATELY THE NET RESULT IS THAT STATE BANKING
DEPARTMENTS HAVE HAD TO SHOULDER MORE OF THE BURDEN OF ONSITE
EXAMINATIONS OF SATISFACTORY BANKS WHILE THE FDIC HAS DIRECTED ITS
PERSONNEL RESOURCES TOWARDS THOSE INSTITUTIONS BELIEVED TO BE OF
GREATEST FINANCIAL RISK.
WE EXPECT THIS TREND TO CONTINUE, AND
RECOGNIZE IN THE PROCESS THAT IT WILL REQUIRE THE STATES TO BOLSTER
THEIR BANKING DEPARTMENTS AND ESTABLISH STABLE FUNDING SOURCES IN
ORDER TO ASSURE THAT THE SUPERVISORY CHALLENGES BROUGHT ON BY THE
CHANGES IN THE MARKETPLACE ARE MET.
THIS WILL BE NO EASY TASK, BUT
I CAN ASSURE YOU THE FDIC STANDS READY TO ASSIST STATE BANKING
DEPARTMENTS, WHERE POSSIBLE.
[LATER ON IN THE CONFERENCE I EXPECT BILL TAYLOR OF THE FEDERAL
RESERVE WILL BE TOUCHING ON THE RECENT CHANGES MADE IN THEIR
EXAMINATION PROGRAM.
IT CALLS FOR AN INCREASED LEVEL OF SUPERVISION
OF STATE MEMBER BANKS WITH INDEPENDENT STATE EXAMINATIONS PLAYING AN
INCREASINGLY IMPORTANT ROLE.]
f*
AT THIS POINT, I WOULD LIKE TO MAKE A COUPLE OF COMMENTS ABOUT
CSBS'S STATE BANKING DEPARTMENT ACCREDITATION PROGRAM. TO DATE,
THREE STATES— ILLINOIS. IOWA AND NEW YORK— HAVE BEEN ACCREDITED.
the a c c r e d i t a t i o n p r o g r a m
is d e s i g n e d t o s t r e n g t h e n s t a t e b a n k i n g
DEPARTMENT CAPABILITIES TO ASSURE THE SAFETY AND SOUNDNESS OF
BANKING WITHIN EACH RESPECTIVE STATE.
I APPLAUD THAT EFFORT.
AND,
AS I MFNTTONED EARLIER. THE FDIC INTENDS TO CONTINUE TO EMPHASIZE
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pl)B ROI F AS INSURER AND DEEMPHASIZE OUR ROLE AS A GENERAL PURPOSE
pFRin at o r of s t a t e b a n k s , wf i n t e n d t o d e f e r t o St a t e a u t h o r i t i e s
uiMFNFVFR POSSIBLE. HOWEVER, WE WILL BE PREPARED TO EXAMINE ANY FDIC
INSURED INSTITUTION THAT NEEDS TO BE REVIEWED.
WHILE A LOT HAS BEEN ACCOMPLISHED IN IMPROVING THE QUALITY OF STATE
BANKING DEPARTMENTS, MUCH WORK STILL REMAINS.
OURSELVES —
LET'S NOT KID
A CRITICAL FACTOR IN THE QUALITY OF ANY ORGANIZATION-15
RFTNfi ABLE TO PAY COMPETITIVE SALARIES —
BEFORE THIS CAN BE
ACCOMPLISHED, STABLE FUNDING SOURCES MUST BE ASSURED.
STATE
LEGISLATURES ARE GOING TO HAVE TO COME TO GRIPS WITH THIS PROBLEM.
THE STAKES ARE TOO HIGH TO WAIT FOR A CRISIS TO OCCUR BEFORE
SOMETHING IS DONE.
FXAMTNFR TRAINING
One a r e a w h e r e S t a t e b a n k i n g d e p a r t m e n t s h a v e b e e n i n c r e a s i n g t h e i r .
EFFORTS IS IN THE AREA OF TRAINING.
FOR 1985. APPROXIMATELY 6QQ
State e x a m i n e r s f r o m 43 s t a t e s a n d Pu e r t o RICQ AND THE-VIRGIN
ISLANDS WILL HAVE PARTICIPATED IN TRAINING SESSIONS SPONSORED-B1
EITHER THE FDIC OR THE FFIEC. THIS IS A SIGNIFICANT INCREASE OVER
1984. WHEN 370 EXAMINERS ATTENDED SUCH SESSIONS.
THE PROJECTIONS FOR 1986 INDICATE THAT 46 STATES, PUERTO RICO AMD
THE VTROTN ISLANDS WILL NOMINATE 890 STATE EXAMINFRS TO ATTEND THE
VARIOUS TRAINING COURSES OFFERED AT THE FDIC TRAINING CENTER IN
ROSSLYN, VIRGINIA.
THIS COMMITMENT TO TRAINING INDICATES THAT STATE
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BANKING DEPARTMENTS ARE SERIOUS ABOUT IMPROVING THE SKILLS OF THEIR
EXAMINERS.
I SHOULD POINT OUT THAT OF THE 600 STATE EXAMINERS
ATTENDING IN 1985, ABOUT 200 WERE PARTIALLY FUNDED BY THE CSBS.
WE RECOGNIZE THE IMPORTANCE OF KEEPING EXAMINERS UP-TO-DATE ON THE
CHANGES OCCURRING IN THE BANKING INDUSTRY AND INTEND TO CONTINUE TO
MEET THE TRAINING NEEDS OF BOTH STATE AND FEDERAL EXAMINERS.
LEGAL ASSISTANCE PROGRAMS
ANOTHER AREA WHERE THE FDIC HAS PROVIDED ASSISTANCE TO THE STATES IS
OUR LEGAL ASSISTANCE PROGRAM.
WHILE THIS IS NOT A FORMAL PROGRAM TO
HELP IN DRAFTING STATE STATUTES, THE FDIC HAS PROVIDED TECHNICAL
ADVICE ON PROPOSED STATE BANKING LAWS AND COMMENTS ON ANY PROPOSED
STATUTES THAT AFFECT THE FDIC.
AREAS WHICH WOULD FACILITATE THE
DIVIDED EXAMINATION PROGRAM INCLUDE STATE AUTHORIZATION FOR THE
EXAMINATION OF AFFILIATES AND BANK SERVICE CORPORATIONS OR SIMILAR
ENTITIES.
ALSO, SOME STATE BANKING DEPARTMENTS NEED INVESTIGATIVE
POWERS, SUBPOENA POWERS, AND AUTHORITY FOR THE EXAMINATION OF
HOLDING COMPANIES.
A SECOND AREA OF STATE BANKING LAW WHICH MAY BE IN NEED OF REVIEW IS
ENFORCEMENT AUTHORITY STATE REGULATORS NEED TOOLS SIMILAR TO THE
FEDERAL POWERS CONTAINED IN SECTION 8 OF THE FEDERAL DEPOSIT
INSURANCE ACT.
THESE POWERS INCLUDE CEASE-AND-DESIST AUTHORITY,
BANK OFFICER REMOVAL, AND THE ABILITY TO ASSESS CIVIL MONETARY
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PENALTIES FOR CERTAIN VIOLATIONS OF LAW.
IN ORDER TO IMPLEMENT
THESE POWERS. THE STATE BANK INR DFPARTMENTS WOULD NEED RULEMAKING
AUTHORITY TO ESTABLISH DUF PROCESS PROCEDURES.
STATE LIQUIDATION LAWS ALSO MAY BE IN NEED OF REVIEW.
WE ARE
PREDICTING APPROXIMATELY 120 PLUS BANK FAILURES THIS YEAR AND
PERHAPS A SIMILAR NUMBER NEXT YEAR.
THE DAYS WHEN ONLY A DOZEN
BANKS OR LESS FAILED IN ANY GIVEN YEAR ARE GONE AND ARE NOT EXPECTED
TO RETURN IN THE NEAR FUTURE.
STATE LAWS WHICH FACILITATE PURCHASE
tun ASSUMPTION TRANSACTIONS —
SUCH AS BRANCHING ABILITY -- WILL
MAKF BOTH OUR JOBS EASIER AND MINIMIZE THE D ISRUPTIONS TO THE
COMMUNITY.
THESE ARE JUST A FEW OF THE AREAS IN WHICH THE FDIC CAN OFFER
TECHNICAL ASSISTANCE.
JOINT ENFORCFMENT PROGRAM
AN IMPORTANT ASPECT IN OUR OVERALL COOPERATIVE EFFORTS"WITH THE
St a t e s is o u r j o i n t e n f o r c e m e n t p r o g r a m . T he f e d e r a l a n d s t a t e
AGENCIES JOIN TOGETHER ON MEMORANDUMS OF UNDERSTANDING WITH BANKS
AND ON FORMAL ENFORCEMENT ACTIONS.
A MEMORANDUM IS A WAY OF
FORMALIZING A COMPREHENSIVE CORRECTIVE PROGRAM WITH A BANK'S BOARD
WITHOUT THE NECESSITY OF A FORMAL ADMINISTRATIVE PROCEEDING.
THE
JOINT MEMORANDUM TELLS A BANK’S BOARD THAT BOTH THE FEDERAL AND
State a u t h o r i t i e s s u p p o r t a g i v e n c o u r s e of a c t i o n , at p r e s e n t , we
CONSULT WITH STATE AUTHORITIES, AS REQUIRED BY LAW, BEFORE ISSUING
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CEASE-AND-DESIST ORDERS AND INFORMALLY CONSULT WITH EACH OTHER ON
LESS FORMAL MEMORANDUMS OF UNDERSTANDING.
f n f o r c f m FNT
COORDINATION IN THE
AREA NOT ONLY PROVIDES FOR A MORE UNIFIED FRONT TO THE
INSTITUTION BUT ALSO ENHANCES COMMUNICATION AMONG ALL THREE
PflRTTFS.
I BELIEVE IT IS AN ESSENTIAL INGREDIENT IN PROVIDING GOOD
SUPERVISION.
COMMON APPLICATIONS AND REPORT FORMS
A FEW YEARS AGO, THE FDIC EMBARKED ON A PROGRAM TO DEVELOP COMMON
APPLICATION FORMS COMPATIBLE WITH STATE AND FEDERAL NEEDS.
TODAY
APPROXIMATELY 25 STATES UTILIZE A COMMON APPLICATION FORM.
PROCESSING PERIODS ALSO HAVE BEEN DRASTICALLY CUT AND THE FDIC BOARD
HAS DELEGATED APPROVAL AUTHORITY ON MOST APPLICATIONS TO THE
regional d i r e c t o r s ,
now only those applications involving a policy
MATTER AND SOME APPLICATIONS RECOMMENDED FOR DISAPPROVAL ARE
FORWARDED TO THE FDIC BOARD.
ACCESS TO THE FDIC'S COMPUTER DATABASE
Wh i le a p p l i c a t i o n f o r m s h a v e b e e n s t r e a m l i n e d , b a n k f i n a n c i a l
REPORTING IS ANOTHER MATTER.
IN THE PAST, THE FINANCIAL INFORMATION
PROVIDED BY BANKS WAS USED PRINCIPALLY FOR MACROECONOMIC PURPOSES
AND ANALYZING OVERALL TRENDS IN THE INDUSTRY.
TODAY, THE REPORTS OF
Co n d i t i o n a n d r e p o r t s of in c o m e ("Ca l l r e p o r t s ") p l a y a n i n t e g r a l
ROLE IN THE INDIVIDUAL SUPERVISION ACCORDED A PARTICULAR
INSTITUTION.
AND STATFS CAN ACCESS THE FDIC’S COMPUTERIZED DATABASE.
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CURRENTLY, 27 STATES ACCESS OUR COMPUTER DATABASE ON A SHARED COST
BASIS■ THE BANKING DEPARTMENT IN EACH PARTICIPATING STATE HAS A
TFRMINAL THAT GIVES IT IMMEDIATE ACCESS TO A WEALTH OF KEY BANKING
INFORMATION CONCERNING THE BANKS SUPERVISED BY THAT DEPARTMENT. THE
STATE CAN OBTAIN CALL REPORT/ INCOME REPORT AND SUMMARY OF DEPOSIT
INFORMATION ON ALL BANKS AND, FOR STATE NONMEMBER BANKS, EXAMINATION
DATA FROM THE FDIC’S EXTENDED MONITORING SYSTEM.
HARD COPY UNIFORM
BANK PERFORMANCE REPORTS WHICH FACILITATE A FINANCIAL ANALYSIS OF
THE INSTITUTION ARE ALSO AVAILABLE ON A QUARTERLY BASIS.
THE STATE BANKING DEPARTMENT CAN OBTAIN THE SAME INFORMATION FOR ALL
ITS STATE MEMBER BANKS FROM ITS LOCAL FEDERAL RESERVE BANK.
A GREAT DEAL OF OFFSITE MONITORING INFORMATION IS AVAILABLE AND 27
STATES ALREADY HAVE ACCESS TO THIS INFORMATION.
I WONDER, HOWEVER,
HOW MANY OF THOSE STATES ARE TAKING FULL ADVANTAGE OF THIS VALUABLE
SUPERVISORY TOOL?
FOR STATE REGULATORS, THE DEVELOPMENT OF OFFSITE
MONITORING SYSTEMS TO COMPLEMENT ONSITE EXAMINATIONS IS A MUST.
FFIEC EXAMINATION REPORT
I AM SURE SOME OF YOU HAVE WONDERED WHAT HAS HAPPENED TO THE
INTERAGENCY EXAMINATION REPORT SCHEDULED TO HAVE BEEN IMPLEMENTED ON
Se p t e m b e r l.
at p r e s e n t , e a c h f e d e r a l a g e n c y
is h o l d i n g off
IMPLEMENTING THE NEW EXAMINATION REPORT AS A RESULT OF THE
Co m p t r o l l e r ’s a n n o u n c e m e n t a t t h e l a s t f f i e c m e e t i n g t h a t t h e y w e r e
LOOKING INTO IMPLEMENTING A NEW EXAMINATION PROGRAM WHICH WOULD
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RENDER THE INTERAGENCY REPORT OBSOLETE.
THE FDIC IS RELUCTANT TO
IMPLEMENT A NEW EXAMINATION REPORT IF IT IS NOT GOING TO BE TRULY AN
INTERAGENCY REPORT.
THE FUTURE OF THE INTERAGENCY REPORT W ILL HAVE
TO BE IRONFD OUT BY THE FFIEC.
NFW DIRECTIVES
WE ARE PREPARED TO TALK WITH YOU ABOUT NEW INITIATIVES IN
COOPERATION, PARTICULARLY AS WE MOVE TOWARD SOME REGIONAL TYPE
BANKING.
WHAT ARE YOUR SUGGESTIONS?
OVERALL SUPERVISION
COMMUNICATION AMONG REGULATORS AND BANKERS IS MORE IMPORTANT THAN
EVER BEFORE.
WHILE I HAVE FOCUSED ON RELATIONS BETWFFN THE FDIC AND
THE STATES. STATE-TO-STATE COORDINATION IS ONE ISSUE THAT WILL
BECOME MORE IMPORTANT AS INTERSTATE BANKING COMES DOWN THE ROAD.
SOME STATES ARE ALREADY INITIATING DISCUSSIONS IN THIS AREA.
THE
IDEA OF SHARING STATE EXAMINATION DATA WITH OTHER STATES MAY REQUIRE
LEGISLATIVE CHANGES.
IT IS AN AREA TO LOOK AT AND ONE WHICH WE HOPE
WE CAN HELP BY PROVIDING A FOCAL POINT FOR COOPERATION.
Our n a t i o n h a s b e e n w e l l - s e r v e d f o r o v e r a c e n t u r y by t h e d u a l
BANKING SYSTEM.
I BELIEVE IT HAS BEEN VERY VALUABLE IN HELPING TO
FOSTER AN INNOVATIVE FINANCIAL STRUCTURE.
WE BELIEVE THE FEDERAL
Go v e r n m e n t m u s t be v e r y c a r e f u l n o t t o u n d e r m i ne THE DUAL CHARTERING
SYSTEM.
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FOR REGULATORS, THE CHANGING ENVIRONMENT IS CREATING NEW CHALLENGES
tm
tuiPFPVTSTON. COORDINATION AMONG ALL OF THE REGULATORY AGENCIES
WILL BE IMPERATIVE IF WE ARE TO DEVELOP EFFECTIVE, COST EFFICIENT
WAYS TO SUPERVISE INSTITUTIONS IN THE 1980S AND BEYOND.
WE STAND
READY TO ASSIST STATE BANKING DEPARTMENTS IN MEETING THESE
CHALLENGES.
@FedFRASER