View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Remarks
of
Martin J. Gruenberg, FDIC Vice Chairman;
14th Annual XBRL International Conference;
Philadelphia, Pennsylvania
December 4, 2006

XBRL AT THE FDIC
Thank you, Walter, for that kind introduction. I would like to extend my gratitude to Grant
Boyd and Diane Mueller, Co-Chairmen of the Philadelphia Conference Committee of
XBRL US, Inc., for inviting me to talk to you today about how XBRL is helping the
Federal Deposit Insurance Corporation (FDIC) to carry out its mission to preserve the
safety and soundness of the United States banking system. I would also like to thank
XBRL International, Inc. for hosting this conference and bringing together such a large,
diverse group from around the world with a common interest in this issue.
The FDIC supports XBRL and this event. Among the many dedicated FDIC
professionals here, I'd like to acknowledge Mike Bartell, the FDIC's Chief Information
Officer and a member of the XBRL - International Steering Committee. Soon after I
arrived at the FDIC last year, Mike brought to my attention the important management
benefits that the FDIC had derived from XBRL, and how the standard enables the FDIC
and other U.S. banking regulators to improve dramatically the reporting of data from the
financial institutions we supervise.
Today I would like to address three issues: first, the critical role that financial reporting
plays in the supervision of banks in the U.S.; second, how the FDIC has utilized the
XBRL standard to improve dramatically the speed and accuracy of reporting of data by
federally-insured financial institutions; and finally, what the FDIC is doing to encourage
the expanded use of the XBRL standard.
The Critical Role of Financial Reporting
Allow me to begin by telling you a bit about the FDIC and the central importance that the
reporting of financial information by banks plays in carrying out our mission to preserve
the safety and soundness of the U.S. banking system.
The FDIC is an independent agency of the federal government. Our mission is to
preserve and promote public confidence in the U.S. banking system by insuring
deposits in banks and thrift institutions; identifying, monitoring and addressing risks to
the deposit insurance fund; and limiting the effect on the economy and the financial
system when a bank or thrift institution fails. We directly examine and supervise over
5,000 FDIC-insured banks, more than half of the institutions in the U.S. banking system.
We also insure deposits in more than 8,700 U.S. banks and thrifts. We were created in

1933 in response to the thousands of bank failures that occurred during the Great
Depression of the 1920s and early 1930s.
To accomplish our mission, we need reliable, consistent, and accurate financial
information from the banks we supervise. For example, all FDIC-insured banks are
required to file quarterly reports with their primary regulator. These reports, the
foundation of our regulatory reporting system, are called Call Reports. Banks must
submit their data between 30 and 45 days after the end of each quarter. We collect
these reports from all FDIC-insured banks. Each institution provides data on
approximately 1,200 different financial concepts.
Call Reports are a critical source of information for every aspect of our nation's bank
supervision programs. Regulators use Call Report data to analyze the risks to banks'
balance sheets and income streams. The data are used to ensure that banks maintain
adequate capital and control their ratios of nonperforming loans. Regulators also use
the data in aggregate form to monitor the health of the banking industry across
segments of the industry and geographical regions. As the industry's insurer, the FDIC
relies on the data to provide a snapshot of individual bank performance and to monitor
the health of the banking system, as a whole, in order to manage the Deposit Insurance
Fund. In short, high- quality, timely financial data are critical for the FDIC to carry out its
mission.
Call Report data — most of which is publicly released — also provide great value to a
wide variety of other consumers of financial information. Call Reports have become the
gold standard of banking data for the industry, financial publishers, data aggregators,
investors, and individual consumers. Investment analysts review the data to monitor and
assess the state of the industry as well as individual banks and thrifts. Individual
consumers routinely tap into the FDIC website to access data on the institutions with
which they interact.
The integrity, accuracy and timeliness of Call Report data are vital. All Call Report users
— bankers, regulators, financial industry reporters and analysts, and other interested
parties and individuals - have a vested interest in making sure that the data are correct
and are accessible in a timely and efficient manner. Incorrect data can have significant
safety and soundness implications. Incorrect data can provide a false view of the
reporting institution and reflect poorly on management and internal controls, making the
bank appear risky. Mistakes can distort aggregate statistics. Call Report data must
accurately and completely reflect the true and current condition of a bank or thrift.
Call Report data transparency, quality and validation are top priorities for the FDIC.
Data are checked against approximately 2,000 validation criteria. And there are
approximately 429 pages of instructions describing in narrative our reporting
requirements. Not surprisingly, we've encountered challenges with data transparency,
quality and timeliness. Before the FDIC adopted XBRL, the data collection and
validation process was cumbersome and time-consuming. Multiple file formats and
inefficient legacy systems required substantial manual effort and resulted in significant

delays. For example, up to 30 percent of reporting institutions submitted data that were
not mathematically consistent. FDIC analysts had to spend up to three weeks manually
checking data quality following submission. The process for finding anomalies involved
phoning, e-mailing and faxing bankers to ask them to clarify or resubmit their data. This
process resulted in significant delays in our ability to release the data to the public.
The FDIC's Application of XBRL — the CDR Project
In 2003, the three U.S. federal banking regulatory agencies — the FDIC, the Federal
Reserve System, and the Office of the Comptroller of the Currency, through the Federal
Financial institutions Examination Council (FFIEC) — undertook the Central Data
Repository (CDR) project to modernize the Call Report data collection process, utilizing
the XBRL standard. That effort was completed in October 2005.
This is how the quarterly reporting system works now: The agencies begin by entering
all of their instructions, business rules and data quality standards into the CDR system.
Once the agencies have verified that the information is accurate, we publish publicly
what are called XBRL taxonomy files. As I understand it, these are simply text files that
don't require a particular brand of software to view. But they can be used to structure all
of the quarterly report information in a very uniform, standard way - so uniform and
standard that, in fact, at least five independent software companies use the data in
these taxonomy files to create software that bankers use to provide Call Report data to
the agencies.
One benefit of using XBRL is that even though five different software packages are
competing to make it as easy as possible to provide the data to the regulators, we can
be assured that each banker is being provided the same instructions, business rules
and quality standards. This enabled the agencies to change our data acceptance policy
to require that banks validate their data prior to submission, using functions built right
into their software. This new reporting process increases efficiency and reduces the
need for regulators to search for anomalies after submission. We receive high-quality
data sooner, and at a lower cost.
Benefits of the CDR Project
Let me turn to the specific benefits of our CDR project. The CDR system has helped our
agencies achieve the following:
Ninety-five percent of banks' original filings are clean, compared to only 66 percent
under the old system;
One hundred percent of data received are meeting mathematical requirements
compared to 70 percent under the old system;
Data receipt begins less than one day after the calendar quarter-end, compared to
weeks of delay under the old system;
Publication of the Quarterly Banking Profile, our flagship Call Report summary
publication, occurs as much as three weeks earlier than before;

Agency analyst productivity has improved 10 to 33 percent;
We gain access to data sooner — improving publishing speed and the ability to analyze
data for supervisory purposes; and
Regulator and bank use of consistent XBRL taxonomies allows real-time correction
capability.
Key to these successes was the minimal disruption to banks. Bankers did not know they
were using XBRL in the new system — it was transparent to them. This was due to our
work with the software vendors that provided the bank filing software.
In short, XBRL has helped us achieve significant efficiencies and reduce operating
costs. The standard has enabled us to improve the immediate quality of the data we
receive. Our data quality standards are conveyed efficiently, requiring significantly less
intervention from agency staff to reconcile and validate. The data are more timely and
accurate, allowing us to make better-informed decisions every day.
Interactive data and a common XBRL language have enabled us to dramatically
improve the quality of communication between the regulatory agencies and reporting
banks. Receiving data faster and more accurately strengthens our supervisory function
and also improves the public transparency of the condition of the banking system.
We've made an important investment in building this new system and it appears that the
benefits have been well worth the cost.
Next Steps
The Central Data Repository was designed and built to allow it to be extended to other
databases. Call Report processing was the first use, but we always envisioned the CDR
processing additional data sets and providing many of the same benefits as the Call
Report data processing.
We are applying XBRL to other data collection and reporting efforts. We are currently
converting the Uniform Bank Performance Report, one of the key financial performance
reporting tools used by bank examiners, to XBRL. We are also analyzing the use of
CDR and XBRL for the FDIC's annual Summary of Deposits Survey, a data series
containing deposit data on roughly 90,000 bank branches. We are working with other
bank regulators to explore how XBRL can bring efficiencies to other interagency
collaborative reporting efforts, such as the international capital requirements under the
new Basel II data series.
We are also working to help the public gain full access to the benefits of XBRL. We are
continuing to enhance transparency - using the mechanisms through which we
distribute Call Report data to the public - by adding a website within the CDR to
efficiently make Call Report data available externally.
Other Uses of XBRL

The FDIC has undertaken several initiatives to promote XBRL in the U.S. and
elsewhere. We helped organize a Community of Practice for U.S. government agencies,
including the Securities Exchange Commission, the Internal Revenue Service, and the
U.S. Treasury Department to share experiences and lessons learned with XBRL. We've
also held several discussions with the U.S. Office of Management and Budget to
discuss XBRL and its potential management value as a U.S. government financial data
exchange standard. And we've met with numerous other entities (both public and
private) here in the U.S. and around the world.
In conclusion, the FDIC's implementation of XBRL has improved the safety and
soundness of the U.S. banking system and its transparency to the public. We believe
that the XBRL standard has widespread applications across both the public and private
sectors with dramatic potential benefits to many forms of financial reporting.
Thank you.

Last Updated 12/05/2006