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Remarks by FDIC Chairman Sheila C. Bair at the 75th
Anniversary "Face Your Finances" Road Show Event

Kansas City, MO – April 7, 2009

Thank you, Crosby.  That was a very nice introduction.  It's great to be in Kansas City.  I am a native of Kansas.  I grew up in southeast Kansas, a little town called Independence.  Many of you may have gone through there from time to time.  I actually worked in Kansas City, Missouri, for a couple years with the old Department of Health Education and Welfare in the regional attorney's office before I moved to Washington.  And went to KU law school as well as college, not far – and spent a lot of time in Kansas City as well.  So, it's very nice to be back. 

I've always loved this city.  It's a very – very pretty city, very family-friendly city, and I think really kind of a symbol of Heartland values of hard work and honesty and integrity.  And you know I grew up with those types of values and I think they've served me well in Washington.  I am direct, sometimes maybe a little too direct, but I think sometimes that Midwestern directness and openness serves us well in Washington. 

I think people more than anything right now just want folks to talk with them and explain to them what's going on and why we have these government programs and what we hope to accomplish and why we're doing what we're doing, and some of the solutions and programs we've come up with are less than optimal but I think we're doing the best we can given the current legal authorities we have. 

As Crosby indicated, for smaller banks, we do have a resolution mechanism that I think has worked pretty well for the larger financial organizations.  We do not have comparable legal authorities and that's created some practical issues in terms of how to deal with certain situations.  But I think that's at least longer term that's a problem that Congress will be addressing.  You know, this is really the center of commerce.  For both Missouri and Kansas, it's a hub for business and finance throughout the Midwest.  You've got a major rail network here and the largest foreign trade zone in the nation.  So, I really think that Kansas City has its finger on the pulse of America. 

And before I get into the rest of my remarks, I would like to recognize our wonderful staff from our FDIC Kansas City Regional Office who are here today.  Give them applause. They are our boots on the ground.  They've been very involved in working hard and planning today's program.  This is one of a series of town hall type meetings that we've done throughout the country,  beginning last year in conjunction with our 75th anniversary.  We saved the best for last.  This one in Kansas City is the final one and I'm very pleased to be here. 

Bank Failures & Lessons Learned

You know, we're here at a very critical time in the American economy.  As all of you know, the economy is not in great shape.  Americans across the nation are feeling the pinch.  I think less so here in American's heartland than in certain of the coastal areas.  You didn't have the huge boom time, so now perhaps the downside is less severe.  But, nonetheless, I know there's pain here as there is in other parts of the country, and so we're working hard to try to get through that. 

I do want to assure you and people throughout the nation that banks insured by the FDIC – your money remains the safest place in the world, and that's even if a bank fails – you're fully protected if you're below our insured deposit limits.  As long as you're under the basic $250,000 per deposit per institution, your money is absolutely safe and sound.  As you know, you can get even higher coverage than the $250,000 depending on how you structure your accounts.  For instance, a single person can get $250,000 in a single account, and then a joint account with a spouse, you can get another $250,000.  And that's all laid out on our Web site at MyFDICInsurace.gov. 

But if you're over that basic $250,000 limit, which will go back to $100,000 at the end of the year, we really encourage you to go to the Web site to make sure that you're fully protected.  We've been around for 75 years and I'm proud to say we have an absolute perfect track record.  Nobody has ever lost a penny of insured deposits and that's certainly not going to change. 

So, while many sources of funding have dried up for other types of financial service providers – banks and deposits have not, they're there.  In fact, insured deposits are growing.  They grew at a rate of 11% last year, which is a pretty eye-popping number.  But well-managed banks, especially community banks – many are represented in the room here today and thank you for coming – that rely primarily on insured deposit funding, should be able to keep lending, they are in fact lending, and they will weather the storm.  They will be a key source of credit to help the economy recover in the months ahead.

As for the overall banking system, it does remain sound, not withstanding some of the things that you may be hearing.  98% of banks are representing 98% of banking assets meet regulatory standards for being well-capitalized.  And despite all the difficulties, most banks actually remain profitable and they do fully meet regulatory standards.  We are obviously concerned about the future trajectory of the economy and whether the banks have sufficient capital buffers to weather more severe economic situations and we're working with our fellow regulators and conducting some stress tests right now. 

I think we're ahead of the curve on that and I want to assure you that we will continue working with Treasury and the Federal Reserve Board and the other bank regulators to make sure the banking industry and the banking system continues to function and serves the credit needs of the economy.  They are a vital life blood of the US economy, especially insured depository institutions since other sources of funding for lending have evaporated. We need to keep those banks lending and keep them stable if we're going to have an economic recovery and start growing again

You know, one thing we've discovered during the credit crisis, that the public really needs to relearn how deposit insurance works.  We saw that with IndyMac.  When people were running the bank – after the bank had already closed.  So, we really redoubled our efforts to get the word out about deposit insurance.  And we found, you know, a bright side of the IndyMac experience was that we found consumers, and depositors in particular, are thirsty for knowledge. 

Calls to our consumer hot line have doubled over the past year or so.  We know people are anxious and concerned and we respond and answer their questions. They’re asking: "Is my money protected?" "Is it safe?" "Is my bank safe?" It's our job to give clear and immediate answers and we try to keep it simple.  I think that's the key to financial education is keeping it simple and basic.  And in fact, we streamlined our rules regarding account structuring and deposit limits to make it a lot easier to figure out whether you're under our insured deposit limits. 

I think people need this kind of support and education to make good decisions about their money, whether it's deposit insurance or the use of credit.  And I think if we can arm consumers with enough knowledge about how to save, how to manage money – keep them thinking and planning before spending, making wise use of credit, thinking before they use credit to make a purchase – we'll all have a fighting chance to dig out of this and grow our personal wealth as well as our collective national economic wealth. We can kind of get back to the morals and cultural values of our parents and grandparents from the Depression era days of saving for a rainy day and accumulating wealth and using your house as a place to accumulate wealth, not as an ATM machine. 

I think we're all learning that and getting back in touch with those values.  And I think you know the silver lining of all of this is that we are getting back to those notions of thrift and greater conservatism when it comes to spending and using credit. 

75 Years of Success

As for the FDIC, we're still celebrating our 75th anniversary.  We are the oldest and largest deposit insurer in the world.  Our system works so well that now 100 nations follow our example with some form of deposit insurance and we routinely offer training and technical assistance to other countries in setting up their insured deposit institutions.  

As the saying goes, imitation is the sincerest form of flattery, so we've been flattered a lot especially in the last 18 months.  Even the UK, after the bank run on Northern Rock, came to us and asked us for input, and in fact, restructured their deposit insurance system to be much more along the lines of what we have here in the United States with the FDIC.

Our message is confidence and stability.  You can be confident that your money is safe and the banking system is stable because insured deposits are backed by the full faith and credit of the United States government.  As I said, we've set up a series of national news events and projects that are all aimed at protecting our economic democracy for the next 75 years.  We want people to know that the FDIC is watching over Main Street.  We really are there for Main Street, for the Main Street depositors.  Everyone who walks into a bank and sees the "Member FDIC" sign knows that their money is in the safest place on earth. 

To heighten public awareness and confidence banks – we are undertaking this national awareness campaign and that campaign has included paid advertisements in major newspapers, mag- magazines, lifestyle publications – we've even been on the Internet.  You know You Tube, we're every place, radio and TV, as well as a public service announcement campaign.  The ads tell why deposit insurance is important, how it works, what the limits are and, most importantly, where consumers can get more information. 

Public Service Announcements

Last fall, we launched a series of short PSA's that have been airing on TV and radio outlets nationwide and appearing in print on billboards, buses and shopping centers.  I hope maybe you've seen some.  We're very excited about these spots.  They feature Suzy Orman, the personal finance TV star and invite people to use our electronic deposit insurance estimator – or EDIE.  It's a very user-friendly tool and it's on MyFDICInsurace.gov.  I'd encourage you to go take a look if you haven't already.  It gives people information they can use and the ads are catchy and to the point, and I think they come at a very crucial time. 

We are getting some real traction from these public education efforts.  It really has been a big success.  Our media people estimate that we have reached 300 million people.  That's virtually everybody in America and we're doubling our efforts to reach America's diverse population.  And as part of this campaign, we've specifically targeted individual media markets including African Americans, Hispanics and Asian Americans.  Some of the materials have also been translated into foreign languages including Spanish, Chinese, Vietnamese, and Korean. 

In recent months, literally hundreds of news stories and personal finance columns about deposit insurance have blazed across virtually every form of media and we're here again today.  I've done a lot with the local media here and I thank you, all of you, the local TV stations and print media for coming and joining us and sitting down and talking with me. 

You probably saw the CBS 60 Minutes segment which gave the inside story on how the FDIC closes a bank, how we protect depositors and how we work with communities to calm frayed nerves and prevent a panic.  And I don't know if you saw that – my favorite scene was when a man came to the bank – the bank was closed Friday night and he came in Saturday morning with a big suitcase ready to take all of his cash out. A member of our team sat down and talked with him. He ended up leaving with an empty suitcase and that was a good thing.  He decided to leave his money where it was. 

We actually opened a few new deposit accounts that day even after the bank had closed.  It had been acquired by another healthier bank.  All this is public service journalism at its best. I think this segment really helped demystify the closing process and help people understand that even if their bank fails. It's a small minority of banks that have failed out of the 8300, again, 25 last year, 21 so far this year – so it's a very small minority.  But people understand even if their bank does fail, it's really a non-event if you're insured

Key Questions

Some of the other events we've had – in Chicago, Dallas, San Francisco, and New York.  And again, we're wrapping up here in Kansas City.  So, this is really an interactive process when we do these meetings.  I want to hear from you as much you may want to hear from me and I'm looking forward to learning from the audience and their questions and our excellent panelists. 

We want to get a good feel for how people are dealing with the current economic environment and we want to know what else we can be doing back in Washington to help your community in areas such as stemming foreclosures or making sure that credit is available on responsible terms.  So, I hope the take-away today will be a bundle of new insights and innovative ideas for educating the public about money and banking. 

We'll be asking you to consider a couple of key questions during today's discussions.  For instance, what can the FDIC, banks, and community organizations do to better inform the public, which kinds of banking accounts can best maximize wealth accumulation, what forms of financial education will help people make good decisions about taking out a mortgage, saving for retirement, or sending a child to college.  And, what do local mainstream bankers say are the biggest roadblocks that consumers face in building assets and using their services. 

We'd like you to think about these problems as well as hope- hopefully suggest some solutions.  And we want solutions not only that we'll learn that will work here in Kansas City – but hopefully we can bootstrap for the rest of the country.  With your help today and in the weeks and months ahead, I know we can improve financial literacy and together we can rebuild people's confidence in themselves, rebuild their trust in the banking system, and brighten their outlook for the economy.  We're seeing that happening already. 

So, now let me get started with the panel discussion.   I'm very privileged to have a very talented panel with vast experience in banking and personal finance and working with consumers.  So, if – if you could join me on stage. 

• Julie Riddle is the director of the Family Asset Building Program at the Family Conservancy.  Julie's expertise includes individual development accounts, financial education, tax preparation, asset building, home ownership, small business development, and anti-poverty work. 
• Bill Dana is president and CEO of the family owned Central Bank of Kansas City and has been there for the past 17 years.  He's been a leader in the banking industry for over 38 years.  Bill manages day-to-day operations from the bank's main office in northeast Kansas City. 
• Peggy Brotherton-Ford is the program administrator for InnerLight, Inc., a nonprofit organization that promotes financial literacy.  InnerLight runs seminars and counsels people on how to save money, avoid high credit card balances and deal with debt collectors. 
• Vanessa Finley is executive director of the First Step Fund, a nonprofit agency that trains and supports low to moderate entrepreneurs in the area.  Vanessa also chairs the Missouri Asset Development Coalition, the state's micro-enterprise trade association. 

Let's welcome them all with a very round – warm round of applause.  

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