Ombudsman Report to the Industry
Message from Cottrell L. Webster, FDIC Ombudsman
I am pleased to present the latest in our series of online reports to
the financial services industry about issues and concerns raised to
the FDIC Office of the Ombudsman (OO). This report covers the period
1, 2009, through June 30, 2009.
During the first half of the year, 243 industry representatives contacted
the OO requesting assistance. In addition, OO staff spoke about banking
44 financial industry representatives through outreach visits, telephone
calls and industry-sponsored conferences. Bankers continued to express
overall satisfaction with the FDIC. Their major area of concern
continued to be the struggling
economy and its impact on the Deposit Insurance Fund (DIF).
The OO also spoke to 563 members
of the public about the FDIC and banking matters affecting them – a
continuing reminder that actions taken by the FDIC not only affect the
industry, but also touch the lives of the public.
During the six-month reporting period ending June 30, the FDIC
resolved 45 bank failures at considerable expense to the DIF.
While the public is reassured by the FDIC's ability to
resolve bank failures, concerns
about the level and sufficiency of the DIF were
common. Through its authority, the FDIC has increased
general assessments and charged a special assessment, to be collected
on September 30, 2009, with the ultimate goal of returning the DIF
to the statutory threshold defined by Congress. As OO representatives
reassured the public about prospects for the DIF, we also noted
that FDIC obligations are backed
by the full faith and credit of the United States Government.
Many of the government
programs implemented during the latter half of 2008
to revive the economy continue to function.
In addition, a pilot Legacy Loans Program is in the works to help
facilitate the sale of assets acquired by the FDIC through receivership.
report offers a brief summary of the programs and other relevant
We welcome suggestions and concerns about the FDIC in
its supervisory role. The OO summarizes these comments for FDIC senior
management review – without attribution – to
eliminate the possibility of reprisal. In addition to regional
specialists in Washington, D.C., provide assistance, regardless
of your location. Please visit our Web site (www.fdic.gov/regulations/resources/ombudsman)
for more information.
||Cottrell L. Webster
Office of the Ombudsman
about the Economy
The economy continued to be the greatest individual concern
of bankers who spoke to the OO during the first half of 2009. The
federal government has developed
extraordinary programs to revive the financial services industry
and the economy as a whole, some of which involve the FDIC's participation.
Extension of Increased Deposit Insurance Coverage
With the passage of Helping Families Save Their Homes Act in
May 2009, Congress extended the temporary increase in deposit insurance
coverage through 2013. For more information about FDIC deposit
insurance visit www.fdic.gov/deposit.
Extension of Temporary Liquidity Guarantee Program
In March 2009, the FDIC Board of Directors extended the debt guarantee
portion of the FDIC's Temporary Liquidity Guarantee Program
(TLGP) through October 31, 2009. The program provides an FDIC guarantee
for new, senior unsecured debt issued by banks, thrifts, bank holding companies,
thrift holding companies, helping institutions to fund their operations.
In August 2009, the FDIC Board extended the Transaction
Account Guarantee (TAG) component of the TLGP through June 30, 2010.
The TAG component provides insurance coverage for all deposits in non-interest-bearing
transaction accounts, as well as NOW accounts that pay minimal interest,
at insured depository institutions that opt into the program.
The TLGP, a voluntary program, has been effective in unlocking inter-bank
credit markets and restoring
rationality to credit spreads, thereby increasing funds for loans
to creditworthy businesses and consumers. For more information about the
FDIC's Temporary Liquidity Guarantee Program visit www.fdic.gov/tlgp.
Legacy Loans Program
In March 2009, the U.S. Treasury, in conjunction with the FDIC announced
the formation of a Legacy Loans Program (LLP). The FDIC's initial role
in this proposed program was to provide oversight
for the formation, funding and operation of the new public-private investment
would purchase loans and other assets from open depository institutions.
Although asset sales for open banks through the LLP were eventually postponed,
on July 31 the FDIC announced an alternative proposal for the LLP by
testing the funding mechanism via the sale of receivership assets. For
on the Legacy Loans Program visit www.fdic.gov/llp.
Mounting bank failures have caused the Deposit Insurance Fund to
decline from record levels in 2008. As mentioned in the April
2009 OO Report to Industry, the FDIC is statutorily required to restore
the Deposit Insurance Fund
percent of estimated insured deposits within five years (absent
extraordinary circumstances). On February 27, 2009, the FDIC Board
adopted a revised restoration plan for the DIF to extend to seven
years the length of time to restore the DIF reserve ratio to 1.15
percent, and increased the deposit insurance assessment rates for
certain institutions. On May 22, the Board voted to levy a special
assessment on insured institutions – to be collected on September
30, 2009 – to help replenish the DIF.
The issue of increased deposit insurance assessments for FDIC-insured
institutions is a
struggling for profitability in
Institution executives typically
understand the need for increased assessments and special assessments,
but also express concern about the negative effect on earnings,
capital and the availability of credit.
When asked by members of the public, the OO reiterates that the
FDIC does not impose deposit insurance assessments on depositors;
for paying assessments. The FDIC has no formal position on
the practice of institutions passing the cost of these
assessments to their customers through special fees; however, these
institutions should not suggest that the FDIC is imposing
the fee on
Since the FDIC announced a loan modification program at its conservatorship
of IndyMac Federal
FSB, on August 20, 2008,
OO has received
calls from borrowers who want to participate in such a
program at their own institution.
NOTE: If you have comments or suggestions about this semiannual report, please contact
FDIC Ombudsman Cottrell Webster at (703) 562-6040, or by e-mail at email@example.com.
To receive e-mail notifications of future OO semiannual reports as soon as
they are posted to the FDIC's Web site, follow the instructions at E-Mail updates.