2.   Improve the FDIC case manager program so that the case manager and the banks the case manager is responsible for are located in the same geographical region.

3.  Someone suggested that something needs to be done with the amounts for assessments, stating there was a "big cliff". In other words, when an assessment is made, it is substantial.  He recommended that the FDIC establish a range of assessments. 

4.  FDIC premiums should be paid in arrears to when premiums were discontinued for 1A banks – and going forward -- on the net increase in deposits (i.e. on the change in deposits rather than the total deposits).  

I agree. That is why we recently expanded our regulatory burden reduction project to the entire Federal Financial Institutions Examination Council (FFIEC). This Council – which I chair for the next year – is an organization established by Congress to help coordinate the regulatory functions of the various banking agencies. We were able to secure the Council’s approval recently to begin a ‘top to bottom review’ of the regulations under our purview with an eye toward eliminating duplication and redundancies as well as looking for ways to reduce burden.

In addition to paperwork and information collection requirements, perhaps the greatest burden is the cost of our current regulatory structure. I gave a speech recently which questioned the need for all the duplicative bureaucracy we have within the federal banking agencies and suggested some reforms that could save the industry a significant amount of money (The full text of my speech explains my proposals).

I hope you will read it and give me your thoughts. We are soliciting input and would eventually like to have a more comprehensive reform proposal to put on the table.

We have a job to do, and we will do it. But I think we also have an obligation to accomplish our mission with as little burden or duplication of effort as possible. Thank you for your thoughts.

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2.   Improve the FDIC case manager program so that the case manager and the banks the case manager is responsible for are located in the same geographical region.

This is a good suggestion. I can understand that, particularly when a bank that is part of a financial structure headquartered far away, the supervision could seem remote and inaccessible.

The primary goal of the Case Managers’ program, which we initiated in 1998, was to enhance risk assessment and supervision activities by assigning responsibility and accountability for related institutions to one individual. Regardless of geography, the designated Case Manager, as the principal supervisory contact for the FDIC’s regulatory oversight activities for the banking operations of a given institution, should be knowledgeable in all aspects affecting the supervisory risk profile of the institution.  

But nonetheless, the geography is important. That’s why we’re taking a look at our Case Managers’ program with an eye toward ensuring it is providing the effective supervisory oversight and contact envisioned when it was established. The geographic location of the Case Manager’s portfolio of banks will be part of this review. Thank you for the suggestion.

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I agree with you. That’s why our deposit insurance reform recommendations include eliminating the cliff – or the requirement that the FDIC charge assessments when the fund falls below 1.25 percent of estimated insured deposits. Instead, we have proposed a range within which the fund could float. In my view, this will ensure that premiums are distributed more evenly over time. I continue to hope Congress will adopt our proposal this year.

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4.  FDIC premiums should be paid in arrears to when premiums were discontinued for 1A banks – and going forward -- on the net increase in deposits (i.e. on the change in deposits rather than the total deposits).  

With respect to your suggestion to charge banks on increases in deposits rather than their total value, the FDIC is statutorily required to assess deposit insurance premiums that reflect the risk that institutions pose to the FDIC rather than the changes in that risk. The FDIC’s risk is in part contingent on total insured deposits, not just a change from one quarter to the next. I also understand your concern about the institutions who have benefited from the zero basis point assessment on the 1A category in recent years. Our deposit insurance proposal addresses this problem by giving banks who established the current fund in the early 1990s an assessment credit for a number of years – while assessing those who came in later. In my view, this should correct the imbalance, or unfairness, you cite in your comment.

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