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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

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2004 Annual Report

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III. Performance Results Summary - Program Evaluation
During 2004, the FDIC completed evaluations of programs designed to achieve the strategic objectives set forth in the Receivership Management area of the FDIC's 2004 – 2009 Strategic Plan. The following section highlights the issues evaluated and summarizes the results of this evaluation.

Strategic Objective The FDIC resolves failed insured depository institutions in the least-costly manner.
Issues evaluated
  • What is the process for marketing failing institutions?
  • How is a listing of qualified and interested potential bidders generated?
Findings During 2004, four financial institutions failed. Three of the four were marketed using a Web -based automated notification system. The fourth was not marketed due to the unique situation involving allegations of fraud and little advance notice of the closing. The FDIC maintains a database of qualified and interested potential bidders consisting of financial institutions. In composing the potential bidders list, the FDIC takes into account the failed institution's geographic location, competitive environment, minority-owned status, financial condition, asset size, capital level and regulatory ratings. By using a Web-based system, the FDIC can market to a potential bidder both the failed institution and its assets more effectively and efficiently.

Strategic Objective Receiverships are managed to maximize net return toward an orderly and timely termination.
Issues evaluated
  • How are net returns maximized?
  • What constitutes orderly and timely termination?
Findings For 2004, the FDIC's goal was to market 85 percent of book value of a failed institution's marketable assets within 90 days of failure. Five financial institutions reached their 90-day threshold during this time. In each instance, 100 percent of the marketable assets were marketed within 90 days. Returning failed bank assets to the private sector quickly allows the FDIC to maximize net recoveries and minimize any disruption to the local community. The oversight and prompt termination of the receivership preserves value for the uninsured depositors and other receivership claimants by reducing overhead and other holding costs. The FDIC uses a number of information technology applications, including Internet auctions, to facilitate the management and marketing of assets.

Strategic Objective Potential recoveries, including claims against professionals, are investigated and are pursued and resolved in a fair and cost-effective manner.
Issues evaluated
  • How are potential recoveries identified and investigated?
Findings The FDIC follows extensive guidelines on how to conduct an investigation of a failed institution to identify potential claims and recovery sources. Every aspect of the process is extensively documented and reviewed, from pre-closing steps, to previewing potential claims and discovering and preserving sources of recovery for these claims, through tracking costs and recoveries. In addition, the FDIC keeps careful track of investigations at a high level through the Management Control Plan, which serves to maintain a record of each investigation and keep risks in check. Such risks principally arise from the failure to maintain accurate reports and records necessary to substantiate claims.

Last Updated 03/25/2005

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