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2010 Annual Report

I. Management’s Discussion and Analysis

Effective Management of Strategic Resources

The FDIC recognizes that it must effectively manage its human, financial, and technological resources in order to successfully carry out its mission and meet the performance goals and targets set forth in its annual performance plan. The Corporation must align these strategic resources with its mission and goals and deploy them where they are most needed in order to enhance its operational effectiveness, and minimize potential financial risks to the DIF. Major accomplishments in improving the Corporation’s operational efficiency and effectiveness during 2010 follow.

Human Capital Management

The FDIC’s human capital management programs are designed to recruit, develop, reward, and retain a highly skilled, cross-trained, diverse, and results-oriented workforce. In 2010, the FDIC stepped up workforce planning and development initiatives that emphasized hiring individuals with the skill sets needed to address the greatly increased number of bank failures and problem institutions. The Corporation also deployed a number of strategies to more fully engage all employees in advancing the FDIC’s mission.

Succession Management

In 2010, the Corporation significantly expanded its education and training curriculum for employees in the business lines, support functions, and for leadership development. Additionally, classroom learning and development opportunities were supplemented and supported with the expansion of e-learning, simulations, electronic performance support systems, job aids, and tool kits that were made available to new and tenured employees to quickly facilitate work processes and overall efficiencies. The FDIC is also engaged in a number of knowledge management approaches as it moves through the current financial crisis.

In 2010, the FDIC built on the transformed leadership development curriculum launched in 2009 and continues to expand opportunities to all employees, including new hires. This curriculum takes a holistic approach, aligning leadership development with critical corporate goals and objectives, and promotes the desired corporate culture. By developing employees across the span of their careers, the Corporation builds a culture of leadership and further promotes a leadership succession strategy.

Additionally, the Corporation formalized its Master of Business Administration (MBA) program for Corporate Managers and Executive Managers, in conjunction with a major university. The evaluation results of the pilot MBA program were overwhelmingly positive, and participants provided explicit examples of direct application to their jobs and improved strategic thinking. Five candidates were selected for the 2010-2013 class.

Strategic Workforce Planning and Readiness

The FDIC utilized a number of employment strategies in 2010 to meet the need for additional human resources resulting from the increased number of failed financial institutions and the volume of additional examinations. Among these strategies, the FDIC reemployed over 240 retired FDIC examiners, attorneys, resolutions and receiverships specialists, and support personnel; hired employees of failed institutions in temporary and term positions; recruited mid-career examiners who had developed their skills in other organizations; recruited term loan review specialists and compliance analysts from the private sector; and redeployed current FDIC employees with the requisite skills from other parts of the Corporation.

As the number of failed financial institutions continued to grow in 2010, the FDIC fully staffed two temporary satellite offices on both the west coast and the east coast to bring resources to bear in areas especially hard hit. The West Coast Temporary Satellite Office opened in Irvine, CA, in spring 2009, and as of year-end 2010 had nearly 500 employees. The East Coast Temporary Satellite Office opened in Jacksonville, FL, in fall 2009, and as of year-end 2010 had over 460 employees, most of whom were hired in 2010. In January 2010, the FDIC Board authorized opening a third satellite office in Schaumburg, IL. During 2010, the Midwest Temporary Satellite Office was established and now has over 300 employees on board. The Corporation also increased resolutions and receiverships staff in the Dallas Regional Office.

Almost all of the new employees in these new offices were hired on a non-permanent basis to handle the temporary increase in bank-closing and asset management activities expected over the next two to four years. To fully staff these offices and meet other needs brought on by the financial crisis, including increased examination activities, the Corporation hired approximately 2,000 additional employees in 2010. The use of term appointments will allow the FDIC staff to return to an adjusted normal size once the crisis is over without the disruptions that reductions in permanent staff would cause.

The FDIC continued its efforts to build workforce flexibility and readiness by increasing its entry-level hiring into the Corporate Employee Program (CEP). The CEP is a multi-year development program designed to cross-train new employees in the FDIC’s major business lines. In 2010, 148 new business line employees (883 hired since program inception) entered this multi-discipline program. The CEP continued to provide a foundation across the full spectrum of the Corporation’s business lines, allowing for greater flexibility to respond to changes in the financial services industry and in meeting the Corporation’s human capital needs. As in years past, the program continued to provide the FDIC flexibilities as program participants were called upon to assist with both bank examination and bank closing activities based on the skills they obtained through their program requirements and experiences. As anticipated, participants are also successfully earning their commissioned bank examiner credentials, having completed their three to four years of specialized training in field offices across the country. The FDIC had 163 commissioned participants by the end of 2010. These individuals are well-prepared to lead examinations on behalf of the Corporation.

Employee Engagement

The FDIC continually evaluates its human capital programs and strategies to ensure that the Corporation remains an employer of choice and that all of its employees are fully engaged and aligned with the Corporation’s mission. The FDIC’s annual employee survey incorporates and expands on the Federal Employee Viewpoint Survey mandated by Congress. A corporate Culture Change Initiative was instituted in 2008 to address issues resulting from the survey.

The Culture Change Initiative has continued to gain momentum, and progress is occurring toward completion of goals identified in the Culture Change Strategic Plan. The 2008 and 2009 employee survey results showed marked improvement in the areas of opportunity, while maintaining or improving on areas of strength. In 2010, the Corporation was honored with an award from the Partnership for Public Service as third best large agency in the Best Places to Work in the Federal Government rankings, based on the results of the 2009 All-Employee Survey. Much of this improvement is attributable to the Culture Change Program.

A new Culture Change Initiative was launched in September 2010 with an emphasis on individual as well as corporate responsibility for culture improvement. The Culture Change Council was reconstituted with new members, focus groups were conducted to determine where efforts should be made, training was conducted, and a number of other programs were begun as a result. Analysis indicates a positive response to these events and a willingness to continue to engage in the change process. The question-and-answer mailbox and quarterly all-employee teleconferences with the Chairman continued so that employees could provide input, make suggestions, and ask questions.

Employee Learning and Development

The FDIC offers a range of learning and development opportunities to meet the varied needs of its employees. It uses innovative solutions to prepare new and existing employees for the challenges ahead. By streamlining existing courses, promoting blended learning, and creating online, just-in-time toolkits and job aids, new employees can more quickly and thoroughly assume their job functions and assist with examination and resolution activities. In order to meet the 2010 learning needs of employees, the FDIC responded with flexible course scheduling, additional instructor-led and online courses, electronic performance support systems, and greater access to online resources via a newly redesigned intranet website.

In support of business requirements, the Corporation developed two new pre-commissioning courses for compliance examiners, a revised certificate program focused on the receivership and resolution function, and online toolkits for mid-career examiners. In addition to technical training, the Corporation also continued to focus on the development of all employees and future leaders by launching additional leadership development courses and electives. The FDIC’s leadership development curriculum supports the regulations issued by the Office of Personnel Management in December 2009 on succession planning and development for managers and supervisors. Additionally in 2010, the capabilities of the learning management system were expanded to allow the Corporation to track its employees’ certificates and continuing education requirements.

To meet the challenges of a growing workforce and provide additional flexibility in employee learning and development, the Corporation located training facilities within the temporary satellite offices. The Corporation quickly assessed the specific needs of employees in these locations and delivered training on-site, thereby reducing the need for and expense associated with employee travel. The Corporation also undertook several knowledge management initiatives, capturing lessons learned from the current financial crisis so that future generations of FDIC employees and managers can benefit from the experience.

In 2010, the Corporation provided its employees with 172 instructor-led courses and 1,950 online courses to support various mission requirements. There were 16,010 instances of completed instructor-led courses and 32,850 instances of completed online courses.

Information Technology Management

IT resources are among the most valuable assets available to the FDIC in fulfilling its corporate mission. In today’s rapidly changing business environment, technology is frequently the foundation for achieving many FDIC business goals, especially those addressing efficiency and effectiveness in an industry where timely and accurate communication and data are paramount for supervising institutions, resolving institution failures, and monitoring associated risks in the marketplace.

IT Support for Resolutions

During 2010, the FDIC provided prompt and effective IT support for all bank closings. This was accomplished by ensuring that application systems, technologies, and staff were available to support the FDIC’s closing operations. In particular, the FDIC modernized its automated insured deposit claims process and increased the FDIC’s capacity to process very large failed banks and multiple failed banks’ information. The application supporting this process was critical to the FDIC’s successful closing operations during 2010. Additionally, the non-deposit claims feature of this application increased efficiency of the overall closing process. This new subsystem introduced significant new technical capabilities to the FDIC.

IT Support for Asset Marketing

The FDIC’s marketing of failed financial institution assets is a critical resolution and post-closing function to ensure the minimal loss possible from the closed institution. As the number of resolutions increased, so did IT operations and support for asset management. To ensure that the best possible application systems were available to support this critical function, the FDIC made a number of key enhancements to the Corporation’s primary asset management system. During 2010, significant improvements were made in the stability, scalability, and performance of this application, which enabled the Corporation to keep pace with the large increase of assets resulting from 157 bank closings. The enhanced application now accommodates, with room for expansion, thousands of online users and tens of billions of dollars of assets for sale.

Strengthening the FDIC’s Privacy Program

The FDIC has a well-established privacy program that works to maintain privacy awareness and promote transparency and public trust. Privacy, the protection of sensitive information, including personally identifiable information (PII), is integral to accomplishing the mission of the FDIC in both the banking industry and among U.S. consumers. The privacy program is a critical part of the Corporation’s business operations. Education and awareness are key components of the FDIC’s privacy program. During 2010, the FDIC held its second Privacy Awareness Week event to raise employee awareness about identity theft and fraud prevention. In addition, the FDIC conducted a corporate wide campaign called “Sensitive Data: Handle with Care” to increase employee and contractor awareness about their responsibilities to safeguard sensitive data and PII. More recently, the FDIC also implemented a new “Think Privacy” awareness campaign that includes privacy tips on each employee’s hardcopy earnings and leave statements and the nationwide distribution of lobby posters.

In response to the FDIC’s increased reliance on third-party vendors that support bank post-closing activities, the FDIC performed privacy assessments of the five vendors that process significant amounts of sensitive bank-customer data during the loan sale and asset valuation process subsequent to a bank closing. To complete these assessments, the FDIC developed and implemented a privacy risk assessment questionnaire and tool in order to determine the maturity of the vendors’ privacy program. In addition, the FDIC performed Privacy Impact Assessments, which collected information regarding the adequacy of their processes for handling and protecting the privacy and security of sensitive bank-customer data.

The FDIC has seen a sharp increase in the volume of needed information from failing institutions. To ensure that this increased data requirement does not increase its PII risk, the FDIC completed the second of three in-depth assessments of the bank closing process to identify and address risks to the privacy and security of bank-customer PII. A key outcome of this effort was the creation of a new Privacy Compliance Officer (PCO) role for each bank closing weekend. In this role, the PCO is the designated official responsible for monitoring privacy protection requirements during the bank closing weekend. In addition, during 2010, the FDIC improved the agency’s monitoring of the enterprise network to identify at-risk privacy data and prevent the loss of that information, particularly social security numbers. The FDIC was proactive in conducting unannounced privacy walkthroughs of its headquarters offices in order to check for unsecured sensitive data and PII and to increase employee and management awareness about protecting such data. Further, the FDIC also conducts an annual review of the Corporation’s digital library to identify, monitor, reduce, and secure documents containing PII.


Last Updated 5/5/2011 communications@fdic.gov