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.
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