2015 Annual Report
I. Management’s Discussion and Analysis
The Year in Review
In 2015, the FDIC continued to play a leading role in supporting and promoting the global development of effective deposit insurance, bank supervision, and resolution regimes as integral components of the financial safety net. The FDIC worked with several standard-setting, regulatory, supervisory, and multi-lateral organizations such as the Association of Supervisors of Banks of the Americas (ASBA), the BCBS, the Financial Services Volunteer Corps (FSVC), the Financial Stability Board (FSB), the International Association of Deposit Insurers (IADI), the Internati onal Monetary Fund (IMF), and the World Bank. FDIC staff also: facilitated training for several hundred participants from counterpart agencies around the world; participated in technical assistance missions to several countries; and conducted secondment programs to further the international community’s understanding and implementation of best practices in deposit insurance, bank supervision, and failure resolutions.
International Association of Deposit Insurers
The IADI contributes to global financial stability by promoting international cooperation in the field of deposit insurance; providing guidance for establishing new, and enhancing existing, deposit insurance systems; and encouraging wide international contact among deposit insurers and other interested parties. IADI is now recognized as the standard-setting body for deposit insurance by major international financial institutions, including the FSB, the BCBS, the IMF, the World Bank, and the European Community. Since its founding in 2002, IADI has grown from 26 members to 80 deposit insurers from 77 jurisdictions. FDIC Chairman Martin J. Gruenberg served as the President of IADI and Chair of its Executive Council from November 2007 to October 2012. In October 2015, FDIC Vice Chairman Thomas M. Hoenig was elected to a two-year term to serve as President of IADI and Chair of its Executive Council.
IADI and the BCBS jointly issued the Core Principles for Effective Deposit Insurance Systems in 2009 and completed the accompanying Compliance Assessment Methodology for the Core Principles in 2010 (together, the Core Principles). The FSB later included the Core Principles as part of its Compendium of Key Standards for Sound Financial Systems. During the fall of 2014, IADI’s Executive Council and the FSB approved a revised set of Core Principles that replaced the original (2009) version.
Subsequently, an IADI drafting team, led by FDIC staff, began revising the Handbook for the Assessment of Compliance with the Core Principles (Handbook). The Handbook is being designed as a “how-to” guide, which will provide additional guidance on assessing a jurisdiction’s compliance with the Core Principles and will include lessons learned from collaboration with IMF and World Bank Financial Sector Assessment Program (FSAP) review teams, IADI Core Principles Regional Workshops, and IADI Self-Assessment Technical Assistance Program (SATAP) reviews.
The IMF and World Bank use the Core Principles in the context of the FSAP reviews, to assess the effectiveness of jurisdictions’ deposit insurance systems and practices. This represents an important milestone in the growing global acceptance of the role of effective deposit insurance systems in maintaining financial stability. IADI, under FDIC leadership of the Training and Conference Committee, has trained more than 300 staff members from over 74 jurisdictions in conducting self-assessments for compliance with the Core Principles. In collaboration with the Deposit Insurance Fund of Kosovo, the FDIC led a Regional Workshop in Pristina, Kosovo, during May 2015 on Assessment of Compliance with the Revised Core Principles. In June 2015, the FDIC led a team of experts on an IADI SATAP review of the Korea Deposit Insurance Corporation in Seoul, Korea.
FDIC executives and subject-matter experts partnered with IADI in helping to develop and deliver several international programs in 2015. In September 2015, for example, Vice Chairman Thomas M. Hoenig joined global bank resolution and deposit insurance leaders at a conference hosted jointly by IADI and the Financial Stability Institute Conference. The conference, which was held at the Bank for International Settlements in Basel, Switzerland, explored key issues related to resolution and crisis management. The FDIC also led the organizing committee for IADI’s Biennial Research Conference held in June 2015, in Basel, Switzerland. Vice Chairman Hoenig presented at the conference, along with several FDIC subject-matter experts. Finally, in addition to the Vice Chairman’s new role as IADI President and Chair of its Executive Council, FDIC staff provides strategic guidance and leadership to multiple IADI standing committees, subcommittees, and working groups.
Association of Supervisors of Banks of the Americas
The FDIC has been a member of ASBA since its founding in 1999 and supports ASBA’s mission of promoting sound bank supervision and regulation throughout the Western Hemisphere. ASBA represents bank supervisors from 36 jurisdictions. The FDIC strives to lead the development of strong supervisory policies in this hemisphere through actively engaging with the Board, chairing ASBA’s Training and Technical Committee, and providing leadership in many of the Association’s research and guidance working groups.
In 2015, senior FDIC staff chaired the ASBA Training and Technical Committee, which is responsible for designing and implementing ASBA’s training strategy that advances the adoption of sound bank supervision policies and practices among members. ASBA’s training program reaches more than 600 members annually, with FDIC support, both as chair and training provider. In support of ASBA’s training program, the FDIC led a technical assistance training mission in Guatemala City, Guatemala, titled Banking Crisis and Resolutions in 2015. During the year, the FDIC also partnered with the U.S. Treasury Department and ASBA to promote stronger cooperation and information sharing between deposit insurers and bank supervisors in Latin America and the Caribbean.
Basel Committee on Banking Supervision
The FDIC supported the development of sound regulatory policy through effective participation in the BCBS and its relevant groups, subgroups, and task forces. Major work areas for the BCBS include those conducted by the:
- Policy Development Group (PDG) and its:
- Coherence and Calibration Task Force
- Working Group on Capital
- Trading Book Group
- Leverage Ratio Group
- Working Group on Liquidity
- Risk Measurement Group
- Ratings and Securitization Work Stream
- Task Force on Standardized Approaches
- Task Force on Interest Rate Risk in the
- Banking Book
- Task Force on Scope of Regulatory Consolidation
- Research Task Force
- Quantitative Impact Study Working Group
- Coherence and Calibration Task Force
- Supervision and Implementation Group and its:
- Working Group on Operational Risk
- Standards Implementation Group –
- Standards Implementation Group – Trading Book
- Task Force on Supervisory Colleges
- Task Force on Pillar 2
- Working Group on Operational Risk
- Macroprudential Supervision Group
- Accounting Experts Group and its:
- Audit Subgroup
- Audit Subgroup
- Anti-Money Laundering Expert Group
- Task Force on Simplicity and Comparability
- Task Force on Sovereign Exposures
- Working Group on Margining Requirements
- OTC Derivatives Regulators’ Forum
- OTC Derivatives Supervisor Group
- OTC Derivatives Assessment Team
- Joint Central Counterparties Task Force
- Task Force on Securitization Markets
International Derivatives Work
For many years, the FDIC has been actively engaged in cooperation with market, prudential, and financial stability authorities in policy development and regulatory activities in the derivatives markets. The FDIC also participates in the work of Derivatives Regulators’ Forum and the OTC Derivatives Supervisors Group.
International Capacity Building
The FDIC’s international efforts supporting the development of effective deposit insurance systems, bank supervisory practices, and bank resolution regimes continued to grow in 2015. FDIC staff contributed to international capacity building by providing study tours, secondments, and technical assistance to foreign counterparts. These engagements resulted in an enhanced dialogue between the FDIC and foreign counterparts in significant areas such as bank supervision and regulatory developments post crisis, the legal framework and operations for bank resolutions, and optimal funding strategies for deposit insurers.
FDIC management and staff hosted study tours for 214 people representing 31 jurisdictions during the year. In addition, the FDIC’s Corporate University provided training in bank supervision and information technology to 173 foreign delegates from 20 jurisdictions. In 2015, the FDIC also launched a new training program for foreign regulatory officials, FDIC 101: An Introduction to Deposit Insurance, Bank Supervision, and Resolutions (FDIC 101), designed to provide a structured and comprehensive view of how the FDIC executes its key business functions. FDIC 101 incorporates technical expertise from across the Corporation into a semi-annual, five-day intensive course.
The FDIC contributes to global and domestic bank supervision, deposit insurance, and resolution initiatives by providing staff to support long-term projects and technical assistance missions led by the IMF, U.S. Treasury Department, the FSVC, and the World Bank. The FDIC also continued long-established programs for staffing multiple details with the U.S. Treasury Department’s Office of International Banking and Securities Markets and with the FSVC to work on a variety of technical assistance programs. The FSVC’s long-term assignments included on-site project work on lending to small-to-medium-sized enterprises and anti-money laundering in Indonesia, Angola, Tanzania, Jordan, and Egypt.
The FDIC also completed short-term technical assistance missions to Egypt to promote access to credit, and to Poland to assist with the deposit insurer’s organizational development. The FDIC partnered with the World Bank to provide technical assistance to the Nigeria Deposit Insurance Corporation and the Zimbabwe Deposit Protection Corporation on the development of quantitative models to estimate appropriate target fund ratios for their deposit insurance funds. The FDIC also partnered with the World Bank to provide technical assistance to Mexico’s bank supervisor, Comisión Nacional Bancaria y de Valores, on off-site risk-based supervision.
The FDIC expands and strengthens international engagement by providing secondment opportunities to foreign officials to engage in long-term consultation with FDIC subject-matter experts in areas related to bank supervision, deposit insurance, and resolutions. In 2015, two officials from the Deposit Insurance Corporation of Japan and the Korea Deposit Insurance Corporation concluded their secondments to the FDIC, and two new secondees from these agencies joined the FDIC, each for one-year assignments.
Key International Engagements
The FDIC continued to advance policy making priorities and strengthen its relationships with key jurisdictions worldwide through its participation in interagency dialogues in 2015.
In January 2015, FDIC executives traveled to Beijing to participate in the 11th U.S.-China Joint Economic Committee Meeting to discuss with their Chinese counterparts issues related to deposit insurance and the U.S. bank resolution regime. FDIC representatives, alongside representatives from the other U.S. financial regulatory authorities, also participated in the annual U.S.-India Financial Regulatory Dialogue in January to discuss issues related to bank resolution and financial inclusion. In April 2015, representatives from the FDIC, FRB, and OCC met with delegates from the China Banking Regulatory Commission (CBRC) for the eighth annual CBRC-U.S. Supervisors’ Bilateral Conference to discuss supervisory issues of mutual interest.
In May 2015, the FDIC joined other U.S., Canadian, and Mexican financial sector regulators in Ottawa for the 20th meeting of the North American Free Trade Agreement (NAFTA) Financial Services Committee (FSC). The participants discussed financial sector regulation, key policy issues, current cross-border financial sector issues, and recent developments in financial service regulations. The FDIC led the discussion on cross-border resolution, which included a discussion of resolution planning, resolution plans, and cross-border coordination efforts.
The 7th U.S.-China Strategic and Economic Dialogue was held in Washington D.C. in June 2015. FDIC Chairman Martin J. Gruenberg participated, alongside other leaders from U.S. and Chinese government agencies, giving remarks during the session on financial sector reform. Chairman Gruenberg commended China on the adoption of a deposit insurance system and emphasized the importance of strong bilateral cooperation and robust resolution regimes for global financial stability.