Letter from the Director
Economic data suggest the U.S. economy is growing again, and there
are signs that banking industry earnings may be on the point of resuming
an upward trend.
However, bankers and regulators continue to deal with the workload generated
by the financial crisis. We are seeing additional bank failures, and the number
of insured institutions on the FDIC’s problem bank list is rising, although
more slowly than in past quarters. This issue of Supervisory Insights looks
at one resolution and supervisory strategy that has helped the Corporation
resolution costs and strengthen its liquidity position.
The FDIC is making greater use of loss-sharing agreements
which not only allow the Corporation to sell failed bank assets at the
time of failure, but also provide
the opportunity to recover prior asset losses when market conditions improve.
From January 1, 2009, through May 14, 2010, the FDIC entered into these agreements
for about three-fourths of the 212 bank failures.
These agreements affect not only the resolution of failing banks,
but also the examination process for acquiring banks. “FDIC Loss-Sharing Agreements:
A Primer” provides an overview of the loss-sharing process, addresses
the regulatory treatment of assets subject to these agreements, and discusses
accounting rules and capital implications for the acquisition of failed
The financial crisis has highlighted the need for greater transparency
and strengthened consumer protections in the financial system. The Credit
Responsibility and Disclosure Act of 2009 (Credit CARD Act) was enacted
to ensure fair treatment of consumers and transparent practices for open-end
plans, including credit cards. This issue’s “From the Examiner’s
Desk” feature explains how the provisions of the Credit CARD Act and amendments
to Regulation Z—including new disclosure requirements and billing and payment
practice restrictions—result in changes in bank compliance requirements.
This article offers suggestions for how examiners may assess compliance with
We hope you take the time to read these articles, and we encourage
our readers to continue to provide feedback on articles and suggest
issues. Please e-mail your comments and questions to SupervisoryJournal@fdic.gov.
Sandra L. Thompson
Division of Supervision and Consumer Protection