F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N

2O1O

A N N U A L R E P O R T
Mission

The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress 

to maintain stability and public confidence in the nation’s financial system by:

■ insuring deposits,

■ examining and supervising financial institutions for safety and soundness and consumer 

protection, and 

■ managing receiverships.

Vision

The FDIC is a recognized leader in promoting sound public policies, addressing risks in the nation’s 

financial system, and carrying out its insurance, supervisory, consumer protection, and receivership 

management responsibilities.

Values

The FDIC and its employees have a tradition of distinguished public service. Six core values guide us in 

accomplishing our mission:

1. Int

We adhere to the highest ethical and professional standards.

2. C

We are a highly skilled, dedicated, and diverse workforce that is empowered to achieve 

outstanding results.

3. Team

We communicate and collaborate effectively with one another and with other regulatory agencies.

4. E

We respond quickly and successfully to risks in insured depository institutions and the 

financial system.

5. Acc

We are accountable to each other and to our stakeholders to operate in a financially responsible 

and operationally effective manner.

6. Fa

We respect individual viewpoints and treat one another and our stakeholders with impartiality, 

dignity, and trust.
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A N N U A L R E P O R T
2 FDIC 2010 ANNUAL REPORT

March 31, 2011

Dear Sir,

In accordance with:

Q the provisions of section 17(a) of the Federal Deposit Insurance Act,

Q the Chief Financial Officers Act of 1990, Public Law 101-576, 

Q the Government Performance and Results Act of 1993,

Q the provisions of Section 5 (as amended) of the Inspector General Act of 1978, and

Q the Reports Consolidation Act of 2000,

The Federal Deposit Insurance Corporation (FDIC) is pleased to submit its 2010 Annual Report (also 

referred to as the Performance and Accountability Report), which includes the audited financial statements 

of the Deposit Insurance Fund (DIF) and the Federal Savings and Loan Insurance Corporation 

Resolution Fund.

In accordance with the Reports Consolidation Act of 2000, the FDIC completed an assessment of the 

reliability of the performance data contained in this report. No material inadequacies were found, and 

the data are considered to be complete and reliable.

Based on internal management evaluations, and in conjunction with the results of independent financial 

statement audits, the FDIC can provide reasonable assurance that the objectives of Section 2 (internal 

controls) and Section 4 (financial management systems) of the Federal Managers’ Financial Integrity 

Act of 1982 have been achieved, and that the FDIC has no material weaknesses. Additionally, the U.S. 

Government Accountability Office did not identify any significant deficiencies in the FDIC’s internal 

controls for 2010. We are committed to maintaining effective internal controls corporate-wide in 2011.

Sincerely,

Sheila C. Bair

Chairman

________________________________________________________________________

The President of the United States

The President of the United States Senate

The Speaker of the United States House of Representatives

Federal Deposit Insurance Corporation

550 17th Street NW, Washington, DC 20429 Office of the Chairman
FDIC 2010 ANNUAL REPORT 3

Table of Contents

Message from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Message from the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . 10

Dodd-Frank Wall Street Reform and Consumer Protection Act . . . . . . . . . . . . . 13

1. Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . 17

The Year in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Supervision and Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Resolutions and Receiverships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Effective Management of Strategic Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

2. Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Deposit Insurance Fund Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Investment Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

3. Performance Results Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Summary of 2010 Performance Results by Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

2010 Budget and Expenditures by Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Performance Results by Program and Strategic Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Prior Years’ Performance Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Program Evaluation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

4. Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Deposit Insurance Fund (DIF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

FSLIC Resolution Fund (FRF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Government Accountability Office’s Audit Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Management’s Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

Overview of the Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

5. Management Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Enterprise Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Material Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

Management Report on Final Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

6. Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

A. Key Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

B. More About the FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

C. Office of Inspector General’s Assessment of the Management and 

Performance Challenges Facing the FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
4 fdic 2010 annual report 

FDIC by the Numbers

INSURING DEP

EXAMINING INSTIT

MANAGING RECEIV

EDUCATING C

In its unique role as deposit insurer of banks and savings associations, and in cooperation with the

other state and federal regulatory agencies, the DIC promotes the safety and soundness of the 

financial system and the insured depository institutions by identifying, monitoring, and addressing 

risks to the Deposit Insurance Fund (

TheFDIC promotes public understanding and the development of sound public policy by provi

timely and accurate financial and economic information and analyses. It minimizes disruptive effects

from the failure of financial institutions. It assures fairness in the sale of financial products and the

provision of financial services.

TheFDIC ’s long and continuing tradition of excellence in public service is supported and susta

by a highly skilled and diverse workforce that continuously monitors and responds rapidly and 

successfully to changes in the financial environment.

At the FDIC, we are working together to be the best.

$250,000 DEPOS

442,557 L

INSU

USER S

0

I

D

DO

L

157FAILE

RE

7,657INSURED

146,000

DEPOSI

INQUI

27,372 CONSUM

AND IN

7LANG

FOR MON

SMART

C

45,776

NEW BAN

OPENED

AL

I

28BANK

PARI

SMALL-

8,150FDIC F

EMP

87INTERATONAL

580 VISITORs representing 60 

227016-FDIC_AR_.indd 4 4/11/11 
FDIC 2010 ANNUAL REPORT 5

During 2010, the FDIC met the 

challenge of protecting a record $6.2 

trillion of insured deposits in over 

half a billion accounts held by approximately 

7,700 FDIC-insured institutions. Our guarantee 

has protected depositors since 1933, with none 

ever losing so much as a penny of insured 

funds. The FDIC’s mission remains one of the 

most important and compelling across all of 

government, especially as we continue working 

through the fallout from the recent financial 

crisis. Our mission—promoting and maintaining 

the public’s confidence in our nation’s financial 

system by protecting insured depositors—

motivates each of us on a daily basis to engage 

meaningfully in our work for the betterment of 

the American public.

Our commitment to the FDIC’s mission and the 

pride and ownership displayed by our employees, 

resulted in our being recognized as the third best 

place to work among large federal agencies in the 

Partnership for Public Service’s 2010 Best Places to 

Work in the Federal Government. These rankings 

are the most comprehensive and authoritative 

rating and analysis of federal employee 

satisfaction. The rankings reflect the sentiments 

of more than 263,000 federal employees who 

completed the survey, and were driven by 

responses to questions about whether employees 

would recommend their agency as a good place 

to work, how satisfied they are with their jobs, 

and how satisfied they are with their agency on an 

overall basis.

Message from 

the Chairman

Daniel Rosenbaum/The New York Times/Redux
6 FDIC 2010 ANNUAL REPORT

The year 2010 was a year of transition in 

dealing with the aftermath of the financial 

crisis that began in 2008 and of major change 

in the financial regulatory system. The FDIC 

continued to focus on cleaning up failed banks, 

strengthening bank supervision, ensuring the 

financial capacity of the Deposit Insurance 

Fund (DIF), and beginning the huge task of 

implementing regulatory reforms passed by the 

Congress that are intended to prevent another 

financial meltdown.

During 2010, 157 banks failed, up from 140 

the previous year and the highest number since 

1992. However, fewer banks failed than we had 

projected, and failures likely peaked in 2010, 

although the number of problem institutions—

those with the two lowest supervisory ratings—

rose to 884, which was the highest year-end total 

since 1992. Historically, the vast majority of 

problem institutions do not fail.

While we expect 2010 to have been the peak 

year for problem and failed institutions, as the 

economy recovers, substantial residual workload 

remains from the failures that occurred in prior 

years. Accordingly, we have been adding to our 

operational resources. The FDIC workforce grew 

to 8,150 full-time equivalent positions at yearend 2010, up from 6,557 at year-end 2009, and 

is authorized to increase by another 13 percent 

during 2011 as we move some contracting work 

in-house to achieve cost savings. In recognition 

of anticipated lower projected bank failure 

resolution costs, the FDIC Board approved a 2011 

Corporate Operating Budget of $3.9 billion, a 

slight decrease from 2010.

Reforming the 

Regulatory Structure

Congress passed and President Obama signed the 

Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) in late July. The 

new law includes far-reaching changes to restore 

market discipline, internalize the costs of risktaking, and make our regulatory process more 

attuned to systemic risks. It greatly expands the 

FDIC’s regulatory responsibilities. It also made 

permanent the $250,000 standard maximum 

deposit insurance limit that had been raised 

temporarily from $100,000 during the crisis.

One of the objectives of the Dodd-Frank Act 

is to restore market discipline by repudiating 

the doctrine that certain large, complex, 

interconnected financial institutions are simply 

too big to fail; hence, the law gave the FDIC the 

power to resolve these institutions when they 

get into trouble. The new law also created the 

Financial Stability Oversight Council (FSOC)—

of which the FDIC was made one of the 10 

voting members—to identify and respond to 

the threat of systemic risks, such as the housing 

bubble that triggered the recent financial crisis. 

The new law also created an independent 

consumer watchdog, the Consumer Financial 

Protection Bureau (CFPB).

In carrying out our many new responsibilities, 

we were authorized to write 44 rulemakings, 

some of which are discretionary, including 18 

independent and 26 joint rulemakings. We 

were also granted new or enhanced enforcement 

authorities. In addition, we are subject to 

new reporting requirements and are required 

to undertake numerous studies and other 

actions. Implementation will require extensive 

coordination among the regulatory agencies and 

will fundamentally change the way we regulate 

larger complex financial institutions. Work began 

on a number of these rules in 2010.

The most significant rulemakings include 

implementation of:

Q the new resolution plan requirement;

Q the new capital floor requirement;
FDIC 2010 ANNUAL REPORT 7

Q the new orderly liquidation authority;

Q the change to the deposit insurance 

assessment base;

Q the so-called Volcker Rule that imposes 

trading restrictions on financial institutions;

Q source of strength requirements for bank and 

thrift holding companies; and

Q credit risk retention requirements for 

securitizations.

Reorganization of the

Supervision Function

In addition to issuing rulemakings, we reorganized 

our banking supervisory function to help 

carry out our new responsibilities under the 

Dodd-Frank Act. We created the new Office of 

Complex Financial Institutions to focus on the 

FDIC’s expanded responsibilities to implement 

a comprehensive risk analysis and assessment 

program for the largest, systemically important 

financial institutions. This office will perform 

continuous review and oversight of bank holding 

companies with more than $100 billion in assets 

as well as nonbank financial companies designated 

as systemically important by the new FSOC and 

will be responsible for establishing relationships 

and agreements with the relevant foreign 

jurisdictions involved in the supervision of these 

large firms. The new office will also be responsible 

for ensuring that the resolution plans developed 

by these firms are credible.

We also split our Division of Supervision and 

Consumer Protection into two separate divisions: 

the Division of Risk Management Supervision 

and the Division of Depositor and Consumer 

Protection. The new consumer division will 

allocate our resources more effectively while 

maintaining the cooperation and information 

sharing between consumer protection and safety 

and soundness examiners that are critical to an 

integrated supervisory approach. It will also 

complement, and work closely with, the 

new CFPB. 

Keeping the DIF Strong 

as Banks Recover

The Dodd-Frank Act requires that the DIF reserve 

ratio reach 1.35 percent by September 30, 2020. 

It also removed the upper limit on the designated 

reserve ratio (DRR) and therefore, on the size 

of the fund. The law also changed the insurance 

premium assessment base from domestic deposits 

to assets minus tangible equity.

In carrying out these changes, the FDIC Board 

proposed a comprehensive, long-term plan for 

fund management based on the new law and 

an FDIC historical analysis of DIF losses. This 

analysis demonstrates that to maintain a positive 

fund balance and steady, predictable assessment 

rates, the reserve ratio must be at least 2 percent 

before a period of large fund losses and average 

assessment rates over time must be approximately 

8.5 basis points of domestic deposits to achieve 

this ratio.

Protecting Depositors and 

Resolving Failed Institutions

As the number of failed institutions rose during 

the year, the FDIC continued using strategies 

instituted in 2009 to protect the depositors 

and customers of these institutions at the least 

possible cost to the DIF. The FDIC continued 

aggressively marketing failing institutions leading 

to the sale of the vast majority of these failed 

entities to healthier acquirers. These strategies 

helped to preserve banking relationships in 

many communities and provided depositors 

and customers with uninterrupted access to 

essential banking services. To this end, analysis 

is performed on every failing institution to 

identify branches located in low- and moderateincome areas to minimize the effect that any 
8 FDIC 2010 ANNUAL REPORT

proposed resolution transaction may have on these 

customers. Moreover, the FDIC’s use of loss-share 

agreements, where failed bank assets are passed 

to the acquirer—thus remaining in the private 

sector—with the FDIC sharing in any potential 

losses on the assets, is expected to save the FDIC 

$39.0 billion over the cost of liquidation.

Balanced Supervision under 

Adverse Conditions

As supervisor for approximately 4,700 community 

banks, the FDIC saw its workload rise in 2010 

with the increase in the number of FDICsupervised problem institutions. The FDIC 

responded to these challenges by prioritizing 

examination activities, increasing staffing levels, 

and making greater use of off-site monitoring 

and on-site visitations between examinations. 

We actively communicated with bankers through 

a variety of outreach activities, including a 

Community Bank Advisory Committee, now 

in its second year. This Advisory Committee 

provides real-time advice and guidance on a broad 

range of small community bank issues, as well as 

local conditions in communities throughout the 

country. We have also worked closely with other 

bank regulatory agencies to issue a number of 

Financial Institution Letters on risk management 

and compliance issues, including the Secure and 

Fair Enforcement for Mortgage Licensing Act of 

2008. Striking a balanced approach to bank 

supervision during a period of adversity for the 

industry remains essential to ensuring that credit is 

made available to finance the economic recovery. 

Preventing Unnecessary 

Foreclosures

Once again, the FDIC was at the forefront of 

efforts to stem the sharp rise in home foreclosures 

caused by unaffordable mortgages and high 

unemployment. In addition to advocating wider 

adoption of streamlined and sustainable loan 

modifications, we required failed-bank acquirers 

under loss-share agreements to modify qualifying 

at-risk mortgages by cutting interest rates and, in 

some cases, deferring principal. The FDIC also 

worked to expand the availability of principal 

write-downs as the erosion of homeowner equity 

may increase the likelihood of delinquencies and, 

in the case of loss-share agreements, losses to 

the DIF.

Reviving Mortgage 

Securitization

Mortgage securitization and the “originate to 

distribute” model of mortgage lending played 

leading roles in the buildup to the financial crisis. 

After the crisis, private securitization virtually 

shut down as investors lost confidence in market 

practices that were insufficiently transparent and 

ineffective in aligning their interests with those 

of originators and underwriters. After seeking 

and reviewing public comment, the FDIC Board 

approved new standards for its existing “safe 

harbor” protections for securitizations by banks 

that are later placed into receivership. These rules 

are designed to foster better risk management 

by strengthening underwriting, providing better 

disclosure, and requiring issuers to retain a 

financial interest in the securities while supporting 

profitable and sustainable securitizations by 

insured banks and thrifts. The goal is to improve 

industry standards in these areas in order to avoid 

future losses to the DIF and to support a revival of 

mortgage securitization on a sounder footing. 

Protecting Consumers 

and Expanding Access to 

Banking Services

The FDIC has traditionally played a leading role 

in shielding consumers from predatory practices 

and promoting access to mainstream financial 

services for all segments of the population. 

We accomplish this through a special website 

(www.economicinclusion.gov), our Advisory 

Committee on Economic Inclusion, our Alliance 
FDIC 2010 ANNUAL REPORT 9

for Economic Inclusion, our Money Smart

financial literacy program, and our National 

Survey of Unbanked and Underbanked Households.

A new initiative under way to improve access 

to mainstream banking services for low-income 

families is the Model Safe Accounts Pilot program 

approved by the FDIC Board in August. This 

program is designed to evaluate the feasibility of 

insured depository institutions offering basic, “no 

frills” transactional and savings accounts. The 

accounts will be FDIC-insured, have low rates and 

fees, and be subject to consumer protection laws, 

regulations, and guidance. 

We are also committed to ensuring that banks 

monitor their overdraft programs to protect 

consumers from excessive fees as well as protect 

their own reputations as stewards of customer 

trust. In late November, we issued final guidance 

on how to reduce problems and avoid hefty fees 

associated with automatic overdraft programs. 

A 2008 FDIC study found that some people 

were chronically using overdraft programs as a 

way to obtain short-term—and very expensive—

loans. While many community banks already 

prudently manage their overdraft programs, some 

banks operate automated programs that lead to 

inappropriate use of these high-cost, short-term 

credit products. The new guidelines provide 

consumers with better information about the cost 

of automatic overdraft programs and require banks 

to intervene when customers use the backstop too 

frequently.

Basel Committee on 

Banking Supervision: 

Capital and Liquidity

To meet the challenges of the future and to 

protect insured depositors, the FDIC actively 

participated in the Basel Committee’s efforts to 

raise global capital standards and institute new 

liquidity requirements. In December 2010, the 

Basel Committee released Basel III: A global 

regulatory framework for more resilient banks and 

banking systems, which increases the quality of 

capital, introduces a Tier 1 common equity ratio, 

requires banks to hold capital conservation and 

countercyclical buffers, increases the minimum 

Tier 1 capital ratio from 4 to 6 percent, and 

increases risk weights for certain bank exposures 

such as counterparty credit risk. The Basel 

Committee also agreed for the first time to 

institute an international leverage ratio and 

new quantitative liquidity thresholds, including 

both a short-term threshold and a longer-term 

structural metric. These capital standards and 

liquidity requirements will improve the ability of 

internationally active banks to meet funding needs 

and lend during periods of stress. 

The FDIC: An Enduring Symbol 

of Confidence

The year 2010 was another very busy and 

challenging year for the FDIC, and hopefully 

the peak year for bank failures. These are 

unprecedented times for our economy and the 

FDIC, but we are prepared to meet the demands 

of our times and committed to carrying out our 

mission of maintaining confidence and stability 

in the American financial system. I am especially 

grateful for the hard-working, dedicated, can-do 

men and women of the FDIC for all they have 

done to respond to the demands of the crisis and 

help put the nation’s financial system back on the 

road to recovery.

Sincerely,

Sheila C. Bair
10 FDIC 2010 ANNUAL REPORT

I

am pleased 

to present 

the Federal 

Deposit Insurance 

Corporation’s (FDIC) 

2010 Annual Report

(also referred to as 

the Performance and 

Accountability Report). 

The report covers 

financial and program performance information, 

and summarizes our successes for the year. The 

FDIC takes pride in providing timely, reliable, and 

meaningful information to its many stakeholders.

For the nineteenth consecutive year, the U.S. 

Government Accountability Office (GAO) issued 

unqualified audit opinions for the two funds 

administered by the Corporation: the Deposit 

Insurance Fund (DIF) and the Federal Savings and 

Loan Insurance Corporation (FSLIC) Resolution 

Fund (FRF). These unqualified audit opinions 

validate our efforts to ensure that the financial 

statements of the funds for which we are stewards 

are fairly presented. I applaud the hard work and 

dedication of the FDIC staff.

At the conclusion of 2010 and moving forward 

into 2011, the DIF balance remains negative. The 

DIF’s 2010 financial statements reflect the effect 

of a difficult banking environment, in which 157 

banks failed. This total exceeds all bank failures 

between 1993 and 2008, and is the highest annual 

number since 1992, when 179 failures occurred.

Financial Results for 2010

For 2010, the DIF’s comprehensive income was 

$13.5 billion compared to a comprehensive loss 

of $38.1 billion during 2009. This year-overyear change of $51.6 billion was primarily due 

to a $58.6 billion decline in the provision for 

insurance losses, partially offset by a $4.1 billion 

decrease in assessments earned (largely attributable 

to the 2009 special assessment). 

The provision for insurance losses was negative 

$848 million for 2010, compared to positive 

$57.7 billion for 2009. The 2009 provision 

reflected the significant losses estimated to be 

incurred by the DIF from the 2009 and future 

failures. In contrast, the 2010 negative provision 

is primarily impacted by a reduction in the 

contingent loss reserve due to the improvement 

in the financial condition of institutions that were 

previously identified to fail and adjustments to the 

estimated losses for banks that have failed.

The DIF’s total liquidity declined by $19.9 

billion, or 30 percent, to $46.2 billion during 

2010. The decrease was primarily the result 

of disbursing $28.8 billion to fund 157 bank 

failures during 2010, although it should be noted 

that 130 of these failures were resolved as cashconserving loss-share transactions (in which the 

acquirers purchased substantially all of the failed 

institutions’ assets and the FDIC and the acquirers 

entered into loss-share agreements) requiring 

lower initial resolution funding. Moreover, during 

2010, the DIF received $13.6 billion in dividends 

and other payments from its receiverships, which 

helped to mitigate the DIF liquidity’s decline.

Message from the Chief 

Financial Officer
FDIC 2010 ANNUAL REPORT 11

In accordance with the requirements of the 

Federal Managers’ Financial Integrity Act of 1982, 

the FDIC’s management conducted its annual 

assessment and concluded that the system of 

internal controls, taken as a whole, complies with 

internal control standards prescribed by GAO 

and provides reasonable assurance that the related 

objectives are being met. In 2009, GAO identified 

a material weakness in internal controls related 

to estimating losses to the DIF from resolution 

transactions involving loss-share agreements, in 

addition to a significant deficiency existing over 

information systems. The FDIC worked hard 

during 2010, implementing control improvements 

and comprehensive control enhancements to 

address these issues. I am proud to report that 

these are not repeat findings for 2010.

Our performance in 2010 gives us confidence 

that we can meet the challenges of an everchanging banking industry. In 2011, we will 

continue to focus on effective cost management, 

and maintaining a strong enterprise-wide risk 

management and internal control program. These 

include identifying and addressing risks to the 

insurance fund; implementing the Dodd-Frank 

Wall Street Reform and Consumer Protection Act; 

and providing Congress, other regulatory agencies, 

insured depository institutions, and the public 

with critical and timely information and analyses 

on the financial condition of both the banking 

industry and the FDIC-managed funds.

Sincerely,

Steven O. App
12 FDIC 2010 ANNUAL REPORT

Front row (left to right): Director Thomas Curry, Chairman Sheila Bair, Vice Chairman Martin Gruenberg. Middle row (left to right): Jason Cave, 

Mitchell Glassman (retired), Sandra Thompson, James Angel, Cottrell Webster, Arthur Murton, Arleas Upton Kea, Thom Terwilliger. Back row (left 

to right): Jesse Villarreal, Bret Edwards, D. Michael Collins, Russell Pittman, Steven App, and Andrew Gray. 

Not pictured: Michael Krimminger, Paul Nash, and Fred Cams.

FDIC Senior Leaders
FDIC 2010 ANNUAL REPORT 13

Enacted on July 21, 2010, the DoddFrank Wall Street Reform and Consumer 

Protection Act (“the Dodd-Frank Act” 

or “the Act”) provides the most comprehensive 

legislative reform of the U.S. financial sector 

since the 1930s. Aimed at addressing the causes 

of the financial crisis of the last few years, the 

Act, among other things, provides for a more 

comprehensive, macro perspective for identifying 

and taking action in response to emerging risks 

in financial sectors and closing regulatory gaps; 

heightened prudential supervision of systemically 

important nonbank financial companies and large, 

interconnected bank holding companies; orderly 

liquidation of systemically important nonbank 

financial companies and bank holding companies; 

elimination of open assistance to preserve a 

failing insured depository institution; improved 

consumer financial protections and mortgage 

lending practices; and enhanced transparency 

and supervision of over-the-counter derivatives, 

swaps, and securities activities; and other investor 

protections. The Act significantly impacts the 

FDIC in its roles as supervisor, receiver, and 

deposit insurer, as well as making changes to the 

FDIC’s corporate structure.

Supervision

The Dodd-Frank Act creates a new risk oversight 

umbrella group, the Financial Stability Oversight 

Council (FSOC). In an effort to mitigate potential 

systemic risks, the FSOC is empowered to 

designate certain nonbank financial companies 

for supervision by the Board of Governors of 

the Federal Reserve System (Federal Reserve) 

and to make recommendations for heightened 

prudential supervision of those nonbank financial 

companies and bank holding companies with total 

consolidated assets of $50 billion or more. The 

FSOC also may designate systemically important 

financial market utilities or payment, clearing 

or settlement activities. The FDIC is one of ten 

voting members of the FSOC.

The FSOC’s recommendations may include, 

for example, leverage limits, risk-based capital 

requirements, liquidity requirements, and 

concentration limits. The Federal Reserve will 

be responsible for implementing heightened 

prudential standards and supervising such firms. 

These firms also may be subject to orderly 

liquidation under Title II of the Act, in which 

the FDIC will act as receiver to resolve the firm 

through a process similar to that used to resolve 

failed insured depository institutions. The Act 

requires the FDIC and the Federal Reserve to issue 

joint regulations implementing the requirement 

that these systemically important financial 

companies develop plans for their rapid and 

orderly resolution in the event of material financial 

distress or failure. It also gives the FDIC backup 

examination authority over these systemically 

important financial companies.

The Dodd-Frank Act abolishes the Office 

of Thrift Supervision (OTS) and transfers 

responsibility for thrift supervision to the Office 

of the Comptroller of the Currency (OCC) and 

Dodd-Frank Wall Street 

Reform and Consumer 

Protection Act
14 FDIC 2010 ANNUAL REPORT

the FDIC, as of the statutory “transfer date” (i.e., 

July 21, 2011). The FDIC will be responsible for 

the supervision of state chartered thrifts, while the 

OCC will supervise federal thrifts. The Federal 

Reserve will supervise thrift holding companies 

and their non-depository institution subsidiaries.

The Dodd-Frank Act also creates a new Consumer 

Financial Protection Bureau (CFPB) within the 

Federal Reserve System. The CFPB will have 

exclusive rulemaking authority for specified federal 

consumer protection laws and will also have 

examination and primary enforcement authority 

for many nonbank financial service providers and 

insured depository institutions (IDIs) and credit 

unions with total assets of over $10 billion (and 

any affiliated IDIs). With regard to IDIs over $10 

billion otherwise in its jurisdiction, the FDIC 

will have backup enforcement authority for laws 

over which the CFPB has primary authority. The 

FDIC retains its current authority and programs 

under the Community Reinvestment Act and 

other consumer related laws not specified for 

all IDIs within its jurisdiction. It also retains all 

examination and enforcement authorities over 

IDIs with total assets of $10 billion or less within 

its jurisdiction. Examination coordination and 

information sharing with the new CFPB 

is required.

Receivership

As noted, the FDIC may be appointed as receiver 

for a failed systemically significant nonbank 

financial company or large, interconnected 

bank holding company. The orderly liquidation 

authority is similar to the resolution authority for 

IDIs under the Federal Deposit Insurance Act. 

However, no monies from the DIF may be used in 

connection with an orderly liquidation under Title 

II of the Act. Those resolutions will be funded 

initially by borrowing against the assets of the 

failed financial company, with the borrowings to 

be repaid from asset sales and, if necessary, from 

“clawbacks” of certain additional payments and 

from additional risk-based assessments against 

large financial companies. The Act expressly 

prohibits the use of taxpayer funds to prevent the 

liquidation of any financial company under Title 

II, and taxpayers shall bear no losses from the 

exercise of any authority under Title II.

Deposit Insurance

The Dodd-Frank Act permanently increases 

the standard maximum deposit insurance 

amount to $250,000, and made the increase 

retroactive to January 1, 2008. The Act also 

provides temporary unlimited deposit insurance 

coverage for noninterest-bearing transaction 

accounts for two years from December 31, 2010, 

through December 31, 2012. During this time, 

all noninterest-bearing transaction accounts 

are fully insured, regardless of the balance in 

the account and the ownership capacity of the 

funds. This coverage is available to all depositors, 

including consumers, businesses, and government 

entities. The unlimited coverage is separate 

from, and in addition to, the standard insurance 

coverage provided for a depositor’s other accounts 

held at an FDIC-insured bank.

The Act directs the FDIC to amend its regulations 

to define “assessment base” as average consolidated 

total assets minus average tangible equity. For 

custodial banks and banker’s banks, the FDIC 

may subtract an additional amount as necessary to 

ensure that the assessment appropriately reflects 

the risk posed by such institutions.

The Act eliminates the maximum limitation 

on the designated reserve ratio (DRR) and 

raises the minimum DRR from 1.15 percent to 
FDIC 2010 ANNUAL REPORT 15

1.35 percent of estimated insured deposits. It 

requires the FDIC to take such steps as may be 

necessary for the reserve ratio of the DIF to reach 

1.35 percent of estimated insured deposits by 

September 30, 2020. The FDIC must offset the 

effect on IDIs with total consolidated assets of 

less than $10 billion of this one-time requirement 

to reach 1.35 percent by that date rather than 

1.15 percent by the end of 2016. The Act also 

eliminates the payment of dividends from the DIF 

when the reserve ratio is between 1.35 percent 

and 1.50 percent and provides the FDIC sole 

discretion to limit or suspend dividends when the 

reserve ratio exceeds 1.50 percent.

FDIC Corporate Structure

The Dodd-Frank Act places the Director of the 

CFPB on the FDIC Board in lieu of the Director 

of the OTS. In addition, the Act requires the 

FDIC to establish by January 21, 2011, an Office 

of Minority and Women Inclusion (OMWI) 

to develop standards for equal employment 

opportunity and the racial, ethnic, and gender 

diversity of the agency’s workforce and senior 

management; increase participation of minorityand women-owned businesses in agency programs 

and contracts; and assess the diversity policies and 

practices of entities regulated by the agency. The 

OMWI is also to advise the agency on the impact 

of policies and regulations on minority- and 

women-owned businesses. The FDIC transferred 

the responsibilities of the Office of Diversity and 

Economic Opportunity to OMWI, effective 

January 21, 2011.

Other Financial 

Regulatory Reforms

The Act also makes a number of other 

reforms, including:

Q Requiring that minimum leverage and 

risk-based capital requirements for IDIs, 

depository institution holding companies and 

nonbank financial companies supervised by 

the Federal Reserve can be no lower than the 

generally applicable requirements in effect on 

July 21, 2010 (the “Collins Amendment”);

Q Prohibiting bank holding companies and 

their affiliates from engaging in proprietary 

trading or sponsoring or investing in a hedge 

fund or private equity fund (the so-called 

“Volcker Rule”);

Q Requiring greater transparency and regulation 

of over-the-counter derivatives, assetbacked securities (including risk retention 

requirements), hedge funds, mortgage brokers 

and payday lenders;

Q Requiring the financial regulators to 

prohibit incentive compensation at financial 

institutions that encourages excessive 

risk taking;

Q Providing new rules for transparency and 

accountability for credit rating agencies and 

requiring regulators to eliminate regulatory 

reliance on credit ratings; and

Q Establishing a Federal Insurance Office to, 

among other things, participate in the FSOC 

and monitor issues in the insurance industry.
SECTION TITLE WILL GO HERE 17

The Year in Review

The year 2010 was relatively challenging for 

the FDIC. In addition to the normal course of 

business, the Corporation continued to resolve 

failed insured depository institutions (IDIs), 

increasing resources as needed. The FDIC also 

started initial steps in the implementation of the 

Dodd-Frank Act, continued its work on highprofile policy issues, and published numerous 

Notices of Proposed Rulemaking (NPRs) 

throughout the year, seeking comment from the 

public. The Corporation also continued to focus 

on a strong supervisory program. The FDIC made 

enhancements to several versions of the Money 

Smart education curriculum. The FDIC also 

sponsored and co-sponsored major conferences 

and participated in local and global outreach 

initiatives.

Highlighted in this section are the Corporation’s 

2010 accomplishments in each of its three 

major business lines—Insurance, Supervision 

and Consumer Protection, and Receivership 

Management—as well as its program 

support areas.

Insurance

The FDIC insures bank and savings association 

deposits. As insurer, the FDIC must continually 

evaluate and effectively manage how changes 

in the economy, the financial markets, and the 

banking system affect the adequacy and the 

viability of the Deposit Insurance Fund (DIF).

State of the Deposit Insurance Fund

During 2009 and 2010, losses to the DIF were 

high. As of December 31, 2010, both the fund 

balance and the reserve ratio were negative after 

reserving for probable losses for anticipated bank 

failures. For the year, assessment revenue and 

lower-than-anticipated bank failures resulted 

in an increase in the reserve ratio to negative 

0.12 percent as of December 31, 2010, up from 

negative 0.39 percent at the beginning of the year. 

Long-Term Comprehensive Fund 

Management Plan

As a result of the Dodd-Frank Act revisions, 

the FDIC developed a comprehensive, longterm management plan for the DIF designed to 

MANAGEMENT’S DISCUSSION AND ANALYSIS

Management’s Discussion 

and Analysis
18 MANAGEMENT’S DISCUSSION AND ANALYSIS

reduce the pro-cyclicality in the existing system 

and achieve moderate, steady assessment rates 

throughout economic and credit cycles while 

also maintaining a positive fund balance even 

during a banking crisis, by setting an appropriate 

target fund size and a strategy for assessment rates 

and dividends. The FDIC set out the plan in a 

proposed rulemaking adopted in October 2010. 

The plan was finalized in rulemakings adopted in 

December 2010 and February 2011.

New Restoration Plan

Pursuant to the comprehensive plan, in October 

2010, the FDIC adopted a new Restoration 

Plan to ensure that the reserve ratio reaches 1.35 

percent by September 30, 2020. Because of 

lower expected losses over the next five years than 

previously anticipated, and the additional time 

provided by the Dodd-Frank Act to meet the 

minimum (albeit higher) required reserve ratio, 

the new Restoration Plan elected to forego the 

uniform 3 basis point increase in assessment rates 

scheduled to go into effect on January 1, 2011.

Setting the Designated Reserve Ratio

Using historical fund loss and simulated income 

data from 1950 to the present, the FDIC 

undertook an analysis to determine how high the 

reserve ratio would have had to have been before 

the onset of the two crises that occurred since the 

late 1980s to have maintained both a positive fund 

balance and stable assessment rates throughout 

the period. The analysis concluded that a 

moderate, long-term average industry assessment 

rate, combined with an appropriate dividend 

or assessment rate reduction policy, would have 

been sufficient to have prevented the fund from 

becoming negative during the crises, though the 

fund reserve ratio would have had to exceed 2.0 

percent before the onset of the crises.

Therefore, pursuant to provisions in the Federal 

Deposit Insurance Act that require the FDIC 

Board to set the DRR for the DIF annually, the 

FDIC Board proposed in October 2010 to set 

the 2011 Designated Reserve Ratio (DRR) at 

2.0 percent of estimated insured deposits. The 

Board approved a final rule adopting this DRR 

on December 14, 2010. The FDIC views the 

2.0 percent DRR as a long-term goal and the 

minimum level needed to withstand future crises 

of the magnitude of past crises. However, the 

FDIC’s analysis shows that a reserve ratio higher 

than 2.0 percent would increase the chance that 

the fund will remain positive during a future 

economic and banking downturn similar to or 

more severe than past crises. Thus, the 2.0 percent 

DRR should not be viewed as a cap on the fund.

Long-Term Assessment Rate Schedules and 

Dividend Policies

Once the reserve ratio reaches 1.15 percent, 

the FDIC believes that assessment rates can be 

reduced to a moderate level. Therefore, pursuant 

to its statutory authority to set assessments, in 

October 2010, the FDIC Board proposed a lower 

assessment rate schedule to take effect when 

the fund reserve ratio exceeds 1.15 percent. To 

increase the probability that the fund reserve 

ratio will reach a level sufficient to withstand a 

future crisis, the FDIC also proposed suspending 

dividends permanently when the fund reserve 

ratio exceeds 1.5 percent. In lieu of dividends, 

the FDIC Board proposed to adopt progressively 

lower assessment rate schedules when the reserve 

ratio exceeds 2.0 percent and 2.5 percent. 

These lower assessment rate schedules will serve 

much the same function as dividends, but will 

provide more stable and predictable effective 

assessment rates. The FDIC finalized these longterm assessment rate and dividend changes in 

February 2011 in concert with the changes to the 

assessment base and large-bank pricing system 

described below. 

Change in the Deposit Insurance 

Assessment Base

Change in the Assessment Base

The Dodd-Frank Act requires the FDIC to amend 

its regulations to define the assessment base as 

average consolidated total assets minus average 

tangible equity, rather than total domestic deposits 

(which, with minor adjustments, it has been since 

1935). The Act allows the FDIC to modify the 

assessment base for banker’s banks and custodial 

banks. In November 2010, the FDIC approved 
MANAGEMENT’S DISCUSSION AND ANALYSIS 19

a proposed rulemaking that would implement 

these changes to the assessment base. The FDIC 

finalized this rulemaking in February 2011.

The Dodd-Frank Act also requires that, for at 

least five years, the FDIC must make available 

to the public the reserve ratio and the DRR 

using both estimated insured deposits and the 

new assessment base. As of December 31, 2010, 

the FDIC estimates that the reserve ratio would 

have been negative 0.06 percent using the new 

assessment base (as opposed to negative 0.12 

percent using estimated insured deposits) and 

that the 2.0 percent DRR using estimated insured 

deposits would have been 1.0 percent using the 

new assessment base.

Conforming Changes to Risk-Based Premium 

Rate Adjustments

The changes to the assessment base necessitated 

changes to existing risk-based assessment rate 

adjustments. The current assessment rate schedule 

incorporates adjustments for types of funding that 

either pose heightened risk to the DIF or that help 

to offset risk to the DIF. Because the magnitude of 

these adjustments and the cap on the adjustments 

have been calibrated to a domestic deposit assessment base, the rule changing the assessment base 

also recalibrates the unsecured debt and brokered 

deposit adjustments. Since secured liabilities 

will be included in the assessment base, the rule 

eliminates the secured liability adjustment.

The assessment rate of an institution would also 

increase if it holds unsecured debt issued by other 

IDIs. The issuance of unsecured debt by an IDI 

lessens the potential loss to the DIF in the event of 

the institution’s failure; however, when the debt is 

held by other IDIs, the overall risk in the system is 

not reduced. 

Conforming Changes to Assessment Rates

The new assessment base under the Dodd-Frank 

Act will be larger than the current assessment 

base. Applying the current rate schedule to 

the new assessment base would result in larger 

total assessments than are currently collected. 

Accordingly, the rule changing the assessment 

base also established new rates to take effect in 

the second quarter of 2011 that will result in 

collecting approximately the same amount of 

assessment revenue under the new base as under 

the current rate schedule using the existing 

(domestic deposit) base. These schedules also 

incorporate the changes from the proposed large 

bank pricing rule that was finalized in February 

2011 along with the change in the assessment 

base. The initial base rates for all institutions will 

range from 5 to 35 basis points. 

The initial base assessment rates, range of possible 

rate adjustments, and minimum and maximum 

total base rates are shown in the table below.

Changes to the assessment base, assessment 

rate adjustments, and assessment rates will take 

effect April 1, 2011. As explained above, the rate 

schedules will decrease when the reserve ratio 

reaches 1.15, 2.0, and 2.5 percent.

Proposed Initial and Total Base Assessment Rates1

Risk 

Category I

Risk 

Category II

Risk 

Category III

Risk 

Category IV

Large and Highly 

Complex Institutions

Initial base assessment rate 5–9 14 23 35 5–35

Unsecured debt adjustment2 (4.5)–0 (5)–0 (5)–0 (5)–0 (5)–0

Brokered deposit adjustment ...... 0–10 0–10 0–10 0–10

Total Base Assessment Rate 2.5–9 9–24 18–33 30–45 2.5–45

1 Total base assessment rates do not include the proposed depository institution debt adjustment.

2 The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an IDI’s initial base assessment rate; thus, 

for example, an IDI with an initial base assessment rate of 5 basis points would have a maximum unsecured debt adjustment of 2.5 

basis points and could not have a total base assessment rate lower than 2.5 basis points.
20 MANAGEMENT’S DISCUSSION AND ANALYSIS

Changes to the Large Bank Assessment System

The FDIC continued its efforts to reduce the 

pro-cyclicality of the deposit insurance assessment 

system by issuing a proposed rule in November 

2010, that was finalized in February 2011, and 

revises the assessment system applicable to large 

IDIs to better reflect risk at the time a large 

institution assumes the risk, to better differentiate 

large institutions during periods of good economic 

conditions, and to better take into account 

the losses that the FDIC may incur if such an 

institution fails.

The rule eliminates risk categories for large 

institutions. As required by the Dodd-Frank Act, 

under the rule, the FDIC will no longer use longterm debt issuer ratings to calculate assessment 

rates for large institutions. The rule combines 

CAMELS1

 ratings and financial measures into two 

scorecards—one for most large institutions and 

another for the remaining very large institutions 

that are structurally and operationally complex or 

that pose unique challenges and risks in case of 

failure (highly complex institutions). In general, a 

highly complex institution is an institution (other 

than a credit card bank) with more than $50 

billion in total assets that is controlled by a parent 

or intermediate parent company with more than 

$500 billion in total assets, or a processing bank 

or trust company with at least $10 billion in 

total assets.

Both scorecards use quantitative measures that 

are readily available and useful in predicting an 

institution’s long-term performance to produce 

two scores—a performance score and a loss 

severity score—that will be combined and 

converted to an initial assessment rate. The 

performance score measures an institution’s 

financial performance and its ability to withstand 

stress. The loss severity score quantifies the relative 

magnitude of potential losses to the FDIC in the 

event of the institution’s failure. The rule will take 

effect in the second quarter of 2011.

Temporary Liquidity Guarantee Program

On October 14, 2008, the FDIC announced 

and implemented the Temporary Liquidity 

Guarantee Program (TLGP). The TLGP consists 

of two components: (1) the Debt Guarantee 

Program (DGP)—an FDIC guarantee of certain 

newly issued senior unsecured debt; and (2) 

the Transaction Account Guarantee Program 

(TAGP)—an FDIC guarantee in full of 

noninterest-bearing transaction accounts.

Under the DGP, the FDIC initially guaranteed 

in full, through maturity or June 30, 2012, 

whichever came first, the senior unsecured debt 

issued by a participating entity between October 

14, 2008, and June 30, 2009, although in 2009 

the issuance period was extended through October 

31, 2009. The FDIC’s guarantee on each debt 

instrument also was extended in 2009 to the 

earlier of the stated maturity date of the debt or 

December 31, 2012.

The FDIC charged a fee based on the amount 

and term of the debt issued. Fees ranged from 50 

basis points on an annualized basis for debt with 

a maturity of 180 days or less, increasing to 75 

basis points on an annualized basis for debt with a 

maturity of 181 to 364 days and 100 basis points 

on an annualized basis for debt with maturities 

of 365 days or greater. In conjunction with the 

program extension in 2009, the FDIC assessed 

an additional surcharge on debt with a maturity 

of one year or greater issued after April 1, 2009. 

Unlike the other TLGP fees, which were reserved 

for possible TLGP losses and not generally 

available for DIF purposes, the surcharge was 

deposited into the DIF and used by the FDIC 

when calculating the reserve ratio of the Fund. 

The surcharge varied depending on the type of 

institution issuing the debt, with IDIs paying the 

lower fees.

The TAGP initially guaranteed in full all domestic 

noninterest-bearing transaction deposits held at 

participating banks and thrifts through December 

31, 2009. This deadline was extended twice 

1 The CAMELS composite rating represents the adequacy of Capital, the quality of Assets, the capability of Management, 

the quality and level of Earnings, the adequacy of Liquidity, and the Sensitivity to market risk, and ranges from “1” 

(strongest) to “5” (weakest).
MANAGEMENT’S DISCUSSION AND ANALYSIS 21

and expired on December 31, 2010. The 

guarantee also covered negotiable order of 

withdrawal (NOW) accounts at participating 

institutions—provided the institution initially 

committed to maintain interest rates on the 

accounts of no more than 0.50 percent (later 

reduced to 0.25 percent) for the duration of 

the program—and Interest on Lawyers Trust 

Accounts (IOLTAs) and functional equivalents. 

Participating institutions were initially assessed a 

10 basis point surcharge on the portion of covered 

accounts that were not otherwise insured. The fees 

for the TAGP were increased at the first extension 

to either 15 basis points, 20 basis points, or 25 

basis points, depending on the institution’s deposit 

insurance assessment category.

Program Statistics

Institutions were initially required to elect whether 

to participate in one or both of the programs. 

More than half of the over 14,000 eligible entities 

elected to opt in to the DGP, while over 7,100 

banks and thrifts, or 86 percent of FDIC-insured 

institutions, initially opted in to the TAGP. Most 

of the institutions that opted out of the DGP 

had less than $1 billion in assets and issued no 

appreciable amount of senior unsecured debt.

Over the course of the DGP’s existence, 121 

entities issued TLGP debt. At its peak, the 

DGP guaranteed almost $350 billion of debt 

outstanding (see chart below). As of December 

31, 2010, the total amount of remaining FDICguaranteed debt outstanding was $267 billion.

The FDIC collected $10.4 billion in fees and 

surcharges under the DGP. As of December 31, 

2010, the FDIC paid $8 million on seven claims 

that were filed when four participating entities 

(all holding companies) defaulted on debt issued 

under the DGP. Further claims on notes issued by 

one entity are expected, since some of the notes 

issued by this entity have not yet matured. Losses 

through the end of the DGP guarantee period in 

2012 are expected to be limited.

$400

350

300

250

200

150

100

50

0

OCT-08 DEC-08 FEB-09 APR-09 JUN-09 AUG-09 OCT-09 DEC-09 FEB-10 APR-10 JUN-10 AUG-10 OCT-10 DEC-10

Dollars in Billions

OUTSTANDING TLGP DEBT BY MONTH
22 MANAGEMENT’S DISCUSSION AND ANALYSIS

Under the TAGP, the FDIC guaranteed an average 

of $114 billion of deposits during the fourth 

quarter of 2010. As of December 31, 2010, the 

last day of the program, over 5,100 FDIC-insured 

institutions reported having guaranteed deposits. 

As of December 31, 2010, the FDIC has collected 

$1.1 billion in fees under the TAGP.2

 Cumulative 

estimated TAGP losses on failures as of December 

31, 2010, totaled $2.3 billion. 

Overall, TLGP fees are expected to exceed the 

losses from the program. Remaining TLGP fees 

will be added to the DIF balance at the conclusion 

of the program. If fees are insufficient to cover the 

costs of the program, the difference will be made 

up through a systemic risk special assessment.

Transaction Account Guarantee 

Program Phase-Out

The TAGP was designed to eliminate potentially 

disruptive shifts in deposit funding and thus 

preserve bank lending capacity. The program 

proved effective. However, because bank failures 

continued to grow during 2009 and 2010, the 

FDIC remained concerned that terminating the 

TAGP too quickly could reverse the progress made 

in restoring financial markets to more normal 

conditions. To help transition institutions out of 

the TAGP, therefore, the FDIC Board, on August 

26, 2009, approved a final rule that extended 

the TAGP for an additional six months, through 

June 30, 2010, with higher assessment fees for 

institutions participating in the extension period. 

The final rule also provided an opportunity for 

participating entities to opt out of the TAGP 

extension. Over 6,400 institutions (or 93 percent 

of institutions participating at year-end) elected to 

continue in the TAGP.

In June 2010, the FDIC remained concerned that, 

because of the lingering effects of the financial 

crisis and recession, terminating the TAGP too 

quickly could lead to liquidity problems for a 

number of community banks. The Board therefore 

approved a final rule authorizing another sixmonth extension, until December 31, 2010, of 

the TAGP. The FDIC did not increase assessment 

fees with the second extension, but the final rule 

reduced the permissible interest rate for the NOW 

accounts covered by the guarantee to no higher 

than 0.25 percent in order to better align the 

program with prevailing market rates. The FDIC 

provided institutions still participating in the 

TAGP in the second quarter of 2010 with a onetime opportunity to opt out of the second TAGP 

extension, effective July 1, 2010. Almost 6,000 

institutions (or 93 percent of those institutions 

that were participating at the time) remained in 

the TAGP. The final rule authorizing the second 

extension also gave the FDIC Board the authority 

to further extend the TAGP, without further 

rulemaking, should economic conditions warrant 

an additional extension, for a period of time not 

to extend beyond December 31, 2011. However, 

the passage of the Dodd-Frank Act eliminated the 

need for such an extension of the TAGP.

Temporary Unlimited Coverage for 

Noninterest-Bearing Transaction Accounts 

under the Dodd-Frank Act

The Dodd-Frank Act provides temporary 

unlimited deposit insurance coverage for 

noninterest-bearing transaction accounts from 

December 31, 2010 through December 31, 2012, 

regardless of the balance in the account and the 

ownership capacity of the funds. The unlimited 

coverage is available to all depositors, including 

consumers, businesses, and government entities. 

The coverage is separate from, and in addition 

to, the standard insurance coverage provided for 

a depositor’s other accounts held at an FDICinsured bank. 

A noninterest-bearing transaction account is a 

deposit account where: 

Q Interest is neither accrued nor paid; 

Q Depositors are permitted to make transfers 

and withdrawals; and 

Q The bank does not reserve the right to require 

advance notice of an intended withdrawal. 

2 This figure reflects fees assessed through September 30, 2010, and collected as of December 30, 2010. 
MANAGEMENT’S DISCUSSION AND ANALYSIS 23

The Act’s temporary unlimited coverage also 

includes trust accounts established by an attorney 

or law firm on behalf of clients, commonly known 

as IOLTAs, or functionally equivalent accounts.

Money market deposit accounts (MMDAs) and 

NOW accounts are not eligible for this temporary 

unlimited insurance coverage, regardless of the 

interest rate, even if no interest is paid. 

Complex Financial Institution Program

The FDIC’s Complex Financial Institution 

(CFI) Program addresses the unique challenges 

associated with the supervision, insurance, 

and potential resolution of large and complex 

insured institutions. The FDIC’s ability to 

analyze and respond to risks in these institutions 

is of particular importance, as they make up a 

significant share of the banking industry’s assets. 

The Program provides for a consistent approach 

to large-bank supervision nationwide, allows 

for the analysis of financial institution risks 

on an individual and comparative basis, and 

enables a quick response to risks identified at 

large institutions. The Program’s objectives are 

achieved through extensive cooperation with the 

FDIC’s regional offices, other FDIC divisions and 

offices, and the other bank and thrift regulators. 

Given the heightened risk levels stemming 

from continued adverse economic and market 

conditions, the FDIC has expanded its presence at 

the nation’s largest and most complex institutions 

through additional and enhanced on-site and offsite monitoring.

The Program expanded coverage at large and 

complex institutions from eight to ten in 2010 

and increased its on-site presence, as designated 

by the FDIC Board, to assess risk, monitor 

liquidity, and participate in targeted reviews with 

the primary federal regulators. In July 2010, the 

FDIC entered into an interagency memorandum 

of understanding (MOU) which allows FDIC 

examiners to conduct special examinations of 

certain institutions covered by the MOU. The 

MOU should enhance the FDIC’s access to those 

institutions and encourage ongoing effective 

communication among the federal regulators.

The Large Insured Depository Institution (LIDI) 

Program remains the primary instrument for 

off-site monitoring of IDIs with $10 billion or 

more in total assets, or under this threshold at 

regional discretion. The LIDI Program provides a 

comprehensive process to standardize data capture 

and reporting through nationwide quantitative 

and qualitative risk analysis of large and complex 

institutions. As of June 30, 2010, the LIDI 

Program encompassed 110 institutions with 

total assets of $10.3 trillion. The LIDI Program 

was refined again in 2010 to better quantify risk 

to the insurance fund in all large banks. This 

was accomplished, in collaboration with other 

divisions and offices, through a revision to the 

LIDI Scorecard, which better aligns with and 

supports the FDIC’s large-bank deposit insurance 

pricing responsibilities. The LIDI Scorecard is 

designed to weigh key risk areas and provide a risk 

ranking and measurement system that compares 

IDIs on the basis of both the probability of failure 

and exposure to loss at failure. The comprehensive 

LIDI Program is essential to effective large bank 

supervision by capturing information on the risks 

and utilizing that information to best deploy 

resources to high-risk areas, determine the need 

for supervisory action, and support insurance 

assessments and resolution planning.

Office of Complex Financial Institutions

The Office of Complex Financial Institutions 

(OCFI) was created in 2010 to focus on the 

expanded responsibilities of the FDIC by the 

Dodd-Frank Act for the assessment of risk in 

the largest, systemically important financial 

institutions. The OCFI is responsible for oversight 

and monitoring of large, systemically important 

financial institutions (SIFIs). Specifically, through 

both on-site and off-site monitoring, OCFI 

will develop an in-depth understanding of the 

operations and risk profiles of all IDIs and bank 

holding companies with assets over $100 billion 

and other companies designated as systemically 

important by the Financial Stability Oversight 

Council (FSOC).

Additionally, in conjunction with the Federal 

Reserve, OCFI will develop regulations governing 

the preparation, approval, and monitoring of 
24 MANAGEMENT’S DISCUSSION AND ANALYSIS

resolution and recovery plans developed by SIFIs 

commonly referred to as “living wills.” OCFI will 

be responsible for developing detailed resolutions 

plans and strategies for assigned institutions. 

OCFI will also identify and manage international 

and cross-border issues that might complicate the 

resolution process, and, accordingly, will build 

and maintain relationships with key international 

stakeholders.

In 2010, OCFI focused on creating and staffing 

senior management positions. Work also began 

on developing resolution strategies for specific 

SIFIs and more broadly scoping a process, 

strategies, and data needs for ongoing risk 

assessment at SIFIs.

Center for Financial Research

The Center for Financial Research (CFR) was 

founded by the Corporation in 2004 to encourage 

and support innovative research on topics 

important to the FDIC’s role as deposit insurer 

and bank supervisor. During 2010, the CFR cosponsored three major conferences.

The 20th Annual Derivatives Securities and Risk 

Management Conference, which the FDIC 

co-sponsored with Cornell University’s Johnson 

Graduate School of Management and the 

University of Houston’s Bauer College of Business, 

was held in April 2010 at the Seidman Center. 

The two-day conference attracted over 100 

researchers from around the world. Conference 

presentations focused on issues such as credit risk 

measurement, equity option pricing, commodity 

market speculation, and risk management.

In October 2010, the FDIC and the Federal 

Reserve hosted a two-day symposium on 

mortgages and the future of housing finance. 

Over 300 experts from the public, private, and 

academic sectors participated in discussions of 

mortgage finance, foreclosures, loan modifications, 

and securitizations. Federal Reserve Chairman Ben 

Bernanke and FDIC Chairman Sheila Bair spoke 

at the symposium regarding the need for reform 

to restore stability to the housing finance system 

and to aggressively examine the incentives of the 

U.S. system of mortgage finance to ensure that the 

problems that contributed to the financial crisis 

are addressed.

The CFR and the Journal for Financial Services 

Research (JFSR) hosted the 10th Annual Bank 

Research Conference: Finance and Sustainable 

Growth in October. The two-day conference 

included the presentation of 17 papers and 

was attended by over 100 participants. Experts 

discussed a range of topics, including the global 

financial crisis, credit derivatives and the default 

risk of large complex financial institutions, and 

bank capital adequacy.

International Outreach

The past year has been defined by broad 

international efforts to respond effectively to the 

causes of the global financial crisis. One of the 

important lessons of the crisis is that effective 

systems of deposit insurance are important not 

only for the protection of individual depositors 

but also for overall financial stability. Inadequate 

systems of deposit insurance place individual 

depositors at risk and can have a significant 

negative impact on public confidence in the 

financial system as a whole. The FDIC has 

provided leadership and support to international 

standard-setting organizations and international 

financial institutions, and has established bilateral 

agreements with other bank supervisory and 

deposit insurance governmental organizations, 

resulting in significant advancements in 

promoting sound financial systems. 

In 2009, the International Association of Deposit 

Insurers (IADI) and the Basel Committee on 

Banking Supervision (BCBS) jointly published 

Core Principles for Effective Deposit Insurance 

Systems (Core Principles). The Core Principles were 

later adopted by the Financial Stability Board 

(FSB), which added them to its Compendium of 

Standards. Under the FDIC’s leadership, IADI, 

BCBS, the International Monetary Fund (IMF), 

the European Forum of Deposit Insurers (EFDI), 

the World Bank, and the European Commission 

collaborated in developing a methodology for 

assessing compliance with the Core Principles. 

The methodology was submitted for approval 
MANAGEMENT’S DISCUSSION AND ANALYSIS 25

by the executive governing boards of IADI, 

EFDI, and BCBS and presented to the FSB in 

December 2010. Together, the Core Principles

and the methodology will be considered for 

inclusion among the FSB’s 12 Key Standards 

for Sound Financial Systems. Once adopted, 

the Core Principles methodology is expected 

to be used to assess deposit insurance systems 

by the IMF in its Financial Sector Assessment 

Program, and by the FSB in its peer review of 

deposit insurance systems, which is scheduled for 

2011. The leadership of IADI under Martin J. 

Gruenberg, the Vice Chairman of the FDIC, has 

been instrumental in advancing the establishment 

of the Core Principles as the standards for deposit 

insurance. Vice Chairman Gruenberg was reelected to serve as President of IADI and Chair 

of the Executive Council in November 2010. 

During his tenure as President, the membership 

of IADI has grown from 48 to 62 deposit 

insurance members, including new members from 

Germany, Italy, Poland, Belgium, Switzerland, 

Australia, and Paraguay.

The FDIC is integrally involved with the FSB’s 

Cross Border Crisis Management Working 

Group (CBCM). The group has been tasked with 

evaluating options and making recommendations 

on how to address issues related with the too-bigto-fail issue. In particular, the CBCM has been 

focused on recovery and resolution (R&R) for 

SIFIs. FSB member countries have been working 

on preparing R&R plans for SIFIs domiciled in 

their jurisdictions. The FDIC has been involved 

in R&R planning for the top five U.S. firms and 

has participated in Crisis Management Group 

meetings hosted by foreign regulators. The 

FDIC has also provided input and leadership 

to the CBCM’s development of technical work 

streams related to obstacles encountered in a 

SIFI resolution. These work streams are focused 

on booking practices, intragroup guarantees, 

payments and settlement systems and legal 

entities/management information systems.

Since January 2009, international regulators have 

been meeting periodically to exchange views and 

share information on developments related to 

central counterparties (CCPs) for over-the-counter 

(OTC) credit derivatives. Based on the success of 

this cooperation, the OTC Derivatives Regulators’ 

Forum was formed to provide regulators with a 

means to cooperate, exchange views, and share 

information related to OTC derivatives, CCPs, 

and trade repositories. FDIC staff has an active 

role in the OTC Derivatives Regulators’ Forum 

and the OTC Derivative Supervisors’ Group. 

Work streams of particular interest include 

collateral safekeeping practices, dispute resolution, 

and the build out of the central clearing platforms. 

Additionally, staff is completing a data access/user 

agreement MOU to assure ready access to data in 

trade repositories.

Throughout 2010, the FDIC participated in 

Governors and Heads of Supervision and BCBS 

meetings and contributed to the work streams, 

task forces, and the Policy Development Group 

that developed and refined regulatory forms to 

address a new definition of capital, treatment of 

counterparty credit risk, an international leverage 

ratio, capital conservation and countercyclical 

buffers, liquidity requirements, and surcharges 

on SIFIs. The BCBS published the final capital 

and liquidity reforms in December 2010, 

along with the results of the comprehensive 

quantitative impact study and an assessment of 

the macroeconomic impact of the transition to 

stronger capital and liquidity requirements. In 

addition to these capital and liquidity reforms, 

the FDIC also participated in BCBS initiatives 

related to surveillance standards, remuneration, 

supervisory colleges, operational risk, accounting 

issues for consistency, and corporate governance.

The FDIC finalized a resolution and crisis 

management MOU with the China Banking 

Regulatory Commission (CBRC) in 2010. The 

FDIC is currently in the process of negotiating 

a similar MOU with the Swiss Financial Market 

Supervisory Authority (FINMA). The MOU 

with FINMA is expected to be finalized by the 

end of 2011. The FDIC has reached out to other 

strategic countries including India, and has been 

met with enthusiasm by Indian officials. In 2011, 

the FDIC will review its resolution MOU with 

the Bank of England to determine what, if any, 
26 MANAGEMENT’S DISCUSSION AND ANALYSIS

changes need to be made in light of regulatory 

developments both in the U.S. and the United 

Kingdom.

The 2010 Strategic and Economic Dialogue 

(S&ED) was held in Beijing, China, in May and 

was the second such event held under President 

Obama’s administration. President Barack Obama 

and Chinese President Hu Jintao agreed to the 

S&ED in April 2009 to deepen and promote 

mutually beneficial cooperation between the U.S. 

and China in key economic and strategic areas. 

Chairman Bair and staff participated in this year’s 

S&ED and also met with leaders of the People’s 

Bank of China and the CBRC in side meetings to 

further strengthen the FDIC’s relationship with 

these bank regulatory agencies. During the 

meeting with the CBRC, CBRC Chairman Liu 

and Chairman Bair signed an MOU enhancing 

cooperation in times of financial instability and in 

cases of cross-border resolution.

Chairman Bair and staff visited New Delhi and 

Mumbai, India, in June to meet with senior 

representatives of public and private sector 

organizations, including the Ministry of Finance, 

the Reserve Bank of India (RBI), the Deposit 

Insurance and Credit Guarantee Corporation, 

and the National Bank for Agriculture and Rural 

Development to discuss financial inclusion efforts 

in the U.S. and India and to explore possible areas 

of future cooperation between the two countries. 

Chairman Bair was the keynote speaker at an 

event hosted by the RBI, which was attended 

by senior RBI officials, bankers, and financial 

industry representatives. The Chairman’s speech 

addressed U.S. financial regulatory reform, the 

importance of promoting financial inclusion and 

education, and the efforts made by both the U.S. 

and India to reach their unbanked population. 

Chairman Bair also announced plans to translate 

the FDIC’s Money Smart program into Hindi for 

use in India.

The FDIC continued to provide technical 

assistance through training, consultations, and 

briefings to foreign bank supervisors, deposit 

insurance authorities, and other governmental 

officials.

Q The FDIC, on behalf of IADI, provided the 

content and technical subject matter expertise 

in the development of four tutorials released 

through the Financial Stability Institute’s FSI 

Connect: Premiums and Fund Management, 

Deposit Insurance – Reimbursing Depositors 

– Parts I and II, and Liquidation of Failed 

Bank Assets. FDIC hosted two IADI executive 

training seminars: Resolution of Problem 

Banks (April) and Claims Management: 

Reimbursement to Insured Depositors 

(July). Over 125 deposit insurance and 

bank regulatory officials from more than 35 

countries attended the training programs. The 

FDIC developed the IADI Capacity Building 

Program website for organizations to use 

for identifying available technical expertise 

resources from IADI members. The website 

was released in the fall of 2010. 

Q The FDIC hosted 87 visits with 580 visitors 

from approximately 60 countries in 2010. 

In July, Chairman Bair met with members 

of the European Parliament’s Committee on 

Economic and Monetary Affairs to discuss 

U.S. financial regulatory reform and the 

FDIC’s new authorities, SIFIs, and Basel II 

reform. FDIC staff met with representatives 

of Chinese authorities and banks on multiple 

occasions throughout the year. Topics of 

these meetings included discussions about 

the health of the U.S. banking industry, 

financial reform, FDIC supervision of banks, 

the bank resolution process, and the FDIC’s 

management of the distressed assets of failed 

banks. The FDIC hosted a multi-day study 

tour for the Board of Directors of the Nigeria 

Deposit Insurance Corporation (NDIC) in 

October. NDIC guests also traveled to the 

New York Regional Office to learn about 

the role of the regional offices and their 

relationship with headquarters. The FDIC 

hosted secondees, one from each of the 

following organizations during 2010: the 

Korea Deposit Insurance Corporation, the 

Financial Services Commission in Korea, and 

the Savings Deposit Insurance Fund of Turkey.
MANAGEMENT’S DISCUSSION AND ANALYSIS 27

Q June marked the three-year anniversary of the 

secondment program agreed upon between the 

Financial Services Volunteer Corps (FSVC) 

and the FDIC to place one or more FDIC 

employees full-time in FSVC’s Washington, 

DC, office. Between September 2009 and 

August 2010, FSVC hosted four secondees 

who participated in 20 projects that took place 

in Albania, Algeria, Egypt, Jordan, Malawi, 

and Morocco. Additionally, the secondees 

provided services for their counterparts in 

Albania, Egypt, Libya, and Malawi from 

Washington, DC, and completed a project 

for the Central Bank of Iraq in Jordan. The 

secondees worked directly with eight overseas 

regulatory counterparts and trained almost 

440 individuals. In these efforts, they spent 

over 1,850 hours providing direct technical 

assistance.

Q The FDIC continues to support the work and 

mission of the Association of Supervisors of 

Banks of the Americas (ASBA). In furtherance 

of the FDIC’s commitment to ASBA 

leadership and strategic development, in July 

2010, FDIC staff participated in ASBA’s 

board of directors and technical committee 

meetings. To facilitate ASBA’s research and 

guidance initiatives, a senior bank examiner 

will participate in ASBA’s Stress Testing 

Working Group, and FDIC staff is responding 

to ASBA’s review of the implementation of 

International Financial Reporting Standards. 

These research and guidance efforts are 

intended to promote sound bank supervisory 

practices among ASBA members.

Supervision and 

Consumer Protection

Supervision and consumer protection are 

cornerstones of the FDIC’s efforts to ensure the 

stability of and public confidence in the nation’s 

financial system. The FDIC’s supervision program 

promotes the safety and soundness of FDICsupervised IDIs, protects consumers’ rights, and 

promotes community investment initiatives.

Examination Program

The FDIC’s strong bank examination program 

is the core of its supervisory program. As of 

December 31, 2010, the Corporation was the 

primary federal regulator for 4,386 FDICinsured, state-chartered institutions that were not 

members of the Federal Reserve System (generally 

referred to as “state non-member” institutions). 

Through risk management (safety and soundness), 

consumer compliance and Community 

Reinvestment Act (CRA), and other specialty 

examinations, the FDIC assesses an institution’s 

operating condition, management practices and 

policies, and compliance with applicable laws and 

regulations. The FDIC also educates bankers and 

consumers on matters of interest and addresses 

consumer questions and concerns.

As of December 31, 2010, the Corporation 

conducted 2,720 statutorily required 

risk management (safety and soundness) 

examinations, including a review of Bank 

Secrecy Act compliance, and all required 

follow-up examinations for FDIC-supervised 

problem institutions within prescribed time 

frames. The FDIC also conducted 1,780 CRA/

compliance examinations (914 joint CRA/

compliance examinations, 854 compliance-only 

examinations,3

 and 12 CRA-only examinations) 

and 3,276 specialty examinations. All CRA/

compliance examinations were also conducted 

within the time frames established by FDIC 

policy, including required follow-up examinations 

of problem institutions. The following table 

compares the number of examinations, by type, 

conducted from 2008 through 2010.

3 Compliance-only examinations are conducted for most institutions at or near the mid-point between joint compliance/

CRA examinations under the Community Reinvestment Act of 1977, as amended by the Gramm-Leach-Bliley Act 

of 1999. CRA examinations of financial institutions with aggregate assets of $250 million or less are subject to a CRA 

examination no more than once every five years if they receive a CRA rating of “Outstanding” and no more than once 

every four years if they receive a CRA rating of “Satisfactory” on their most recent examination.
28 MANAGEMENT’S DISCUSSION AND ANALYSIS

Risk Management

As of December 31, 2010, there were 884 insured 

institutions with total assets of $390.0 billion 

designated as problem institutions for safety and 

soundness purposes (defined as those institutions 

having a composite CAMELS4

 rating of “4” or 

“5”), compared to the 702 problem institutions 

with total assets of $402.8 billion on December 

31, 2009. This constituted a 26 percent increase 

in the number of problem institutions and a 3 

percent decrease in problem institution assets. 

In 2010, 267 institutions with aggregate assets 

of $157 billion were removed from the list 

of problem financial institutions, while 449 

institutions with aggregate assets of $198 billion 

were added to the list. Westernbank Puerto Rico, 

Mayaguez, Puerto Rico, which was the largest 

failure in 2010, with $11.9 billion in assets, was 

added to the problem institution list in 2008 and 

resolved in 2010. The FDIC is the primary federal 

regulator for 583 of the 884 problem institutions, 

with total assets of $202.5 billion and $390.0 

billion, respectively.

During 2010, the Corporation issued the 

following formal and informal corrective actions 

to address safety and soundness concerns: 

300 Consent Orders and 424 Memoranda of 

Understanding. Of these actions, 9 Consent 

FDIC Examinations 2008 – 2010

2010 2009 2008

Risk Management (Safety and Soundness): 

State Non-member Banks 2,488 2,398 2,225

Savings Banks 225 203 186

Savings Associations 0 1 1

National Banks 3 0 2

State Member Banks 4 2 2

Subtotal – Risk Management Examinations 2,720 2,604 2,416

CRA/Compliance Examinations:

Compliance/Community Reinvestment Act 914 1,435 1,509

Compliance-only 854 539 313

CRA-only 12 7 4

Subtotal – CRA/Compliance Examinations 1,780 1,981 1,826

Specialty Examinations:

Trust Departments 465 493 451

Data Processing Facilities 2,811 2,780 2,577

Subtotal – Specialty Examinations 3,276 3,273 3,028

Total 7,776 7,858 7,270

4 The CAMELS composite rating represents the adequacy of Capital, the quality of Assets, the capability of Management, 

the quality and level of Earnings, the adequacy of Liquidity, and the Sensitivity to market risk, and ranges from “1” 

(strongest) to “5” (weakest).
MANAGEMENT’S DISCUSSION AND ANALYSIS 29

Orders and 16 Memoranda of Understanding 

were issued based, in part, on apparent violations 

of the Bank Secrecy Act.

The FDIC is required to conduct follow-up 

examinations of all state non-member institutions 

designated as problem institutions within 12 

months of the last examination. As of December 

31, 2010, all follow-up examinations for problem 

institutions were performed on schedule.

Compliance

As of December 31, 2010, there were 54 insured 

state non-member institutions with total assets 

of $36.4 billion, rated “4” or “5” for consumer 

compliance purposes. All follow-up examinations 

for these institutions were performed on schedule.

During 2010, the Corporation issued the 

following formal and informal corrective actions 

to address compliance concerns: 23 Consent 

Orders and 122 Memoranda of Understanding.

Bank Secrecy Act/Anti-Money Laundering

The FDIC pursued a number of Bank Secrecy Act 

(BSA), Counter-Financing of Terrorism (CFT), 

and Anti-Money Laundering (AML) initiatives 

in 2010.

The FDIC conducted three training sessions in 

2010 for 65 central bank representatives from 

Afghanistan, Argentina, Ghana, Iraq, Jordan, 

Kuwait, Mali, Mauritania, Morocco, Nigeria, 

Pakistan, Paraguay, Qatar, Senegal, and Turkey. 

The training focused on AML/CFT controls, 

the AML examination process, customer due 

diligence, suspicious activity monitoring, and 

foreign correspondent banking. The sessions also 

included presentations from the Federal Bureau 

of Investigation (FBI) on combating terrorist 

financing, and the Financial Crimes Enforcement 

Network (FinCEN) on the role of financial 

intelligence units in detecting and investigating 

illegal activities.

Chairman Sheila C. Bair meets with Puerto Rico Financial Institutions Commissioner Alfredo Padilla, left, and Puerto Rico Governor 

Luis Fortuño, center.
30 MANAGEMENT’S DISCUSSION AND ANALYSIS

This year, the inaugural Advanced International 

AML/CFT School was offered. The goal of this 

course is to provide seasoned government staff 

with an appropriate understanding of high-risk 

areas and transactions, their potential effect on a 

financial institution, and how to identify potential 

red flags. Expert instructors were provided by 

the United States Attorney’s Office, the Drug 

Enforcement Administration, U.S. Immigration 

and Customs Enforcement, the FBI, FinCEN, 

and the FDIC’s Legal Division.

Additionally, the FDIC met with eight Namibian 

and Zambian foreign officials and 14 European 

representatives as a part of the U.S. Department of 

State’s International Visitor Leadership Program to 

discuss the FDIC’s AML Supervisory Program. 

FFIEC BSA/AML Examination Manual

The FDIC participated in the revision and 

issuance of the 2010 FFIEC BSA/AML 

Examination Manual. The manual was released 

by the Federal Financial Institutions Examination 

Council (FFIEC) for publication and distribution 

on April 29, 2010. It reflects the ongoing 

commitment of the federal banking agencies 

to provide current and consistent guidance on 

risk-based policies, procedures, and processes 

for banking organizations to comply with the 

BSA and to safeguard operations from money 

laundering and terrorist financing. The manual 

was updated to further clarify supervisory 

expectations and to incorporate regulatory 

changes since the 2007 release. The revisions also 

reflect feedback from the banking industry and 

examination staff. The FDIC has also translated 

the manual into Spanish.

Minority Depository Institution Activities

The preservation of Minority Depository 

Institutions (MDIs) remains a high priority for the 

FDIC. In 2010, the FDIC continued to seek ways 

to improve communication and interaction with 

MDIs and to respond to the concerns of minority 

bankers. Many of the MDIs took advantage of 

the technical assistance offered by the FDIC, 

requesting technical assistance on a number of 

bank supervision issues, including but not limited 

to, the following:

Q Troubled Asset Relief Program (TARP)

Q Deposit insurance assessments

Q Proper use of interest reserves

Q Filing branch and merger applications

Q Complying with Part 365 – Real Estate 

Lending Standards

Q Preparing Call Reports

Q Performing due diligence for loan 

participations

Q Monitoring CRE concentrations

Q Reducing adversely classified assets

Q Identifying and monitoring reputation risk

Q Maintaining adequate liquidity

Q Compliance issues 

Q Community Reinvestment Act (CRA)

Q Procedures for filing regulatory appeals

Q Criteria for assigning CAMELS ratings

The FDIC continued to offer the benefit of 

having an examiner or a member of regional office 

management return to FDIC-supervised MDIs 

from 90 to 120 days after examinations to assist 

management in understanding and implementing 

examination recommendations or to discuss other 

issues of interest. Ten MDIs took advantage of this 

initiative in 2010. Also, the FDIC regional offices 

held outreach training efforts and educational 

programs for MDIs.

The FDIC hosted a series of Asset Purchaser, 

Investor, and Minority Depository Institutions 

Outreach seminars throughout the country, where 

investors, and minority- and women-owned 

firms received information on purchasing assets 
MANAGEMENT’S DISCUSSION AND ANALYSIS 31

from the FDIC and opportunities for investors 

to invest in or establish an MDI. Seminars were 

held in Atlanta, GA; New York, NY; Houston, 

TX; Miami, FL; Los Angeles, CA; San Francisco, 

CA; and Washington, DC. The seminars were well 

received, with over 650 participants in attendance. 

The FDIC held quarterly conference calls and 

banker roundtables with MDIs in the geographic 

regions. Topics of discussion for the quarterly calls 

included both compliance and risk management 

topics, and topics at the roundtables included 

the economy, overall banking conditions, deposit 

insurance assessments, accounting, and other bank 

examination issues.

The FDIC partnered with the Federal Reserve’s 

Partnership for Progress to provide technical 

assistance and training to MDIs interested 

in applying for the New Markets Tax Credit 

(NMTC). The training consisted of a series 

of webinars to educate MDIs about becoming 

Community Development Entities, completing 

NMTC applications, and best practices on 

NMTC projects.

Capital and Liquidity Rulemaking 

and Guidance

Credit Ratings ANPR

In August 2010, the FDIC, along with the 

other federal banking agencies, published 

an Advance Notice of Proposed Rulemaking 

(ANPR) regarding alternatives to the use of credit 

ratings in the risk-based capital rules for banking 

organizations. The ANPR was issued in response 

to section 939(A) of the Dodd-Frank Act, which 

requires the agencies to review regulations that 

(1) require an assessment of the creditworthiness 

of a security or money market instrument, 

and (2) contain references to or requirements 

regarding credit ratings. In addition, the agencies 

are required to remove such references and 

requirements and substitute in their place uniform 

standards of creditworthiness, where feasible.

Market Risk NPR

In December 2010, the FDIC Board of Directors 

approved the publication of a joint Notice 

of Proposed Rulemaking (NPR) designed to 

enhance the market risk capital framework by 

addressing default and credit risk migration, 

innovations in trading book exposures, and other 

deficiencies revealed during the recent financial 

crisis. Enhancements to the framework include 

requirements to compute capital for stressed valueat-risk, and incremental default risk, standardized 

capital requirements for certain securitization 

positions, a capital floor for correlation trading 

exposures, and increased transparency through 

enhanced disclosures.

Advanced Approaches Floor NPR

In December 2010, the FDIC Board of Directors 

approved a joint NPR to implement certain 

requirements of Section 171 of the DoddFrank Act. Section 171 requires, among other 

things, that the agencies’ generally applicable 

capital requirements serve as a floor for other 

capital requirements the agencies may establish 

and, specifically, as a permanent floor for the 

advanced approaches risk-based capital rule. Final 

rulemaking will be completed in 2011.

FAS 166 and 167 Final Rule

In January 2010, the agencies finalized the 

amendment to the risk-based capital rules to 

reflect the issuance of FAS 166 and 167, which 

required certain off-balance-sheet assets to be 

moved back onto a bank’s balance sheet. The 

final rule provided an optional transition period 

that allowed a bank to phase in over one year 

the impact on risk-weighted assets of the change 

in the U.S. generally accepted accounting rules. 

The rule also eliminated the exclusion of certain 

consolidated asset-backed commercial paper 

programs from risk-weighted assets.

Interest Rate Risk

Economic conditions in 2010 presented 

significant risk management challenges to 

depository institutions. For a number of 

institutions, increased loan losses and sharp 

declines in the value of certain securities portfolios 

placed downward pressure on capital and earnings. 

In the prevailing interest rate environment, taking 

advantage of a steeply upward sloping yield curve 

by funding longer-term assets with shorter-term 
32 MANAGEMENT’S DISCUSSION AND ANALYSIS

liabilities may have provided short-term gains 

to earnings helping offset losses, but could pose 

risks to an institution’s capital and future earnings 

should short-term interest rates rise. To reinforce 

the federal banking agencies’ existing guidance 

—The Joint Agency Policy Statement on Interest 

Rate Risk—and to remind institutions to not lose 

focus on their management of interest rate risk, 

the agencies issued new guidance on January 6, 

2010—Advisory on Interest Rate Risk Management. 

The guidance updated and clarified existing 

supervisory guidance on the sound practices 

for managing interest rate risk, noting that 

institutions should assess the likely effects 

of meaningful stress scenarios, including interest 

rate shocks of at least 300 to 400 basis points 

and that institutions are expected to conduct 

independent reviews of their interest rate risk 

models and management processes. 

Liquidity Guidance

Recent turmoil in the financial markets 

emphasized the importance of effective liquidity 

risk management for the safety and soundness 

of financial institutions. To emphasize the 

importance of cash flow projections, diversified 

funding sources, stress testing, a cushion of 

liquid assets, and a formal, well-developed 

contingency funding plan as primary tools for 

measuring and managing liquidity risk, the 

federal banking agencies issued new guidance on 

March 22, 2010—Funding and Liquidity Risk 

Management. This policy statement summarizes 

the principles of sound liquidity risk management 

issued in the past and, when appropriate, 

supplements them with the ‘‘Principles for Sound 

Liquidity Risk Management and Supervision’’ 

issued by the BCBS in September 2008.

Other Guidance Issued

During 2010, the FDIC issued and participated 

in the issuance of other guidance in several areas as 

described below.

Bargain Purchases and Assisted Acquisitions

Market conditions in the banking industry, 

including the significant number of FDIC-assisted 

acquisitions of failed depository institutions, have 

contributed to an increase in bargain purchase 

transactions. A bargain purchase occurs when 

the fair value of the net assets acquired in a 

business combination exceeds the fair value of 

any consideration transferred by the acquiring 

institution. Bargain purchase gains are reported 

in earnings and included in the computation 

of regulatory capital under the agencies’ capital 

standards. To address the supervisory issues arising 

from business combinations that result in bargain 

purchase gains, the FDIC, along with the other 

financial regulators, issued Interagency Supervisory 

Guidance on Bargain Purchases and FDIC- and 

NCUA-Assisted Acquisitions on June 7, 2010. The 

guidance addresses the agencies’ concerns about 

the quality and composition of capital when a 

bargain purchase gain is expected to result from 

a business combination and describes the capital 

preservation and other conditions the agencies 

may impose in their approval of acquisitions. The 

guidance also discusses the agencies’ expectations 

with respect to the appropriate application of 

accounting standards to business combinations.

Examinations of Institutions with FDIC 

Loss-Share Agreements

Beginning in 2009, the FDIC increasingly entered 

into loss-share agreements with institutions 

acquiring failed IDIs. Under such an agreement, 

the FDIC and an acquiring institution share in the 

losses on a specified pool of a failed institution’s 

assets, which maximizes asset recoveries and 

minimizes losses to the DIF. In May 2010, the 

FDIC issued guidance to its examination staff 

on how examiners should take into account 

the implications and benefits of loss-share in 

their supervision of banks that have acquired 

assets of failed institutions covered by loss-share 

agreements. Examiners are expected to consider 

the impact of these agreements when performing 

asset reviews, assessing accounting entries, 

assigning adverse classifications, and determining 

CAMELS ratings and examination conclusions. 

The FDIC has made this examination guidance 

available to bankers, the other banking agencies, 

and other parties to promote their understanding 

of the FDIC’s approach to the examination of 

banks with loss-share agreements. To provide 
MANAGEMENT’S DISCUSSION AND ANALYSIS 33

greater visibility to the effect of loss-share 

agreements on the examination process, the 

Summer 2010 issue of the FDIC’s Supervisory 

Insights, published in June, included “FDIC 

Loss-Sharing Agreements: A Primer”. This article 

provides an overview of the loss-share process, 

addresses the regulatory treatment of assets subject 

to these agreements, and discusses the accounting 

rules and capital implications for the acquisition 

of failed bank assets. 

Troubled Asset Relief Program’s Community 

Development Capital Initiative

In 2010, the FDIC actively engaged with the 

U.S. Department of the Treasury (Treasury) and 

the other federal bank regulatory agencies in 

considering applications to the Troubled Asset 

Relief Program’s (TARP) Community Development 

Capital Initiative (CDCI). The TARP CDCI 

invested lower-cost capital in Community 

Development Financial Institutions (CDFIs), 

which are financial institutions that target at least 

60 percent of their lending and other economic 

development activities in areas underserved by 

traditional financial services providers. In its 

role as primary federal supervisor for state nonmember institutions, the FDIC reviewed 64 

TARP CDCI applications and forwarded approval 

recommendations to Treasury for 12 institutions 

that met Treasury’s Program standards. Treasury 

approved ten institutions for participation in 

the Program.

The FDIC desired to reach a favorable 

recommendation for all TARP CDCI applications 

and worked closely with bank managements that 

were striving to achieve Treasury’s standards for 

approval. CDFIs can provide critically needed 

loan and depository services to underserved 

communities.

Meeting the Credit Needs of Creditworthy 

Small Business Borrowers

In response to difficulties some small business 

owners are experiencing in obtaining or renewing 

credit to support their operations, the FDIC, 

along with other financial regulators, issued 

Interagency Statement on Meeting the Credit 

Needs of Creditworthy Small Business Borrowers

on February 12, 2010. The statement builds 

on principles of existing guidance and strives 

to ensure that supervisory policies do not 

inadvertently curtail the availability of credit to 

sound small business borrowers. The statement 

reiterates regulatory expectations for institutions 

to effectively monitor and manage credit 

concentrations but notes that institutions should 

not automatically refuse credit to sound borrowers 

because of their particular industry or 

geographic location.

The statement also explains that examiners will 

not criticize prudent underwriting practices, that 

examiners will take a balanced approach when 

assessing small business lending activities, and that 

examiners will not adversely classify loans solely 

due to declining collateral values, provided that a 

borrower has the willingness and ability to repay 

loans according to reasonable terms.

Correspondent Concentration Risks

On April 30, 2010, the FDIC, along with the 

other financial regulators, issued guidance on 

Correspondent Concentration Risks to outline the 

agencies’ expectations for identifying, monitoring, 

and managing correspondent concentration risks. 

The guidance addresses the agencies’ expectations 

relative to performing due diligence on credit 

exposures to, and funding transactions with, 

other financial institutions. The guidance notes 

that a financial institution’s relationship with a 

correspondent may result in credit and funding 

concentrations and acknowledges that, while some 

correspondent concentrations meet legitimate 

business needs, the concentrations represent 

a lack of diversification management should 

address when formulating strategic plans and risk 

management policies and procedures.

Appraisal and Evaluation Guidelines

On December 2, 2010, the FDIC, along with 

the other federal banking agencies, issued final 

Interagency Appraisal and Evaluation Guidelines

to provide further clarification of the agencies’ 

appraisal regulations and supervisory guidance 

to institutions and examiners about prudent 

appraisal and evaluation programs. The guidelines 

reflect changes in appraisal standards and 
34 MANAGEMENT’S DISCUSSION AND ANALYSIS

advancements in regulated institutions’ collateral 

valuation methods and clarify longstanding 

supervisory expectations for an institution’s 

appraisal and evaluation program to conduct 

real estate lending in a safe and sound manner. 

Further, the guidelines promote consistency in 

the application and enforcement of the agencies’ 

appraisal regulations and safe and sound 

banking practices.

Incentive Compensation

On June 21, 2010, the FDIC joined the other 

federal banking agencies in issuing interagency 

Guidance on Sound Incentive Compensation Policies. 

This guidance was issued to address incentive 

compensation practices in the financial services 

industry that contributed to the recent financial 

crisis. The guidance uses a “principles-based” 

approach and describes the agencies’ expectations 

for banking organizations to maintain incentive 

compensation practices consistent with safetyand-soundness standards. One main goal of 

the guidance is to align employee rewards with 

longer-term organizational objectives, including 

consideration of potential risks and risk outcomes.

Golden Parachute

As part of supervisory efforts to address executive 

compensation in the financial services industry, 

the FDIC issued Guidance on Golden Parachute 

Applications on October 14, 2010, to clarify 

the golden parachute application process 

for troubled institutions, specify the type of 

information necessary to satisfy the certification 

requirements, and highlight factors considered by 

supervisory staff when determining whether to 

approve a golden parachute payment. A golden 

parachute payment refers to amounts paid by 

troubled entities to an institution-affiliated 

party (IAP) that are contingent on the IAP’s 

termination. Applications made on behalf of 

senior management will be subject to heightened 

scrutiny that will include an evaluation of the 

individual’s performance and involvement in 

corporate initiatives and policymaking. For 

lower-level employees, a de minimis golden 

parachute payment of up to $5,000 per individual 

is permissible without a supervisory application 

in most cases. The bank is required to maintain a 

record of the individuals receiving the payments, 

together with signed and dated certifications of 

the amounts received.

Concerns with Energy Lending Programs

The FDIC, along with other financial regulators, 

issued an alert on July 6, 2010, notifying financial 

institutions about a Federal Housing Finance 

Authority (FHFA) Statement Relative to Concerns 

with Certain Energy Lending Programs. The 

statement relates to FHFA and FDIC concerns 

with certain energy retrofit lending programs 

and indicates institutions should be aware of 

such programs, as deficiencies within the 

programs, such as weak underwriting and 

consumer-protection standards, could affect an 

institution’s residential mortgage lending activities 

and its ability to sell loans to Fannie Mae and 

Freddie Mac.

Secure and Fair Enforcement for Mortgage 

Licensing Act of 2008

On July 28, 2010, the FDIC along with the other 

federal banking agencies, published the final rule 

implementing the requirements of the Secure 

and Fair Enforcement for Mortgage Licensing 

Act of 2008 (SAFE Act). The SAFE Act requires 

residential mortgage loan originators who are 

employees of national and state banks, savings 

associations, Farm Credit System institutions, 

credit unions, and certain of their subsidiaries 

(agency-regulated institutions) to be registered 

in the Nationwide Mortgage Licensing System 

and Registry, an online database. The FIL 

highlights the rule’s requirements for appropriate 

policies, procedures, and management systems 

to ensure compliance with the SAFE Act. 

The SAFE Act is intended to improve the 

accountability and tracking of residential mortgage 

loan originators (MLOs), enhance consumer 

protection, reduce fraud, and provide consumers 

with easily accessible information regarding an 

MLO’s professional background.
MANAGEMENT’S DISCUSSION AND ANALYSIS 35

Municipal Advisor Rule

On October 1, 2010, the FDIC issued a FIL 

announcing the Securities and Exchange 

Commission’s (SEC) issuance of an interim final 

temporary rule requiring all municipal advisors to 

register with the SEC by October 1, 2010. The 

FIL highlights definitions of municipal advisors 

and municipal financial products, and notified 

financial institutions that they should review their 

dealings with municipal entities to determine 

if such dealings will require registration as a 

municipal advisor.

Regulatory Relief

During 2010, the FDIC issued 23 Financial 

Institution Letters (FILs) that provided guidance 

to help financial institutions and facilitate recovery 

in areas damaged by severe storms, tornadoes, 

flooding, and other natural disasters.

Consumer Protection and Compliance Rules 

and Guidance

In March 2010, the FDIC approved and issued, 

along with the other federal bank regulators, 

updated Interagency Questions and Answers 

Regarding Community Reinvestment. These Q&As 

consolidate and supersede all previously published 

versions of this guidance. A new Q&A provides 

examples of how to demonstrate that community 

development services meet the criteria of serving 

low- and moderate-income areas and people. The 

revised Q&As enable consideration of a pro rata 

share of mixed income affordable housing projects 

as community development projects. 

In September 2010, the FDIC, along with the 

other federal bank regulators, issued a final CRA 

rule to implement a provision of the Higher 

Education Opportunity Act. The rule provides for 

consideration of low-cost higher education loans 

to low-income borrowers as a positive factor when 

assessing a financial institution’s record of meeting 

community credit needs under the CRA. The 

rule also incorporates a CRA statutory provision 

that allows the agencies to consider a financial 

institution’s capital investment, loan participation, 

and other ventures with minority-owned financial 

institutions, women-owned institutions, and lowincome credit unions as factors in assessing the 

institution’s CRA record. 

In December 2010, the agencies published 

a final CRA rule that revises the definition 

of “community development” in the CRA 

regulations to provide favorable CRA 

consideration for loans, investments, and 

services by financial institutions that directly 

support, enable or facilitate eligible projects 

and activities in designated target areas of the 

Neighborhood Stabilization Program (NSP) 

approved by the Department of Housing and 

Urban Development. The expanded definition 

of “community development” in the CRA 

regulations will help leverage NSP funds in areas 

experiencing high foreclosure and vacancy rates 

and neighborhood blight.

In May 2010, the FDIC issued guidance to assist 

lenders in meeting their compliance obligations 

under the National Flood Insurance Program 

(NFIP) during periods when the statutory 

authority of the Federal Emergency Management 

Agency (FEMA) to issue flood insurance contracts 

under the NFIP lapses. In December 2010, the 

FDIC issued a notice to its supervised financial 

institutions that FEMA announced that Preferred 

Risk Policy eligibility will be extended two years 

beginning January 1, 2011.

In August 2010, the FDIC, in cooperation 

with the other FFIEC member agencies, issued 

supervisory guidance on reverse mortgage 

products. The guidance emphasizes the consumer 

protection concerns raised by reverse mortgages 

and the importance of financial institutions 

mitigating the compliance and reputation risks 

associated with these products.

In September 2010, the FDIC issued a 

compliance guide for state non-member banks 

wishing to use the model privacy form to comply 

with disclosure requirements under the GrammLeach-Bliley Act.

In November 2010, the FDIC issued final 

supervisory guidance on overdraft payment 

programs. The final guidance reaffirms existing 
36 MANAGEMENT’S DISCUSSION AND ANALYSIS

supervisory expectations described in the February 

2005 Joint Guidance on Overdraft Protection 

Programs, and provides specific guidance with 

respect to automated overdraft payment programs. 

In particular, the FDIC guidance states that 

financial institution management should be 

especially vigilant with respect to product overuse, 

which may harm consumers.

Monitoring Emerging Risks

The FDIC relies heavily on on-site supervisory 

activities to identify existing and emerging risks. 

In addition to on-site supervisory activities, 

the FDIC uses several established off-site 

processes, including the Statistical CAMELS 

Off-site Rating (SCOR) system and the Growth 

Monitoring System (GMS), as well as more recent 

comprehensive reviews (such as the Quarterly 

Supervisory Risk Profile), to assess how identified 

risks are likely to affect insured institutions’ risk 

profiles and ratings. These ongoing analyses have 

been augmented with numerous ad hoc reviews, 

such as reviews of commercial real estate lending 

trends, interest rate risk exposure, allowance 

for loan and lease loss trends, and dividend 

payments. Furthermore, the FDIC replaced its 

former Underwriting Survey with a Credit and 

Consumer Products/Services Survey. The new 

survey extends beyond underwriting practices and 

addresses new or evolving products, strategies, 

and consumer compliance issues and is now 

completed by examiners at the conclusion of 

each risk management and consumer compliance 

examination. Supervisory staff monitors and 

analyzes this real-time examiner input and uses 

the information to help determine the need 

for changes in policy guidance or supervisory 

strategies as appropriate.

Regulatory Reporting Revisions

The FDIC, jointly with the Office of the 

Comptroller of the Currency and the Federal 

Reserve Board, implemented revisions to the 

Consolidated Reports of Condition and Income 

(Call Reports) that took effect in March and 

December 2010. The revisions responded to such 

developments as the temporary increase in the 

deposit insurance limit, changes in accounting 

standards, and credit availability concerns. The 

reporting changes that took effect on March 

31, 2010, included new data on other than 

temporary impairments of debt securities, loans 

to non-depository financial institutions, and assets 

acquired from failed institutions covered by FDIC 

loss-share agreements; additional data on certain 

time deposits and unused commitments; and a 

change from annual to quarterly reporting for 

small-business and small-farm lending data. 

The agencies began to collect new data 

pertaining to reverse mortgages annually 

effective December 31, 2010.

As a result of a change in the basis for calculating 

assessments for banks participating in the FDIC’s 

TAGP in the third quarter of 2010, the agencies 

revised the Call Report items used to collect 

data on TAGP-eligible accounts in September 

2010. For the final two quarters of the TAGP, 

participating banks were required to report the 

total dollar amount and number of TAGP-eligible 

accounts as average daily balances rather than 

quarter-end balances.

With the enactment of temporary unlimited 

insurance coverage for noninterest-bearing 

transaction accounts by the Dodd-Frank Act 

effective December 31, 2010, the agencies added 

two new items to the Call Report as of that date 

for the reporting of the quarter-end dollar amount 

and number of noninterest-bearing transaction 

accounts as defined in the Act. These new items 

must be completed by all banks, not only those 

that participated in the TAGP.

In September 2010, the agencies proposed several 

revisions to the Call Report, primarily to assist 

the agencies in gaining a better understanding 

of banks’ credit and liquidity risk exposures. The 

proposed revisions, which took effect on March 

31, 2011, include additional data on troubled 

debt restructurings, commercial mortgage-backed 

securities, private sector deposits, loans and other 

real estate covered by FDIC loss-share agreements, 

bank-owned life insurance, and trust department 

collective investment funds; new data on auto 

loans, deposits obtained through deposit listing 

services, and assets and liabilities of consolidated 
MANAGEMENT’S DISCUSSION AND ANALYSIS 37

variable interest entities and captive insurance 

subsidiaries; and instructional revisions relating to 

construction loans and repricing data. 

Promoting Economic Inclusion

The FDIC undertook a number of initiatives in 

2010 to promote financial access to IDIs for lowand moderate-income communities. 

Alliance for Economic Inclusion

The goal of the FDIC’s Alliance for Economic 

Inclusion (AEI) initiative is to collaborate with 

financial institutions; community organizations; 

local, state, and federal agencies; and other 

partners in select markets to launch broad-based 

coalitions to bring unbanked and underserved 

consumers into the financial mainstream.

The FDIC expanded its AEI efforts during 2010 

to increase measurable results in the areas of 

new bank accounts, small-dollar loan products, 

remittance products, and the delivery of financial 

education to more underserved consumers. 

During 2010, over 152 banks and organizations 

joined AEI nationwide, bringing the total number 

of AEI members to 1,119. There were 45,776 new 

bank accounts opened during 2010, bringing the 

total number of bank accounts opened through 

the AEI to 208,458. During 2010, approximately 

56,556 consumers received financial education 

through the AEI, bringing the total number of 

consumers educated to 199,392. Also, 48 banks 

were in the process of offering or developing 

small-dollar loans, 27 banks were offering 

remittance products, and 26 banks were providing 

innovative savings products through the AEI at 

the end of 2010.

During 2010, the FDIC expanded its efforts 

to address additional markets with high 

concentrations of unbanked and underbanked 

households and aligned its targeted efforts with 

the results of its 2009 unbanked survey. Presently 

in 14 markets, the FDIC began the initial 

organization and planning for AEI initiatives in 

two additional markets: Milwaukee, WI, and 

St. Louis, MO. Additionally, the FDIC worked 

closely during 2010 to provide technical assistance 

and support to communities in Ohio and 

northwestern Indiana interested in forming AEI 

coalitions, and provided a loaned executive to lead 

the Bank On California campaign.

The FDIC also worked closely during 2010 with 

the National League of Cities to provide technical 

assistance to facilitate the implementation of Bank 

On campaigns in: Seattle, WA; Savannah, GA; 

Houston and San Antonio, TX; Indianapolis, IN; 

Aurora, IL; Gaithersburg, MD; and Jacksonville, 

FL. The FDIC was also invited to serve as a 

working committee member and advisor to 

facilitate the launch of a Bank On Washington, 

DC, campaign launched in April 2010.

Advancing Financial Education

The FDIC’s award-winning Money Smart

curriculum is available in seven languages, largeprint and Braille versions, as computer-based 

instruction, and as podcast audio instruction. 

Since its inception, over 2.4 million individuals 

have participated in Money Smart classes and selfpaced computer-based instruction. Approximately 

300,000 of these participants subsequently 

established new banking relationships.

The FDIC significantly expanded its financial 

education efforts during 2010 through a multipart strategy that included making available 

timely, high-quality financial education 

products, expanding delivery channels, and 

sharing best practices.

In 2010, the FDIC released an enhanced version 

of its instructor-led Money Smart financial 

education curriculum for adults. The enhanced 

curriculum incorporates changes in the law and 

industry practices that have occurred since Money 

Smart was last revised in 2006. For instance, the 

curriculum reflects recent amendments to the 

rules pertaining to credit cards as well as the new 

overdraft opt-in rule. A new module, Financial 

Recovery, provides an overview of the steps 

consumers can take to rebuild their finances after a 

financial setback. Similar enhancements were also 

made to Money Smart for Young Adults.

The FDIC also released a Spanish language 

version of the Money Smart Podcast Network, a 

portable audio version of Money Smart suitable 
38 MANAGEMENT’S DISCUSSION AND ANALYSIS

for use with virtually all MP3 players. Showing 

the appeal of a portable audio version, the MP3 

English version received more than 522,000 hits 

during more than 23,000 individual sessions 

(individual visitors) during 2010, and the Spanish 

version received nearly 1,000 hits between its 

release on October 14, 2010, and year-end.

The FDIC’s delivery channels for financial 

education were expanded, in particular, through 

a historic partnership agreement signed on 

November 15, 2010, with the National Credit 

Union Administration and the U.S. Department

of Education, to promote financial education 

and access for low- and moderate-income 

students. The agreement will promote educators 

and IDIs working together to help students 

receive financial education and use mainstream 

banking products.

Financial education best practices were shared 

through four editions of Money Smart News, 

which reached over 40,000 subscribers. Success 

stories were shared on topics including reaching 

households struggling to survive a job loss and 

providing financial education to 

college students.

As a member of the Financial Literacy and 

Education Commission, the FDIC continued 

to actively support the Commission’s efforts to 

improve financial literacy in America. During 

2010, the FDIC was significantly involved in 

the work of the National Strategy Working 

Group, which was charged with drafting a new 

national strategy to promote financial literacy 

and education. In addition, the FDIC chairs the 

Commission’s Core Competencies Subcommittee, 

which worked closely with the Department 

of the Treasury and a group of experts in the 

financial education field, including researchers 

and practitioners, to help draft the various core 

principles that individuals should know and the 

basic concepts program providers should cover.

The FDIC also took a leadership role among 

federal agencies to promote the 2010 America 

Saves Week to encourage consumers to establish 

a basic savings account or boost existing savings. 

Chairman Bair authored the nationally distributed 

Your Savings – Good for You, Your Family, and Your 

Peace of Mind op-ed. In addition, a video featuring 

Chairman Bair encouraging consumers to save 

and participate in America Saves Week received 

over 6,000 views on YouTube and was featured on 

the homepage of America Saves. The FDIC also 

provided technical assistance or other involvement 

to at least 15 America Saves coalitions.

Leading Community Development

FDIC community affairs staff are located in 

each of the FDIC’s regions and lead a range of 

community development activities. In 2010, 

the FDIC undertook over 200 community 

development, technical assistance, financial 

education, and outreach activities and events. 

These activities were designed to promote 

awareness of investment opportunities to financial 

institutions, access to capital within communities, 

knowledge-sharing among the public and private 

sector, and wealth-building opportunities for 

families. Staff also provided technical assistance 

and training to financial institutions on 

community development and other CRA-related 

topics. Representatives throughout the financial 

industry and their stakeholders collaborated 

with the FDIC on a broad range of initiatives 

structured to meet local and regional needs for 

financial products and services, credit, assetbuilding, affordable housing, small business and 

micro-enterprise development, and financial 

education.

During 2010, the FDIC launched a pilot initiative 

to build awareness of the FDIC’s asset purchase 

opportunities among nonprofit affordable 

housing developers, NSP grantees, and local 

municipalities. The pilot was designed to increase 

their access and ability to successfully bid on 

and acquire FDIC-owned real estate from failed 

banks for redevelopment for affordable housing 

and other community development purposes. 

As a result, 30 properties were purchased from 

the FDIC by NSP grantees and redeployed as 

affordable housing in the southeast region.
MANAGEMENT’S DISCUSSION AND ANALYSIS 39

Recognizing the importance of small business 

growth and job creation as an essential 

component in America’s economic recovery, the 

FDIC continued its emphasis on facilitating 

small-business development, expansion, and 

recovery during 2010. The FDIC entered into 

a strategic alliance with the U.S. Small Business 

Administration (SBA) on September 8, 2010, 

to facilitate the development and expansion, of 

small businesses. As part of the agreement, the 

FDIC and the SBA collaborated in co-sponsoring 

small-business information, resource, and 

capacity-building seminars in New York, NY; 

Los Angeles, CA; Memphis, TN; Greensboro, 

AL; Jackson, MS; New Orleans, LA; Tampa, FL; 

Richmond, VA; and Raleigh, NC. The events 

provided information and resources to over 1,500 

small business owners, entrepreneurs, banking 

professionals and others.

The FDIC continued its initiative to help 

consumers and the banking industry avoid 

unnecessary foreclosures and stop foreclosure 

“rescue” scams that promise false hope to 

consumers at risk of losing their homes.

The FDIC focused its foreclosure mitigation 

efforts in three areas during 2010:

Q Direct outreach to consumers with 

information, education, counseling, and 

referrals. During 2010, in collaboration 

with NeighborWorks® America, the FDIC 

sponsored four counselor-driven homeowner 

outreach events in high-need markets to 

provide face-to-face assistance for borrowers 

at risk of foreclosure. More than 4,000 

homeowners attended these events. 

Q Industry outreach and education 

targeted to lenders, loan servicers, local 

governmental agencies, housing counselors, 

and first responders (faith-based 

organizations, advocacy organizations, 

social service organizations, etc.). During 

2010, the FDIC hosted or co-hosted five 

major loan modification scam outreach 

events in collaboration with NeighborWorks®

America. These events were targeted to local 

agencies and nonprofits that have the capacity 

to educate stakeholders. These events resulted 

in more than 40,000 pieces of FDIC-branded 

outreach materials provided to partners for 

distribution, and led to more than 200 scams 

being reported to authorities. 

Q Support for capacity-building initiatives 

to help expand the quantity and quality 

of foreclosure counseling assistance that 

is available within the industry. Working 

closely with NeighborWorks® America and 

other national and local counselors and 

intermediaries, the FDIC worked to support 

industry efforts to build the capacity of 

housing counseling agencies. For example, the 

FDIC facilitated two community stabilization 

place trainings, which led to more than 69 

homeownership professionals being trained 

in best practices and strategies to promote 

community recovery.

Gulf Coast Oil Spill Response

The FDIC strongly supported efforts to expedite 

a recovery from the April 22, 2010, Deepwater 

Horizon oil spill in the Gulf Coast region. At 

the onset of this spill of national significance, the 

FDIC recognized that some borrowers’ cash flow 

and repayment capacity would be unexpectedly 

impaired, and that banks should consider assisting 

borrowers that would be severely impacted. 

Accordingly, on May 7, 2010, the FDIC issued 

FIL 24-2010, Guidance for Financial Institutions 

Working with Borrowers in the Gulf Coast Region 

Affected by a “Spill of National Significance”. This 

guidance encourages banks to work constructively 

with borrowers experiencing difficulties beyond 

their control because of damage caused by the 

spill. It also encourages banks to extend repayment 

terms, restructure existing loans, or ease terms 

for new loans in a manner consistent with sound 

banking practices. The guidance recognizes that 

efforts to work with borrowers in communities 

under stress can be consistent with safe and 

sound banking practices as well as in the public 

interest. The FDIC also joined the other banking 

agencies in issuing a similar directive on July 14, 

2010, titled Interagency Statement on Financial 

Institutions Affected by the Deepwater Horizon 

Oil Spill.
40 MANAGEMENT’S DISCUSSION AND ANALYSIS

Through field offices in Florida, Alabama, 

Mississippi, and Louisiana, and frequent 

interaction with state regulators and bank 

trade organizations, the FDIC worked hard 

to understand the spill’s impact on banking, 

commerce, and tourism. FDIC executives from 

Washington and the Dallas and Atlanta regional 

offices conducted outreach and communicated 

with various constituencies to enhance knowledge 

of the spill’s scope and effects. In addition, the 

FDIC engaged in a concerted dialogue with trade 

associations, community and business leaders, 

and congressional staff from the Gulf Coast 

region to gain an “on the ground” perspective on 

the spill’s short- and long-term implications. The 

FDIC will strive to maintain this dialogue with 

bankers and community leaders to ensure its 

supervisory approach prudently accommodates 

recovery efforts.

Affordable Small-Dollar Loan Guidelines 

and Pilot Program

The FDIC’s two-year Small-Dollar Loan Pilot 

Program concluded in the fourth quarter of 2009, 

with final data reported to the FDIC in midMay 2010. The pilot was a case study designed 

to illustrate how banks can profitably offer 

affordable small-dollar loans as an alternative to 

high-cost credit products such as payday loans 

and fee-based overdraft programs. At the end of 

the pilot, 28 banks were participating with total 

assets ranging from $28 million to $10 billion 

and operations in 28 states. Over the course of the 

pilot, participating banks originated more than 

34,400 small-dollar loans with a principal balance 

of $40.2 million. 

The pilot demonstrated that banks can offer 

alternatives to costly forms of emergency 

credit, and resulted in a template of essential 

product design and delivery elements for safe, 

affordable, and feasible small-dollar loans that 

can be replicated by other banks. (See www.fdic.

gov/smalldollarloans/ for the template). Going 

forward, the FDIC is working with the banking 

industry, consumer and community groups, 

nonprofit organizations, other government 

agencies, and others to research and pursue 

strategies that could prove useful in expanding the 

supply of small-dollar loans. Among other things, 

these strategies include:

Q Highlighting the facts about the pilot and 

other successful small-dollar loan models. 

Q Studying creation of pools of nonprofit or 

government funds to serve as “guarantees” for 

small-dollar loans. 

Q Encouraging broad-based partnerships among 

banks, nonprofit, and community groups to 

work together in designing and delivering 

small-dollar loans. 

Q Studying the feasibility of safe and innovative 

emerging small-dollar loan technologies and 

business models. 

Q Considering ways that regulators can 

encourage banks to offer safe and affordable 

small-dollar products, and that these products 

can receive favorable CRA consideration.

Information Technology, Cyber Fraud, and 

Financial Crimes 

The FDIC sponsored a Combating Commercial 

Payments Fraud Symposium in March 2010 

that focused on the nature of this increasingly 

sophisticated form of financial fraud and how the 

industry and regulators can effectively respond. 

Other major accomplishments during 2010 in 

promoting information technology (IT) security 

and combating cyber fraud and other financial 

crimes included the following: 

Q Published, in conjunction with the other 

FFIEC agencies, a Retail Payment Systems 

Handbook. The booklet discusses various 

technologies and products used in payment 

systems and the risk management techniques 

that institutions should use.

Q Issued, in conjunction with the other FFIEC 

agencies, an updated and expanded program 

to review specialized software used by financial 

institutions.
MANAGEMENT’S DISCUSSION AND ANALYSIS 41

Q Published, in conjunction with the other 

FFIEC agencies, a white paper entitled “The 

Detection and Deterrence of Mortgage Fraud 

Against Financial Institutions”.

Q Issued Guidance on Mitigating Risk Posed 

by Information Stored on Photocopiers, Fax 

Machines and Printers.

Q Assisted financial institutions in identifying 

and shutting down approximately 47 

“phishing” websites. The term “phishing”—as 

in fishing for confidential information—refers 

to a scam that encompasses fraudulently 

obtaining and using an individual’s personal or 

financial information. 

Q Issued 130 Special Alerts to FDIC-supervised 

institutions on reported cases of counterfeit or 

fraudulent bank checks. 

Q Issued 3 Consumer Alerts pertaining to 

e-mails and telephone calls fraudulently 

claiming to be from the FDIC.

The FDIC conducts IT examinations at each 

risk management examination to ensure that 

institutions have implemented adequate risk 

management practices for the confidentiality, 

integrity, and availability of the institution’s 

sensitive, material, and critical information 

assets using the FFIEC Uniform Rating 

System for Information Technology (URSIT). 

The FDIC also participates in interagency 

examinations of significant technology service 

providers. In 2010, the FDIC conducted 2,121 

IT examinations at financial institutions and 

technology service providers. Further, as part 

of its ongoing supervision process, the FDIC 

monitors significant events, such as data breaches 

and natural disasters, that may impact financial 

institution operations or customers.

As an additional element of its leadership role in 

promoting effective bank supervision practices, 

the FDIC provides technical assistance, training, 

and consultations to international governmental 

banking regulators in the area of IT examinations. 

In 2010, the FDIC provided foreign technical 

assistance training to the Central Bank of Iraq and 

the Bank of Albania to train examiners and develop 

examination policies for managing IT and other 

operational risks.

Consumer Complaints and Inquiries 

The FDIC investigates consumer complaints 

concerning FDIC-supervised institutions and 

answers inquiries from the public about consumer 

protection laws and banking practices. As of 

December 31, 2010, the FDIC received 13,756 

written complaints, of which 6,862 involved 

complaints against state non-member institutions. 

The FDIC responded to over 97 percent of these 

complaints within time frames established by 

corporate policy, and acknowledged 100 percent 

of all consumer complaints and inquiries within 

14 days. The FDIC also responded to 1,960 

written inquiries, of which 388 involved state 

non-member institutions. In addition, the FDIC 

responded to 6,666 telephone calls from the 

public and members of the banking community, 

4,375 of which concerned state non-member 

institutions.

Deposit Insurance Education

An important part of the FDIC’s deposit 

insurance mission is ensuring that bankers and 

consumers have access to accurate information 

about the FDIC’s rules for deposit insurance 

coverage. The FDIC has an extensive deposit 

insurance education program consisting of 

seminars for bankers, electronic tools for 

estimating deposit insurance coverage, and written 

and electronic information targeted for both 

bankers and consumers.

In 2010, the FDIC continued its efforts to 

educate bankers and consumers about the rules 

and requirements for FDIC insurance coverage. 

The FDIC conducted a series of eight nationwide 

telephone seminars for bankers on deposit 

insurance coverage. These seminars reached an 

estimated 60,000 bankers participating at over 

16,000 bank locations throughout the country. 

The FDIC also updated its deposit insurance 

coverage publications and educational tools for 

consumers and bankers, including brochures, 

resource guides, videos, and the Electronic 

Deposit Insurance Estimator (EDIE).
42 MANAGEMENT’S DISCUSSION AND ANALYSIS

Deposit Insurance Coverage Inquiries

During 2010, the FDIC received and answered 

approximately 143,000 telephone deposit 

insurance-related inquiries from consumers 

and bankers. Of these inquiries, 119,000 were 

addressed by the FDIC Call Center and 24,000 

were handled by deposit insurance coverage 

subject matter experts. In addition to telephone 

deposit insurance inquiries, the FDIC received 

3,000 written deposit insurance coverage inquiries 

from consumers and bankers. Of these inquiries, 

99 percent received responses within two weeks, as 

required by corporate policy. 

Resolutions and Receiverships

The FDIC has the unique mission of protecting 

depositors of insured banks and savings 

associations. No depositor has ever experienced 

a loss on the insured amount of his or her 

deposit in an FDIC-insured institution due to 

a failure. Once an institution is closed by its 

chartering authority—the state for state-chartered 

institutions, the OCC for national banks, and 

the OTS for federal savings associations—and 

the FDIC is appointed receiver, the FDIC is 

responsible for resolving the failed bank or savings 

association.

The FDIC employs a variety of business 

practices to resolve a failed institution. These 

business practices are typically associated with 

either the resolution process or the receivership 

process. Depending on the characteristics of the 

institution, the FDIC may recommend several 

of these practices to ensure the prompt and 

smooth payment of deposit insurance to insured 

depositors, to minimize the impact on the DIF, 

and to speed dividend payments to creditors of the 

failed institution.

The resolution process involves valuing a failing 

institution, marketing it, soliciting and accepting 

bids for the sale of the institution, determining 

which bid is least costly to the insurance fund, and 

working with the acquiring institution through 

the closing process.

In order to minimize disruption to the local 

community, the resolution process must be 

performed quickly and as smoothly as possible. 

There are three basic resolution methods: purchase 

and assumption transactions, deposit payoffs, 

and utilizing a Deposit Insurance National 

Bank (DINB).

The purchase and assumption (P&A) transaction 

is the most common resolution method used 

for failing institutions. In a P&A transaction, a 

healthy institution purchases certain assets and 

assumes certain liabilities of the failed institution. 

There are a variety of P&A transactions that 

can be used. Since each failing bank situation is 

different, P&A transactions provide flexibility 

to structure deals that result in the highest value 

for the failed institution. For each possible P&A 

transaction, the acquirer may either acquire 

all or only the insured portion of the deposits. 

Loss sharing may be offered by the receiver in 

connection with a P&A transaction. In a lossshare transaction, the FDIC as receiver agrees to 

share losses on certain loans with the acquirer. 

The FDIC usually agrees to absorb a significant 

portion (for example, 80 percent) of future losses 

on assets that have been designated as “shared loss 

assets” for a specific period of time (for example, 

five to ten years). The economic rationale for 

these transactions is that keeping shared loss 

assets in the banking sector can produce a better 

net recovery than would the FDIC’s immediate 

liquidation of these assets.

Deposit payoffs are only executed if a bid for a 

P&A transaction does not meet the least-cost test 

or if no bids are received, in which case the FDIC, 

in its corporate capacity as deposit insurer, makes 

sure that the customers of the failed institution 

receive the full amount of their insured deposits.

The Banking Act of 1933 authorized the FDIC to 

establish a DINB to assume the insured deposits 

of a failed bank. A DINB is a new national 

bank with limited life and powers which allows 

failed bank customers a brief period of time to 

move their deposit account(s) to other insured 

institutions. A DINB allows for a failed bank to 
MANAGEMENT’S DISCUSSION AND ANALYSIS 43

Asset Management and Sales

As part of its resolution process, the FDIC makes 

every effort to sell as many assets as possible to an 

assuming institution. Assets that are retained by 

the receivership are evaluated, and for 95 percent 

of the failed institutions, at least 90 percent of the 

book value of marketable assets are marketed for 

sale within 90 days of an institution’s failure for 

cash sales and 120 days for structured sales.

Structured sales for 2010 totaled $8.8 billion in 

unpaid principal balances from commercial real 

estate and residential loans acquired from various 

receiverships. These transactions oftentimes 

involved FDIC guaranteed purchase money 

debt and equity in a limited liability company 

shared between the respective receivership which 

contributed the assets to the sale and the successful 

purchaser. Cash sales of assets for the year totaled 

$773 million in book value.

As a result of our marketing and collection efforts, 

the book value of assets in inventory decreased by 

$14.4 billion in 2010. The chart below shows the 

beginning and ending balances of these assets by 

asset type.

Assets in Inventory by Asset Type

Dollars in Millions

Asset Type

Assets in 

Inventory

01/01/10

Assets in 

Inventory

12/31/10

Securities $12,425 $12,820

Consumer Loans 475 56

Commercial Loans 4,423 3,369

Real Estate Mortgages 15,613 5,683

Other Assets/Judgments 4,096 2,103

Owned Assets 3,257 2,086

Net Investments in 

Subsidiaries 1,066 881

Total $41,355 $26,998

be liquidated in an orderly fashion, minimizing 

disruption to local communities and 

financial markets.

The receivership process involves performing 

the closing functions at the failed institution, 

liquidating any remaining failed institution assets, 

and distributing any proceeds of the liquidation to 

the FDIC and other creditors of the receivership. 

In its role as receiver, the FDIC has used a wide 

variety of strategies and tools to manage and sell 

retained assets. These include, but are not limited 

to: asset sale and/or management agreements, 

structured transactions, and securitizations.

Financial Institution Failures

During 2010, the FDIC experienced a significant 

increase in the number of institution failures, 157, 

as compared to previous years. For the institutions 

that failed, the FDIC successfully contacted 

all known qualified and interested bidders to 

market these institutions. The FDIC also made 

insured funds available to all depositors within 

one business day of the failure if it occurred on a 

Friday and within two business days if the failure 

occurred on any other day of the week. There were 

no losses on insured deposits, and no appropriated 

funds were required to pay insured deposits.

The following chart provides a comparison of 

failure activity over the last three years.

Failure Activity 2008 – 2010

Dollars in Billions

2010 2009 2008

Total Institutions 157 140 25

Total Assets of 

Failed Institutions1 $92.1 $169.7 $371.9

Total Deposits of 

Failed Institutions1 $79.5 $137.1 $234.3

Estimated Loss to the DIF $24.2 $37.1 $19.6 

1 Total Assets and Total Deposits data are based on the last Call 

Report filed by the institution prior to failure.
44 MANAGEMENT’S DISCUSSION AND ANALYSIS

The FDIC makes extensive use of contractors 

in managing and selling the assets of failed 

institutions. In order to ensure that contractor 

resources are effectively managed, a substantial 

number of dedicated contract oversight and 

management positions were added during 2010 

and extensive training was conducted for new 

employees before assigning them to contractor 

oversight duties. All newly designated oversight 

managers and technical monitors receive training 

in advance of performing contract administration 

responsibilities. Further, new reporting capabilities 

were implemented to the procurement system. 

The contracting department was reorganized, and 

the ratio of task orders to oversight managers was 

significantly reduced.

Receivership Management Activities

The FDIC, as receiver, manages failed banks and 

their subsidiaries with the goal of expeditiously 

winding up their affairs. The oversight and 

prompt termination of receiverships help to 

preserve value for the uninsured depositors 

and other creditors by reducing overhead 

and other holding costs. Once the assets of a 

failed institution have been sold and the final 

distribution of any proceeds is made, the FDIC 

terminates the receivership estate. In 2010, the 

number of receiverships under management 

increased by 84 percent, due to the increase in 

failure activity. The following chart shows overall 

receivership activity for the FDIC in 2010.

Receivership Activity

Active Receiverships as of 01/01/101 187

New Receiverships 157

Receiverships Inactivated 0

Active Receiverships as of 12/31/101 344

1 Includes eight FSLIC Resolution Fund receiverships.

Minority and Women Outreach

The FDIC relies on contractors to help meet 

its mission to maintain stability and public 

confidence in the U.S. financial system. In 2010, 

the FDIC continued to host “Doing Business 

with the FDIC” and “Representing the FDIC” 

seminars. The FDIC conducted four seminars 

nationwide and reached out to Minority and 

Women Owned Businesses (MWOBs) and 

Minority and Women Owned Law Firms 

(MWOLFs) to inform them about the FDIC’s 

procurement and legal opportunities. In addition, 

FDIC staff served as panel members, exhibitors, 

and active participants in numerous events 

sponsored by trade and community organizations, 

and provided valuable information to attendees 

regarding the FDIC’s procurement process.

As a result of this additional outreach, the FDIC 

has registered approximately 2,200 MWOBs in 

an internal database. This database was used in 

addition to the newly developed ARON Database 

System (ARON) for generating source lists. 

ARON was developed exclusively for the FDIC 

in an effort to retrieve comprehensive lists of 

competitive MWOBs for potential solicitations. 

The system retrieves contractors’ information 

directly from the Central Contractor Registration 

(CCR) System. Firms that want to do business 

with the government must be registered in the 

CCR System.

In 2010, the FDIC awarded 2,573 contracts, of 

which 522 contracts, or 20 percent, were awarded 

to MWOBs. The total value of contracts awarded 

was $2.6 billion, of which $641 million, or 24 

percent, was awarded to MWOBs, compared to 

32 percent for all of 2009. Lower award values in 

areas where there was strong MWOB participation 

in conjunction with increases in award dollars in 

areas where there was no MWOB participation 

resulted in an overall decrease in dollars awarded 

to MWOBs in 2010. In addition, the FDIC paid 

outside counsel $87 million for legal services, 

of which $8 million, or 10 percent, was paid to 

MWOLFs, compared to 3 percent for all of 2009.

As a result of the number of bank failures for 

2010, the FDIC took a proactive effort to target 

minority and women investors to create awareness, 

promote synergy, and provide information 

regarding purchasing failed bank assets and 

acquiring and/or creating minority depository 

institutions. As previously stated, the FDIC 
MANAGEMENT’S DISCUSSION AND ANALYSIS 45

developed and jointly sponsored eight Asset 

Purchaser, Investor, and Minority Depository 

Institution (AIM) seminars.

In 2011, the FDIC will continue to encourage and 

foster diversity and the inclusion of minorities and 

women in its asset sales program as it continues to 

liquidate assets from failed financial institutions. 

The FDIC will explore an investor match program 

to connect large and small investors interested 

in bidding on the FDIC’s structured sales. In 

addition, the FDIC will conduct workshops to 

provide technical assistance to small investors 

and asset managers on how to participate in 

structured sales.

Protecting Insured Depositors

With the increase in failure activity in 2010, the 

FDIC’s focus on protecting insured depositors 

of failed institutions was of critical importance. 

Confidence in the banking system hinges on 

deposit insurance, and no insured deposits went 

unpaid in 2010.

The FDIC’s ability to attract healthy institutions 

to assume deposits and purchase assets of failed 

banks and savings associations at the time of 

failure minimizes the disruption to customers and 

allows assets to be returned to the private sector 

immediately. Assets remaining after resolution are 

liquidated by the FDIC in an orderly manner, and 

the proceeds are used to pay creditors, including 

depositors whose accounts exceeded the insurance 

limit. During 2010, the FDIC paid dividends of 

$5 million to depositors whose accounts exceeded 

the insured limit(s). 

Professional Liability and Financial 

Crimes Recoveries

FDIC staff works to identify potential claims 

against directors, officers, accountants, fidelity 

bond carriers, appraisers, attorneys, and other 

professionals who may have contributed to 

the failure of an IDI. Once a claim is deemed 

meritorious and cost effective to pursue, the 

FDIC initiates legal action against the appropriate 

parties. During the year, the FDIC recovered 

approximately $78 million from these professional 

liability claims/settlements. In addition, as part 

of the sentencing process for those convicted of 

criminal wrongdoing against institutions that 

later failed, a court may order a defendant to pay 

restitution or to forfeit funds or property to the 

receivership. The FDIC, working in conjunction 

with the U.S. Department of Justice, collected 

$6 million in criminal restitutions and forfeitures 

during the year. At the end of 2010, the FDIC’s 

caseload was composed of 153 professional 

liability lawsuits (up from 89 at year-end 2009) 

and 2,750 open investigations (up from 1,878) 

at year-end 2009. There also were 4,895 active 

restitution and forfeiture orders (up from 3,379 

at year-end 2009). This includes 247 FSLIC 

Resolution Fund orders, i.e., orders inherited 

from the Federal Savings and Loan Insurance 

Corporation on August 10, 1989, and orders 

inherited from the Resolution Trust Corporation 

on January 1, 1996.

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 resultsoriented 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.
46 MANAGEMENT’S DISCUSSION AND ANALYSIS

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 entrylevel 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 
MANAGEMENT’S DISCUSSION AND ANALYSIS 47

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 precommissioning 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.
48 MANAGEMENT’S DISCUSSION AND ANALYSIS

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.

“All of us share the credit for improving the corporate culture,” said Chairman Sheila C. Bair, shown here displaying the FDIC’s Best 

Places to Work award with (from left) Arleas Upton Kea, Benita Swann, Jesse Villarreal, Ira Kitmacher, and Brenda Hardnett.
MANAGEMENT’S DISCUSSION AND ANALYSIS 49

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 postclosing 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.
2

FINANCIAL HIGHLIGHTS 51

Deposit Insurance 

Fund Performance

The FDIC administers the Deposit Insurance 

Fund (DIF) and the FSLIC Resolution Fund 

(FRF), which fulfills the obligations of the former 

Federal Savings and Loan Insurance Corporation 

(FSLIC) and the former Resolution Trust 

Corporation (RTC). The following summarizes 

the condition of the DIF. (See the accompanying 

graphs on FDIC-Insured Deposits and Insurance 

Fund Reserve Ratios on the following page.)

For 2010, the DIF’s comprehensive income was 

$13.5 billion compared to a comprehensive loss 

of $38.1 billion during 2009. This year-overyear change of $51.6 billion was primarily due 

to a $58.6 billion decline in the provision for 

insurance losses, partially offset by a $4.1 billion 

decrease in assessments earned (largely attributable 

to the 2009 special assessment). 

The provision for insurance losses was negative 

$848 million for 2010, compared to positive 

$57.7 billion for 2009. The 2009 provision 

reflected the significant losses estimated to be 

incurred by the DIF from the 2009 and future 

failures. In contrast, the 2010 negative provision 

is primarily impacted by a reduction in the 

contingent loss reserve due to the improvement 

in the financial condition of institutions that were 

previously identified to fail and adjustments to the 

estimated losses for banks that have failed.

The DIF’s total liquidity declined by $19.9 

billion, or 30 percent, to $46.2 billion during 

2010. The decrease was primarily the result 

of disbursing $28.8 billion to fund 157 bank 

failures during 2010, although it should be noted 

that 130 of these failures were resolved as cashconserving loss-share transactions (in which the 

acquirers purchased substantially all of the failed 

institutions’ assets and the FDIC and the acquirers 

entered into loss-share agreements) requiring 

lower initial resolution funding. Moreover, during 

2010, the DIF received $13.6 billion in dividends 

and other payments from its receiverships, which 

helped to mitigate the DIF liquidity’s decline.

Financial

Highlights
52 FINANCIAL HIGHLIGHTS

SEP-07 DEC-07 MAR-08 JUN-08 SEP-08 DEC-08 MAR-09 JUN-09 SEP-09 DEC-09 MAR-10 JUN-10 SEP-10

Dollars in Billions

ESTIMATED DIF INSURED DEPOSITS

0

1,000

2,000

3,000

4,000

5,000

6,000

SOURCE: Commercial Bank Call and Thrift Financial Reports

Note: Beginning in the fourth quarter of 2010, estimated insured deposits include the entire balance of noninterest-bearing transaction accounts.

$7,000

DEC-10

Fund Balances as a Percent of Insured Deposits

DEPOSIT INSURANCE FUND RESERVE RATIOS 1.5

1.2

0.9

0.6

0.3

0.0

–0.3

–0.6

SEP-07 DEC-07 MAR-08 JUN-08 SEP-08 DEC-08 MAR-09 JUN-09 SEP-09 DEC-09 MAR-10 JUN-10 SEP-10 DEC-10
FINANCIAL HIGHLIGHTS 53

Corporate Operating Budget

The FDIC segregates its corporate operating 

budget and expenses into two discrete 

components: ongoing operations and receivership 

funding. The receivership funding component 

represents expenses resulting from financial 

institution failures and is, therefore, largely driven 

by external forces, while the ongoing operations 

component accounts for all other operating 

expenses and tends to be more controllable 

and estimable. Corporate Operating expenses 

totaled $3.4 billion in 2010, including $1.4 

billion in ongoing operations and $2.0 billion 

in receivership funding. This represented 

approximately 96 percent of the approved budget 

for ongoing operations and 80 percent of the 

approved budget for receivership funding for 

the year. (The numbers above in this paragraph 

will not agree with the DIF and FRF financial 

statements due to differences in how items 

are classified.)

The Board of Directors approved a 2011 

Corporate Operating Budget of approximately 

$3.9 billion, consisting of $1.7 billion for 

ongoing operations and $2.2 billion for 

receivership funding. The level of approved 

ongoing operations budget is approximately 

$251 million (18 percent) higher than actual 

2010 ongoing operations expenses, while the 

approved receivership funding budget is roughly 

$205 million (10 percent) higher than actual 

2010 receivership funding expenses.

As in prior years, the 2011 budget was formulated 

primarily on the basis of an analysis of projected 

workload for each of the Corporation’s three 

major business lines and its major program 

support functions. The most significant factors 

contributing to the proposed increase in the 

ongoing operations component of the budget are 

further staffing increases for the Corporation’s risk 

management and consumer protection supervisory 

programs in 2011; the implementation of a larger 

Deposit Insurance Fund Selected Statistics 

For the years ended December 31

Dollars in Millions

2010 2009 2008

Financial Results

Revenue $13,380 $24,706 $7,306 

Operating Expenses 1,593 1,271 1,033 

Insurance and Other Expenses (includes provision for loss) (1,518) 59,438 43,306 

Net Income (Loss) 13,305 (36,003) (37,033)

Comprehensive Income (Loss) 13,510 (38,138) (35,137)

Fund Balance $(7,352) $(20,862) $17,276 

Reserve Ratio (0.12) % (0.39) % 0.36 %

Selected Statistics

Total DIF-Member Institutions1 7,657 8,012 8,305 

Problem Institutions 884 702 252 

Total Assets of Problem Institutions $390,017 $402,782 $159,405 

Institution Failures 157 140 25 

Total Assets of Failed Institutions in Year2 $92,085 $169,709 $371,945 

Number of Active Failed Institution Receiverships 336 179 41 

1 Commercial banks and savings institutions. Does not include U.S. insured branches of foreign banks.

2 Based upon the last Call Report filed by the institution prior to failure.
54 FINANCIAL HIGHLIGHTS

permanent staffing platform in the Division of 

Resolutions and Receiverships (DRR) to ensure 

the Corporation’s future readiness to resolve 

failed banks; and the addition of a number of 

new positions to fulfill the Corporation’s new 

responsibilities under the Dodd-Frank Act. In 

addition, the 2011 receivership funding budget 

allows for resources for contractor support as well 

as non-permanent staffing for DRR, the Legal 

Division, and other organizations should workload 

in these areas require an immediate response.

Investment Spending

The FDIC instituted a separate Investment 

Budget in 2003. It has a disciplined process for 

reviewing proposed new investment projects and 

managing the construction and implementation 

of approved projects. All of the projects in the 

current investment portfolio are major IT system 

initiatives. Proposed IT projects are carefully 

reviewed to ensure that they are consistent with 

the Corporation’s enterprise architecture. The 

project approval and monitoring processes also 

enable the FDIC to be aware of risks to the 

major capital investment projects and facilitate 

appropriate, timely intervention to address 

these risks throughout the development 

process. An investment portfolio performance 

review is provided to the FDIC’s Board of 

Directors quarterly.

The Corporation undertook significant capital 

investments during the 2003-2010 period, the 

largest of which was the expansion of its Virginia 

Square office facility. Other projects involved 

the development and implementation of major 

IT systems. Investment spending totaled $266.4 

million during this period, peaking at $108.2 

million in 2004. Spending for investment projects 

in 2010 totaled approximately $0.4 million.

In 2011, investment spending is estimated at

$7 million.

Dollars in Millions

INVESTMENT SPENDING 2003 – 2010

$120

100

80

60

40

20

0

2003 2004 2005 2006 2007 2008 2009 2010
55

PROGRAM AREA: Insurance

Performance Results

PERFORMANCE RESULTS SUMMARY

3

Performance

Results Summary

Q Presented updated deposit insurance fund 

projections to the FDIC Board twice, in 

June and October 2010. No changes were 

recommended for assessment rates in June. 

In October, based on updated projections 

and changes to the Restoration Plan target 

required by the Dodd-Frank Act, staff 

recommended that the Board forgo the three 

basis point increase that was scheduled to 

take effect on January 1, 2011. 

Q In October, based on updated projections, 

staff estimated that the reserve ratio will 

become positive by year-end 2011 and will 

reach 1.15 percent by the fourth quarter 

of 2018. The FDIC intends to pursue 

rulemaking next year to implement the 

Dodd-Frank Act requirement that the FDIC 

offset the effect of requiring the reserve ratio 

reach 1.35 percent by September 30, 2020 

rather than 1.15 percent by year-end 2016 

on smaller banks. 

Summary of 2010 

Performance Results 

by Program

The FDIC successfully achieved 30 of the 34 

annual performance targets established in its 2010 

Annual Performance Plan. Three targets were 

deferred due to specific legislation in the DoddFrank Act. One target will be met in 2011. There 

were no instances in which 2010 performance 

had a material adverse effect on the successful 

achievement of the FDIC’s mission or its strategic 

goals and objectives regarding its major program 

responsibilities.

Additional key accomplishments are noted below.
56 PERFORMANCE RESULTS SUMMARY

PROGRAM AREA: Insurance (continued)

Performance Results

Q Completed reviews of the recent accuracy of 

the contingent loss reserves. 

Q Researched and analyzed emerging risks 

and trends in the banking sector, financial 

markets, and the overall economy to identify 

issues affecting the banking industry and the 

deposit insurance fund.

Q Supported supervision activities related to 

fair lending, enforcement actions, and the 

unbanked and underbanked survey, and 

supported efforts of the Advisory Committee 

on Economic Inclusion (ComE-In). 

Q Began a comprehensive study of the trends 

and events that contributed to the recent 

financial crisis. 

Q Provided senior/executive management 

policy research and analysis in support of 

legislative efforts to reform financial industry 

regulation, as well as support for testimonies 

and speeches. 

Q Published economic and banking 

information and analyses, through the FDIC 

Quarterly, FDIC Quarterly Banking Profile 

(QBP), FDIC State Profiles, and the Center for 

Financial Research Working Papers.

Q Conducted over 40 outreach events for 

bankers and community groups to discuss 

risks affecting the financial services industry.

Q Answered 99 percent of written inquiries 

from consumers and bankers about FDIC 

deposit insurance coverage within 14 days.

Q Electronic Deposit Insurance Estimator 

(EDIE) user sessions for 2010 totaled 

442,557.

Q Expanded avenues for publicizing deposit 

insurance rules and resources by:

X Enhancing EDIE to (1) incorporate new 

functionality that allows users to calculate 

coverage for irrevocable trust accounts 

and government accounts and (2) provide 

each FDIC-insured bank the opportunity 

to integrate the EDIE application into 

the bank’s website. 

X Producing an updated version of the 

FDIC Overview Video on Deposit 

Insurance Coverage for consumers and 

new bank employees. 

X Updating the FDIC’s consumer and 

banker brochures on deposit insurance 

coverage.

These resources are available on the FDIC’s 

website with the video also available on the 

FDIC’s YouTube channel and downloadable 

for multimedia applications.

Q Developed computer-based training for 

all FDIC examiners on FDIC deposit 

insurance coverage. The training provides an 

opportunity for all examiners to strengthen 

and enhance their knowledge of deposit 

insurance and the risks associated with 

insured institutions engaging in deposit 

placement activities. 
PERFORMANCE RESULTS SUMMARY 57

PROGRAM AREA: Supervision and Consumer Protection

Performance Results

Q Conducted 2,813 Bank Secrecy Act 

examinations, including required follow-up 

examinations and visitations.

Q Conducted 2,121 IT examinations of 

financial institutions and technology service 

providers.

Q Worked with other federal banking 

regulators and the Basel Committee on 

Banking Supervision to develop proposals to 

strengthen capital and liquidity requirements.

Q Published Final Rulemaking for the Secure 

and Fair Enforcement for Mortgage 

Licensing Act of 2008 and posted the final 

guidance to the FDIC website to implement 

provisions applicable to mortgage loan 

originators employed by insured depositories.

Q Published the Supervisory Insights journal to 

contribute to and promote sound principles 

and best practices for bank supervision. 

Q Among other releases, issued Financial 

Institution Letters (FILs) providing 

guidance on (1) meeting the needs of 

creditworthy small business borrowers; (2) 

identifying, monitoring, and managing 

correspondent concentration risks; (3) 

prudent appraisal and evaluation programs; 

(4) incentive compensation practices; (5) 

golden parachute payments; (6) deposit 

collection and placement activities in FDICsupervised institutions; and (7) registering 

as a municipal advisor under the Securities 

and Exchange Commission’s new rule. In 

addition, 23 disaster relief FILs were issued.

Q Issued industry notification of two 

interagency releases regarding conducting 

cross-border funds transfers and examination 

procedures for compliance with the Unlawful 

Internet Gambling Enforcement Act.

Q Issued joint final Community Reinvestment 

Act (CRA) rule change corresponding to 

statutory requirements relating to student 

loans and activities in cooperation with 

minority- and women-owned financial 

institutions and low-income credit unions. In 

addition, issued final CRA rule that revised 

the definition of “community development” 

in the CRA regulations, to provide favorable 

CRA consideration for loans, investments, 

and services by financial institutions that 

directly support, enable or facilitate eligible 

projects and activities in designated target 

areas of the Neighborhood Stabilization 

Program (NSP) that are approved by 

the Department of Housing and Urban 

Development (HUD).

Q Announced annual adjustment to the asset 

size thresholds used to define small bank, 

small savings associations, intermediate 

small bank and intermediate small savings 

associations under the CRA regulations.

Q Updated interagency guidance on the CRA. 

Jointly issued, with other Federal Financial 

Institutions Examination Council member 

agencies, supervisory guidance on reverse 

mortgage products. 

Q Issued final supervisory guidance on overdraft 

payment programs, which reaffirms existing 

supervisory expectations and provides specific 

guidance with respect to automated overdraft 

payment programs.

Q Issued guidance to assist lenders in meeting 

their compliance obligations under the 

National Flood Insurance Program (NFIP) 

during periods when the statutory authority 

of the Federal Emergency Management 

Agency (FEMA) to issue flood insurance 

contracts under the NFIP lapses; released 

compliance guide for state non-member 

banks wishing to use the model privacy form 

to comply with disclosure requirements 
58 PERFORMANCE RESULTS SUMMARY

PROGRAM AREA: Receivership Management

Performance Results

under the Gramm-Leach-Bliley Act; issued 

financial institutions notice on FEMA 

announcement that Preferred Risk Policy 

eligibility will be extended two years 

beginning January 1, 2011.

Q Issued examination procedures corresponding 

to amendments to Regulation CC 

(Expedited Funds Availability); Regulation 

Z (Truth in Lending) under the Credit 

Card Accountability Responsibility and 

Disclosure Act of 2009, the Higher 

Education Opportunity Act of 2008, and 

the Helping Families Save Their Homes Act 

of 2009; Regulation DD (Truth in Savings); 

Regulation E (Electronic Fund Transfers); the 

Fair Credit Reporting Act (FCRA) Furnisher 

Rule; and the FCRA Risk-Based Pricing 

Rule. 

Q Issued examination procedures for identifying 

Unfair or Deceptive Acts or Practices that are 

violations of Section 5 of the Federal Trade 

Commission Act as well as for reviewing 

third-party relationships and identifying 

associated risks. 

PROGRAM AREA: Supervision and Consumer Protection (continued)

Performance Results

Q Adopted a final rule requiring the largest 

IDIs to adopt mechanisms that would, in the 

event of the institution’s failure, (1) provide 

the FDIC with standard deposit account and 

other customer information and (2) allow the 

placement and release of holds on liability 

accounts, including deposits.

Q Identified and implemented program 

improvements to ensure efficient and 

effective management of the contract 

resources used to perform receivership 

management functions. Implemented 

enhanced reporting capabilities from the 

Automated Procurement System. 

Q Optimized the effectiveness of oversight 

managers and technical monitors by 

restructuring work assignments, providing 

enhanced technical support, and improving 

supervision.

Q Terminated at least 75 percent of new 

receiverships that are not subject to loss-share 

agreements, structured sales, or other legal 

impediments within three years of the date of 

failure.

Q Made final decisions for 82 percent of all 

investigated claim areas that were within 18 

months of the institution’s failure date.
PERFORMANCE RESULTS SUMMARY 59

2010 Budget and 

Expenditures by Program 

(Excluding Investments)

The FDIC budget for 2010 totaled 

$4.0 billion. Excluding $198 million, or 

5 percent, for Corporate General and 

Administrative expenditures, budget amounts 

were allocated to corporate programs as follows: 

$205 million, or 5 percent, to the Insurance 

program; $927 million, or 23 percent, to the 

Supervision and Consumer Protection 

program; and $2.7 billion, or 67 percent, to 

the Receivership Management program.

Actual expenditures for the year totaled $3.4 

billion. Excluding $157 million, or 5 percent, 

for Corporate General and Administrative 

expenditures, actual expenditures were allocated 

to programs as follows: $274 million, or 8 

percent, to the Insurance program; $787 

million, or 23 percent, to the Supervision and 

Consumer Protection program; and $2.2 

billion, or 64 percent, to the Receivership 

Management program.

INSURANCE PROGRAM

RECEIVERSHIP

MANAGEMENT PROGRAM

GENERAL 

AND ADMINISTRATIVE

Dollars in Millions

2010 BUDGET AND EXPENDITURES (SUPPORT ALLOCATED)

0

500

1,000

1,500

2,000

2,500

$3,000

SUPERVISION AND CONSUMER

PROTECTION PROGRAM

BUDGET EXPENDITURES
60 PERFORMANCE RESULTS SUMMARY

Performance Results by Program and Strategic Goal

2010 Insurance Program Results

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding.

#

Annual 

Performance Goal Indicator Target Results

1 Respond promptly 

to all financial 

institution closings 

and related emerging 

issues.

Number of business days 

after institution failure that 

depositors have access to 

insured funds either through 

transfer of deposits to the 

successor insured depository 

institution or depositor payout.

Insured depositor losses 

resulting from a financial 

institution failure.

Depositors have access to insured funds 

within one business day if the failure 

occurs on a Friday.

Depositors have access to insured funds 

within two business days if the failure 

occurs on any other day of the week.

There are no depositor losses on 

insured deposits.

No appropriated funds are required to 

pay insured depositors.

Achieved.

See pg. 43.

Achieved.

See pg. 43

Achieved.

See pg. 43.

Achieved.

See pg. 43.

2 Disseminate data and 

analyses on issues 

and risks affecting 

the financial services 

industry to bankers, 

supervisors, the 

public, and other 

stakeholders.

Scope and timeliness of 

information dissemination on 

identified or potential issues 

and risks.

Disseminate results of research and 

analyses in a timely manner through 

regular publications, ad hoc reports, 

and other means.

Undertake industry outreach 

activities to inform bankers and other 

stakeholders about current trends, 

concerns, and other available FDIC 

resources.

Achieved.

See pg. 56.

Achieved.

See pg. 56.

3 Set assessment 

rates to restore the 

insurance fund 

reserve ratio to the 

statutory minimum 

of at least 1.15% of 

estimated insured 

deposits by year-end 

2016, in accordance 

with the Amended 

Restoration Plan.

Update projections and 

recommend changes for 

assessments, as necessary.

Monitor progress in achieving 

the Amended Restoration 

Plan.

Provide updated fund projections to 

the FDIC Board of Directors by June 

30, 2010, and December 31, 2010.

Recommend deposit insurance 

assessment rates for the DIF to the 

FDIC Board as necessary.

Provide updates to the FDIC 

Board by June 30, 2010, and 

December 31, 2010.

Achieved.

See pgs. 18, 55.

Achieved.

See pgs. 18, 55.

Achieved.

See pgs. 18, 55.

4 Expand and 

strengthen the 

FDIC’s participation 

and leadership role 

in supporting robust 

international deposit 

insurance systems.

Scope of information sharing 

and assistance available to 

international governmental 

bank regulatory and deposit 

insurance entities.

Undertake outreach activities to inform 

and train foreign bank regulators and 

deposit insurers.

Foster strong relationships with 

international banking regulators and 

associations that promote sound 

banking supervision and regulation, 

failure resolutions, and deposit 

insurance practices.

Develop methodology for assessing 

compliance with implementation of 

the Core Principles for Effective Deposit 

Insurance Systems.

Achieved.

See pgs. 25-27.

Achieved.

See pgs. 24-27.

Achieved.

See pgs. 24-25.
PERFORMANCE RESULTS SUMMARY 61

2010 Supervision and Consumer Protection Program Results

Strategic Goal: FDIC-insured institutions are safe and sound. 

#

Annual 

Performance Goal Indicator Target Results

1 Conduct on-site 

risk management 

examinations to 

assess the overall 

financial condition, 

management 

practices and policies, 

and compliance with 

applicable laws and 

regulations of FDICsupervised depository 

institutions.

Percentage of required 

examinations conducted in 

accordance with statutory 

requirements and FDIC 

policy.

One hundred percent of required 

risk management examinations are 

conducted on schedule.

Achieved.

See pgs. 27-28.

2 Take prompt and 

effective supervisory 

action to address 

unresolved problems 

identified during the 

FDIC examination 

of FDIC-supervised 

institutions that 

receive a composite 

Uniform Financial 

Institutions Rating 

of “3”, “4”, or 

“5” (problem 

institution). Monitor 

FDIC-supervised 

insured depository 

institutions’ 

compliance with 

formal and informal 

enforcement actions.

Percentage of follow-up 

examinations and on-site 

visits of 3-, 4-, or 5-rated 

institutions conducted within 

required time frames.

One hundred percent of required 

on-site visits are conducted within six 

months of completion of the prior 

examination to confirm that the 

institution is fulfilling the requirements 

of the corrective program.

One hundred percent of required 

follow-up examinations are conducted 

within 12 months of completion of 

the prior examination to confirm 

that identified problems have been 

corrected.

Achieved.

See pgs. 27-29.

Achieved.

See pgs. 27-29.

3 Assist in protecting 

the infrastructure 

of the U.S. banking 

system against 

terrorist financing, 

money laundering 

and other financial 

crimes.

Percentage of required 

examinations conducted in 

accordance with statutory 

requirements and FDIC 

policy. 

One hundred percent of required Bank 

Secrecy Act examinations are conducted 

on schedule.

Achieved.

See pg. 27.
62 PERFORMANCE RESULTS SUMMARY

#

Annual 

Performance Goal Indicator Target Results

4 More closely align 

regulatory capital 

with risk and 

ensure that capital 

is maintained at 

prudential levels.

Final Basel II Standardized 

Approach.

Controls on banks’ use of 

internal or external ratings.

Revisions to the Market Risk 

Amendment of 1996.

Revisions to regulatory capital 

charges for resecuritizations 

and asset-backed commercial 

paper liquidity facilities.

Complete by December 31, 2010, 

the rulemaking for implementing 

the Standardized Approach for an 

appropriate subset of U.S. banks.

Complete by December 31, 2010, the 

rulemaking for amending the floors 

for banks that calculate their riskbased capital requirements under the 

Advanced Approaches Capital rule to 

ensure capital requirements meet safetyand-soundness objectives.

Complete by December 31, 2010, the 

rulemaking for implementing revisions 

to the Market Risk Amendment of 

1996.

Complete by December 31, 2010, 

the rulemaking for implementing 

revisions to regulatory capital charges 

for resecuritizations and asset-backed 

commercial paper liquidity facilities.

Deferred.

See pg. 55.

Not Achieved.

See pg. 31.

Deferred.

See pg. 55.

Deferred.

See pg. 55.

Strategic Goal: Consumers’ rights are protected and FDIC-supervised institutions invest in 

their communities.

#

Annual 

Performance Goal Indicator Target Results

5 Conduct on-site 

CRA and compliance 

examinations to 

assess compliance 

with applicable laws 

and regulations by 

FDIC-supervised 

depository 

institutions.

Percentage of examinations 

conducted in accordance with 

statutory requirements and 

FDIC policy.

One hundred percent of required 

examinations are conducted on 

schedule.

Achieved.

See pgs. 27-28.

6 Take prompt and 

effective supervisory 

action to monitor 

and address 

problems identified 

during compliance 

examinations of 

FDIC-supervised 

institutions that 

receive an overall “3”, 

“4”, or “5” rating 

for compliance with 

consumer protection 

and fair lending laws.

Percentage of follow-up 

examinations or visitations of 

3-, 4-, and 5-rated institutions 

conducted within required 

time frames.

One hundred percent of followup examinations or visitations are 

conducted within 12 months of 

completion of the prior examination to 

confirm that the institution is fulfilling 

the requirements of the corrective 

program and that the identified 

problems have been corrected.

Achieved.

See pgs. 27, 29.

2010 Supervision and Consumer Protection Program Results (continued)

Strategic Goal: FDIC-insured institutions are safe and sound. 
PERFORMANCE RESULTS SUMMARY 63

#

Annual 

Performance Goal Indicator Target Results

7 Effectively investigate 

and respond to 

written consumer 

complaints and 

inquiries about 

FDIC-supervised 

financial institutions.

Timely responses to written 

consumer complaints and 

inquiries.

Responses are provided to 95 percent 

of written consumer complaints and 

inquiries within time frames established 

by policy, with all complaints and 

inquiries receiving at least an initial 

acknowledgement within two weeks.

Achieved.

See pg. 41.

8 Establish, in 

consultation with 

the FDIC’s Advisory 

Committee on 

Economic Inclusion 

and other regulatory 

agencies, national 

objectives and methods 

for reducing the 

number of unbanked 

and underbanked 

individuals.

Completion of initiatives to 

facilitate progress in improving 

the engagement of low- and 

moderate-income individuals 

with mainstream financial 

institutions.

Facilitate completion of final 

recommendation on the initiatives 

identified in the Advisory Committee’s 

strategic plan.

Implement, or establish plans to 

implement, Advisory Committee 

recommendations approved by the 

FDIC for further action, including 

new research, demonstration and 

pilot projects, and new and revised 

supervisory and public policies.

Achieved.

See pg. 37.

Achieved.

See pgs. 37-40.

2010 Receivership Management Program Results

Strategic Goal: Resolutions are orderly and receiverships are managed effectively.

#

Annual 

Performance Goal Indicator Target Results

1 Market failing 

institutions to all 

known qualified and 

interested potential 

bidders.

Scope of qualified and 

interested bidders solicited.

Contact all known qualified and 

interested bidders.

Achieved.

See pg. 43.

2 Value, manage, and 

market assets of 

failed institutions 

and their subsidiaries 

in a timely manner 

to maximize net 

return.

Percentage of failed 

institution’s assets marketed.

Enhancements to contract 

management program.

For at least 95 percent of insured 

institution failures, market at least 

90 percent of the book value of the 

institution’s marketable assets within 90 

days of the failure date (for cash sales) 

or 120 days of the failure date (for 

structured sales).

Implement enhanced reporting 

capabilities from the Automated 

Procurement System.

Ensure that all newly designated 

oversight managers and technical 

monitors receive training in advance 

of performing contract administration 

responsibilities.

Optimize the effectiveness of oversight 

managers and technical monitors 

by restructuring work assignments, 

providing enhanced technical support, 

and improving supervision.

Achieved.

See pg. 43.

Achieved.

See pg. 44.

Achieved.

See pg. 44.

Achieved.

See pg. 58.

2010 Supervision and Consumer Protection Program Results (continued)

Strategic Goal: Consumers’ rights are protected and FDIC-supervised institutions invest in 

their communities.
64 PERFORMANCE RESULTS SUMMARY

2010 Receivership Management Program Results (continued)

Strategic Goal: Resolutions are orderly and receiverships are managed effectively.

#

Annual 

Performance Goal Indicator Target Results

3 Manage the 

receivership estate 

and its subsidiaries 

toward an orderly 

termination.

Timely termination of new 

receiverships.

Terminate within three years of the 

date of failure, at least 75 percent of 

new receiverships that are not subject 

to loss-share agreements, structured 

sales, or other legal impediments.

Achieved.

See pg. 58.

4 Conduct 

investigations into all 

potential professional 

liability claim 

areas for all failed 

insured depository 

institutions, and 

decide as promptly 

as possible to close 

or pursue each claim, 

considering the size 

and complexity of 

the institution.

Percentage of investigated 

claim areas for which a 

decision has been made to 

close or pursue the claim.

For 80 percent of all claim areas, a 

decision is made to close or pursue 

claims within 18 months of the failure 

date.

Achieved.

See pg. 58.

Prior Years’ Performance Results

Refer to the respective full Annual Report of prior years for more information on performance results 

for those years. Minor wording changes may have been made to reflect current goals and targets. 

(Shaded areas indicate no such target existed for that respective year.)

Insurance Program Results

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding.

Annual Performance Goals and Targets 2009 2008 2007

1. Respond promptly to all financial institution closings and emerging issues.

Depositors have access to insured funds within one business day if the failure 

occurs on a Friday.

Achieved. Achieved. Achieved.

Depositors have access to insured funds within two business days if the failure 

occurs on any other day of the week.

Achieved. Achieved. Achieved.

Complete rulemaking/review comments received in response to the 

Advance Notice of Proposed Rulemaking on Large-Bank Deposit Insurance 

Determination Modernization.

Achieved. Achieved.

There are no depositor losses on insured deposits. Achieved. Achieved.

No appropriated funds are required to pay insured depositors. Achieved. Achieved.

2. Identify and address risks to the Deposit Insurance Fund (DIF).

Assess the insurance risks in large (all for 2008-2009) insured depository 

institutions and adopt appropriate strategies.

Achieved. Achieved. Achieved.

Identify and follow up on all material issues raised through off-site review 

and analysis.

Achieved. Achieved. Achieved.
PERFORMANCE RESULTS SUMMARY 65

Annual Performance Goals and Targets 2009 2008 2007

Identify and analyze existing and emerging areas of risk, including nontraditional and subprime mortgage lending, declines in housing market 

values, mortgage-related derivatives/collateralized debt obligations (CDOs), 

hedge fund ownership of insured institutions, commercial real estate lending, 

international risk, and other financial innovations.

Achieved. Achieved. Achieved.

Address potential risks from cross-border banking instability through 

coordinated review of critical issues and, where appropriate, negotiate 

agreements with key authorities.

Achieved. Achieved.

3. Disseminate data and analyses on issues and risks affecting the financial services industry to bankers, supervisors, the 

public, and other stakeholders.

Disseminate results of research and analyses in a timely manner through regular 

publications, ad hoc reports, and other means.

Achieved. Achieved. Achieved.

Industry outreach activities are undertaken to inform bankers and other 

stakeholders about current trends, concerns, and other available FDIC resources.

Achieved. Achieved. Achieved.

4. Effectively administer temporary financial stability programs.

Provide liquidity to the banking system by guaranteeing noninterest-bearing 

transaction deposit account and new senior unsecured debt issued by eligible 

institutions under the TLGP.

Achieved.

Implement an orderly phase-out of new guarantees under the program when 

the period for issuance of new debt expires.

Achieved.

Substantially complete by September 30, 2009, the review of and 

recommendations to the Department of Treasury on CPP applications from 

FDIC-supervised institutions.

Achieved.

Expeditiously implement procedures for the LLP, including the guarantee to 

be provided for debt issued by Public Private Investment Funds, and provide 

information to financial institutions and private investors potentially interested 

in participating.

Achieved.

Expeditiously implement procedures to review the use of CPP funds, TLGP 

guarantees, and other resources made available under financial stability 

programs during examinations of participating FDIC-supervised institutions.

Achieved.

5. Maintain and improve the deposit insurance system.

Adopt and implement revisions to the pricing regulations that provide for 

greater risk differentiation among insured depository institutions reflecting both 

the probability of default and loss in the event of default.

Achieved.

Revise the guidelines and enhance the additional risk measures used to adjust 

assessment rates for large institutions.

Achieved.

Implement the new deposit insurance pricing system. Achieved.

Review the effectiveness of the new pricing regulations that were adopted to 

implement the reform legislation.

Achieved.

Complete and issue guidance on the pricing of deposit insurance for 

large banks.

Achieved.

Enhance the additional risk measures used to adjust assessment rates for 

large institutions.

Achieved.

Publish an ANPR seeking comment on a permanent dividend system. Achieved.

Develop a final rule on a permanent dividend system. Achieved.

2010 Insurance Program Results (continued)

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding.
66 PERFORMANCE RESULTS SUMMARY

Annual Performance Goals and Targets 2009 2008 2007

Ensure/enhance the effectiveness of the reserving methodology by applying 

sophisticated analytical techniques to review variances between projected losses 

and actual losses, and by adjusting the methodology accordingly.

Achieved. Achieved. Achieved.

Set assessment rates to maintain the insurance fund reserve ratio between 1.15 

and 1.50 percent of estimated insured deposits. Restore to 1.15 percent by yearend 2015.

Achieved. Not 

Achieved.

Achieved.

Monitor progress in achieving the restoration plan. Achieved.

6. Provide educational information to insured depository institutions and their customers to help them understand the 

rules for determining the amount of insurance coverage on deposit accounts.

Publish a comprehensive and authoritative resource guide for bankers, 

attorneys, financial advisors and similar professionals on the FDIC’s rules 

and requirements for deposit insurance coverage of revocable and irrevocable 

trust accounts. 

Achieved.

Conduct at least three sets of Deposit Insurance Seminar/teleconferences (per 

quarter in 2009) for bankers.

Achieved. Achieved.

Conduct a series of national teleconferences for insured financial institutions 

to address current questions and issues relating to FDIC insurance coverage of 

deposit accounts.

Achieved.

Conduct outreach events and activities to support a deposit insurance education 

program that features the FDIC 75th anniversary theme.

Achieved.

Assess the feasibility of (and if feasible, define the requirements for) a 

consolidated Electronic Deposit Insurance Estimator (EDIE) application for 

bankers and consumers (to be developed in 2009).

Achieved.

Respond to 90 percent of inquiries from consumers and bankers about FDIC 

deposit insurance coverage within time frames established by policy.

Achieved. Achieved.

Respond to 90 percent of written inquiries from consumers and bankers about 

FDIC deposit insurance coverage within two weeks.

Achieved.

Enter into deposit insurance education partnerships with consumer 

organizations to educate consumers.

Achieved.

Expand avenues for publicizing deposits insurance rules and resources to 

consumers through a variety of media.

Achieved.

7. Expand and strengthen the FDIC’s participation and leadership role in providing technical guidance, training, consulting 

services, and information to international governmental banking and deposit insurance organizations.

Undertake outreach activities to inform and train foreign bank regulators and 

deposit insurers. 

Achieved. Achieved. Achieved.

Foster strong relationships with international banking regulators and 

associations that promote sound banking supervision and regulations, failure 

resolution and deposit insurance practices. 

Achieved. Achieved. Achieved.

Insurance Program Results (continued)

Strategic Goal: Insured depositors are protected from loss without recourse to taxpayer funding.
PERFORMANCE RESULTS SUMMARY 67

Supervision and Consumer Protection Program Results

Strategic Goal: FDIC-supervised institutions are safe and sound.

Annual Performance Goals and Targets 2009 2008 2007

1. Conduct on-site risk management examinations to assess the overall financial condition, management practices and 

policies, and compliance with applicable laws and regulations of FDIC-supervised depository institutions.

One hundred percent of required risk management examinations are conducted 

on schedule.

Achieved. Achieved. Achieved.

2. Take prompt and effective supervisory action to address problems identified during the FDIC examination of FDICsupervised institutions that receive a composite Uniform Financial Institutions Rating of “4” or “5” (problem 

institution). Monitor FDIC-supervised insured depository institutions’ compliance with formal and informal 

enforcement actions.

One hundred percent of follow-up examinations are conducted within 12 

months of completion of the prior examination.

Achieved. Achieved. Achieved.

3. Assist in protecting the infrastructure of the U.S. banking system against terrorist financing, money laundering and 

other financial crimes.

One hundred percent of required Bank Secrecy Act (BSA) examinations are 

conducted on schedule.

Achieved. Achieved.

4. Increase regulatory knowledge to keep abreast of current issues related to money laundering and terrorist financing.

An additional 10 percent of BSA/AML subject-matter experts nationwide are 

certified under the Association of Certified Anti-Money Laundering Specialists 

certification program.

Achieved.

5. More closely align regulatory capital with risk in large or multinational banks while maintaining capital at 

prudential levels. 

Develop options for refining Basel II that are responsive to lessons learned from 

the 2007-2008 market turmoil.

Achieved.

Further develop the Basel II framework to ensure that it does not result 

in a substantial reduction in risk-based capital requirements or significant 

competitive inequities among different classes of banks. Consider alternative 

approaches for implementing the Basel Capital Accord.

Achieved.

Conduct analyses of early results of the performance of new capital rules in 

light of recent financial turmoil as information becomes available.

Achieved. Achieved.

Working domestically and internationally, develop improvements to 

regulatory capital requirements based on the experience of the recent financial 

market turmoil.

Achieved.

Promote international cooperation on the adoption of supplemental capital 

measures in countries that will be operating under Basel II.

Achieved.

Participate in the continuing analysis of the projected results of the new 

capital regime.

Achieved.

6. More closely align regulatory capital with risk in banks not subject to Basel II capital rules while maintaining 

capital at prudential levels.

Finalize a regulatory capital framework based on the Basel II “Standardized 

Approach” as an option for U.S. banks not required to use the new advanced 

approaches.

Achieved.

Complete rulemaking on Basel IA. Not 

Applicable.
68 PERFORMANCE RESULTS SUMMARY

Annual Performance Goals and Targets 2009 2008 2007

7. Ensure that FDIC-supervised institutions that plan to operate under the new Basel II Capital Accord are well 

positioned to respond to the new capital requirements.

Performed on-site examinations or off-site analyses of all FDIC-supervised 

banks that have indicated a possible intention to operate under Basel II 

to ensure that they are effectively working toward meeting required 

qualification standards.

Not 

Applicable.

Achieved.

8. Reduce regulatory burden on the banking industry while maintaining appropriate consumer protection and safety 

and soundness safeguards.

Complete and evaluate options for refining the current risk-focused approach 

used in the conduct of BSA/AML examinations to reduce the burden they 

impose on FDIC-supervised institutions.

Achieved.

Applicable provisions of the Financial Services Regulatory Relief Act of 2006 

(FSRRA) are implemented in accordance with statutory requirements.

Partially 

Achieved.

Support is provided to the Government Accountability Office (GAO), as 

requested, for studies required under FSRRA.

Achieved.

State AML assessments of Money Service Businesses (MSB) are incorporated 

into FDIC risk management examinations in states where MSB AML 

regulatory programs are consistent with FDIC risk management standards.

Partially 

Achieved.

Strategic Goal: Consumers’ rights are protected and FDIC-supervised institutions invest in 

their communities.

1. Conduct CRA and compliance examinations in accordance with the FDIC’s examination frequency policy.

One hundred percent of required examinations are conducted on schedule. Achieved. Achieved. Achieved.

2. Take prompt and effective supervisory action to monitor and address problems identified during compliance 

examinations of FDIC-supervised institutions that received a “4” or “5” rating for compliance with consumer 

protection and fair lending laws.

One hundred percent of follow-up examinations or visitations are conducted 

within 12 months from the date of a formal enforcement action to confirm 

compliance with the prescribed enforcement action.

Not 

Achieved.

Achieved. Achieved.

3. Determine the need for changes in current FDIC practices for following up on significant violations of consumer 

compliance laws and regulations identified during examinations of banks for compliance with consumer protection 

and fair lending laws.

Complete a review of the effectiveness of the 2007 instructions issued on 

the handling of repeat instances of significant violations identified during 

compliance examinations.

Achieved.

An analysis is completed for all institutions on the prevalence and scope 

of repeat instances of significant violations from the previous compliance 

examination.

Achieved.

A determination is made regarding the need for changes to current FDIC and 

FFIEC guidance on follow-up supervisory action on significant violations 

identified during compliance examinations based on the substance and level of 

risk posed to consumers by these repeat violations.

Achieved.

Supervision and Consumer Protection Program Results (continued)

Strategic Goal: FDIC-supervised institutions are safe and sound.
PERFORMANCE RESULTS SUMMARY 69

Annual Performance Goals and Targets 2009 2008 2007

4. Scrutinize evolving consumer products, analyze their current or potential impact on consumers and identify potentially 

harmful or illegal practices. Promptly institute a supervisory response program across FDIC-supervised institutions 

when such practices are identified.

Proactively identify and respond to harmful or illegal practices associated with 

evolving consumer products.

Achieved. Achieved.

Develop and implement new supervisory response programs across all 

FDIC-supervised institutions to address potential risks posed by new 

consumer products.

Achieved.

5. Provide effective outreach related to the CRA, fair lending, and community development.

Conduct 50 in 2009 (125 in prior years) technical assistance (examination 

support) efforts or banker/community outreach activities related to CRA, fair 

lending, and community development.

Achieved. Achieved. Achieved.

Evaluate the Money Smart initiative and curricula for necessary updates and 

enhancements, such as games for young people, information on elder financial 

abuse, and additional language versions, if needed.

Achieved.

Initiate the longitudinal survey project to measure the effectiveness of the 

Money Smart for Young Adults curriculum.

Achieved.

Release a “Young Adult” version of the Money Smart curriculum. Achieved.

Distribute at least 10,000 copies of the “Young Adult” version of Money Smart. Achieved.

Analysis of survey results is disseminated within six months of completion of 

the survey through regular publications, ad hoc reports, and other means.

Achieved.

Provide technical assistance, support, and consumer outreach activities in all 

six FDIC regions to at least eight local NeighborWorks® America affiliates or 

local coalitions that are providing foreclosure mitigation counseling in high 

need areas. 

Achieved. Achieved.

200,000 additional individuals are taught using the Money Smart curriculum. Achieved.

120 school systems and government entities are contacted to make them aware 

of the availability of Money Smart as a tool to teach financial education to high 

school students.

Achieved.

A review of existing risk management and compliance/CRA examination 

guidelines and practices is completed to ensure that they encourage and support 

the efforts of insured financial institutions to foster economic inclusion, 

consistent with safe and sound banking practices.

Achieved.

A pilot project is conducted with banks near military installations to provide 

small-dollar loan alternatives to high-cost payday lending.

Not 

Achieved.

Strategies are developed and implemented to encourage FDIC-supervised 

institutions to offer small-denomination loan programs.

Achieved.

Research is conducted and findings disseminated on programs and strategies 

to encourage and promote broader economic inclusion within the nation’s 

banking system.

Achieved.

6. Continue to expand the FDIC’s national leadership role in development and implementation of programs and strategies 

to encourage and promote broader economic inclusion within the nation’s banking system.

Expand the number of AEI coalitions by two. Achieved.

Analyze quarterly data submitted by participating institutions to identify early 

trends and potential best practices.

Achieved. Achieved.

Supervision and Consumer Protection Program Results (continued)

Strategic Goal: Consumers’ rights are protected and FDIC-supervised institutions invest in 

their communities.
70 PERFORMANCE RESULTS SUMMARY

Supervision and Consumer Protection Program Results (continued)

Strategic Goal: Consumers’ rights are protected and FDIC-supervised institutions invest in 

their communities.

Annual Performance Goals and Targets 2009 2008 2007

Open 27,000 new bank accounts. Achieved.

Initiate new small-dollar loan products in 32 financial institutions. Achieved.

Initiate remittance products in 32 financial institutions. Achieved.

Reach 18,000 consumers through financial education initiatives. Achieved.

7. Educate consumers about their rights and responsibilities under consumer protection laws and regulations.

Expand the use of media, such as the Internet, videos, and MP3 downloads, to 

disseminate information to the public on their rights and responsibilities 

as consumers.

Achieved.

8. Effectively investigate and respond to consumer complaints about FDIC-supervised financial institutions.

Responses are provided to 95 percent (90 percent for 2007-08) of written 

complaints and inquiries within time frames established by policy, with all 

complaints and inquiries receiving at least an initial acknowledgment within 

two weeks.

Achieved. Achieved. Achieved.

Receivership Management Program Results

Strategic Goal: Recovery to creditors of receiverships is achieved.

Annual Performance Goals and Targets 2009 2008 2007

1. Market failing institutions to all known qualified and interested potential bidders.

Contact all known qualified and interested bidders. Achieved. Achieved. Achieved.

2. Value, manage, and market assets of failed institutions and their subsidiaries in a timely manner to maximize 

net return.

Ninety percent of the book value of a failed institution’s marketable assets is 

marketed within 90 days of failure.

Achieved. Achieved. Achieved.

Identify and implement program improvements to ensure efficient and 

effective management of the contract resources used to perform receivership 

management functions.

Achieved.

3. Manage the receivership estate and its subsidiaries toward an orderly termination.

Terminate all receiverships within 90 days of the resolution of all impediments. Achieved. Achieved.

Terminate at least 75 percent of new receiverships within three years of the date 

of failure.

Achieved.

4. Conduct investigations into all potential professional liability claim areas for all failed insured depository institutions 

and decide as promptly as possible to close or pursue each claim, considering the size and complexity of the institution.

For 80 percent of all claim areas, a decision is made to close or pursue claims 

within 18 months of the failure date.

Achieved. Achieved. Not 

Applicable. 

No claims 

within the 

18-month 

period.
PERFORMANCE RESULTS SUMMARY 71

Program Evaluation

Program evaluations are designed to improve 

the operational effectiveness of the FDIC’s 

programs and ensure that objectives are met. 

These evaluations are often led by the Office of 

Enterprise Risk Management (OERM) and are 

generally interdivisional, collaborative efforts 

involving management and staff from the 

affected program(s).

The Corporation’s 2010 Annual Performance Plan 

contained several objectives aimed at ensuring 

that the FDIC would continue to address key 

corporate issues, including continuing work on 

issues relating to contract oversight management, 

anticipated increases in bank failures, and 

continuous improvements to the FDIC’s core 

business functions.

During 2009, in direct response to challenges 

associated with the financial crisis, the FDIC 

created six internal organizations and working 

groups to address areas of increased risk to ensure 

that both the FDIC’s core businesses and new 

responsibilities were being managed as effectively 

as possible. During 2010, OERM and other areas 

of the Corporation continued this work. The six 

initiatives are tied to: 1) Legacy Loans; 2) Systemic 

Resolution Authority; 3) Temporary Liquidity 

Guarantee Program; 4) Loss-Share Agreements; 5) 

Contract Management Oversight; and 6) Resource 

Management. For each initiative, key issues and 

risks were identified, action plans and performance 

metrics were developed as necessary, and the 

Chairman was briefed on at least a monthly 

basis. In many cases, enhancements to operating 

procedures and automated systems of support 

were made as a direct result of this heightened 

management attention. Significantly, all 

identified program needs have been coordinated 

with those persons responsible for planning, 

budgeting, staffing, and ensuring the adequacy of 

infrastructure support.

These and other actions were taken in addition 

to evaluations that are part of the Corporation’s 

ongoing efforts to seek continuous improvements 

in its programs and operations. Some of these 

2010 initiatives included: reviews of financial 

management and controls governing contract 

operations; the sampling and testing of transaction 

accuracy and controls; improved communication 

between our examination and receivership 

activities; and continued scrutiny of systems 

development efforts to support our new and/or 

expanded business activities.

Program evaluation activities in 2011 will 

focus on key corporate issues, including 

implementation of the Dodd-Frank Act, 

corporate reorganization, control testing, and 

continuous improvements to the FDIC’s core 

business functions.
FINANCIAL STATEMENTS AND NOTES 73

4 Financial Statements 

and Notes
74 FINANCIAL STATEMENTS AND NOTES

Deposit Insurance Fund

Federal Deposit Insurance Corporation

Deposit Insurance Fund Balance Sheet at December 31

Dollars in Thousands

2010 2009

Assets

Cash and cash equivalents $27,076,606 $54,092,423 

Cash and investments - restricted - systemic risk (Note 16)

(Includes cash/cash equivalents of $5,030,369 at December 31, 2010 

and $6,430,589 at December 31, 2009)

6,646,968 6,430,589 

Investment in U.S. Treasury obligations, net (Note 3) 12,371,268 5,486,799 

Assessments receivable, net (Note 9) 217,893 280,510 

Receivables and other assets - systemic risk (Note 16) 2,269,422 3,298,819 

Trust preferred securities (Note 5) 2,297,818 1,961,824 

Interest receivable on investments and other assets, net 259,683 220,588 

Receivables from resolutions, net (Note 4) 29,532,545 38,408,622 

Property and equipment, net (Note 6) 416,065 388,817 

Total Assets $81,088,268 $110,568,991 

Liabilities

Accounts payable and other liabilities $514,287 $273,338 

Unearned revenue - prepaid assessments (Note 9) 30,057,033 42,727,101 

Liabilities due to resolutions (Note 7) 30,511,877 34,711,726 

Deferred revenue - systemic risk (Note 16) 9,054,541 7,847,447 

Postretirement benefit liability (Note 13) 165,874 144,952 

Contingent liabilities for: 

 Anticipated failure of insured institutions (Note 8) 17,687,569 44,014,258 

 Systemic risk (Note 16) 149,327 1,411,966 

 Litigation losses (Note 8) 300,000 300,000 

Total Liabilities 88,440,508 131,430,788 

Commitments and off-balance-sheet exposure (Note 14)

Fund Balance

Accumulated Net Loss (7,696,428) (21,001,312)

Unrealized Gain on U.S. Treasury investments, net (Note 3) 26,698 142,127 

Unrealized postretirement benefit Loss (Note 13) (18,503) (2,612)

Unrealized Gain on trust preferred securities (Note 5) 335,993 0 

Total Fund Balance (7,352,240) (20,861,797)

Total Liabilities and Fund Balance $81,088,268 $110,568,991 

The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENTS AND NOTES 75

Deposit Insurance Fund

Federal Deposit Insurance Corporation

Deposit Insurance Fund Statement of Income and Fund Balance for the Years Ended December 31

Dollars in Thousands

2010 2009

Revenue

Interest on U.S. Treasury obligations $204,871 $704,464 

Assessments (Note 9) 13,610,436 17,717,374 

Systemic risk revenue (Note 16) (672,818) 1,721,626 

Realized gain on sale of securities 0 1,389,285 

Other revenue (Note 10) 237,425 3,173,611 

Total Revenue 13,379,914 24,706,360 

Expenses and Losses

Operating expenses (Note 11) 1,592,641 1,271,099 

Systemic risk expenses (Note 16) (672,818) 1,721,626 

Provision for insurance losses (Note 12) (847,843) 57,711,772 

Insurance and other expenses 3,050 4,447 

Total Expenses and Losses 75,030 60,708,944 

Net Income (Loss) 13,304,884 (36,002,584)

Unrealized Loss on U.S. Treasury investments, net (115,429) (2,107,925)

Unrealized postretirement benefit Loss (Note 13) (15,891) (27,577)

Unrealized Gain on trust preferred securities (Note 5) 335,993 0 

Comprehensive Income (Loss) 13,509,557 (38,138,086)

Fund Balance - Beginning (20,861,797) 17,276,289 

Fund Balance - Ending $(7,352,240) $(20,861,797)

The accompanying notes are an integral part of these financial statements.
76 FINANCIAL STATEMENTS AND NOTES

Deposit Insurance Fund

Federal Deposit Insurance Corporation

Deposit Insurance Fund Statement of Cash Flows for the Years Ended December 31

Dollars in Thousands

2010 2009

Operating Activities

Net Income (Loss): $13,304,884 $(36,002,584)

Adjustments to reconcile net income to net cash (used by) 

 provided by operating activities:

Amortization of U.S. Treasury obligations (5,149) 210,905 

Treasury inflation-protected securities inflation adjustment (23,051) 10,837 

Gain on sale of U.S. Treasury obligations 0 (1,389,285)

Depreciation on property and equipment 68,790 70,488 

Loss on retirement of property and equipment 620 924 

Provision for insurance losses (847,843) 57,711,772 

Unrealized Loss on postretirement benefits (15,891) (27,577)

Guarantee termination fee from Citigroup 0 (1,961,824)

Change In Operating Assets and Liabilities:

Decrease in assessments receivable, net 62,617 737,976 

(Increase) Decrease in interest receivable and other assets (34,194) 192,750 

(Increase) in receivables from resolutions (16,607,671) (60,229,760)

Decrease (Increase) in receivable - systemic risk 1,029,397 (2,160,688)

Increase in accounts payable and other liabilities 240,949 140,740 

Increase in postretirement benefit liability 20,922 30,828 

(Decrease) in contingent liabilities - systemic risk (1,262,639) (25,672)

(Decrease) Increase in liabilities due to resolutions (4,199,849) 29,987,265 

(Decrease) Increase in unearned revenue - prepaid assessments (12,670,068) 42,727,101 

Increase in deferred revenue - systemic risk 1,203,936 5,769,567 

Net Cash (Used by) Provided by Operating Activities (19,734,240) 35,793,763 

Investing Activities Provided by:

Maturity of U.S. Treasury obligations 21,558,000 6,382,027 

Sale of U.S. Treasury obligations 0 15,049,873 

Investing Activities Used by:

Purchase of property and equipment (96,659) (91,468)

Purchase of U.S. Treasury obligations (30,143,138) 0 

Net Cash (Used by) Provided by Investing Activities (8,681,797) 21,340,432 

Net (Decrease) Increase in Cash and Cash Equivalents (28,416,037) 57,134,195 

Cash and Cash Equivalents - Beginning 60,523,012 3,388,817 

 Unrestricted Cash and Cash Equivalents - Ending 27,076,606 54,092,423 

 Restricted Cash and Cash Equivalents - Ending 5,030,369 6,430,589 

Cash and Cash Equivalents - Ending $32,106,975 $60,523,012 

The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENTS AND NOTES 77

Notes to the Financial Statements

Deposit Insurance Fund

December 31, 2010 and 2009 

1. Legislation and 

Operations of the 

Deposit Insurance Fund

Overview

The Federal Deposit Insurance Corporation 

(FDIC) is the independent deposit insurance 

agency created by Congress in 1933 to maintain 

stability and public confidence in the nation’s 

banking system. Provisions that govern the 

operations of the FDIC are generally found in 

the Federal Deposit Insurance (FDI) Act, as 

amended (12 U.S.C. 1811, et seq). In carrying 

out the purposes of the FDI Act, as amended, the 

FDIC insures the deposits of banks and savings 

associations (insured depository institutions), 

and in cooperation with other federal and state 

agencies promotes the safety and soundness of 

insured depository institutions by identifying, 

monitoring and addressing risks to the Deposit 

Insurance Fund (DIF). An active institution’s 

primary federal supervisor is generally determined 

by the institution’s charter type. Commercial and 

savings banks are supervised by either the FDIC, 

the Office of the Comptroller of the Currency, 

or the Federal Reserve Board, while savings 

associations (known as “thrifts”) are supervised 

by the Office of Thrift Supervision (OTS). (See 

“Recent Legislation” below for certain OTS 

functional responsibilities to be transferred to the 

FDIC in the future.) 

The FDIC is the administrator of the DIF and is 

responsible for protecting insured bank and thrift 

depositors from loss due to institution failures. 

The FDIC is required by 12 U.S.C. 1823(c) 

to resolve troubled institutions in a manner 

that will result in the least possible cost to DIF 

unless a systemic risk determination is made that 

compliance with the least-cost test would have 

serious adverse effects on economic conditions 

or financial stability and any action or assistance 

taken under the systemic risk determination 

would avoid or mitigate such adverse effects. A 

systemic risk determination under this statutory 

provision can only be invoked by the Secretary of 

the Treasury, in consultation with the President, 

and upon the written recommendation of twothirds of both the FDIC Board of Directors and 

the Board of Governors of the Federal Reserve 

System. Until passage of recent legislation (see 

“Recent Legislation” below), a systemic risk 

determination could permit open bank assistance. 

As explained below, such open bank assistance is 

no longer available. The systemic risk provision 

requires the FDIC to recover any related losses to 

the DIF through one or more special assessments 

from all insured depository institutions and, with 

the concurrence of the Secretary of the Treasury, 

depository institution holding companies (see 

Note 16).

The FDIC is also the administrator of the FSLIC 

Resolution Fund (FRF). The FRF is a resolution 

fund responsible for the sale of remaining assets 

and satisfaction of liabilities associated with 

the former Federal Savings and Loan Insurance 

Corporation (FSLIC) and the former Resolution 

Trust Corporation. The DIF and the FRF are 

maintained separately to fund their respective 

mandates of the FDIC.

Pursuant to the enactment of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act 

(Dodd-Frank Act) on July 21, 2010 (see “Recent 

Legislation” below), the FDIC is the manager of 

the Orderly Liquidation Fund (OLF). Established 

as a separate fund in the U.S. Treasury (Treasury), 

the OLF is inactive and unfunded until the FDIC 

is appointed as receiver for a covered financial 

company (a failing financial company, such as 

a bank holding company or nonbank financial 

company for which a systemic risk determination 

has been made as set forth in section 203 of 

the Dodd-Frank Act). At the commencement 

of an orderly liquidation of a covered financial 

company, the FDIC may borrow funds required 

by the receivership from the Treasury, up to 

the Maximum Obligation Limitation for each 

covered financial company and in accordance 

with an Orderly Liquidation and Repayment 

Plan. Borrowings will be deposited in the OLF 

and repaid to the Treasury with the proceeds 
78 FINANCIAL STATEMENTS AND NOTES

of asset sales. If such proceeds are insufficient, 

any remaining shortfall must be recovered from 

assessments imposed on financial companies as 

specified in the Dodd-Frank Act.

Recent Legislation

The Dodd-Frank Act (Public Law 111-203) 

provides comprehensive reform of the supervision 

and regulation of the financial services industry. 

Under this legislation, the FDIC’s new 

responsibilities include: 1) broad authority to 

liquidate failing systemic financial firms in an 

orderly manner as manager of the newly created 

OLF; 2) issuing regulations, jointly with the 

Federal Reserve Board (FRB), requiring that 

nonbank financial companies supervised by the 

FRB and bank holding companies with assets 

equal to or exceeding $50 billion provide the FRB, 

the FDIC, and the Financial Stability Oversight 

Council (FSOC) a plan for their rapid and orderly 

resolution in the event of material financial 

distress or failure; 3) serving as a voting member 

of the FSOC; 4) back-up examination authority 

for nonbank financial companies supervised by 

the FRB and bank holding companies with at 

least $50 billion in assets; 5) back-up enforcement 

actions against depository institution holding 

companies if their conduct or threatened conduct 

poses a risk of loss to the DIF; and 6) federal 

oversight of state-chartered thrifts upon the 

transfer of such authority from OTS (between 

12 and 18 months after enactment of the DoddFrank Act, currently set for July 21, 2011). 

The Dodd-Frank Act limits the systemic risk 

determination authority under 12 U.S.C. 

1823(c) to DIF-insured depository institutions 

for which the FDIC has been appointed receiver 

and requires that any action taken or assistance 

provided under this authority must be for the 

purpose of winding up the insured depository 

institution in receivership. Under Title XI of 

the Act, the FDIC is granted new authority to 

establish a widely available program to guarantee 

obligations of solvent insured depository 

institutions or solvent depository institution 

holding companies (including affiliates) upon 

systemic determination of a liquidity event during 

times of severe economic distress. This program 

would not be DIF-funded; it would be funded 

by fees and assessments paid by all participants in 

the program. If fees are insufficient to cover losses 

or expenses, the FDIC must impose a special 

assessment on participants as necessary to cover 

the insufficiency. Any excess funds at the end of 

the liquidity event program would be deposited in 

the General Fund of the Treasury. 

The new law also makes changes related 

to the FDIC’s deposit insurance mandate. 

These changes include a permanent increase 

in the standard deposit insurance amount to 

$250,000 (retroactive to January 1, 2008) and 

unlimited deposit insurance coverage for noninterest bearing transaction accounts for two 

years, from December 31, 2010 to the end of 

2012. Additionally, the legislation changes the 

assessment base (from a deposits-based formula to 

one based on assets) and establishes new reserve 

ratio requirements (see Note 9). 

Operations of the DIF

The primary purposes of the DIF are to: 1) 

insure the deposits and protect the depositors 

of DIF-insured institutions and 2) resolve failed 

DIF-insured institutions upon appointment of 

the FDIC as receiver, in a manner that will result 

in the least possible cost to the DIF (unless a 

systemic risk determination is made). 

The DIF is primarily funded from deposit 

insurance assessments. Other available funding 

sources, if necessary, are borrowings from the 

Treasury, the Federal Financing Bank (FFB), 

Federal Home Loan Banks, and insured 

depository institutions. The FDIC has borrowing 

authority of $100 billion from the Treasury and 

a Note Purchase Agreement with the FFB not to 

exceed $100 billion to enhance the DIF’s ability to 

fund deposit insurance obligations. 
FINANCIAL STATEMENTS AND NOTES 79

A statutory formula, known as the Maximum 

Obligation Limitation (MOL), limits the amount 

of obligations the DIF can incur to the sum of its 

cash, 90 percent of the fair market value of other 

assets, and the amount authorized to be borrowed 

from the Treasury. The MOL for the DIF was 

$106.3 billion and $118.2 billion as of December 

31, 2010 and 2009, respectively. 

Operations of Resolution Entities

The FDIC is responsible for managing and 

disposing of the assets of failed institutions in 

an orderly and efficient manner. The assets held 

by receiverships, pass-through conservatorships 

and bridge institutions (collectively, resolution 

entities), and the claims against them, are 

accounted for separately from DIF assets and 

liabilities to ensure that proceeds from these 

entities are distributed in accordance with 

applicable laws and regulations. Accordingly, 

income and expenses attributable to resolution 

entities are accounted for as transactions of those 

entities. Resolution entities are billed by the FDIC 

for services provided on their behalf.

2. Summary of Significant 

Accounting Policies

General

These financial statements pertain to the financial 

position, results of operations, and cash flows of 

the DIF and are presented in conformity with 

U.S. generally accepted accounting principles 

(GAAP). As permitted by the Federal Accounting 

Standards Advisory Board’s Statement of Federal 

Financial Accounting Standards 34, The Hierarchy 

of Generally Accepted Accounting Principles, 

Including the Application of Standards Issued by 

the Financial Accounting Standards Board, the 

FDIC prepares financial statements in conformity 

with standards promulgated by the Financial 

Accounting Standards Board (FASB). These 

statements do not include reporting for assets 

and liabilities of resolution entities because these 

entities are legally separate and distinct, and the 

DIF does not have any ownership interests in 

them. Periodic and final accountability reports 

of resolution entities are furnished to courts, 

supervisory authorities, and others upon request.

Use of Estimates

Management makes estimates and assumptions 

that affect the amounts reported in the financial 

statements and accompanying notes. Actual 

results could differ from these estimates. Where 

it is reasonably possible that changes in estimates 

will cause a material change in the financial 

statements in the near term, the nature and extent 

of such changes in estimates have been disclosed. 

The more significant estimates include the 

assessments receivable and associated revenue; the 

allowance for loss on receivables from resolutions 

(including loss-share agreements); liabilities 

due to resolutions; the estimated losses for 

anticipated failures, litigation, and representations 

and warranties; guarantee obligations for the 

Temporary Liquidity Guarantee Program and 

structured transactions; the valuation of trust 

preferred securities; and the postretirement benefit 

obligation. 

Cash Equivalents

Cash equivalents are short-term, highly liquid 

investments consisting primarily of U.S. Treasury 

Overnight Certificates. 

Investment in U.S. 

Treasury Obligations

DIF funds are required to be invested in 

obligations of the United States or in obligations 

guaranteed as to principal and interest by the 

United States. The Secretary of the Treasury must 

approve all such investments in excess of $100,000 

and has granted the FDIC approval to invest DIF 

funds only in U.S. Treasury obligations that are 

purchased or sold exclusively through the Bureau 

of the Public Debt’s Government Account Series 

(GAS) program.
80 FINANCIAL STATEMENTS AND NOTES

The DIF’s investments in U.S. Treasury 

obligations are classified as available-for-sale. 

Securities designated as available-for-sale are 

shown at fair value. Unrealized gains and losses are 

reported as other comprehensive income. Realized 

gains and losses are included in the Statement 

of Income and Fund Balance as components of 

net income. Income on securities is calculated 

and recorded on a daily basis using the effective 

interest or straight-line method depending on the 

maturity of the security. 

Revenue Recognition for 

Assessments

Assessment revenue is recognized for the 

quarterly period of insurance coverage based 

on an estimate. The estimate is derived from 

an institution’s risk-based assessment rate and 

assessment base for the prior quarter adjusted for 

the current quarter’s available assessment credits, 

any changes in supervisory examination and 

debt issuer ratings for larger institutions, and a 

modest deposit insurance growth factor. At the 

subsequent quarter-end, the estimated revenue 

amounts are adjusted when actual assessments 

for the covered period are determined for each 

institution. (See Note 9 for additional information 

on assessments.) 

Capital Assets and Depreciation

The FDIC buildings are depreciated on a straightline basis over a 35 to 50 year estimated life. 

Leasehold improvements are capitalized and 

depreciated over the lesser of the remaining life 

of the lease or the estimated useful life of the 

improvements, if determined to be material. 

Capital assets depreciated on a straight-line basis 

over a five-year estimated useful life include 

mainframe equipment; furniture, fixtures, and 

general equipment; and internal-use software. 

Personal computer equipment is depreciated on 

a straight-line basis over a three-year estimated 

useful life.

Related Parties

The nature of related parties and a description of 

related-party transactions are discussed in Note 1 

and disclosed throughout the financial statements 

and footnotes.

Disclosure about Recent Relevant 

Accounting Pronouncements

Q Accounting Standards Update (ASU) No. 

2009-17, Improvements to Financial Reporting 

by Enterprises Involved with Variable Interest 

Entities, modified Accounting Standards 

Codification (ASC) Topic 810, Consolidation, 

to incorporate the provisions of former 

Statement of Financial Accounting Standards 

(SFAS) No. 167, Amendments to FASB 

Interpretation No. 46(R), effective for reporting 

periods beginning after November 15, 2009. 

The provisions of ASC 810 require that an 

enterprise make qualitative assessments of 

its relationship with a variable interest entity 

(VIE) based on the enterprise’s 1) power to 

direct the activities that most significantly 

impact the economic performance of the 

VIE and 2) obligation to absorb losses of 

the VIE or the right to receive benefits 

from the VIE that could potentially be 

significant to the VIE. If the relationship 

causes the variable interest holder to have 

both of these characteristics, the enterprise is 

considered the primary beneficiary and must 

consolidate the VIE. During 2010, selected 

FDIC receiverships engaged in structured 

transactions, some of which resulted in 

the issuance of note obligations that were 

guaranteed by the FDIC in its corporate 

capacity (see Note 8). In accordance with 

the provisions of ASC 810, an analysis of 

each structured transaction was performed 

to determine whether the terms of the legal 

agreements extended rights that would cause 

the FDIC in its corporate capacity to be 

characterized as the primary beneficiary. The 

conclusion of these analyses was that the 
FINANCIAL STATEMENTS AND NOTES 81

FDIC in its corporate capacity did not have 

the power to direct the significant activities 

of any entity with which it was involved at 

December 31, 2010 and therefore, there is 

no current consolidation requirement for the 

DIF 2010 financial statements. In making 

that determination, consideration was given to 

which, if any, activities were significant to each 

VIE. Often, the right to service collateral, to 

liquidate collateral or to unilaterally dissolve 

the LLC or trust was determined to be the 

most significant activity. In other cases, it 

was determined that there were no significant 

ongoing activities and that the design of the 

entity was the best indicator of which party 

was the primary beneficiary. The results of 

each analysis identified a party other than the 

FDIC in its corporate capacity as the primary 

beneficiary. In the future, the FDIC in its 

corporate capacity may become the primary 

beneficiary upon the activation of provisional 

contract rights that extend to the corporation 

if payments are made on guarantee claims. 

Ongoing analyses will be required in order to 

monitor implications for ASC 810 provisions. 

Q ASU No. 2009-16, Accounting for Transfers 

of Financial Assets modified ASC Topic 

860, Transfers and Servicing, to incorporate 

the provisions of former SFAS No. 166, 

Accounting for Transfers of Financial Assets, 

an amendment of FASB Statement No. 140, 

effective for reporting periods beginning after 

November 15, 2009. The provisions of ASC 

860 remove the concept of a qualifying special 

purpose entity, change the requirements for 

derecognizing financial assets and require 

additional disclosures about a transferor’s 

continuing involvement with transferred 

assets. The DIF has not engaged in any 

transfers of financial assets or financial 

liabilities; thus, there is no current impact to 

these financial statements for 2010. 

Q ASU No. 2010-06, Fair Value Measurements 

and Disclosures (Topic 820) – Improving 

Disclosures about Fair Value Measurements, 

requires enhanced disclosures for significant 

transfers into and out of Level 1 (measured 

using quoted prices in active markets) and 

Level 2 (measured using other observable 

inputs) of the fair value measurement 

hierarchy. These disclosures are effective 

for interim and annual reporting periods 

beginning after December 15, 2009. The 

required disclosures are included in Note 15. 

Separate disclosure of the gross purchases, 

sales, issuances, and settlements activity for 

Level 3 (measured using unobservable inputs) 

fair value measurements will become effective 

for fiscal years beginning after December 15, 

2010. Currently, the additional disclosures are 

not expected to impact the DIF.

Other recent accounting pronouncements have 

been deemed to be not applicable or material to 

the financial statements as presented.

3. Investment in U.S. 

Treasury Obligations, Net

As of December 31, 2010 and 2009, investments 

in U.S. Treasury obligations, net, were $12.4 

billion and $5.5 billion, respectively. As of 

December 31, 2010 and 2009, the DIF held $2.0 

billion and $2.1 billion, respectively, of Treasury 

Inflation-Protected Securities (TIPS). These 

securities are indexed to increases or decreases 

in the Consumer Price Index for All Urban 

Consumers (CPI-U).
82 FINANCIAL STATEMENTS AND NOTES

Total Investment in U.S. Treasury Obligations, Net at December 31, 2010

Dollars in Thousands

Maturity

Yield at 

Purchase (a) Face Value

Net Carrying 

Amount

Unrealized 

Holding Gains

Unrealized 

Holding 

Losses Fair Value

U.S. Treasury notes and bonds

Within 1 year 0.73% $3,000,000 $3,052,503 $2,048 $(31) $3,054,520 

U.S. Treasury Inflation-Protected Securities

Within 1 year 3.47% 1,375,955 1,375,967 1,391 0 1,377,358 

After 1 year 

through 5 years 2.41% 615,840 621,412 22,381 0 643,793 

U.S. Treasury bills

Within 1 year 0.19% 7,300,000 7,294,688 909 0 7,295,597 

Total $12,291,795 $12,344,570 $26,729 $(31) $12,371,268 

(a) For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective 

yields on TIPS include a long-term annual inflation assumption as measured by the CPI-U. The long-term CPI-U 

consensus forecast is 1.8 percent, based on figures issued by the Congressional Budget Office and Blue Chip Economic 

Indicators in early 2010.

Total Investment in U.S. Treasury Obligations, Net at December 31, 2009

Dollars in Thousands

Maturity

Yield at 

Purchase (a) Face Value

Net Carrying 

Amount

Unrealized 

Holding Gains

Unrealized 

Holding 

Losses Fair Value

U.S. Treasury notes and bonds

Within 1 year 5.04% $3,058,000 $3,062,038 $48,602 $0 $3,110,640 

After 1 year 

through 5 years 4.15% 300,000 302,755 11,648 0 314,403 

U.S. Treasury Inflation-Protected Securities

After 1 year 

through 5 years 3.14% 1,968,744 1,979,879 81,877 0 2,061,756 

Total $5,326,744 $5,344,672 $142,127 $0 $5,486,799 

(a) For TIPS, the yields in the above table are stated at their real yields at purchase, not their effective yields. Effective 

yields on TIPS include a long-term annual inflation assumption as measured by the CPI-U. The long-term CPI-U 

consensus forecast is 1.1 percent, based on figures issued by the Congressional Budget Office and Blue Chip Economic 

Indicators in early 2009.
FINANCIAL STATEMENTS AND NOTES 83

4. Receivables from

Resolutions, Net

Receivables from Resolutions, Net at December 31 

Dollars in Thousands

2010 2009

Receivables 

from closed 

banks $115,896,763 $98,647,508 

Allowance

for losses (86,364,218) (60,238,886) 

Total $29,532,545 $38,408,622 

The receivables from resolutions include payments 

made by the DIF to cover obligations to insured 

depositors (subrogated claims), advances to 

resolution entities for working capital, and 

administrative expenses paid on behalf of 

resolution entities. Any related allowance for 

loss represents the difference between the funds 

advanced and/or obligations incurred and the 

expected repayment. Estimated future payments 

on losses incurred on assets sold to an acquiring 

institution under a loss-share agreement are 

factored into the computation of the expected 

repayment. Assets held by DIF resolution entities 

(including structured transaction-related assets; see 

Note 8) are the main source of repayment of the 

DIF’s receivables from resolutions. 

As of December 31, 2010, there were 336 active 

receiverships which include 157 established in 

2010. As of December 31, 2010 and 2009, DIF 

resolution entities held assets with a book value 

of $49.9 billion and $49.3 billion, respectively 

(including cash, investments, and miscellaneous 

receivables of $22.9 billion and $7.7 billion, 

respectively). Ninety-nine percent of the current 

asset book value of $49.9 billion are held by 

resolution entities established since 2008.

Estimated cash recoveries from the management 

and disposition of assets that are used to 

determine the allowance for losses were based 

on asset recovery rates from several sources 

including: actual or pending institution-specific 

asset disposition data, failed institution-specific 

asset valuation data, aggregate asset valuation data 

on several recently failed or troubled institutions, 

sampled asset valuation data, and empirical asset 

recovery data based on failures as far back as 1990. 

Methodologies for determining the asset recovery 

rates incorporate estimating future cash recoveries, 

net of applicable liquidation cost estimates, and 

discounting based on market-based risk factors 

applicable to a given asset’s type and quality. The 

resulting estimated cash recoveries are then used 

to derive the allowance for loss on the receivables 

from these resolutions.

For failed institutions resolved using a whole 

bank purchase and assumption transaction with 

an accompanying loss-share agreement, the 

projected future loss-share payments, recoveries, 

and monitoring costs on the covered assets sold 

to the acquiring institution under the agreement 

are considered in determining the allowance for 

loss on the receivables from these resolutions. 

The loss-share cost projections are based on the 

covered assets’ intrinsic value which is determined 

using financial models that consider the quality 

and type of covered assets, current and future 

market conditions, risk factors and estimated 

asset holding periods. For year-end 2010 financial 

reporting, the loss-share cost estimates were 

updated for the majority (62% or 137) of the 222 

active loss-share agreements; the remaining 85 

were already based on recent loss estimates. The 

updated loss projections for the larger loss-share 

agreements were primarily based on new thirdparty valuations estimating the cumulative loss of 

loss-share covered assets. For the smaller loss-share 

agreements, the loss projections were based on a 

financial model that applies recent aggregate asset 

valuation recovery rates against current loss-share 

covered asset balances. 

Note that estimated asset recoveries are regularly 

evaluated during the year, but remain subject 

to uncertainties because of potential changes in 

economic and market conditions. Continuing 

economic uncertainties could cause the DIF’s 

actual recoveries to vary significantly from current 

estimates. 
84 FINANCIAL STATEMENTS AND NOTES

Whole Bank Purchase and 

Assumption Transactions with 

Loss-Share Agreements 

Since the beginning of 2008, the FDIC resolved 

223 failures using a Whole Bank Purchase and 

Assumption resolution transaction with an 

accompanying loss-share agreement on assets 

purchased by the financial institution acquirer. 

The acquirer typically assumes all of the deposits 

and purchases essentially all of the assets of a 

failed institution. The majority of the commercial 

and residential loan assets are purchased under a 

loss-share agreement, where the FDIC agrees to 

share in future losses and recoveries experienced 

by the acquirer on those assets covered under the 

agreement. Loss-share agreements are used by 

the FDIC to keep assets in the private sector and 

minimize disruptions to loan customers.

Losses on the covered assets are shared between 

the acquirer and the FDIC in its capacity as 

receiver of the failed institution when losses occur 

through the sale, foreclosure, loan modification, 

or write-down of loans in accordance with the 

terms of the loss-share agreement. The majority 

of the agreements cover a five- to 10-year period 

with the receiver covering 80 percent of the losses 

incurred by the acquirer up to a stated threshold 

amount (which varies by agreement) and the 

acquiring bank covering 20 percent. Typically, any 

losses above the stated threshold amount will be 

reimbursed by the receiver at 95 percent of the 

losses booked by the acquirer. (For agreements 

executed after March 26, 2010, the threshold 

was eliminated and generally 80% of all losses are 

covered by the receiver.) As mentioned above, the 

estimated loss-share liability is accounted for by 

the receiver and is included in the calculation of 

the DIF’s allowance for loss against the corporate 

receivable from the resolution. As loss-share claims 

are asserted and proven, DIF receiverships will 

satisfy these loss-share payments using available 

liquidation funds and/or by drawing on amounts 

due from the DIF for funding the deposits 

assumed by the acquirer (see Note 7). 

Through December 31, 2010, DIF receiverships 

are estimated to pay approximately $38.8 billion 

over the duration of these loss-share agreements 

on approximately $193.0 billion in total covered 

assets at the inception date of these agreements. 

To date, 158 receiverships have made loss-share 

payments totaling $8.3 billion.

Concentration of Credit Risk

Financial instruments that potentially subject the 

DIF to concentrations of credit risk are receivables 

from resolutions. The repayment of DIF’s 

receivables from resolutions is primarily influenced 

by recoveries on assets held by DIF receiverships 

and payments on the covered assets under losssharing agreements. The majority of the $184.4 

billion in remaining assets in liquidation ($27.0 

billion) and current loss-share covered assets 

($157.4 billion) are concentrated in commercial 

loans ($104.4 billion), residential loans ($56.3 

billion), and structured transaction-related assets 

as described in Note 8 ($12.8 billion). Most of the 

assets in these asset types originated from failed 

institutions located in California ($53.4 billion), 

Florida ($20.8 billion), Illinois ($15.7 billion), 

Puerto Rico ($15.3 billion), and Alabama 

($14.6 billion).

5. Trust Preferred Securities

On January 15, 2009, subject to a systemic risk 

determination, the Treasury, the FDIC and the 

Federal Reserve Bank of New York executed 

terms of a guarantee agreement with Citigroup to 

provide loss protection on a pool of approximately 

$301.0 billion of assets that remained on the 

balance sheet of Citigroup. 

In consideration for its portion of the loss-share 

guarantee at inception, the FDIC received $3.025 

billion of Citigroup’s preferred stock (Series G). 

On July 30, 2009, all shares of preferred stock 

initially received were exchanged for 3,025,000 

Citigroup Capital XXXIII trust preferred securities 

(TruPs) with a liquidation amount of $1,000 per 

security and a distribution rate of 8 percent per 

annum payable quarterly. The principal amount 
FINANCIAL STATEMENTS AND NOTES 85

is due in 2039. The Treasury initially received 

$4.034 billion in preferred stock for its loss-share 

protection and received an equivalent, aggregate 

amount of $4.034 billion in trust preferred 

securities at the time of the exchange for TruPs. 

On December 23, 2009, Citigroup terminated 

the loss-share agreement citing improvements in 

its financial condition and in financial market 

stability. The FDIC incurred no loss from the 

guarantee prior to termination of the agreement. 

In connection with the early termination of the 

guarantee program, the Treasury and the FDIC 

agreed that Citigroup would reduce the combined 

$7.1 billion liquidation amount of the TruPs by 

$1.8 billion. Pursuant to an agreement between 

the Treasury and the FDIC, TruPs held by the 

Treasury were reduced by $1.8 billion and the 

FDIC initially retained all of its TruPs holdings 

of $3.025 billion. The FDIC will transfer an 

aggregate liquidation amount of $800 million in 

TruPs to the Treasury, plus any related interest, 

less any payments made or required to be made 

by the FDIC for guaranteed debt instruments 

issued by Citigroup or any of its affiliates under 

the Temporary Liquidity Guarantee Program 

(TLGP; see Note 16). This transfer will occur 

within five days of the date on which no Citigroup 

debt remains outstanding under the TLGP. The 

fair value of these TruPs and related interest are 

recorded as systemic risk assets as described in 

Note 16.

The remaining $2.225 billion (liquidation 

amount) of TruPs held by the FDIC is classified 

as available-for-sale debt securities in accordance 

with FASB ASC Topic 320, Investments – Debt 

and Equity Securities. Upon termination of 

the guarantee agreement, the DIF recognized 

revenue in 2009 of $1.962 billion for the fair 

value of the TruPs (see Note 10). At December 

31, 2010, the fair value of the TruPs was $2.298 

billion (see Note 15). An unrealized holding gain 

of $336 million in 2010 is included in other 

comprehensive income.

6. Property and

Equipment, Net

Property and Equipment, Net at December 31

Dollars in Thousands

2010 2009

Land $37,352 $37,352 

Buildings 

(including leasehold 

improvements) 312,173 295,265 

Application software 

(includes work-inprocess) 122,736 179,479 

Furniture, fixtures, 

and equipment 144,661 117,430 

Accumulated 

depreciation (200,857) (240,709)

Total $416,065 $388,817 

The depreciation expense was $69 million and 

$70 million for 2010 and 2009, respectively.

7. Liabilities Due to 

Resolutions

As of December 31, 2010 and 2009, the DIF 

recorded liabilities totaling $30.4 billion and 

$34.5 billion to resolution entities representing 

the agreed-upon value of assets transferred from 

the receiverships, at the time of failure, to the 

acquirers/bridge institutions for use in funding 

the deposits assumed by the acquirers/bridge 

institutions. Eighty-nine percent of these liabilities 

are due to failures resolved under a whole bank 

purchase and assumption transaction, most with 

an accompanying loss-share agreement. The DIF 

satisfies these liabilities either by directly sending 

cash to the receiverships to fund loss-share and 

other expenses or by offsetting receivables from 

resolutions when a receivership declares a dividend. 

In addition, there was $80 million and $150 

million in unpaid deposit claims related to 

multiple receiverships as of December 31, 2010 

and 2009, respectively. The DIF pays these 

liabilities when the claims are approved. 
86 FINANCIAL STATEMENTS AND NOTES

8. Contingent Liabilities for:

Anticipated Failure of 

Insured Institutions

The DIF records a contingent liability and a loss 

provision for DIF-insured institutions that are 

likely to fail, absent some favorable event such as 

obtaining additional capital or merging, when the 

liability is probable and reasonably estimable. The 

contingent liability is derived by applying expected 

failure rates and loss rates to institutions based on 

supervisory ratings, balance sheet characteristics, 

and projected capital levels. 

The banking industry continued to face significant 

problems in 2010. The slowly recovering 

economic and credit environment challenged the 

soundness of many DIF-insured institutions. The 

ongoing weakness in housing and commercial 

real estate markets led to continuing asset 

quality problems, which hurt banking industry 

performance and weakened many institutions 

with significant portfolios of residential and 

commercial mortgages. Despite the challenging 

conditions evident in certain business lines and 

markets, the losses to the DIF from failures that 

occurred in 2010 fell short of the amount reserved 

at the end of 2009, as the aggregate number and 

size of institution failures in 2010 were less than 

anticipated. The removal from the reserve of 

banks that did fail in 2010, as well as projected 

favorable trends in bank supervisory downgrade 

and failure rates and the smaller size of institutions 

that remain troubled, all contribute to a decline 

by $26.3 billion to $17.7 billion in the contingent 

liability for anticipated failures of insured 

institutions at the end of 2010.

In addition to these recorded contingent 

liabilities, the FDIC has identified risk in the 

financial services industry that could result in 

additional losses to the DIF should potentially 

vulnerable insured institutions ultimately fail. As 

a result of these risks, the FDIC believes that it 

is reasonably possible that the DIF could incur 

additional estimated losses of up to approximately 

$24.5 billion. The actual losses, if any, will 

largely depend on future economic and market 

conditions and could differ materially from this 

estimate.

During 2010, 157 banks with combined assets of 

$93.2 billion failed. Supervisory and market data 

suggest that the banking industry will continue to 

experience elevated levels of stress over the coming 

year. The FDIC continues to evaluate the ongoing 

risks to affected institutions in light of the existing 

economic and financial conditions, and the extent 

to which such risks will continue to put stress on 

the resources of the insurance fund.

Litigation Losses

The DIF records an estimated loss for unresolved 

legal cases to the extent that those losses are 

considered probable and reasonably estimable. 

Probable litigation losses of $300 million were 

recorded for both December 31, 2010 and 2009, 

and the FDIC has determined that there are no 

reasonably possible losses from unresolved cases.

Other Contingencies

IndyMac Federal Bank Representation and 

Indemnification Contingent Liability

On March 19, 2009, the FDIC as receiver of 

IndyMac Federal Bank (IMFB) and certain 

subsidiaries (collectively, sellers) sold substantially 

all of the assets of IMFB and the respective 

subsidiaries, including mortgage loans and 

mortgage loan servicing rights, to OneWest Bank 

and its affiliates. To maximize sale returns, the 

sellers made certain customary representations 

regarding the assets and have certain obligations 

to indemnify the acquirers for losses incurred 

as a result of breaches of such representations, 

losses incurred as a result of the failure to obtain 

contractual counterparty consents to the sale, 

and third party claims arising from pre-sale acts 

and omissions of the sellers or the failed bank. 

Although the representations and indemnifications 

were made by or are obligations of the sellers, 

the FDIC, in its corporate capacity, guaranteed 

the receivership’s indemnification obligations 

under the sale agreements. The representations 

relate generally to ownership of and right to 
FINANCIAL STATEMENTS AND NOTES 87

sell the assets; compliance with applicable law 

in the origination of the loans; accuracy of the 

servicing records; validity of loan documents; 

and servicing of the loans serviced for others. 

Until the period for asserting claims under these 

arrangements have expired and all indemnification 

claims quantified and paid, losses could continue 

to be incurred by the receivership and, in 

turn, the DIF either directly, as a result of the 

FDIC corporate guaranty of the receivership’s 

indemnification obligations, or indirectly, as a 

result of a reduction in the receivership’s assets 

available to pay the DIF’s claims as subrogee for 

insured accountholders. The acquirers’ rights to 

assert actual and potential breaches extend out to 

March 19, 2019 for the Fannie Mae and Ginnie 

Mae reverse mortgage servicing portfolios (unpaid 

principal balance of $21.7 billion at December 31, 

2010 and 2009), March 19, 2014 for the Fannie 

Mae, Freddie Mac and Ginnie Mae mortgage 

servicing portfolios (unpaid principal balance of 

$45.3 billion at December 31, 2010 compared to 

$62.1 billion at December 31, 2009), and March 

19, 2011 for the remaining (private) mortgage 

servicing portfolio and whole loans (unpaid 

principal balance of $74.2 billion at December 

31, 2010 compared to $104.4 billion at 

December 31, 2009). 

As of December 31, 2010, the IndyMac 

receivership has paid $2.8 million in approved 

claims and has accrued an additional $2.6 million 

liability for claims asserted but unpaid. The FDIC 

believes it is likely that additional losses will be 

incurred, however quantifying the contingent 

liability associated with the representations and 

the indemnification obligations is subject to a 

number of uncertainties, including 1) borrower 

prepayment speeds, 2) the occurrence of borrower 

defaults and resulting foreclosures and losses, 3) 

the assertion by third party investors of claims 

with respect to loans serviced for them, 4) the 

existence and timing of discovery of breaches 

and the assertion of claims for indemnification 

for losses by the acquirer, 5) the compliance by 

the acquirer with certain loss mitigation and 

other conditions to indemnification, 6) third 

party sources of loss recovery (such as title 

companies and insurers), 7) the ability of the 

acquirer to refute claims from investors without 

incurring reimbursable losses, and 8) the cost 

to cure breaches and respond to third party 

claims. Because of these and other uncertainties 

that surround the liability associated with 

indemnifications and the quantification of 

possible losses, the FDIC has determined that 

while additional losses are probable, the amount is 

not estimable. 

Purchase and Assumption Indemnification

In connection with purchase and assumption 

agreements for resolutions, the FDIC in its 

receivership capacity generally indemnifies the 

purchaser of a failed institution’s assets and 

liabilities in the event a third party asserts a claim 

against the purchaser unrelated to the explicit 

assets purchased or liabilities assumed at the time 

of failure. The FDIC in its corporate capacity is a 

secondary guarantor if and when a receivership is 

unable to pay. These indemnifications generally 

extend for a term of six years after the date of 

institution failure. The FDIC is unable to estimate 

the maximum potential liability for these types 

of guarantees as the agreements do not specify 

a maximum amount and any payments are 

dependent upon the outcome of future contingent 

events, the nature and likelihood of which cannot 

be determined at this time. During 2010 and 

2009, the FDIC in its corporate capacity made no 

indemnification payments under such agreements 

and no amount has been accrued in the 

accompanying financial statements with respect to 

these indemnification guarantees.

FDIC Guaranteed Debt of 

Structured Transactions

During 2009 and 2010, the FDIC as receiver used 

three types of structured transactions to dispose of 

certain performing and non-performing residential 

mortgage loans, commercial loans, construction 

loans, and mortgage backed securities held by 

the receiverships. The three types of structured 

transactions are: 1) limited liability companies 

(LLCs), 2) securitizations, and 3) structured sale 

guaranteed notes (SSGNs). 
88 FINANCIAL STATEMENTS AND NOTES

LLCs

Under the LLC structure, the FDIC, as receiver, 

contributes a pool of assets to a newly-formed 

LLC and offers for sale, through a competitive bid 

process, some of the equity in the LLC. The dayto-day management of the LLC is transferred to 

the highest bidder along with the purchased equity 

interest. The FDIC, in its corporate capacity, 

guarantees notes issued by the LLCs. In exchange 

for the guarantee, the DIF receives a guarantee fee 

in either a lump-sum, up-front payment based on 

the estimated duration of the note or a monthly 

payment based on a fixed percentage multiplied by 

the outstanding note balance. The terms of these 

guarantees generally stipulate that all cash flows 

received from the entity’s collateral be used in the 

following order to: 1) pay operational expenses of 

the entity, 2) pay FDIC its contractual guarantee 

fee, 3) pay down the guaranteed notes (or, if 

applicable, fund the related defeasance account 

for payoff of the notes at maturity), and 4) pay 

the equity investors. If the FDIC is required to 

perform under these guarantees, it acquires an 

interest in the cash flows of the LLC equal to 

the amount of guarantee payments made plus 

accrued interest thereon. As mentioned above, 

this interest is senior to all equity interests and 

thus will be reimbursed, in full, prior to equity 

holders receiving a return on investment. Once 

all expenses have been paid, the guaranteed 

notes have been satisfied, and FDIC has been 

reimbursed for any guarantee payments, the equity 

holders receive any remaining cash flows. 

Private investors purchased a 40 or 50 percent 

ownership interest in the LLC structures for $1.6 

billion in cash and the LLCs issued notes of $4.4 

billion to the receiverships to partially fund the 

purchase of the assets. The receiverships hold the 

remaining 50 or 60 percent equity interest in the 

LLCs and, in most cases, the guaranteed notes. 

The FDIC in its corporate capacity guarantees the 

timely payment of principal and interest for the 

notes. The terms of the note guarantees extend 

until the earliest of 1) payment in full of the notes 

or 2) two years following the maturity date of the 

notes. The note with the longest term matures 

in 2020. In the event of note payment default by 

a LLC, the FDIC in its corporate capacity can 

take one or more of the following remedies: 1) 

accelerate the payment of the unpaid principal 

amount of the notes; 2) sell the assets held as 

collateral; or 3) foreclose on the equity interests of 

the debtor. 

Securitizations and SSGNs

Securitizations and SSGNs (collectively, “Trusts”) 

are transactions in which certain assets or 

securities from failed institutions are pooled into 

a trust structure. The Trusts issued senior notes, 

subordinate notes, and owner trust certificates 

collateralized by the mortgage-backed securities or 

loans that are transferred to the Trusts. 

Private investors purchased the senior notes 

issued by the Trusts for $4.6 billion in cash. The 

receiverships hold 100 percent of the subordinate 

notes and owner trust certificates (“OTCs”). 

The FDIC in its corporate capacity guarantees 

the timely payment of principal and interest for 

the senior notes. The terms of these guarantees 

generally stipulate that all cash flows received from 

the entity’s collateral be used in the following 

order to: 1) pay operational expenses of the 

entity, 2) pay FDIC its contractual guarantee 

fee, 3) pay interest on the guaranteed notes, 4) 

pay down the guaranteed notes, and 5) pay the 

holders of the subordinate notes and owner trust 

certificates. If the FDIC is required to perform 

under its guarantees, it acquires an interest in the 

cash flows of the trust equal to the amount of 

guarantee payments made plus accrued interest 

thereon. As mentioned above, this interest is 

senior to all interests of subordinate note holders 

and OTC holders and thus will be reimbursed, 

in full, prior to these holders receiving a return 

on any remaining investment. Once all expenses 

have been paid, the guaranteed notes have been 

satisfied, and FDIC has been reimbursed for any 

guarantee payments, the subordinate note holders 

and OTC holders receive the remaining cash flows.
FINANCIAL STATEMENTS AND NOTES 89

All Structured Transactions

Through December 31, 2010, the receiverships 

have transferred a portfolio of loans with an 

unpaid principal balance of $16.4 billion and 

mortgage-backed securities with a book value of 

$6.8 billion to the LLCs and Trusts which have 

issued notes guaranteed by the FDIC. To date, 

the DIF has collected guarantee fees totaling $128 

million and recorded a receivable for additional 

guarantee fees of $170 million, included in the 

“Interest receivable on investments and other 

assets, net” line item. All guarantee fees are 

recorded as deferred revenue, included in the 

“Accounts payable and other liabilities” line item, 

and recognized as revenue primarily on a straightline basis over the term of the notes. At December 

31, 2010, the amount of deferred revenue 

recognized on the balance sheet was $249 million. 

The DIF records no other structured transaction 

related assets or liabilities on its balance sheet.

The estimated loss on the guarantees to the DIF 

is based on the discounted present value of the 

expected guarantee payments by the FDIC, 

reimbursements to the FDIC for guarantee 

payments, and guarantee fee collections. Under 

both a base case and a more stressful modeling 

scenario, the cash flows from the LLC/Trust 

assets provide sufficient coverage to fully pay 

the debts by their maturity dates. Therefore, the 

estimated loss to the DIF from these guarantees 

is zero. To date, FDIC in its corporate capacity 

has not provided, and does not intend to provide, 

any form of financial or other support to a Trust 

or LLC that it was not previously contractually 

required to provide.

As of December 31, 2010, the maximum exposure 

to loss is $8.3 billion, the sum of all outstanding 

debt issued by LLCs and Trusts that is guaranteed 

by the FDIC in its corporate capacity. The 

$8.3 billion is comprised of $4.2 billion issued 

by LLCs, $3.8 billion issued by SSGNs, and 

$.3 billion issued by the securitization. Some 

transactions have established defeasance accounts 

to pay off the notes at maturity. A total of $756 

million has been deposited into these accounts.

9. Assessments 

The Dodd-Frank Act, enacted on July 21, 2010, 

provides for significant DIF assessment and 

capitalization reforms. As a result, the FDIC 

issued proposed regulations and adopted a new 

Restoration Plan. The following presents the 

required DIF reforms and the related FDIC 

actions taken to:

Q define the assessment base generally as average 

consolidated total assets minus average 

tangible equity (the new assessment base).

To amend its regulations, the FDIC issued 

a proposed rulemaking to redefine the 

assessment base used for calculating deposit 

insurance assessments from adjusted 

domestic deposits to average consolidated 

total assets minus average tangible equity 

(measured as Tier 1 capital).

Q annually establish and publish a designated 

reserve ratio (DRR) at the statutory minimum 

percentage of not less than 1.35 percent of 

estimated insured deposits or the comparable 

percentage of the new assessment base. In 

addition, the FDIC must annually determine 

if a dividend should be paid, based on the 

statutory requirement generally to declare 

dividends if the DIF reserve ratio exceeds 1.50 

percent of estimated insured deposits. The 

Board of Directors is given sole discretion to 

suspend or limit dividends and must prescribe 

relevant regulations.

In order to implement these requirements, 

the FDIC proposed a comprehensive 

long-range plan for deposit insurance 

fund management with the intent of 

maintaining a positive fund balance and 

moderate, steady assessment rates. The 

proposed rulemaking would set the DRR 

at 2 percent as a long-term minimum goal 

and adopt a lower assessment rate schedule 

when the reserve ratio reaches 1.15. To 

increase the probability that the fund 

reserve ratio will reach a level sufficient 

to withstand a future crisis, the proposed 

rulemaking would suspend dividends 
90 FINANCIAL STATEMENTS AND NOTES

permanently when the fund reserve 

ratio exceeds 1.5 percent and, in lieu of 

dividends, adopt lower assessment rate 

schedules when the reserve ratio reaches 

2 percent and 2.5 percent so that average 

rates would decline about 25 percent and 

50 percent, respectively. In December 

2010, the FDIC issued a final rule related 

to the DRR portion of the proposed 

rulemaking, setting the DRR at 2 percent 

effective on January 1, 2011.

Q return the reserve ratio to 1.35 percent 

of estimated insured deposits by September 

30, 2020.

To comply with this mandate, the FDIC 

adopted a new Restoration Plan that 

provides for the following: 1) the period 

of the Restoration Plan is extended from 

the end of 2016 to September 30, 2020; 

2) the FDIC will maintain the current 

schedule of assessment rates, foregoing the 

uniform 3 basis point increase previously 

scheduled to take effect on January 1, 

2011; 3) institutions may continue to 

use assessment credits without additional 

restriction during the term of the 

Restoration Plan; 4) the FDIC will pursue 

rulemaking in 2011 regarding the method 

that will be used to offset the effect on 

small institutions (less than $10 billion in 

assets) of the statutory requirement that 

the fund reserve ratio increase from 1.15 

percent to 1.35 percent by September 

30, 2020; and 5) at least semiannually, 

the FDIC will update its loss and income 

projections for the fund and, if needed, 

will increase or decrease rates, following 

notice-and-comment rulemaking, 

if required.

In addition, the FDIC issued a proposed 

rulemaking to revise the assessment system 

applicable to large insured depository institutions 

(IDIs) to better capture risk at the time an IDI 

assumes the risk, to better differentiate IDIs 

during periods of good economic and banking 

conditions based on how they would fare during 

periods of stress or economic downturns, and 

to better take into account the losses that the 

FDIC may incur if such an IDI fails. Specifically, 

proposed changes include eliminating risk 

categories and the use of long-term debt issuer 

ratings for large IDIs and combining CAMELS 

ratings and forward-looking financial measures 

into two scorecards: one for most large IDIs 

and another for large IDIs that are structurally 

and operationally complex or that pose unique 

challenges and risks in case of failure (highly 

complex IDIs).

Assessment Revenue

The assessment rate averaged approximately 17.72 

cents per $100 and 23.32 cents per $100 of the 

assessment base, as defined in part 327.5(b) of 

FDIC Rules and Regulations, for 2010 and 2009, 

respectively. During 2010 and 2009, $13.6 billion 

and $17.7 billion were recognized as assessment 

revenue from institutions. For those institutions 

that did not prepay assessments as described 

below, the “Assessments receivable, net” line 

item of $218 million represents the estimated 

premiums due from IDIs for the fourth quarter of 

2010. The actual deposit insurance assessments for 

the fourth quarter will be billed and collected at 

the end of the first quarter of 2011.

During 2009, the FDIC implemented actions 

to supplement DIF’s revenue through a special 

assessment and its liquidity through prepaid 

assessments from IDIs:

Q On May 22, 2009, the FDIC adopted a 

final rule imposing a 5 basis point special 

assessment on each IDI’s total assets minus 

Tier 1 capital as reported in its report of 

condition as of June 30, 2009. The special 

assessment of $5.5 billion was collected on 

September 30, 2009. 

Q On November 12, 2009, the FDIC adopted a 

final rule to address the DIF’s liquidity needs 

to pay for projected near-term failures and 

to ensure that the deposit insurance system 

remained industry-funded. Pursuant to the 

final rule, on December 30, 2009, a majority 

of IDIs prepaid estimated quarterly risk-based 
FINANCIAL STATEMENTS AND NOTES 91

assessments of $45.7 billion for the period 

October 2009 through December 2012. 

An institution’s quarterly risk-based deposit 

insurance assessment thereafter is offset by 

the amount prepaid until that amount is 

exhausted or until June 30, 2013, when any 

amount remaining would be returned to 

the institution. At December 31, 2010, the 

remaining prepaid amount of $30.1 billion is 

included in the “Unearned revenue – prepaid 

assessments” line item on the Balance Sheet.

Prepaid assessments were mandatory for 

all institutions, but the FDIC exercised 

its discretion as supervisor and insurer to 

exempt an institution from the prepayment 

requirement if the FDIC determined that the 

prepayment would adversely affect the safety 

and soundness of the institution. 

Reserve Ratio

As of December 31, 2010, the DIF reserve ratio 

was -0.12 percent of estimated insured deposits.

Assessments Related to FICO

Assessments continue to be levied on institutions 

for payments of the interest on obligations issued 

by the Financing Corporation (FICO). The FICO 

was established as a mixed-ownership government 

corporation to function solely as a financing vehicle 

for the former FSLIC. The annual FICO interest 

obligation of approximately $790 million is paid 

on a pro rata basis using the same rate for banks 

and thrifts. The FICO assessment has no financial 

impact on the DIF and is separate from deposit 

insurance assessments. The FDIC, as administrator 

of the DIF, acts solely as a collection agent for the 

FICO. During 2010 and 2009, approximately 

$796 million and $784 million, respectively, was 

collected and remitted to the FICO.

10. Other Revenue

Other Revenue for the Years Ended December 31 

Dollars in Thousands

2010 2009

Guarantee 

termination fees $0 $2,053,825

Dividends 

and interest 

on Citigroup 

trust preferred 

securities 177,675 231,227 

Guarantee fees 

for structured 

transactions 44,557 3,465

Debt guarantee 

surcharges 0 871,746

Other 15,193 13,348

Total $237,425 $3,173,611 

Guarantee Termination Fees and 

Dividends and Interest on TruPs

Bank of America 

In January 2009, the FDIC, the Treasury, and 

the Federal Reserve Bank of New York (federal 

parties) signed a Summary of Terms (Term 

Sheet) with Bank of America to guarantee or 

lend against a pool of up to $118.0 billion of 

financial instruments owned by Bank of America. 

In May 2009, prior to completing definitive 

documentation, Bank of America announced 

its intention to terminate negotiations with 

respect to the loss-share guarantee arrangement 

contemplated in the Term Sheet. Bank of 

America paid a termination fee of $425 million to 

compensate the federal parties for the guarantee 

from the date of the signing of the Term Sheet 

through the termination date. Of this amount, 
92 FINANCIAL STATEMENTS AND NOTES

the FDIC received and recognized revenue of $92 

million for the DIF in 2009. No losses were borne 

by the FDIC prior to the termination.

Citigroup

In connection with the termination of a lossshare agreement with Citigroup on December 23, 

2009 (see Note 5), the DIF recognized revenue 

of $1.962 billion for the fair value of the trust 

preferred securities received as consideration for 

the guarantee. The DIF recognized $178 million 

and $231 million of dividends and interest on the 

securities for 2010 and 2009, respectively.

Guarantee Fees for Structured Transactions

The FDIC in its corporate capacity participated 

in structured transactions as guarantor of the 

principal and interest due on certain notes 

issued by related limited liability companies and 

Trusts (see Note 8). The transactions were formed 

to maximize recoveries on assets purchased by 

these entities from receiverships. In exchange for 

the guarantees, the DIF receives guarantee fees 

that are recognized as revenue over the 

term of each guarantee on a straight line basis. 

The DIF recognized revenue in the amount of 

$45 million and $3 million during 2010 and 

2009, respectively.

Surcharges on FDIC-Guaranteed Debt

The DIF collected a surcharge on all debt issued 

under the Temporary Liquidity Guarantee 

Program (TLGP) after March 31, 2009 in an 

effort to provide an incentive for all participants to 

return to the non-guaranteed debt market. Unlike 

other TLGP fees (see Note 16), which are reserved 

for projected TLGP losses, the surcharges collected 

were deposited into the DIF. During 2009, the 

DIF collected surcharges in the amount of $872 

million. No surcharges were collected in 2010.

11. Operating Expenses

Operating expenses were $1.6 billion for 2010, 

compared to $1.3 billion for 2009. The chart below 

lists the major components of operating expenses.

Operating Expenses for the Years Ended December 31

Dollars in Thousands

2010 2009

Salaries and 

benefits $1,184,523 $901,836 

Outside services 360,880 244,479 

Travel 111,110 97,744 

Buildings and 

leased space 85,137 65,286 

Software/Hardware 

maintenance 50,575 40,678 

Depreciation 

of property and 

equipment 68,790 70,488 

Other 35,384 37,563 

Services 

reimbursed by 

TLGP (242) (3,613)

Services billed to 

resolution entities (303,516) (183,362)

Total $1,592,641 $1,271,099 
FINANCIAL STATEMENTS AND NOTES 93

12. Provision for

Insurance Losses

Provision for insurance losses was a negative $848 

million for 2010, compared to a positive $57.7 

billion for 2009. The 2010 negative provision 

is primarily due to lower-than-anticipated loss 

estimates at time of failure for banks that have 

failed and leveling off of estimated losses to the 

DIF from banks expected to fail. The following 

chart lists the major components of the provision 

for insurance losses.

Provision for Insurance Losses for the Years Ended 

December 31

Dollars in Thousands

2010 2009

Valuation Adjustments

Closed banks 

and thrifts $25,483,252 $37,586,603 

Other assets (4,406) (7,885)

Total Valuation 

Adjustments 25,478,846 37,578,718 

Contingent Liabilities Adjustments

Anticipated 

failure of 

insured 

institutions (26,326,689) 20,033,054 

Litigation 0 100,000 

Total Contingent 

Liabilities 

Adjustments (26,326,689) 20,133,054 

Total $(847,843) $57,711,772 

13. Employee Benefits

Pension Benefits and Savings Plans

Eligible FDIC employees (permanent and term 

employees with appointments exceeding one year) 

are covered by the federal government retirement 

plans, either the Civil Service Retirement System 

(CSRS) or the Federal Employees Retirement 

System (FERS). Although the DIF contributes a 

portion of pension benefits for eligible employees, 

it does not account for the assets of either 

retirement system. The DIF also does not have 

actuarial data for accumulated plan benefits or the 

unfunded liability relative to eligible employees. 

These amounts are reported on and accounted for 

by the U.S. Office of Personnel 

Management (OPM).

Eligible FDIC employees also may participate in a 

FDIC-sponsored tax-deferred 401(k) savings plan 

with matching contributions up to five percent. 

Under the Federal Thrift Savings Plan (TSP), 

the FDIC provides FERS employees with an 

automatic contribution of 1 percent of pay and an 

additional matching contribution up to 4 percent 

of pay. CSRS employees also can contribute to 

the TSP, however, they do not receive agency 

matching contributions.

Pension Benefits and Savings Plans Expenses for 

the Years Ended December 31

Dollars in Thousands

2010 2009

Civil Service Retirement 

System $6,387 $6,401 

Federal Employees 

Retirement System 

(Basic Benefit) 78,666 56,451 

FDIC Savings Plan 30,825 25,449 

Federal Thrift 

Savings Plan 28,679 20,503 

Total $144,557 $108,804 
94 FINANCIAL STATEMENTS AND NOTES

Postretirement Benefits

Other Than Pensions

The DIF has no postretirement health insurance 

liability since all eligible retirees are covered by 

the Federal Employees Health Benefit (FEHB) 

program. FEHB is administered and accounted 

for by the OPM. In addition, OPM pays the 

employer share of the retiree’s health insurance 

premiums.

The FDIC provides certain life and dental 

insurance coverage for its eligible retirees, the 

retirees’ beneficiaries, and covered dependents. 

Retirees eligible for life and dental insurance 

coverage are those who have qualified due to: 1) 

immediate enrollment upon appointment or five 

years of participation in the plan and 2) eligibility 

for an immediate annuity. The life insurance 

program provides basic coverage at no cost to 

retirees and allows converting optional coverage to 

direct-pay plans. For the dental coverage, retirees 

are responsible for a portion of the dental premium.

The FDIC has elected not to fund the 

postretirement life and dental benefit liabilities. 

As a result, the DIF recognized the underfunded 

status (difference between the accumulated 

postretirement benefit obligation and the plan 

assets at fair value) as a liability. Since there 

are no plan assets, the plan’s benefit liability 

is equal to the accumulated postretirement 

benefit obligation. At December 31, 2010 and 

2009, the liability was $166 million and $145 

million, respectively, which is recognized in the 

“Postretirement benefit liability” line item on the 

Balance Sheet. The cumulative actuarial losses 

(changes in assumptions and plan experience) and 

prior service costs (changes to plan provisions that 

increase benefits) were $19 million and $3 million 

at December 31, 2010 and 2009, respectively. 

These amounts are reported as accumulated 

other comprehensive income in the “Unrealized 

postretirement benefit loss” line item on the 

Balance Sheet.

The DIF’s expenses for postretirement benefits for 

2010 and 2009 were $9 million and $8 million, 

respectively, which are included in the current and 

prior year’s operating expenses on the Statement 

of Income and Fund Balance. The changes in 

the actuarial losses and prior service costs for 

2010 and 2009 of $16 million and $28 million, 

respectively, are reported as other comprehensive 

income in the “Unrealized postretirement benefit 

loss” line item. Key actuarial assumptions used in 

the accounting for the plan include the discount 

rate of 5.0 percent, the rate of compensation 

increase of 4.1 percent, and the dental coverage 

trend rate of 7.0 percent. The discount rate of 

5.0 percent is based upon rates of return on 

high-quality fixed income investments whose cash 

flows match the timing and amount of expected 

benefit payments. 

14. Commitments and OffBalance-Sheet Exposure

Commitments:

Leased Space

The FDIC’s lease commitments total $204 million 

for future years. The lease agreements contain 

escalation clauses resulting in adjustments, usually 

on an annual basis. The DIF recognized leased 

space expense of $45 million and $29 million for 

the years ended December 31, 2010 and 2009, 

respectively.

Leased Space Commitments

Dollars in Thousands

2011 2012 2013

$54,086 $48,047 $37,005

2014 2015 2016/Thereafter

$28,035 $19,731 $17,229

Off-Balance-Sheet Exposure:

Deposit Insurance

As of December 31, 2010, the estimated insured 

deposits for DIF were $6.2 trillion. This estimate 

is derived primarily from quarterly financial data 

submitted by insured depository institutions to 

the FDIC. This estimate represents the accounting 

loss that would be realized if all insured depository 

institutions were to fail and the acquired assets 
FINANCIAL STATEMENTS AND NOTES 95

provided no recoveries. The amount of $6.2 

trillion includes noninterest-bearing transaction 

accounts that received coverage under the DoddFrank Act beginning on December 31, 2010 to 

the end of 2012.

15. Disclosures About the

Fair Value of Financial

Instruments

Financial assets recognized and measured at fair 

value on a recurring basis at each reporting date 

include cash equivalents (Note 2), the investment 

in U.S. Treasury obligations (Note 3) and trust 

preferred securities (Note 5). The following tables 

present the DIF’s financial assets measured at fair 

value as of December 31, 2010 and 2009.

In exchange for prior loss-share guarantee coverage 

provided to Citigroup as described in Note 5, 

the FDIC and the Treasury received TruPs. At 

December 31, 2010, the fair value of the securities 

in the amount of $3.124 billion was classified 

as a Level 2 measurement based on an FDIC 

developed model using observable market data 

for traded Citigroup securities to determine the 

expected present value of future cash flows. Key 

inputs include market yields on U.S. Dollar 

interest rate swaps and discount rates for default, 

call and liquidity risks that are derived from 

traded Citigroup securities and modeled pricing 

relationships. 

Assets Measured at Fair Value at December 31, 2010

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices in 

Active Markets for 

Identical Assets 

(Level 1)

Significant Other 

Observable Inputs 

(Level 2)

Significant 

Unobservable 

Inputs (Level 3)

Total Assets 

at Fair Value

Assets

Cash and cash equivalents 

(Special U.S. Treasuries)1 $27,076,606 $27,076,606 

Available for Sale Debt Securities

Investment in U.S. 

Treasury Obligations2 12,371,268 12,371,268 

Trust preferred securities $2,297,818 2,297,818 

Trust preferred securities held 

for UST (Note 16) 826,182 826,182 

Total Assets $39,447,874 $3,124,000 $0 $42,571,874 

(1) Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest rates established by the 

U.S. Bureau of Public Debt.

(2) The investment in U.S. Treasury obligations is measured based on prevailing market yields for federal government entities.
96 FINANCIAL STATEMENTS AND NOTES

At December 31, 2009 the fair value of the TruPs 

in the amount of $2.667 billion was classified 

as a Level 3 measurement and was derived from 

a proprietary valuation model developed by 

the Treasury to estimate the value of financial 

instruments obtained as consideration for actions 

taken to stabilize the financial system under the 

Troubled Asset Relief Program. The change in 

fair value classification from Level 3 to Level 2 

between 2009 and 2010 was due to a greater 

reliance on observable inputs. The table below 

reconciles the beginning and ending Level 3 

balances for 2010.

Assets Measured at Fair Value at December 31, 2009

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices in 

Active Markets for 

Identical Assets 

(Level 1)

Significant Other 

Observable Inputs 

(Level 2)

Significant 

Unobservable 

Inputs (Level 3)

Total Assets at Fair 

Value

Assets

Cash and cash equivalents 

(Special U.S. Treasuries)1 $54,092,423 $54,092,423 

Available for Sale Debt Securities

Investment in U.S. Treasury 

Obligations2 5,486,799 5,486,799 

Trust preferred securities $1,961,824 1,961,824 

Trust preferred securities held 

for UST (Note 16) 705,375 705,375

Total Assets $59,579,222 $0 $2,667,199 $62,246,421

(1) Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest rates established by 

the U.S. Bureau of Public Debt. 

(2) The investment in U.S. Treasury obligations is measured based on prevailing market yields for federal government entities.

Fair Value Measurements Using Unobservable Inputs (Level 3) - Trust Preferred Securities 

at December 31

Dollars in Thousands

2010 2009

Beginning balance $2,667,199 $0

Total gains or losses 0 0

Transfers in and/or out of Level 3 (2,667,199) 2,667,199

Total $0 $2,667,199

(a) The Corporation’s policy is to recognize Level 3 transfers as of the beginning of the reporting period. 

(b) The transfer from Level 3 to Level 2 was due to adoption of observable market data for these securities.

Some of the DIF’s financial assets and liabilities 

are not recognized at fair value but are recorded 

at amounts that approximate fair value due to 

their short maturities and/or comparability with 

current interest rates. Such items include interest 

receivable on investments, assessment receivables, 

other short-term receivables, accounts payable and 

other liabilities. 
FINANCIAL STATEMENTS AND NOTES 97

The net receivables from resolutions primarily 

include the DIF’s subrogated claim arising from 

obligations to insured depositors. The resolution 

entity assets that will ultimately be used to pay 

the corporate subrogated claim are valued using 

discount rates that include consideration of 

market risk. These discounts ultimately affect the 

DIF’s allowance for loss against the receivables 

from resolutions. Therefore, the corporate 

subrogated claim indirectly includes the effect of 

discounting and should not be viewed as being 

stated in terms of nominal cash flows.

Although the value of the corporate subrogated 

claim is influenced by valuation of resolution 

entity assets (see Note 4), such valuation is not 

equivalent to the valuation of the corporate 

claim. Since the corporate claim is unique, not 

intended for sale to the private sector, and has no 

established market, it is not practicable to estimate 

a fair value.

The FDIC believes that a sale to the private 

sector of the corporate claim would require 

indeterminate, but substantial, discounts for an 

interested party to profit from these assets because 

of credit and other risks. In addition, the timing 

of resolution entity payments to the DIF on the 

subrogated claim does not necessarily correspond 

with the timing of collections on resolution entity 

assets. Therefore, the effect of discounting used 

by resolution entities should not necessarily be 

viewed as producing an estimate of fair value for 

the net receivables from resolutions.

There is no readily available market for guarantees 

associated with systemic risk (see Note 16).

16. Systemic Risk 

Transactions 

Pursuant to systemic risk determinations, the 

FDIC established the Temporary Liquidity 

Guarantee Program (TLGP) for insured 

depository institutions, designated affiliates 

and certain holding companies during 2008, 

and provided loss-share guarantee assistance to 

Citigroup on a pool of covered assets in 2009, 

which was subsequently terminated as described 

in Note 5. The FDIC received consideration in 

exchange for guarantees issued under the TLGP 

and guarantee assistance provided to Citigroup.

At inception of the guarantees, the DIF recognized 

a liability for the non-contingent fair value of the 

obligation the FDIC has undertaken to stand 

ready to perform over the term of the guarantees. 

As required by FASB ASC 460, Guarantees, this 

non-contingent liability was measured at the 

amount of consideration received in exchange for 

issuing the guarantee. As systemic risk expenses 

are incurred (including contingent liabilities 

and valuation allowances), the DIF will reduce 

deferred revenue and recognize an offsetting 

amount as systemic risk revenue. Revenue 

recognition will also occur during the term of 

the guarantee if a supportable and documented 

analysis has determined that the consideration 

and any related interest/dividend income received 

exceeds the projected systemic risk losses. Any 

deferred revenue not absorbed by losses during the 

guarantee period will be recognized as revenue to 

the DIF.

Temporary Liquidity 

Guarantee Program

The FDIC established the TLGP on October 14, 

2008 in an effort to counter the system-wide crisis 

in the nation’s financial sector. The TLGP consists 

of two components: 1) the Debt Guarantee 

Program (DGP), and 2) the Transaction Account 

Guarantee Program (TAG). The program is 

codified in part 370 of title 12 of the Code of 

Federal Regulations (12 CFR Part 370). 

Debt Guarantee Program

The DGP permitted participating entities to issue 

FDIC-guaranteed senior unsecured debt through 

October 31, 2009. The FDIC’s guarantee for all 

such debt expires on the earliest of the conversion 

date for mandatory convertible debt, the stated 

date of maturity, or December 31, 2012. 

All fees for participation in the DGP are reserved 

for possible TLGP losses. Through the end of 

the debt issuance period, the DIF collected $8.3 

billion of guarantee fees and fees of $1.2 billion 

from participating entities that elected to issue 
98 FINANCIAL STATEMENTS AND NOTES

senior unsecured non-guaranteed debt. The 

fees are included in the “Cash and investments – 

restricted – systemic risk” line item and recognized 

as “Deferred revenue-systemic risk” on the 

Balance Sheet. 

Additionally, as described in Note 5, the FDIC 

holds $800 million (liquidation amount) of 

Citigroup TruPs (and any related interest) as 

security in the event payments are required to be 

made by the DIF for guaranteed debt instruments 

issued by Citigroup or any of its affiliates under 

the TLGP. At December 31, 2010, the fair value 

of these securities totaled $826 million, and was 

determined using the valuation methodology 

described in Note 15 for other Citigroup TruPs 

held by the DIF. There is an offsetting liability in 

“Deferred Revenue- Systemic Risk”, representing 

amounts to be transferred to the Treasury or, if 

necessary, paid for guaranteed debt instruments 

issued by Citigroup or its affiliates under the 

TLGP. Consequently, there is no impact on the 

fund balance to the DIF. 

The FDIC’s payment obligation under the DGP 

is triggered by a payment default. In the event 

of default, the FDIC will continue to make 

scheduled principal and interest payments under 

the terms of the debt instrument through its 

maturity, or in the case of mandatory convertible 

debt, through the mandatory conversion date. The 

debtholder or representative must assign to the 

FDIC the right to receive any and all distributions 

on the guaranteed debt from any insolvency 

proceeding, including the proceeds of any 

receivership or bankruptcy estate, to the extent of 

payments made under the guarantee. 

Since inception of the program, $618 billion in 

total guaranteed debt has been issued. Through 

December 31, 2010, the FDIC has paid $8 

million in claims for principal and interest arising 

from guaranteed debt default by three debt issuers. 

Sixty-six financial entities (39 insured depository 

institutions and 27 affiliates and holding 

companies) had $267.1 billion in guaranteed 

debt outstanding at year end. This reported 

outstanding debt at year end is derived from data 

submitted by debtholders. At December 31, 2010, 

the contingent liability for this guarantee of $149 

million is included in the “Contingent liability for 

systemic risk” line item. The FDIC believes that 

it is reasonably possible that additional estimated 

losses of approximately $545 million could 

occur under the DGP. Given the magnitude of 

outstanding debt and the uncertainty surrounding 

future possible losses, the FDIC believes it is 

appropriate to continue its current practice of 

deferring income recognition for the remaining 

$9.1 billion of “Deferred Revenue-Systemic Risk.” 

Transaction Account Guarantee Program

The Transaction Account Guarantee Program, 

implemented under the TLGP, provided unlimited 

coverage through December 31, 2010 for noninterest bearing transaction accounts held by 

insured depository institutions on all deposit 

amounts exceeding the fully insured limit of 

$250,000. During 2010 and 2009, the FDIC 

collected TAG fees of $481 million and $639 

million, respectively, which are earmarked for 

TLGP possible losses and payments. At December 

31, 2010, the “Receivables and other assets – 

systemic risk” line item includes $50 million of 

estimated TAG fees due from insured depository 

institutions on March 31, 2011. 

Upon the failure of a participating insured 

depository institution, payment of guaranteed 

claims of depositors with non-interest bearing 

transaction accounts were funded with TLGP 

restricted cash. The FDIC is subrogated to these 

claims of depositors against the failed entity, 

and dividend payments by the receivership are 

deposited back into TLGP restricted accounts. 

Since inception of the TAG, covered claims were 

estimated to be $8.8 billion with estimated losses 

of $2.3 billion as of December 31, 2010. 
FINANCIAL STATEMENTS AND NOTES 99

Systemic Risk Activity at December 31, 2010

Dollars in Thousands

Cash and

investments - 

restricted - systemic 

risk (1) 

Receivables and 

other assets - 

systemic risk

Deferred revenue - 

systemic risk

Contingent liability - 

systemic risk

Revenue/Expenses - 

systemic risk

Balance at 01-01-10 $6,430,589 $3,298,819 $(7,847,447) $(1,411,966)

TAG fees collected 480,781 (187,541) (293,240)

DGP assessments collected 3 (3)

Receivable for TAG fees 50,235 (50,235)

Receivable for TAG 

accounts at failed 

institutions (493,128)

Dividends and overnight 

interest on TruPs held 

for UST 63,856 (63,856)

Market value adjustment 

on TruPs held for UST 120,807 (120,807)

Estimated losses for 

TAG accounts at failed 

institutions (583,626) 583,626 $583,626 

Provision for TLGP losses 

in future failures (1,262,639) 1,262,639 (1,262,639)

Guaranteed debt 

obligations paid (7,970) 7,970 5,953 

U.S. investment 

interest collected 12,063 (12,063)

Interest receivable on U.S. 

Treasury obligations 720 (720)

Amortization of U.S. 

Treasury obligations 2,191 (2,191)

Accrued interest purchased (6,822) 6,822 

Unrealized gain on U.S. 

Treasury obligations 247 (247)

TLGP operating expenses 489 242 

Reimbursement to DIF 

for TAG claims and TLGP 

operating expenses incurred (264,834)

Totals $6,646,968 $2,269,422 $(9,054,541) $(149,327) $(672,818)

(1) As of December 31, 2010, the fair value of investments in U.S. Treasury obligations held by TLGP was $1.6 billion. An unrealized gain of $247 thousand is 

reported in the “Deferred revenue - systemic risk” line item.
100 FINANCIAL STATEMENTS AND NOTES

17. Subsequent Events 

Subsequent events have been evaluated through 

March 14, 2011, the date the financial statements 

are available to be issued.

2011 Failures through March 14, 2011

Through March 14, 2011, 25 insured institutions 

failed in 2011 with total losses to the DIF 

estimated to be $1.8 billion. 

Assessments

On February 7, 2011, the FDIC adopted a Final 

Rule, Assessments, Large Bank Pricing, which 

becomes effective on April 1, 2011. The Rule 

amends 12 CFR 327 to implement revisions 

to the FDI Act made by the Dodd-Frank Act 

to: 1) redefine the assessment base used for 

calculating deposit insurance assessments; 2) 

change the assessment rate adjustments; 3) 

lower the initial base rate schedule and the total 

base rate schedule for all insured depository 

institutions to collect approximately the same 

revenue for the DIF under the new assessment 

base as would have been collected under the 

former assessment base; 4) provide progressively 

lower assessment rate schedules when the reserve 

ratio of the DIF reaches certain enumerated 

levels and suspend dividends indefinitely; and 5) 

change the risk-based assessment system for large 

insured depository institutions (generally, those 

institutions with at least $10 billion in 

total assets).

During the last quarter of 2010, FDIC issued 

three Notices of Proposed Rulings (NPRs) 

in order to propose revisions to the FDI Act, 

as amended (see Note 9). This Final Rule 

encompasses all of the proposals contained in the 

NPRs, except the proposal setting the Designated 

Reserve Ratio (DRR), which was covered in the 

DRR Final Rule issued in December 2010. 
FINANCIAL STATEMENTS AND NOTES 101

FSLIC Resolution Fund

Federal Deposit Insurance Corporation

FSLIC Resolution Fund Balance Sheet at December 31

Dollars in Thousands

2010 2009

Assets

Cash and cash equivalents $3,547,907 $3,470,125 

Receivables from thrift resolutions and other 

assets, net (Note 3) 23,408 32,338 

Receivables from U.S. Treasury for goodwill 

litigation (Note 4) 323,495 405,412 

Total Assets $3,894,810 $3,907,875 

Liabilities 

Accounts payable and other liabilities $2,990 $2,972 

Contingent liabilities for goodwill litigation 

(Note 4) 323,495 405,412 

Total Liabilities 326,485 408,384 

Resolution Equity (Note 5)

Contributed capital 127,792,696 127,847,696 

Accumulated deficit (124,224,371) (124,348,205)

Total Resolution Equity 3,568,325 3,499,491 

Total Liabilities and Resolution Equity $3,894,810 $3,907,875 

The accompanying notes are an integral part of these financial statements.
102 FINANCIAL STATEMENTS AND NOTES

FSLIC Resolution Fund

Federal Deposit Insurance Corporation

FSLIC Resolution Fund Statement of Income and Accumulated Deficit for the Years Ended December 31

Dollars in Thousands

2010 2009

Revenue

Interest on U.S. Treasury obligations $3,876 $3,167 

Other revenue 9,393 5,276 

Total Revenue 13,269 8,443 

Expenses and Losses

Operating expenses 3,832 4,905 

Provision for losses (945) 2,051 

Goodwill litigation expenses (Note 4) (53,266) 408,997 

Recovery of tax benefits (63,256) (10,279)

Other expenses 3,070 2,908 

Total Expenses and Losses (110,565) 408,582 

Net Income (Loss) 123,834 (400,139)

Accumulated Deficit - Beginning (124,348,205) (123,948,066)

Accumulated Deficit - Ending $(124,224,371) $(124,348,205)

The accompanying notes are an integral part of these financial statements.

 
FINANCIAL STATEMENTS AND NOTES 103

FSLIC Resolution Fund

Federal Deposit Insurance Corporation

FSLIC Resolution Fund Statement of Cash Flows for the Years Ended December 31

Dollars in Thousands

2010 2009

Operating Activities

Net Income (Loss) $123,834 $(400,139)

Adjustments to reconcile net income (loss) to net 

cash provided (used) by operating activities:

Provision for losses (945) 2,051 

Change in Operating Assets and Liabilities:

Decrease in receivables from thrift resolutions and 

other assets 9,875 563 

Increase (Decrease) in accounts payable and 

other liabilities 18 (5,094)

(Decrease) Increase in contingent liabilities for 

goodwill litigation (81,917) 263,107 

Net Cash Provided (Used) by Operating Activities 50,865 (139,512)

Financing Activities

Provided by:

U.S. Treasury payments for goodwill litigation 

(Note 4) 26,917 142,410 

Net Cash Provided by Financing Activities 26,917 142,410 

Net Increase in Cash and Cash Equivalents 77,782 2,898 

Cash and Cash Equivalents - Beginning 3,470,125 3,467,227 

Cash and Cash Equivalents - Ending $3,547,907 $3,470,125 

The accompanying notes are an integral part of these financial statements.
104 FINANCIAL STATEMENTS AND NOTES

Notes to the Financial Statements

FSLIC Resolution Fund

December 31, 2010 and 2009 

1. Legislative History 

and Operations/

Dissolution of the FSLIC 

Resolution Fund

Legislative History

The Federal Deposit Insurance Corporation 

(FDIC) is the independent deposit insurance 

agency created by Congress in 1933 to maintain 

stability and public confidence in the nation’s 

banking system. Provisions that govern the 

operations of the FDIC are generally found in 

the Federal Deposit Insurance (FDI) Act, as 

amended (12 U.S.C. 1811, et seq). In carrying 

out the purposes of the FDI Act, as amended, the 

FDIC insures the deposits of banks and savings 

associations, and in cooperation with other 

federal and state agencies promotes the safety and 

soundness of insured depository institutions by 

identifying, monitoring and addressing risks to 

the deposit insurance fund established in the FDI 

Act, as amended. In addition, FDIC is charged 

with responsibility for the sale of remaining 

assets and satisfaction of liabilities associated with 

the former Federal Savings and Loan Insurance 

Corporation (FSLIC) and the former Resolution 

Trust Corporation (RTC). 

The U.S. Congress created the FSLIC through the 

enactment of the National Housing Act of 1934. 

The Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 (FIRREA) abolished the 

insolvent FSLIC, created the FSLIC Resolution 

Fund (FRF), and transferred the assets and 

liabilities of the FSLIC to the FRF-except those 

assets and liabilities transferred to the RTCeffective on August 9, 1989. Further, the FIRREA 

established the Resolution Funding Corporation 

(REFCORP) to provide part of the initial funds 

used by the RTC for thrift resolutions.

The RTC Completion Act of 1993 (RTC 

Completion Act) terminated the RTC as of 

December 31, 1995. All remaining assets and 

liabilities of the RTC were transferred to the FRF 

on January 1, 1996. Today, the FRF consists of 

two distinct pools of assets and liabilities: one 

composed of the assets and liabilities of the FSLIC 

transferred to the FRF upon the dissolution of the 

FSLIC (FRF-FSLIC), and the other composed 

of the RTC assets and liabilities (FRF-RTC). 

The assets of one pool are not available to satisfy 

obligations of the other.

The FDIC is the administrator of the FRF and 

the Deposit Insurance Fund. These funds are 

maintained separately to carry out their respective 

mandates.

Operations/Dissolution of the FRF

The FRF will continue operations until all of 

its assets are sold or otherwise liquidated and all 

of its liabilities are satisfied. Any funds remaining 

in the FRF-FSLIC will be paid to the U.S. 

Treasury. Any remaining funds of the FRF-RTC 

will be distributed to the REFCORP to pay the 

interest on the REFCORP bonds. In addition, 

the FRF-FSLIC has available until expended $602 

million in appropriations to facilitate, if required, 

efforts to wind up the resolution activity of the 

FRF-FSLIC. 

The FDIC has conducted an extensive review and 

cataloging of FRF’s remaining assets and liabilities. 

Some of the issues and items that remain open in 

FRF are: 1) criminal restitution orders (generally 

have from 3 to 13 years remaining to enforce); 

2) collections of settlements and judgments 

obtained against officers and directors and 

other professionals responsible for causing or 

contributing to thrift losses (generally have from 

one to 10 years remaining to enforce, unless 

the judgments are renewed, which will result in 

significantly longer periods for collection for some 

judgments); 3) numerous assistance agreements 

entered into by the former FSLIC (FRF could 

continue to receive tax benefits sharing through 

the year 2012); 4) goodwill litigation (no final 

date for resolution has been established; see 

Note 4); and 5) affordable housing program 

monitoring (requirements can exceed 25 years). 

The FRF could potentially realize recoveries from 

tax benefits sharing of up to approximately $52 

million; however, any associated recoveries are not 
FINANCIAL STATEMENTS AND NOTES 105

reflected in FRF’s financial statements given the 

significant uncertainties surrounding the ultimate 

outcome.

Receivership Operations 

The FDIC is responsible for managing and 

disposing of the assets of failed institutions in an 

orderly and efficient manner. The assets held by 

receivership entities, and the claims against them, 

are accounted for separately from FRF assets and 

liabilities to ensure that receivership proceeds are 

distributed in accordance with applicable laws 

and regulations. Also, the income and expenses 

attributable to receiverships are accounted for as 

transactions of those receiverships. Receiverships 

are billed by the FDIC for services provided on 

their behalf.

2. Summary of Significant 

Accounting Policies

General

These financial statements pertain to the financial 

position, results of operations, and cash flows of 

the FRF and are presented in accordance with 

U.S. generally accepted accounting principles 

(GAAP). As permitted by the Federal Accounting 

Standards Advisory Board’s Statement of Federal 

Financial Accounting Standards 34, The Hierarchy 

of Generally Accepted Accounting Principles, 

Including the Application of Standards Issued by 

the Financial Accounting Standards Board, the 

FDIC prepares financial statements in conformity 

with standards promulgated by the Financial 

Accounting Standards Board (FASB). These 

statements do not include reporting for assets and 

liabilities of receivership entities because these 

entities are legally separate and distinct, and the 

FRF does not have any ownership interests in 

them. Periodic and final accountability reports 

of receivership entities are furnished to courts, 

supervisory authorities, and others upon request.

Use of Estimates

Management makes estimates and assumptions 

that affect the amounts reported in the financial 

statements and accompanying notes. Actual results 

could differ from these estimates. Where it is 

reasonably possible that changes in estimates will 

cause a material change in the financial statements 

in the near term, the nature and extent of such 

changes in estimates have been disclosed. The 

more significant estimates include allowance for 

losses on receivables from thrift resolutions and 

the estimated losses for litigation.

Cash Equivalents

Cash equivalents are short-term, highly liquid 

investments consisting primarily of U.S. Treasury 

Overnight Certificates.

Provision for Losses

The provision for losses represents the change 

in the valuation of the receivables from thrift 

resolutions and other assets.

Disclosure about Recent Relevant 

Accounting Pronouncements

Q ASU No. 2010-06, Fair Value Measurements 

and Disclosures (Topic 820) – Improving 

Disclosures about Fair Value Measurements, 

requires enhanced disclosures for significant 

transfers into and out of Level 1 (measured 

using quoted prices in active markets) and 

Level 2 (measured using other observable 

inputs) of the fair value measurement 

hierarchy. These disclosures are effective 

for interim and annual reporting periods 

beginning after December 15, 2009, but 

did not impact the FRF in 2010. Separate 

disclosure of the gross purchases, sales, 

issuances, and settlements activity for Level 

3 (measured using unobservable inputs) fair 

value measurements will become effective 

for fiscal years beginning after December 15, 

2010. Currently, the additional disclosures are 

not expected to impact the FRF. 

Other recent accounting pronouncements have 

been deemed to be not applicable or material to 

the financial statements as presented.
106 FINANCIAL STATEMENTS AND NOTES

Related Parties

The nature of related parties and a description of 

related party transactions are discussed in Note 1 

and disclosed throughout the financial statements 

and footnotes.

3. Receivables From Thrift 

Resolutions and Other 

Assets, Net

Receivables From Thrift Resolutions

The receivables from thrift resolutions include 

payments made by the FRF to cover obligations 

to insured depositors, advances to receiverships for 

working capital, and administrative expenses paid 

on behalf of receiverships. Any related allowance 

for loss represents the difference between the 

funds advanced and/or obligations incurred and 

the expected repayment. Assets held by the FDIC 

in its receivership capacity for the former RTC 

are a significant source of repayment of the FRF’s 

receivables from thrift resolutions. As of December 

31, 2010, eight of the 850 FRF receiverships 

remain active. Half of these receiverships are 

expected to complete their liquidation efforts 

during 2011. The remaining four receiverships 

will remain active until their goodwill litigation or 

liability-related impediments are resolved.

The FRF receiverships held assets with a book 

value of $18 million and $20 million as of 

December 31, 2010 and 2009, respectively 

(which primarily consist of cash, investments, 

and miscellaneous receivables). At December 31, 

2010, $13 million of the $18 million in assets in 

the FRF receiverships was cash held for non-FRF, 

third party creditors. 

Other Assets 

Other assets primarily include credit enhancement 

reserves valued at $17 million and $21 million 

as of December 31, 2010 and 2009, respectively. 

The credit enhancement reserves resulted from 

swap transactions where the former RTC received 

mortgage-backed securities in exchange for singlefamily mortgage loans. The RTC supplied credit 

enhancement reserves for the mortgage loans in 

the form of cash collateral to cover future credit 

losses over the remaining life of the loans. These 

cash reserves, which may cover future credit losses 

through 2020, are valued by estimating credit 

losses on the underlying loan portfolio and then 

discounting cash flow projections using marketbased rates.

4. Contingent Liabilities for:

Goodwill Litigation

In United States v. Winstar Corp., 518 U.S. 839 

(1996), the Supreme Court held that when it 

became impossible following the enactment of 

FIRREA in 1989 for the federal government to 

perform certain agreements to count goodwill 

toward regulatory capital, the plaintiffs were 

entitled to recover damages from the United 

States. Six remaining cases are pending against 

the United States based on alleged breaches of 

these agreements.

On July 22, 1998, the Department of Justice’s 

(DOJ’s) Office of Legal Counsel (OLC) 

concluded that the FRF is legally available to 

satisfy all judgments and settlements in the 

goodwill litigation involving supervisory action 

or assistance agreements. OLC determined 

Receivables From Thrift Resolutions and Other 

Assets, Net at December 31

Dollars in Thousands

2010 2009

Receivables from 

closed thrifts $5,763,949 $5,744,509 

Allowance for losses (5,762,186) (5,736,737)

Receivables from Thrift 

Resolutions, Net 1,763 7,772

Other assets 21,645 24,566 

Total $23,408 $32,338
FINANCIAL STATEMENTS AND NOTES 107

that nonperformance of these agreements was a 

contingent liability that was transferred to the 

FRF on August 9, 1989, upon the dissolution of 

the FSLIC. On July 23, 1998, the U.S. Treasury 

determined, based on OLC’s opinion, that 

the FRF is the appropriate source of funds for 

payments of any such judgments and settlements. 

The FDIC General Counsel concluded that, as 

liabilities transferred on August 9, 1989, these 

contingent liabilities for future nonperformance 

of prior agreements with respect to supervisory 

goodwill were transferred to the FRF-FSLIC, 

which is that portion of the FRF encompassing 

the obligations of the former FSLIC. The FRFRTC, which encompasses the obligations of 

the former RTC and was created upon the 

termination of the RTC on December 31, 1995, is 

not available to pay any settlements or judgments 

arising out of the goodwill litigation. 

The FRF can draw from an appropriation 

provided by Section 110 of the Department 

of Justice Appropriations Act, 2000 (Public 

Law 106-113, Appendix A, Title I, 113 Stat. 

1501A-3, 1501A-20) such sums as may be 

necessary for the payment of judgments and 

compromise settlements in the goodwill litigation. 

This appropriation is to remain available until 

expended. Because an appropriation is available 

to pay such judgments and settlements, any 

estimated liability for goodwill litigation should 

have a corresponding receivable from the U.S. 

Treasury and therefore have no net impact on the 

financial condition of the FRF-FSLIC. 

For the year ended December 31, 2010, the FRF 

paid $27 million as a result of judgments and 

settlements in four goodwill cases compared to 

$142 million for four goodwill cases for the year 

ended December 31, 2009. Of the four goodwill 

cases paid during 2010, only one was active at 

December 31, 2009 due to ongoing litigation. 

The FRF received appropriations from the U.S. 

Treasury to fund these payments. 

The contingent liability and offsetting receivable 

from the U.S. Treasury as of December 31, 2010 

was $323 million for one case compared with 

$405 million for six cases as of December 31, 

2009. No new cases were accrued during 2010. 

The one case comprising the contingent liability 

and offsetting receivable at December 31, 2010 

was accrued prior to 2010 following an appellate 

decision for a specific monetary amount. 

This case is currently before the lower court 

pending on remand following appeal and is still 

considered active. 

Based on representations from the DOJ, the entity 

that defends these lawsuits against the United 

States, the FDIC is unable to estimate a range 

of loss to the FRF-FSLIC for the remaining five 

goodwill cases considered active as of December 

31, 2010. Three of these cases were not accrued 

because court decisions are still pending. In the 

other two cases the appellate courts decided to 

award nothing, but the cases are still active due to 

continued legal proceedings.

Six goodwill cases were active as of December 

31, 2010 compared with eight active cases as of 

December 31, 2009. Of the cases considered 

active at year end 2009, one was fully adjudicated 

with no award and one was settled and paid 

during 2010.

In addition, the FRF-FSLIC pays the goodwill 

litigation expenses incurred by the DOJ based on 

a Memorandum of Understanding (MOU) dated 

October 2, 1998, between the FDIC and the DOJ. 

Under the terms of the MOU, the FRF-FSLIC 

paid $2 million and $4 million to the DOJ for 

fiscal years (FY) 2011 and 2010, respectively. As 

in prior years, the DOJ carried over and applied 

all unused funds toward current FY charges. At 

December 31, 2010, the DOJ had an additional 

$3 million in unused FY 2010 funds that were 

applied against FY 2011 charges of $5 million. 

Guarini Litigation

Paralleling the goodwill cases were similar cases 

alleging that the government breached agreements 

regarding tax benefits associated with certain 

FSLIC-assisted acquisitions. These agreements 

allegedly contained the promise of tax deductions 

for losses incurred on the sale of certain thrift 

assets purchased by plaintiffs from the FSLIC, 

even though the FSLIC provided the plaintiffs 
108 FINANCIAL STATEMENTS AND NOTES

with tax-exempt reimbursement. A provision in 

the Omnibus Budget Reconciliation Act of 1993 

(popularly referred to as the “Guarini legislation”) 

eliminated the tax deductions for these losses.

All eight of the original Guarini cases have been 

settled. However, a case settled in 2006 further 

obligates the FRF-FSLIC as a guarantor for all tax 

liabilities in the event the settlement amount is 

determined by tax authorities to be taxable. The 

maximum potential exposure under this guarantee 

is approximately $81 million. However, the FDIC 

believes that it is very unlikely the settlement will 

be subject to taxation. More definitive information 

may be available during 2011, after the Internal 

Revenue Service (IRS) completes its Large Case 

Program audit on the affected Corporation’s 2006 

returns; this audit is currently underway. The FRF 

is not expected to fund any payment under this 

guarantee and no liability has been recorded. 

Representations and Warranties

As part of the RTC’s efforts to maximize 

the return from the sale of assets from thrift 

resolutions, representations and warranties, and 

guarantees were offered on certain loan sales. 

The majority of loans subject to these agreements 

have been paid off, refinanced, or the period for 

filing claims has expired. The FDIC’s estimate of 

maximum potential exposure to the FRF is zero. 

No claims in connection with representations and 

warranties have been asserted since 1998 on the 

remaining open agreements. Because of the age of 

the remaining portfolio and lack of claim activity, 

the FDIC does not expect new claims to be 

asserted in the future. Consequently, the financial 

statements at December 31, 2010 and 2009, do 

not include a liability for these agreements.
FINANCIAL STATEMENTS AND NOTES 109

5. Resolution Equity

As stated in the Legislative History section of 

Note 1, the FRF is comprised of two distinct 

pools: the FRF-FSLIC and the FRF-RTC. The 

FRF-FSLIC consists of the assets and liabilities of 

the former FSLIC. The FRF-RTC consists of the 

assets and liabilities of the former RTC. Pursuant 

to legal restrictions, the two pools are maintained 

separately and the assets of one pool are not 

available to satisfy obligations of the other.

The following table shows the contributed capital, 

accumulated deficit, and resulting resolution 

equity for each pool.

Resolution Equity at December 31, 2010

Dollars in Thousands

FRF-FSLIC FRF-RTC FRF Consolidated

Contributed capital – 

beginning $46,098,359 $81,749,337 $127,847,696 

Contributed capital – 

ending 46,043,359 81,749,337 127,792,696 

Accumulated deficit (42,643,726) (81,580,645) (124,224,371)

Total $3,399,633 $168,692 $3,568,325

Contributed Capital

The FRF-FSLIC and the former RTC received 

$43.5 billion and $60.1 billion from the U.S. 

Treasury, respectively, to fund losses from thrift 

resolutions prior to July 1, 1995. Additionally, 

the FRF-FSLIC issued $670 million in capital 

certificates to the Financing Corporation (a 

mixed-ownership government corporation 

established to function solely as a financing vehicle 

for the FSLIC) and the RTC issued $31.3 billion 

of these instruments to the REFCORP. FIRREA 

prohibited the payment of dividends on any of 

these capital certificates.

Through December 31, 2010, the FRF-RTC has 

returned $4.6 billion to the U.S. Treasury and 

made payments of $5.0 billion to the REFCORP. 

These actions serve to reduce contributed capital. 

The most recent payment to the REFCORP was 

in January of 2008 for $225 million. 

FRF-FSLIC received $27 million in U.S. Treasury 

payments for goodwill litigation in 2010. 

Furthermore, $323 million and $405 million were 

accrued for as receivables at December 31, 2010 

and 2009, respectively.

Accumulated Deficit

The accumulated deficit represents the cumulative 

excess of expenses and losses over revenue for 

activity related to the FRF-FSLIC and the FRFRTC. Approximately $29.8 billion and $87.9 

billion were brought forward from the former 

FSLIC and the former RTC on August 9, 1989, 

and January 1, 1996, respectively. The FRFFSLIC accumulated deficit has increased by $12.8 

billion, whereas the FRF-RTC accumulated 

deficit has decreased by $6.3 billion, since their 

dissolution dates.
110 FINANCIAL STATEMENTS AND NOTES

6. Disclosures About 

the Fair Value of 

Financial Instruments 

The financial assets recognized and measured at 

fair value on a recurring basis at each reporting 

date are cash equivalents and credit enhancement 

reserves. The following table presents the FRF’s 

financial assets measured at fair value as of 

December 31, 2010 and 2009.

Assets Measured at Fair Value at December 31, 2009

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices in 

Active Markets for 

Identical Assets 

(Level 1)

Significant Other 

Observable Inputs 

(Level 2)

Significant 

Unobservable Inputs 

(Level 3)

Total Assets at Fair 

Value

Assets

Cash equivalents 

(Special U.S. Treasuries)1 $3,470,125 $3,470,125 

Credit enhancements 

reserves2 $21,278 21,278 

Total Assets $3,470,125 $21,278 $3,491,403 

(1) Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest rates established by 

the U.S. Bureau of Public Debt.

(2) Credit enhancement reserves are valued by performing projected cash flow analyses using market-based assumptions (see Note 3).

Assets Measured at Fair Value at December 31, 2010

Dollars in Thousands

Fair Value Measurements Using

Quoted Prices in 

Active Markets for 

Identical Assets 

(Level 1)

Significant Other 

Observable Inputs 

(Level 2)

Significant 

Unobservable Inputs 

(Level 3)

Total Assets at 

Fair Value

Assets

Cash and cash 

equivalents (Special 

U.S. Treasuries)1 $3,547,907 $3,547,907 

Credit enhancement 

reserves2 $17,378 17,378 

Total Assets $3,547,907 $17,378 $3,565,285 

(1) Cash equivalents are Special U.S. Treasury Certificates with overnight maturities valued at prevailing interest rates established by 

the U.S. Bureau of Public Debt.

(2) Credit enhancement reserves are valued by performing projected cash flow analyses using market-based assumptions (see Note 3).

Some of the FRF’s financial assets and liabilities 

are not recognized at fair value but are recorded at 

amounts that approximate fair value due to their 

short maturities and/or comparability with current 

interest rates. Such items include other short-term 

receivables and accounts payable and other liabilities.

The net receivable from thrift resolutions is 

influenced by the underlying valuation of 

receivership assets. This corporate receivable 

is unique and the estimate presented is not 

necessarily indicative of the amount that could 

be realized in a sale to the private sector. Such a 

sale would require indeterminate, but substantial, 

discounts for an interested party to profit from 

these assets because of credit and other risks. 

Consequently, it is not practicable to estimate its 

fair value.
FINANCIAL STATEMENTS AND NOTES 111
112 

114 

116 

118 

120 

122 FINANCIAL STATEMENTS AND NOTES

MANAGEMENT’S RESPONSE

Federal Deposit Insurance Corporation

550 17th Street NW, Washington, DC 20429-9990 Deputy to the Chairman and CFO ______________________________________________________________________________________________

March 14, 2011

Mr. Steven J. Sebastian

Director, Financial Management and Assurance 

U.S. Government Accountability Office

441 G Street, NW

Washington, DC 20548 

Re: FDIC Management Response on the GAO 2010 Financial Statements Audit Report

Dear Mr. Sebastian: 

Thank you for the opportunity to review and comment on the U.S. Government Accountability Office’s 

(GAO’s) draft report titled, Financial Audit: Federal Deposit Insurance Corporation Funds’ 2010 

and 2009 Financial Statements, GAO-11-412. We are pleased that the Federal Deposit Insurance 

Corporation (FDIC) received an unqualified opinion for the nineteenth consecutive year on the 

financial statements of its funds: the Deposit Insurance Fund (DIF) and the FSLIC Resolution Fund 

(FRF). Also, GAO reported that the FDIC had effective internal control over financial reporting and 

compliance with laws and regulations for each fund, and there was no reportable noncompliance with 

the laws and regulations that were tested. 

During the audit year, the FDIC management and staff worked diligently to resolve the material 

weakness and significant deficiency internal control issues that were reported in the 2009 audit. We 

took significant steps to strengthen controls over the loss share estimation process and the information 

systems security and will continue to make improvements in these areas in the coming audit year. Our 

dedication to sound financial management remains a top priority.

In complying with audit standards that require management to provide a written assertion about the 

effectiveness of its internal control over financial reporting, the FDIC has prepared Management’s 

Report on Internal Control over Financial Reporting (see attachment). The report acknowledges 

management’s responsibility for establishing and maintaining internal control over financial reporting 

and provides the FDIC’s conclusion regarding the effectiveness of its internal control. 

We want to thank the GAO staff for their professionalism and dedication during the audit and look 

forward to a productive and successful relationship during the 2011 audit. If you have any questions or 

concerns, please do not hesitate to contact me. 

Sincerely, 

Steven O. App 

Deputy to the Chairman

And Chief Financial Officer

Appendix I
FINANCIAL STATEMENTS AND NOTES 123

The Federal Deposit Insurance Corporation’s (FDIC’s) internal control over financial reporting 

is a process effected by those charged with governance, management, and other personnel, 

designed to provide reasonable assurance regarding the preparation of reliable financial statements 

in conformity with U.S. generally accepted accounting principles (GAAP), and compliance 

with applicable laws and regulations. The objective of the FDIC’s internal control over financial 

reporting is to reasonably assure that (1) transactions are properly recorded, processed and 

summarized to permit the preparation of financial statements in accordance with GAAP, and assets 

are safeguarded against loss from unauthorized acquisition, use, or disposition; and (2) transactions 

are executed in accordance with the laws and regulations that could have a direct and material 

effect on the financial statements.

Management is responsible for establishing and maintaining effective internal control over 

financial reporting. Management assessed the effectiveness of the FDIC’s internal control over 

financial reporting as of December 31, 2010, through its enterprise risk management program 

that seeks to comply with the spirit of the following standards, among others: Federal Managers’ 

Financial Integrity Act of 1982 (FMFIA); Chief Financial Officers Act (CFO Act); Government 

Performance and Results Act (GPRA); Federal Information Security Management Act (FISMA); 

and OMB Circular A-123. In addition, other standards that the FDIC considers are the 

framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission’s 

Internal Control – Integrated Framework and the U.S. Government Accountability Office’s (GAO’s) 

Standards for Internal Control in the Federal Government.

Based on the above assessment, management concluded that, as of December 31, 2010, FDIC’s 

internal control over financial reporting is effective based upon the criteria established in FMFIA.

Federal Deposit Insurance Corporation

March 14, 2011

MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING
124 FINANCIAL STATEMENTS AND NOTES

1 Amendments to prior financial reports produced a $23.1 billion net reduction in industry earnings for 2009, from an 

originally reported $12.5 billion aggregate profit to a $10.6 billion net loss. Most of the revision resulted from a $20.3 

billion increase in charges for goodwill impairment at one large institution.

2 FASB Statements 166 and 167.

Overview of the Industry

The 7,657 FDIC-insured commercial banks and 

savings institutions that filed financial reports as 

of December 31 reported $87.5 billion in net 

income for the full year 2010. This represented a 

considerable improvement over the $10.6 billion 

aggregate net loss posted in 2009.1

 But it is well 

below the record annual earnings of $145.2 

billion registered in 2006. The average return on 

assets (ROA) was 0.66 percent, up compared to a 

negative 0.08 percent in 2009. The year-over-year 

improvement in earnings was broad-based. More 

than two out of every three institutions (67.5 

percent) reported higher net income in 2010 

compared to a year earlier. More than one in five 

institutions (21 percent) reported a net loss for the 

year, but this was a significantly smaller percentage 

than in 2009, when 30.8 percent

were unprofitable.

Lower expenses for asset-quality problems and 

reduced charges for goodwill impairment were the 

principal sources of the improvement in industry 

net income. Provisions for loan and lease losses 

totaled $156.9 billion, which was $92.6 billion 

(37.1 percent) less than insured institutions 

set aside in 2009. Slightly more than half of 

all institutions (51 percent) reported reduced 

loss provisions in 2010. Charges for goodwill 

impairment totaled $1.7 billion in 2010, a decline 

of $28.7 billion compared to 2009. Additional 

support for the improvement in industry net 

income was limited by a $32.2 billion increase in 

income taxes.

Year-over-year comparisons of revenues 

are complicated by the application of new 

accounting rules to financial reporting in 

2010.2

 Implementation of the new rules led to 

the consolidation of a significant amount of 

securitized assets (primarily credit card balances) 

back onto the originating banks’ balance sheets 

in 2010. Along with the resulting increase in 

reported loan balances, there was also an impact 

from the cash flows associated with these balances. 

At institutions affected by the reporting changes, 

reported levels of interest income and expense, net 

interest income, and net charge-offs were elevated, 

while noninterest income items such as income 

from securitization activities, servicing fees, and 

trading revenues were reduced. The effects were 

evident in industry totals. Net interest income was 

$34.4 billion (8.7 percent) higher than in 2009, 

while noninterest income was $23.6 billion (9.1 

percent) lower. The change in reporting rules had 

little or no effect on net revenues. Net operating 

revenue (the sum of net interest income and total 

noninterest income) was only $10.8 billion (1.6 

percent) higher than in 2009.

The average net interest margin (NIM) improved 

to 3.76 percent from 3.47 percent in 2009, as 

average funding costs fell more rapidly than 

average asset yields. This is the highest annual 

NIM since 2002, when it reached 3.96 percent. 

A majority of institutions (57.1 percent) reported 

higher NIMs in 2010, with the largest increases 

occurring at institutions that had securitized credit 

card receivables and were affected by the new 

accounting rules. 

The decline in noninterest income reflected 

reduced servicing fees (down $13.2 billion, or 

44 percent), lower securitization income (down 

$4.3 billion, or 89.9 percent), and lower trading 

revenue (down $1.4 billion, or 5.6 percent). The 

application of new reporting rules contributed 

to these declines. Among the noninterest income 

categories that were not affected by the new rules, 

service charges on deposit accounts were $5.5 

billion (13.1 percent) lower than in 2009, gain 

on sales of loans and other assets was $3.2 billion 

(29.4 percent) lower, and investment banking 

income was $2.1 billion (17.8 percent) lower. 

Noninterest expenses fell by $12.6 billion in 2010, 

as a result of the $28.7 billion reduction in charges 

for goodwill impairment. Salaries and employee 
FINANCIAL STATEMENTS AND NOTES 125

benefits expenses increased by $5.8 billion (3.5 

percent), as the number of employees at insured 

institutions rose by 23,407 (1.1 percent). Expenses 

for premises and fixed assets were $1.0 billion (2.3 

percent) lower than in 2009.

Insured institutions charged-off $187.1 billion 

(net) in troubled loans in 2010, a $1.7 billion 

(0.9 percent) decline from 2009. This is the first 

year-over-year decline in charge-offs in four years, 

and it occurred despite a $26.6 billion (69.8 

percent) increase in reported credit card chargeoffs caused by the new reporting rules that took 

effect in 2010. Most major loan categories had 

lower charge-offs in 2010. Charge-offs of loans to 

commercial and industrial (C&I) borrowers were 

$11.2 billion (35.1 percent) lower, charge-offs of 

real estate construction and development loans 

fell by $6.8 billion (24.8 percent), and chargeoffs of non-credit card consumer loans declined 

by $6.1 billion (31.9 percent). Apart from credit 

cards, the only other major loan category that had 

increased charge-offs was real estate loans secured 

by nonfarm nonresidential properties. Net chargeoffs of these loans were $4.6 billion (54.5 percent) 

higher than in 2009.

In the twelve months ended December 31, the 

amount of loans and leases that were noncurrent 

(90 days or more past due or in nonaccrual 

status) declined by $36.4 billion (9.2 percent). 

This is the first 12-month decline in noncurrent 

loans and leases since 2005. As was the case with 

charge-offs, most major loan categories registered 

improvement in noncurrent levels. Noncurrent 

real estate construction and development loans 

declined by $20.4 billion (28.4 percent) in 

2010, while noncurrent C&I loans fell by $12.5 

billion (30.2 percent). Noncurrent residential 

mortgage loans declined by $3.4 billion (1.9 

percent). The two major loan categories where 

noncurrent balances increased in 2010 were real 

estate loans secured by nonfarm nonresidential 

properties (where noncurrent balances were up 

by $3.9 billion, or 9.2 percent) and credit cards 

(where noncurrent balances rose by $968 million, 

or 6.7 percent). The latter increase reflected the 

application of new reporting rules in 2010. 

Total assets of insured institutions increased 

by $234.2 billion (1.8 percent), in 2010. The 

increase was attributable to new reporting rules 

that caused more than $300 billion in securitized 

loan balances to be consolidated into banks’ 

balance sheets at the beginning of the year. Credit 

card balances at year end 2010 were $280.5 

billion (66.6 percent) higher than a year earlier. 

In contrast, balances in all other major loan 

categories declined during 2010. The largest 

decline occurred in real estate construction and 

development loans, where balances fell by $129.2 

billion (28.7 percent). Other large declines 

occurred in C&I loans (down $36.0 billion, or 2.9 

percent), home equity lines of credit (down $24.7 

billion, or 3.7 percent), real estate loans secured by 

nonfarm nonresidential properties (down $20.5 

billion, or 1.9 percent), and 1-4 family residential 

mortgages (down $18.2 billion, or 1 percent). 

Insured institutions’ securities holdings increased 

by $167.3 billion (6.7 percent) during the year, 

as their U.S. Treasury securities rose by $85.1 

billion (83.0 percent) and their mortgage-backed 

securities increased by $87.4 billion (6.3 percent).

Total deposits increased by $196.2 billion (2.1 

percent), as deposits in domestic offices rose by 

$176.3 billion (2.3 percent). Most of the increase 

in domestic deposits occurred in noninterestbearing accounts, which grew by $136.9 billion 

(8.8 percent). Nondeposit liabilities declined by 

$30.7 billion (1.3 percent) during the year, as 

advances from Federal Home Loan Banks fell 

by $146.7 billion (27.5 percent). Other secured 

borrowings increased by $205.6 billion, as part 

of the consolidation of securitized loan balances 

back into balance sheets at the beginning of 2010. 

Total equity capital, including minority interests 

in consolidated subsidiaries, increased by $68.8 

billion (4.8 percent) in 2010.

The number of institutions on the FDIC’s 

“Problem List” increased from 702 to 884 during 

2010. This is the largest number of “Problem” 

institutions since March 31, 1993, when there were 

928. Total assets of “Problem” institutions declined 

from $402.8 billion to $390.0 billion. During 

2010, 157 insured institutions with $92.1 billion in 

assets failed and were resolved by the FDIC.
MANAGEMENT CONTROL 127

Enterprise Risk Management

The Office of Enterprise Risk Management, 

under the auspices of the Chief Financial Officer 

5

organization, is responsible for corporate oversight 

of internal control and enterprise risk management 

(ERM). This includes ensuring that the FDIC’s 

operations and programs are effective and 

efficient and that internal controls are sufficient to 

minimize exposure to waste and mismanagement. 

The FDIC recognizes the importance of a strong 

risk management and internal control program 

and has adopted a more proactive and enterprisewide approach to managing risk. This approach 

focuses on the identification and mitigation of 

risk consistently and effectively throughout the 

Corporation, with emphasis on those areas/

issues most directly related to the FDIC’s 

overall mission. As an independent government 

corporation, the FDIC has different requirements 

than appropriated federal government agencies; 

nevertheless, its ERM program seeks to comply 

with the spirit of the following standards, 

among others:

Q the Federal Managers’ Financial Integrity 

Act (FMFIA);

Q the Chief Financial Officers Act (CFO Act);

Q the Government Performance and Results 

Act (GPRA);

Q the Federal Information Security Management 

Act (FISMA); and

Q the OMB Circular A-123.

The CFO Act extends to the FDIC the FMFIA 

requirements for establishing, evaluating and 

reporting on internal controls. The FMFIA 

requires agencies to annually provide a statement 

of assurance regarding the effectiveness of 

management, administrative and accounting 

controls, and financial management systems.

The FDIC has developed and implemented 

management, administrative, and financial systems 

controls that reasonably ensure that:

Management 

Control
128 MANAGEMENT CONTROL

Q Programs are efficiently and effectively carried 

out in accordance with applicable laws and 

management policies;

Q Programs and resources are safeguarded 

against waste, fraud, and mismanagement;

Q Obligations and costs comply with applicable 

laws; and

Q Reliable, complete, and timely data are 

maintained for decision-making and 

reporting purposes.

The FDIC’s control standards incorporate the 

Government Accountability Office’s (GAO) 

Standards for Internal Control in the Federal 

Government. Good internal control systems are 

essential for ensuring the proper conduct of FDIC 

business and the accomplishment of management 

objectives by serving as checks and balances 

against undesirable actions or outcomes.

As part of the Corporation’s continued 

commitment to establish and maintain effective 

and efficient internal controls, FDIC management 

routinely conducts reviews of internal control 

systems. The results of these reviews, as well as 

consideration of the results of audits, evaluations, 

and reviews conducted by GAO, the Office of 

Inspector General (OIG), and other outside 

entities, are used as a basis for the FDIC’s 

reporting on the condition of the Corporation’s 

internal control activities.

Material Weaknesses

Material weaknesses are control shortcomings in 

operations or systems that, among other things, 

severely impair or threaten the organization’s 

ability to accomplish its mission or to prepare 

timely, accurate financial statements or reports. 

The shortcomings are of sufficient magnitude 

that the Corporation is obliged to report them to 

external stakeholders.

At the end of the 2009 audit, GAO identified 

a material weakness in the loss-share estimation 

processes and a significant deficiency in the 

information technology security area. Subsequent 

implementation of enhanced controls has 

eliminated the material weakness and the 

significant deficiency.

To determine the existence of material 

weaknesses, the FDIC has assessed the results of 

management evaluations and external audits of 

the Corporation’s risk management and internal 

control systems conducted in 2010, as well as 

management actions taken to address issues 

identified in these audits and evaluations. Based 

on this assessment and application of other 

criteria, the FDIC concludes that no material 

weaknesses existed within the Corporation’s 

operations for 2010.

Additionally, FDIC management will continue 

to focus on high priority areas, including 

implementation of Dodd-Frank Act, the Program 

Management Office organizations, IT systems 

security, resolution of bank failures, and privacy, 

among others.

Management Report on 

Final Actions

As required under amended Section 5 of the 

Inspector General Act of 1978, the FDIC must 

report information on final action taken by 

management on certain audit reports. The tables 

on the following pages provide information on 

final action taken by management on audit reports 

for the federal fiscal year period October 1, 2009, 

through September 30, 2010.
MANAGEMENT CONTROL 129

TABLE 1: Management Report on Final Action on Audits with Disallowed Costs for Fiscal Year 2010

Audit Reports

Number

of Reports Disallowed Costs

 Dollars in Thousands

A. Management decisions – final action not taken at beginning of period 0 $0

B. Management decisions made during the period 4 $34,037

C. Total reports pending final action during the period (A and B) 4 $34,037

D. Final action taken during the period:

1. Recoveries: 

(a) Collections & offsets 2 $8,127

(b) Other 0 $0

2. Write-offs 2 $837

3. Total of 1(a), 1(b), & 2 21 $8,964

E. Audit reports needing final action at the end of the period 2 $25,1482

1

Two reports have both collections and write-offs, thus the total of 1(a), 1(b), and 2 is two.

2

Amount collected in D3 included excess recoveries of $75,000, not reflected in line E.

TABLE 2: Management Report on Final Action on Audits with Recommendations to Put Funds to Better 

Use for Fiscal Year 2010

Audit Reports

Number

of Reports

Funds Put to

Better Use

 Dollars in Thousands

A. Management decisions – final action not taken at beginning of period 0 $0 

B. Management decisions made during the period 2 $410 

C. Total reports pending final action during the period (A and B) 2 $410 

D. Final action taken during the period:

1. Value of recommendations implemented (completed) 1 $151

2. Value of recommendations that management concluded should not or could not be 

implemented or completed 2 $259

3. Total of 1 and 2 23 $410

E. Audit reports needing final action at the end of the period 0 $0

3

One report had both implemented and unimplemented values.

TABLE 3: Audit Reports without Final Actions But with Management Decisions over One Year Old for Fiscal 

Year 2010 

Management Action in Process

Report No.

and Issue Date OIG Audit Finding Management Action

Disallowed

Costs

AUD-10-002

12/11/09

The OIG recommended that the FDIC should 

review and revise (where appropriate) its risk 

assessment methodology, to ensure adequate 

consideration of the risks associated with 

electronic transactions involving the Internet.

The FDIC will formally document and further integrate its existing 

e-authentication risk assessments into the overall risk assessment 

methodology. Also, the FDIC will reassess the e-authentication risk 

assessment process for FDICconnect.

Completed: February 2011

$0 
APPENDICES 131

6

Appendices
132 APPENDICES

The FDIC’s Strategic Plan and Annual 

Performance Plan provide the basis for annual 

planning and budgeting for needed resources. The 

2010 aggregate budget (for corporate, receivership, 

and investment spending) was $4.0 billion, while 

actual expenditures for the year were $3.4 billion, 

about $1.1 billion more than 2009 expenditures.

Over the past decade, the FDIC’s expenditures 

have varied in response to workload. During the 

last two years, expenditures have risen, largely due 

to increasing resolution and receivership activity. 

To a lesser extent, increased expenses have resulted 

from supervision-related costs associated with the 

oversight of more troubled institutions. 

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Dollars in Millions

0

500

1,000

1,500

2,000

2,500

3,000

FDIC EXPENDITURES 2001 – 2010

$3,500

A. Key Statistics
APPENDICES 133

Estimated Insured Deposits and the Deposit Insurance Fund, 

December 31, 1934, through December 31, 2010

Dollars in Millions (except Insurance Coverage)

Deposits in Insured 

Institutions

Insurance Fund as a 

Percentage of

Year

Insurance 

Coverage1

Total Domestic 

Deposits

Est. Insured 

Deposits2

Percentage 

of Insured 

Deposits

Deposit 

Insurance 

Fund

Total Domestic 

Deposits

Est. Insured 

Deposits

2010 $250,000 $7,887,730 $6,221,127 78.9 $(7,352.2) (0.09) (0.12)

2009 250,000 7,705,329 5,407,733 70.2 (20,861.8) (0.27) (0.39)

2008 100,000 7,505,409 4,750,783 63.3 17,276.3 0.23 0.36

2007 100,000 6,921,678 4,292,211 62.0 52,413.0 0.76 1.22

2006 100,000 6,640,097 4,153,808 62.6 50,165.3 0.76 1.21

2005 100,000 6,229,823 3,891,000 62.5 48,596.6 0.78 1.25

2004 100,000 5,724,775 3,622,213 63.3 47,506.8 0.83 1.31

2003 100,000 5,224,030 3,452,606 66.1 46,022.3 0.88 1.33

2002 100,000 4,916,200 3,383,720 68.8 43,797.0 0.89 1.29

2001 100,000 4,565,068 3,216,585 70.5 41,373.8 0.91 1.29

2000 100,000 4,211,895 3,055,108 72.5 41,733.8 0.99 1.37

1999 100,000 3,885,826 2,869,208 73.8 39,694.9 1.02 1.38

1998 100,000 3,817,150 2,850,452 74.7 39,452.1 1.03 1.38

1997 100,000 3,602,189 2,746,477 76.2 37,660.8 1.05 1.37

1996 100,000 3,454,556 2,690,439 77.9 35,742.8 1.03 1.33

1995 100,000 3,318,595 2,663,873 80.3 28,811.5 0.87 1.08

1994 100,000 3,184,410 2,588,619 81.3 23,784.5 0.75 0.92

1993 100,000 3,220,302 2,602,781 80.8 14,277.3 0.44 0.55

1992 100,000 3,275,530 2,677,709 81.7 178.4 0.01 0.01

1991 100,000 3,331,312 2,733,387 82.1 (6,934.0) (0.21) (0.25)

1990 100,000 3,415,464 2,784,838 81.5 4,062.7 0.12 0.15

1989 100,000 3,412,503 2,755,471 80.7 13,209.5 0.39 0.48

1988 100,000 2,337,080 1,756,771 75.2 14,061.1 0.60 0.80

1987 100,000 2,198,648 1,657,291 75.4 18,301.8 0.83 1.10

1986 100,000 2,162,687 1,636,915 75.7 18,253.3 0.84 1.12

1985 100,000 1,975,030 1,510,496 76.5 17,956.9 0.91 1.19

1984 100,000 1,805,334 1,393,421 77.2 16,529.4 0.92 1.19

1983 100,000 1,690,576 1,268,332 75.0 15,429.1 0.91 1.22

1982 100,000 1,544,697 1,134,221 73.4 13,770.9 0.89 1.21

1981 100,000 1,409,322 988,898 70.2 12,246.1 0.87 1.24

1980 100,000 1,324,463 948,717 71.6 11,019.5 0.83 1.16
134 APPENDICES

Estimated Insured Deposits and the Deposit Insurance Fund, 

December 31, 1934, through December 31, 2010 (continued)

Dollars in Millions (except Insurance Coverage)

Deposits in Insured 

Institutions

Insurance Fund as a 

Percentage of

Year

Insurance 

Coverage1

Total Domestic 

Deposits

Est. Insured 

Deposits2

Percentage 

of Insured 

Deposits

Deposit 

Insurance 

Fund

Total Domestic 

Deposits

Est. Insured 

Deposits

1979 40,000 $1,226,943 $808,555 65.9 $9,792.7 0.80 1.21

1978 40,000 1,145,835 760,706 66.4 8,796.0 0.77 1.16

1977 40,000 1,050,435 692,533 65.9 7,992.8 0.76 1.15

1976 40,000 941,923 628,263 66.7 7,268.8 0.77 1.16

1975 40,000 875,985 569,101 65.0 6,716.0 0.77 1.18

1974 40,000 833,277 520,309 62.4 6,124.2 0.73 1.18

1973 20,000 766,509 465,600 60.7 5,615.3 0.73 1.21

1972 20,000 697,480 419,756 60.2 5,158.7 0.74 1.23

1971 20,000 610,685 374,568 61.3 4,739.9 0.78 1.27

1970 20,000 545,198 349,581 64.1 4,379.6 0.80 1.25

1969 20,000 495,858 313,085 63.1 4,051.1 0.82 1.29

1968 15,000 491,513 296,701 60.4 3,749.2 0.76 1.26

1967 15,000 448,709 261,149 58.2 3,485.5 0.78 1.33

1966 15,000 401,096 234,150 58.4 3,252.0 0.81 1.39

1965 10,000 377,400 209,690 55.6 3,036.3 0.80 1.45

1964 10,000 348,981 191,787 55.0 2,844.7 0.82 1.48

1963 10,000 313,304 177,381 56.6 2,667.9 0.85 1.50

1962 10,000 297,548 170,210 57.2 2,502.0 0.84 1.47

1961 10,000 281,304 160,309 57.0 2,353.8 0.84 1.47

1960 10,000 260,495 149,684 57.5 2,222.2 0.85 1.48

1959 10,000 247,589 142,131 57.4 2,089.8 0.84 1.47

1958 10,000 242,445 137,698 56.8 1,965.4 0.81 1.43

1957 10,000 225,507 127,055 56.3 1,850.5 0.82 1.46

1956 10,000 219,393 121,008 55.2 1,742.1 0.79 1.44

1955 10,000 212,226 116,380 54.8 1,639.6 0.77 1.41

1954 10,000 203,195 110,973 54.6 1,542.7 0.76 1.39

1953 10,000 193,466 105,610 54.6 1,450.7 0.75 1.37

1952 10,000 188,142 101,841 54.1 1,363.5 0.72 1.34

1951 10,000 178,540 96,713 54.2 1,282.2 0.72 1.33

1950 10,000 167,818 91,359 54.4 1,243.9 0.74 1.36
APPENDICES 135

Estimated Insured Deposits and the Deposit Insurance Fund, 

December 31, 1934, through December 31, 2010 (continued)

Dollars in Millions (except Insurance Coverage)

Deposits in Insured 

Institutions

Insurance Fund as a 

Percentage of

Year

Insurance 

Coverage1

Total Domestic 

Deposits

Est. Insured 

Deposits2

Percentage 

of Insured 

Deposits

Deposit 

Insurance 

Fund

Total Domestic 

Deposits

Est. Insured 

Deposits

1949 5,000 156,786 76,589 48.8 1,203.9 0.77 1.57

1948 5,000 153,454 75,320 49.1 1,065.9 0.69 1.42

1947 5,000 154,096 76,254 49.5 1,006.1 0.65 1.32

1946 5,000 148,458 73,759 49.7 1,058.5 0.71 1.44

1945 5,000 157,174 67,021 42.6 929.2 0.59 1.39

1944 5,000 134,662 56,398 41.9 804.3 0.60 1.43

1943 5,000 111,650 48,440 43.4 703.1 0.63 1.45

1942 5,000 89,869 32,837 36.5 616.9 0.69 1.88

1941 5,000 71,209 28,249 39.7 553.5 0.78 1.96

1940 5,000 65,288 26,638 40.8 496.0 0.76 1.86

1939 5,000 57,485 24,650 42.9 452.7 0.79 1.84

1938 5,000 50,791 23,121 45.5 420.5 0.83 1.82

1937 5,000 48,228 22,557 46.8 383.1 0.79 1.70

1936 5,000 50,281 22,330 44.4 343.4 0.68 1.54

1935 5,000 45,125 20,158 44.7 306.0 0.68 1.52

1934 5,000 40,060 18,075 45.1 291.7 0.73 1.61

1 The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) temporarily provides unlimited 

coverage for noninterest-bearing transaction accounts for two years beginning December 31, 2010. Coverage limits do 

not reflect temporary increases authorized by the Emergency Economic Stabilization Act of 2008. Coverage for certain 

retirement accounts increased to $250,000 in 2006. Initial coverage limit was $2,500 from January 1 to June 30, 1934.

2 Beginning in the fourth quarter of 2010, estimates of insured deposits include the Dodd-Frank Act temporary 

unlimited coverage for noninterest-bearing transaction accounts. Prior to 1989, figures are for the Bank Insurance Fund 

(BIF) only and exclude insured branches of foreign banks. For 1989 to 2005, figures represent sum of the BIF and 

Savings Association Insurance Fund (SAIF) amounts; for 2006 to 2010, figures are for DIF. Amounts for 1989 - 2010 

include insured branches of foreign banks. Prior to year-end 1991, insured deposits were estimated using percentages 

determined from June Call and Thrift Financial Reports.
136 APPENDICES

Income and Expenses, Deposit Insurance Fund, from Beginning of Operations, 

September 11, 1933, through December 31, 2010

Dollars in Millions

Income Expenses and Losses

Year Total

Assessment 

Income

Assessment 

Credits

Investment 

and Other

Effective 

Assessment 

Rate1 Total

Provision for 

Ins. Losses

Administrative 

and Operating 

Expenses2

Interest & 

Other Ins. 

Expenses

Funding 

Transfer from 

the FSLIC 

Resolution 

Fund

Net Income/

(Loss)

Total $155,776.5 $101,879.8 $11,391.8 $65,877.3 $164,345.5 $134,894.6 $19,731.5 $9,719.4 $139.5 $(8,429.5)

2010 13,379.9 13,611.2 0.8 (230.5) 0.1772% 75.0 (847.8) 1,592.6 (669.8) 0 13,304.9 

2009 24,706.4 17,865.4 148.0 6,989.0 0.2330% 60,709.0 57,711.8 1,271.1 1,726.1 0 (36,002.6)

2008 7,306.3 4,410.4 1,445.9 4,341.8 0.0418% 44,339.5 41,838.8 1,033.5 1,467.2 0 (37,033.2)

2007 3,196.2 3,730.9 3,088.0 2,553.3 0.0093% 1,090.9 95.0 992.6 3.3 0 2,105.3 

2006 2,643.5 31.9 0.0 2,611.6 0.0005% 904.3 (52.1) 950.6 5.8 0 1,739.2 

2005 2,420.5 60.9 0.0 2,359.6 0.0010% 809.3 (160.2) 965.7 3.8 0 1,611.2 

2004 2,240.3 104.2 0.0 2,136.1 0.0019% 607.6 (353.4) 941.3 19.7 0 1,632.7 

2003 2,173.6 94.8 0.0 2,078.8 0.0019% (67.7) (1,010.5) 935.5 7.3 0 2,241.3 

2002 1,795.9 107.8 0.0 2,276.9 0.0023% 719.6 (243.0) 945.1 17.5 0 1,076.3 

2001 2,730.1 83.2 0.0 2,646.9 0.0019% 3,123.4 2,199.3 887.9 36.2 0 (393.3)

2000 2,570.1 64.3 0.0 2,505.8 0.0016% 945.2 28.0 883.9 33.3 0 1,624.9 

1999 2,416.7 48.4 0.0 2,368.3 0.0013% 2,047.0 1,199.7 823.4 23.9 0 369.7 

1998 2,584.6 37.0 0.0 2,547.6 0.0010% 817.5 (5.7) 782.6 40.6 0 1,767.1 

1997 2,165.5 38.6 0.0 2,126.9 0.0011% 247.3 (505.7) 677.2 75.8 0 1,918.2 

1996 7,156.8 5,294.2 0.0 1,862.6 0.1622% 353.6 (417.2) 568.3 202.5 0 6,803.2 

1995 5,229.2 3,877.0 0.0 1,352.2 0.1238% 202.2 (354.2) 510.6 45.8 0 5,027.0 

1994 7,682.1 6,722.7 0.0 959.4 0.2192% (1,825.1) (2,459.4) 443.2 191.1 0 9,507.2 

1993 7,354.5 6,682.0 0.0 672.5 0.2157% (6,744.4) (7,660.4) 418.5 497.5 0 14,098.9 

1992 6,479.3 5,758.6 0.0 720.7 0.1815% (596.8) (2,274.7) 614.83 1,063.1 35.4 7,111.5

1991 5,886.5 5,254.0 0.0 632.5 0.1613% 16,925.3 15,496.2 326.1 1,103.0 42.4 (10,996.4)

1990 3,855.3 2,872.3 0.0 983.0 0.0868% 13,059.3 12,133.1 275.6 650.6 56.1 (9,147.9)

1989 3,496.6 1,885.0 0.0 1,611.6 0.0816% 4,352.2 3,811.3 219.9 321.0 5.6 (850.0)

1988 3,347.7 1,773.0 0.0 1,574.7 0.0825% 7,588.4 6,298.3 223.9 1,066.2 0 (4,240.7)

1987 3,319.4 1,696.0 0.0 1,623.4 0.0833% 3,270.9 2,996.9 204.9 69.1 0 48.5 

1986 3,260.1 1,516.9 0.0 1,743.2 0.0787% 2,963.7 2,827.7 180.3 (44.3) 0 296.4 

1985 3,385.5 1,433.5 0.0 1,952.0 0.0815% 1,957.9 1,569.0 179.2 209.7 0 1,427.6 

1984 3,099.5 1,321.5 0.0 1,778.0 0.0800% 1,999.2 1,633.4 151.2 214.6 0 1,100.3 

1983 2,628.1 1,214.9 164.0 1,577.2 0.0714% 969.9 675.1 135.7 159.1 0 1,658.2 

1982 2,524.6 1,108.9 96.2 1,511.9 0.0769% 999.8 126.4 129.9 743.5 0 1,524.8 

1981 2,074.7 1,039.0 117.1 1,152.8 0.0714% 848.1 320.4 127.2 400.5 0 1,226.6 

1980 1,310.4 951.9 521.1 879.6 0.0370% 83.6 (38.1) 118.2 3.5 0 1,226.8 
APPENDICES 137

Income and Expenses, Deposit Insurance Fund, from Beginning of Operations, 

September 11, 1933, through December 31, 2010 (continued)

Dollars in Millions

Income Expenses and Losses

Year Total

Assessment 

Income

Assessment 

Credits

Investment 

and Other 

Effective 

Assessment 

Rate1 Total

Provision for 

Ins. Losses

Administrative 

and Operating 

Expenses2

Interest & 

Other Ins. 

Expenses

Funding 

Transfer from 

the FSLIC 

Resolution 

Fund

Net Income/

(Loss)

1979 1,090.4 881.0 524.6 734.0 0.0333% 93.7 (17.2) 106.8 4.1 0 996.7 

1978 952.1 810.1 443.1 585.1 0.0385% 148.9 36.5 103.3 9.1 0 803.2 

1977 837.8 731.3 411.9 518.4 0.0370% 113.6 20.8 89.3 3.5 0 724.2 

1976 764.9 676.1 379.6 468.4 0.0370% 212.3 28.0 180.44 3.9 0 552.6

1975 689.3 641.3 362.4 410.4 0.0357% 97.5 27.6 67.7 2.2 0 591.8 

1974 668.1 587.4 285.4 366.1 0.0435% 159.2 97.9 59.2 2.1 0 508.9 

1973 561.0 529.4 283.4 315.0 0.0385% 108.2 52.5 54.4 1.3 0 452.8 

1972 467.0 468.8 280.3 278.5 0.0333% 65.7 10.1 49.6 6.05 0 401.3

1971 415.3 417.2 241.4 239.5 0.0345% 60.3 13.4 46.9 0.0 0 355.0 

1970 382.7 369.3 210.0 223.4 0.0357% 46.0 3.8 42.2 0.0 0 336.7 

1969 335.8 364.2 220.2 191.8 0.0333% 34.5 1.0 33.5 0.0 0 301.3 

1968 295.0 334.5 202.1 162.6 0.0333% 29.1 0.1 29.0 0.0 0 265.9 

1967 263.0 303.1 182.4 142.3 0.0333% 27.3 2.9 24.4 0.0 0 235.7 

1966 241.0 284.3 172.6 129.3 0.0323% 19.9 0.1 19.8 0.0 0 221.1 

1965 214.6 260.5 158.3 112.4 0.0323% 22.9 5.2 17.7 0.0 0 191.7 

1964 197.1 238.2 145.2 104.1 0.0323% 18.4 2.9 15.5 0.0 0 178.7 

1963 181.9 220.6 136.4 97.7 0.0313% 15.1 0.7 14.4 0.0 0 166.8 

1962 161.1 203.4 126.9 84.6 0.0313% 13.8 0.1 13.7 0.0 0 147.3 

1961 147.3 188.9 115.5 73.9 0.0323% 14.8 1.6 13.2 0.0 0 132.5 

1960 144.6 180.4 100.8 65.0 0.0370% 12.5 0.1 12.4 0.0 0 132.1 

1959 136.5 178.2 99.6 57.9 0.0370% 12.1 0.2 11.9 0.0 0 124.4 

1958 126.8 166.8 93.0 53.0 0.0370% 11.6 0.0 11.6 0.0 0 115.2 

1957 117.3 159.3 90.2 48.2 0.0357% 9.7 0.1 9.6 0.0 0 107.6 

1956 111.9 155.5 87.3 43.7 0.0370% 9.4 0.3 9.1 0.0 0 102.5 

1955 105.8 151.5 85.4 39.7 0.0370% 9.0 0.3 8.7 0.0 0 96.8 

1954 99.7 144.2 81.8 37.3 0.0357% 7.8 0.1 7.7 0.0 0 91.9 

1953 94.2 138.7 78.5 34.0 0.0357% 7.3 0.1 7.2 0.0 0 86.9 

1952 88.6 131.0 73.7 31.3 0.0370% 7.8 0.8 7.0 0.0 0 80.8 

1951 83.5 124.3 70.0 29.2 0.0370% 6.6 0.0 6.6 0.0 0 76.9 

1950 84.8 122.9 68.7 30.6 0.0370% 7.8 1.4 6.4 0.0 0 77.0 
138 APPENDICES

Income and Expenses, Deposit Insurance Fund, from Beginning of Operations, 

September 11, 1933, through December 31, 2010 (continued)

Dollars in Millions

Income Expenses and Losses

Year Total

Assessment 

Income

Assessment 

Credits

Investment 

and Other

Effective 

Assessment 

Rate1 Total

Provision for 

Ins. Losses

Administrative 

and Operating 

Expenses2

Interest & 

Other Ins. 

Expenses

Funding 

Transfer from 

the FSLIC 

Resolution 

Fund

Net Income/

(Loss)

1949 151.1 122.7 0.0 28.4 0.0833% 6.4 0.3 6.1 0.0 0 144.7 

1948 145.6 119.3 0.0 26.3 0.0833% 7.0 0.7 6.36 0.0 0 138.6

1947 157.5 114.4 0.0 43.1 0.0833% 9.9 0.1 9.8 0.0 0 147.6 

1946 130.7 107.0 0.0 23.7 0.0833% 10.0 0.1 9.9 0.0 0 120.7 

1945 121.0 93.7 0.0 27.3 0.0833% 9.4 0.1 9.3 0.0 0 111.6 

1944 99.3 80.9 0.0 18.4 0.0833% 9.3 0.1 9.2 0.0 0 90.0 

1943 86.6 70.0 0.0 16.6 0.0833% 9.8 0.2 9.6 0.0 0 76.8 

1942 69.1 56.5 0.0 12.6 0.0833% 10.1 0.5 9.6 0.0 0 59.0 

1941 62.0 51.4 0.0 10.6 0.0833% 10.1 0.6 9.5 0.0 0 51.9 

1940 55.9 46.2 0.0 9.7 0.0833% 12.9 3.5 9.4 0.0 0 43.0 

1939 51.2 40.7 0.0 10.5 0.0833% 16.4 7.2 9.2 0.0 0 34.8 

1938 47.7 38.3 0.0 9.4 0.0833% 11.3 2.5 8.8 0.0 0 36.4 

1937 48.2 38.8 0.0 9.4 0.0833% 12.2 3.7 8.5 0.0 0 36.0 

1936 43.8 35.6 0.0 8.2 0.0833% 10.9 2.6 8.3 0.0 0 32.9 

1935 20.8 11.5 0.0 9.3 0.0833% 11.3 2.8 8.5 0.0 0 9.5 

1933-34 7.0 0.0 0.0 7.0 N/A 10.0 0.2 9.8 0.0 0 (3.0)

1 Figures represent only BIF-insured institutions prior to 1990, BIF- and SAIF-insured institutions from 1990 through 2005, and DIF-insured 

institutions beginning in 2006. After 1995, all thrift closings became the reponsibility of the FDIC and amounts are reflected in the SAIF. 

The effective assessment rate is calculated from annual assessment income (net of assessment credits), excluding transfers to the Financing 

Corporation (FICO), Resolution Funding Corporation (REFCORP) and FSLIC Resolution Fund, divided by the four quarter average 

assessment base. The effective rates from 1950 through 1984 varied from the statutory rate of 0.0833 percent due to assessment credits provided 

in those years. The statutory rate increased to 0.12 percent in 1990 and to a minimum of 0.15 percent in 1991. The effective rates in 1991 and 

1992 varied because the FDIC exercised new authority to increase assessments above the statutory minimum rate when needed. Beginning in 

1993, the effective rate was based on a risk-related premium system under which institutions paid assessments in the range of 0.23 percent to 

0.31 percent. In May 1995, the BIF reached the mandatory recapitalization level of 1.25 percent. As a result, BIF assessment rates were reduced 

to a range of 0.04 percent to 0.31 percent of assessable deposits, effective June 1995, and assessments totaling $1.5 billion were refunded in 

September 1995. Assessment rates for the BIF were lowered again to a range of 0 to 0.27 percent of assessable deposits, effective the start of 

1996. In 1996, the SAIF collected a one-time special assessment of $4.5 billion. Subsequently, assessment rates for the SAIF were lowered 

to the same range as the BIF, effective October 1996. This range of rates remained unchanged for both funds through 2006. As part of the 

implementation of the Federal Deposit Insurance Reform Act of 2005, assessment rates were increased to a range of 0.05 percent to 0.43 percent 

of assessable deposits effective at the start of 2007, but many institutions received a one-time assessment credit ($4.7 billion in total) to offset the 

new assessments. On December 16, 2008, the FDIC Board of Directors (the “Board”) adopted a final rule to temporarily increase assessment 

rates for the first quarter of 2009 to a range of 0.12 percent to 0.50 percent of assessable deposits. On February 27, 2009, the Board adopted a 

final rule effective April 1, 2009, setting initial base assessment rates to a range of 0.12 percent to 0.45 percent of assessable deposits. On June 

30, 2009, a special assessment was imposed on all insured banks and thrifts, which amounted in aggregate to approximately $5.4 billion. For 

8,106 institutions, with $9.3 trillion in assets, the special assessment was 5 basis points of each institution’s assets minus tier one capital; 89 other 

institutions, with assets of $4.0 trillion, had their special asssessment capped at 10 basis points of their second quarter assessment base.

2 These expenses, which are presented as operating expenses in the Statement of Income and Fund Balance, pertain to the FDIC in its corporate 

capacity only and do not include costs that are charged to the failed bank receiverships that are managed by the FDIC. The receivership expenses 

are presented as part of the “Receivables from Resolutions, net” line on the Balance Sheet. The narrative and graph presented in the “Corporate 

Planning and Budget” section of this report (page 132) show the aggregate (corporate and receivership) expenditures of the FDIC.

3 Includes $210 million for the cumulative effect of an accounting change for certain postretirement benefits.

4 Includes a $106 million net loss on government securities.

5 This amount represents interest and other insurance expenses from 1933 to 1972.

6 Includes the aggregate amount of $81 million of interest paid on capital stock between 1933 and 1948.
APPENDICES 139

Number, Assets, Deposits, Losses, and Loss To Funds of Insured

Thrifts Taken Over or Closed Because of Financial Difficulties, 

1989 Through 19951

Dollars in Thousands

Year Total Assets Deposits Estimated 

Receivership 

Loss2

Loss to Funds3

Total 748 $393,986,574 $317,501,978 $75,318,843 $81,580,645

1995 2 423,819 414,692 28,192 27,750

1994 2 136,815 127,508 11,472 14,599

1993 10 6,147,962 4,881,461 267,595 65,212

1992 59 44,196,946 34,773,224 3,234,883 3,780,121

1991 144 78,898,904 65,173,122 8,627,894 9,126,190

1990 213 129,662,498 98,963,962 16,063,762 19,258,655

19894 318 134,519,630 113,168,009 47,085,045 49,308,118

1

 Beginning in 1989 through July 1, 1995, all thrift closings were the responsibility of the Resolution Trust Corporation 

(RTC). Since the RTC was terminated on December 31, 1995, and all assets and liabilities transferred to the FSLIC 

Resolution Fund (FRF), all the results of the thrift closing activity from 1989 through 1995 are now reflected on FRF’s 

books. Year is the year of failure, not the year of resolution.

2

 The estimated losses represent the projected loss at the fund level from receiverships for unreimbursed subrogated claims 

of the FRF and unpaid advances to receiverships from the FRF.

3

 The Loss to Funds represents the total resolution cost of the failed thrifts in the FRF-RTC fund, which includes 

corporate revenue and expense items such as interest expense on Federal Financing Bank debt, interest expense on 

escrowed funds, and interest revenue on advances to receiverships, in addition to the estimated losses for receiverships.

4

 Total for 1989 excludes nine failures of the former FSLIC.
140 APPENDICES

FDIC-Insured Institutions Closed During 2010

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

Purchase and Assumption - All Deposits

Bank of Leeton

Leeton, MO

NM 1,662 $20,128 $20,335 $20,091 $9,046 01/22/10 Sunflower Bank, N.A.

Salina, KS

Citizens Bank Trust Company of Chicago

Chicago, IL

NM 2,259 $73,490 $74,519 $71,552 $42,861 04/23/10 Republic Bank of Chicago

Oak Brook, IL

The Bank of Bonifay

Bonifay, FL

NM 10,577 $242,871 $230,190 $225,391 $78,605 05/07/10 First Federal Bank of Florida

Lake City, FL

Towne Bank of Arizona

Mesa, AZ

NM 1,018 $120,246 $113,243 $98,547 $44,096 05/07/10 Commerce Bank of Arizona

Tucson, AZ

First National Bank

Savannah, GA 

N 3,856 $252,520 $231,857 $211,261 $93,989 06/25/10 The Savannah Bank, N.A.

Savannah, GA

The Gordon Bank

Gordon, GA

NM 2,548 $29,259 $26,867 $29,273 $8,882 10/22/10 Morris Bank

Dublin, GA

Whole Bank Purchase and Assumption - All Deposits

Horizon Bank

Bellingham, WA

NM 39,716 $1,188,956 $1,049,063 $1,040,135 $383,684 01/08/10 Washington FS&LA

Seattle, WA

St. Stephen State Bank

St. Stephen, MN

NM 2,347 $22,895 $23,912 $23,371 $12,197 01/15/10 First State Bank of St. Joseph

St. Joseph, MN

Town Community Bank & Trust

Antioch, IL

NM 1,717 $70,758 $68,323 $69,557 $26,642 01/15/10 First American Bank

Elk Grove Village, IL

Evergreen Bank

Seattle, WA

NM 11,116 $395,980 $340,378 $315,121 $109,168 01/22/10 Umpqua Bank

Roseburg, OR

Premier American Bank

Miami, FL

NM 4,865 $299,225 $285,554 $268,053 $112,344 01/22/10 Premier American Bank, N.A.

Miami, FL

Charter Bank

Santa Fe, NM

SB 19,945 $1,201,922 $859,933 $821,503 $246,120 01/22/10 Charter Bank

Albuquerque, NM

Columbia River Bank

The Dalles, OR

NM 49,744 $955,112 $908,132 $891,998 $167,875 01/22/10 Columbia State Bank

Tacoma, WA

First Regional Bank

Los Angeles, CA

NM 17,633 $2,082,684 $1,664,450 $1,540,091 $545,163 01/29/10 First-Citizens Bank & Trust 

Company

Raleigh, NC

American Marine Bank

Bainbridge Island, WA

NM 22,622 $329,246 $287,443 $269,735 $81,369 01/29/10 Columbia State Bank

Tacoma, WA

First National Bank of Georgia

Carrollton, GA

N 49,467 $840,633 $780,196 $751,253 $197,132 01/29/10 Community & Southern Bank

Carrollton, GA

Community Bank and Trust

Cornelia, GA

NM 99,016 $1,181,717 $1,067,957 $1,020,389 $363,060 01/29/10 SCBT, N.A.

Orangeburg, SC 

Florida Community Bank

Immokalee, FL

NM 25,340 $835,701 $776,556 $794,414 $331,055 01/29/10 Premier American Bank, N.A.

Miami, FL

Marshall Bank National Association

Hallock, MN

N 3,837 $58,566 $55,662 $49,297 $14,524 01/29/10 United Valley Bank

Cavalier, ND

1st American State Bank of Minnesota

Hancock, MN

NM 1,375 $18,155 $16,327 $14,452 $5,042 02/05/10 Community Development 

Bank, FSB

Ogema, MN

George Washington Savings Bank

Orland Park, IL

SI 15,015 $413,673 $395,310 $398,398 $91,528 02/19/10 FirstMerit Bank, N.A.

Akron, OH 
APPENDICES 141

FDIC-Insured Institutions Closed During 2010 (continued)

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

La Jolla Bank, FSB

La Jolla, CA

SB 43,243 $3,646,071 $2,799,362 $2,879,761 $1,035,182 02/19/10 OneWest Bank, FSB

Pasadena, CA

The La Coste National Bank

La Coste, TX

N 3,052 $53,936 $49,275 $49,068 $3,684 02/19/10 Community National Bank

Hondo, TX

Marco Community Bank

Marco Island, FL

SM 4,326 $119,578 $117,097 $120,435 $33,844 02/19/10 Mutual of Omaha Bank

Omaha, NE

Carson River Community Bank

Carson City, NV

NM 937 $51,095 $50,024 $51,024 $19,057 02/26/10 Heritage Bank of Nevada

Reno, NV

Rainier Pacific Bank

Tacoma, WA

SI 38,259 $717,806 $446,192 $429,154 $184,644 02/26/10 Umpqua Bank

Roseburg, OR

Bank of Illinois

Normal, IL

SM 8,050 $211,711 $198,487 $185,977 $41,856 03/05/10 Heartland Bank and Trust 

Company

Bloomington, IL

Sun American Bank

Boca Raton, FL

SM 9,845 $535,724 $443,481 $438,042 $149,588 03/05/10 First-Citizens Bank & Trust 

Company

Raleigh, NC

LibertyPointe Bank

New York, NY

NM 4,809 $216,500 $209,477 $198,442 $39,489 03/11/10 Valley National Bank

Wayne, NJ

The Park Avenue Bank

New York, NY

NM 8,771 $520,146 $494,505 $477,584 $107,539 03/12/10 Valley National Bank

Wayne, NJ

Statewide Bank

Covington, LA

NM 9,696 $243,215 $207,821 $206,074 $59,955 03/12/10 Home Bank

Lafayette, LA

Old Southern Bank

Orlando, FL

SM 6,110 $336,390 $319,746 $328,893 $87,984 03/12/10 Centennial Bank

Conway, AR

Century Security Bank

Duluth, GA

NM 1,256 $96,535 $93,967 $95,230 $39,269 03/19/10 Bank of Upson

Thomaston, GA

Appalachian Community Bank

Ellijay, GA

NM 40,289 $1,010,075 $917,575 $924,510 $309,652 03/19/10 Community & Southern Bank

Carrollton, GA

American National Bank

Parma, OH

N 1,173 $70,318 $66,752 $67,496 $26,511 03/19/10 The National Bank & Trust 

Company

Wilmington, OH

Bank of Hiawassee

Hiawassee, GA

NM 17,119 $377,779 $339,597 $329,792 $116,484 03/19/10 Citizens South Bank

Gastonia, NC

State Bank of Aurora

Aurora, MN

NM 2,641 $28,159 $27,801 $26,502 $8,693 03/19/10 Northern State Bank

Ashland, WI

First Lowndes Bank

Fort Deposit, AL

NM 8,621 $137,175 $131,117 $122,594 $35,314 03/19/10 First Citizens Bank

Luverne, AL

Desert Hills Bank

Phoenix, AZ

NM 9,393 $496,552 $426,473 $410,763 $108,310 03/26/10 New York Community Bank

Westbury, NY

Key West Bank

Key West, FL

SB 1,477 $88,031 $67,662 $76,254 $25,370 03/26/10 Centennial Bank

Conway, AR

McIntosh Commercial Bank

Carrollton, GA

NM 7,785 $363,405 $343,339 $315,912 $141,844 03/26/10 CharterBank

West Point, GA

Unity National Bank

Cartersville, GA

N 13,028 $300,590 $264,286 $244,923 $70,961 03/26/10 Bank of the Ozarks

Little Rock, AR

Beach First National Bank

Myrtle Beach, SC

N 12,329 $590,024 $516,026 $518,344 $119,396 04/09/10 Bank of North Carolina

Thomasville, NC

AmericanFirst Bank

Clermont, FL

NM 2,684 $104,034 $81,887 $92,563 $19,084 04/16/10 TD Bank, N.A. 

Wilmington, DE
142 APPENDICES

FDIC-Insured Institutions Closed During 2010 (continued)

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

Butler Bank

Lowell, MA

SI 8,010 $245,534 $233,222 $225,408 $27,738 04/16/10 People’s United Bank

Bridgeport, CT

City Bank

Lynwood, WA

NM 26,952 $981,913 $1,020,494 $903,819 $264,329 04/16/10 Whidbey Island Bank

Coupeville, WA

First Federal Bank of North Florida

Palatka, FL

SB 16,768 $440,122 $324,198 $371,552 $13,095 04/16/10 TD Bank, N.A.

Wilmington, DE

Innovative Bank

Oakland, CA

NM 4,349 $266,816 $225,241 $211,111 $44,817 04/16/10 Center Bank

Los Angeles, CA

Riverside National Bank of Florida

Fort Pierce, FL

N 235,048 $3,393,818 $2,724,623 $2,861,518 $605,501 04/16/10 TD Bank, N.A.

Wilmington, DE

Tamalpais Bank

San Rafael, CA

NM 12,006 $611,504 $487,582 $462,814 $76,525 04/16/10 Union Bank, N.A.

San Francisco, CA

Amcore Bank, N.A.

Rockford, IL

N 154,667 $3,066,240 $3,421,194 $2,774,842 $320,947 04/23/10 Harris National Association

Chicago, IL

Broadway Bank

Chicago, IL

NM 8,086 $1,059,194 $1,113,959 $1,021,203 $391,357 04/23/10 MB Financial Bank, N.A.

Chicago, IL

Lincoln Park Savings Bank

Chicago, IL

SI 11,153 $194,618 $162,627 $162,662 $52,020 04/23/10 Northbrook Bank and Trust 

Company

Northbrook, IL

New Century Bank

Chicago, IL

NM 6,612 $447,239 $492,046 $427,045 $125,868 04/23/10 MB Financial Bank, N.A. 

Chicago, IL

Peotone Bank and Trust Company

Peotone, IL

NM 8,405 $130,165 $124,676 $124,317 $46,514 04/23/10 First Midwest Bank

Itasca, IL

Wheatland Bank

Naperville, IL

NM 8,011 $441,694 $438,502 $445,153 $136,915 04/23/10 Wheaton Bank and Trust

Wheaton, IL

BC National Bank

Butler, MO

N 3,382 $52,204 $43,635 $40,180 $15,798 04/30/10 Community First Bank

Butler, MO

CF Bancorp

Port Huron, MI

SI 73,727 $1,599,122 $1,418,445 $1,732,557 $487,779 04/30/10 First Michigan Bank

Troy, MI

Champion Bank

Creve Coeur, MO

NM 4,242 $195,510 $153,763 $160,292 $68,999 04/30/10 BankLiberty 

Liberty, MO

Frontier Bank

Everett, WA

NM 96,539 $3,250,734 $2,846,886 $2,759,290 $1,096,211 04/30/10 Union Bank, N.A.

San Francisco, CA

Eurobank

San Juan, PR

NM 23,521 $2,453,138 $1,970,724 $2,313,651 $1,187,775 04/30/10 Oriental Bank and Trust

San Juan, PR

R-G Premier Bank of Puerto Rico

Hato Rey, PR

NM 325,495 $5,681,177 $4,220,108 $5,496,730 $1,455,166 04/30/10 Scotiabank de Puerto Rico

San Juan, PR

Westernbank Puerto Rico

Mayaguez, PR

NM 302,338 $10,797,345 $8,619,969 $10,274,407 $4,249,644 04/30/10 Banco Popular de Puerto Rico

San Juan, PR

1st Pacific Bank of California

San Diego, CA

SM 4,299 $335,798 $291,173 $267,981 $80,457 05/07/10 City National Bank

Los Angeles, CA

Access Bank

Champlin, MN

NM 1,602 $31,996 $31,969 $29,681 $8,644 05/07/10 Prinsbank

Prinsburg, MN

Midwest Bank and Trust Company

Elmwood Park, IL

SM 78,283 $3,172,915 $2,420,738 $2,265,630 $221,301 05/14/10 FirstMerit Bank, N.A.

Akron, OH

New Liberty Bank

Plymouth, MI

NM 3,125 $111,239 $101,884 $99,290 $28,640 05/14/10 Bank of Ann Arbor

Ann Arbor, MI
APPENDICES 143

FDIC-Insured Institutions Closed During 2010 (continued)

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

Satilla Community Bank

Saint Marys, GA

NM 2,348 $135,688 $134,005 $122,425 $32,822 05/14/10 Ameris Bank

Moultrie, GA

Southwest Community Bank

Springfield, MO

NM 1,505 $100,659 $102,463 $97,449 $32,114 05/14/10 Simmons First National Bank

Pine Bluff, AR

Pinehurst Bank

St. Paul, MN

NM 1,597 $61,215 $58,288 $54,630 $11,474 05/21/10 Coulee Bank

La Crosse, WI

Bank of Florida–Southeast

Ft. Lauderdale, FL

NM 7,333 $595,318 $531,752 $477,614 $77,586 05/28/10 Everbank

Jacksonville, FL

Bank of Florida–Southwest

Naples, FL

NM 11,061 $640,894 $559,897 $567,536 $106,905 05/28/10 Everbank

Jacksonville, FL

Bank of Florida–Tampa Bay

Tampa, FL

NM 2,628 $240,513 $224,024 $244,489 $40,273 05/28/10 Everbank

Jacksonville, FL

Granite Community Bank

Granite Bay, CA

N 2,920 $102,913 $94,252 $94,825 $21,447 05/28/10 Tri Counties Bank

Chico, CA

Sun West Bank

Las Vegas, NV

NM 6,753 $360,662 $353,943 $331,949 $96,693 05/28/10 City National Bank

Los Angeles, CA

First National Bank

Rosedale, MS

N 2,122 $60,449 $63,483 $72,828 $25,123 06/04/10 The Jefferson Bank

Fayette, MS

TierOne Bank

Lincoln, NE

SB 176,888 $2,824,737 $2,185,817 $1,897,433 $313,755 06/04/10 Great Western Bank

Sioux Falls, SD

Washington First International Bank

Seattle, WA

NM 10,035 $520,887 $441,362 $396,237 $136,118 06/11/10 East West Bank

Pasadena, CA

Nevada Security Bank

Reno, NV

NM 9,846 $492,491 $479,759 $475,638 $87,810 06/18/10 Umpqua Bank

Roseburg, OR

High Desert State Bank

Albuquerque, NM

NM 2,026 $80,343 $80,985 $73,025 $24,829 06/25/10 First American Bank

Artesia, NM

Peninsula Bank

Englewood, FL

NM 13,339 $630,179 $580,140 $605,285 $226,929 06/25/10 Premier American Bank

Miami, FL

USA Bank

Port Chester, NY

NM 2,985 $190,678 $188,644 $190,006 $65,243 07/09/10 New Century Bank

Phoenixville, PA

Bay National Bank

Lutherville, MD

N 2,661 $217,743 $212,612 $205,167 $23,368 07/09/10 Bay Bank, FSB

Lutherville, MD

Home National Bank 

Blackwell, OK

N 25,726 $585,445 $514,038 $512,769 $83,213 07/09/10 RCB Bank

Claremore, OK

Mainstreet Savings Bank, FSB

Hastings, MI

SB 8,132 $96,584 $63,291 $62,759 $15,690 07/16/10 Commercial Bank

Alma, MI

Metro Bank of Dade County

Miami, FL

SM 8,766 $399,441 $375,522 $369,253 $75,556 07/16/10 NAFH National Bank

Miami, FL

Olde Cypress Community Bank

Clewiston, FL

SB 8,110 $161,355 $157,997 $160,183 $38,643 07/16/10 CenterState Bank of 

Florida, N.A.

Winter Haven, FL

Turnberry Bank

Aventura, FL

SB 3,888 $240,250 $179,169 $177,459 $40,535 07/16/10 NAFH National Bank

Miami, FL

Woodlands Bank

Bluffton, SC

SB 6,554 $382,803 $364,808 $360,454 $120,068 07/16/10 Bank of the Ozarks

Little Rock, AR

First National Bank of the South

Spartanburg, SC

N 20,097 $619,374 $550,891 $540,575 $83,037 07/16/10 NAFH National Bank

Miami, FL
144 APPENDICES

FDIC-Insured Institutions Closed During 2010 (continued)

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

Community Security Bank

New Prague, MN

NM 4,984 $100,649 $95,100 $94,987 $21,438 07/23/10 Roundbank 

Waseca, MN 

Crescent Bank & Trust Company

Jasper, GA

NM 28,701 $970,235 $932,809 $918,107 $279,759 07/23/10 Renasant Bank

Tupelo, MS

Home Valley Bank

Cave Junction, OR

SM 13,230 $250,488 $227,935 $227,449 $44,651 07/23/10 South Valley Bank & Trust

Klamath Falls, OR

Southwest USA Bank

Las Vegas, NV

NM 2,068 $203,690 $183,985 $178,885 $79,904 07/23/10 Plaza Bank

Irvine, CA

Sterling Bank

Lantana, FL

SM 7,533 $354,966 $329,541 $317,657 $54,119 07/23/10 IBERIABANK

Lafayette, LA

Thunder Bank

Sylvan Grove, KS

SM 1,454 $28,248 $27,048 $25,813 $8,007 07/23/10 The Bennington State Bank

Salina, KS

Williamsburg First National Bank

Kingstree, SC

N 8,801 $130,411 $126,993 $117,906 $10,103 07/23/10 First Citizens Bank and Trust 

Company, Inc. 

Columbia, SC

Bayside Savings Bank

Port Saint Joe, FL

SB 2,191 $64,344 $52,720 $49,891 $19,966 07/30/10 Centennial Bank

Conway, AR

Coastal Community Bank

Panama City Beach, FL

NM 12,152 $377,469 $370,016 $372,707 $106,767 07/30/10 Centennial Bank

Conway, AR

Liberty Bank

Eugene, OR

NM 30,465 $714,574 $692,670 $679,600 $200,197 07/30/10 Home Federal Bank

Nampa, ID

NorthWest Bank and Trust

Acworth, GA

NM 3,861 $160,763 $155,531 $152,916 $39,380 07/30/10 State Bank and Trust Company

Macon, GA

The Cowlitz Bank

Longview, WA

NM 10,709 $489,019 $474,742 $448,186 $82,180 07/30/10 Heritage Bank

Olympia, WA

Ravenswood Bank

Chicago, IL

NM 4,472 $264,628 $269,448 $265,043 $104,994 08/06/10 Northbrook Bank and 

Trust Company

Northbrook, IL

Palos Bank and Trust Company

Palos Heights, IL

NM 26,165 $493,391 $467,784 $462,086 $86,611 08/13/10 First Midwest Bank

Itasca, IL

Butte Community Bank

Chico, CA

NM 45,195 $498,751 $471,256 $461,309 $34,729 08/20/10 Rabobank, N.A.

El Centro, CA

Community National Bank at Bartow

Bartow, FL

N 2,804 $67,918 $63,708 $60,308 $15,429 08/20/10 CenterState Bank of Florida, N.A. 

Winter Haven, FL

Imperial Savings & Loan Association

Martinsville, VA 

SB 1,363 $9,448 $10,090 $9,374 $5,062 08/20/10 River Community Bank, N.A.

Martinsville, VA

Independent National Bank

Ocala, FL

N 10,146 $156,218 $141,877 $143,569 $32,403 08/20/10 CenterState Bank of Florida, N.A. 

Winter Haven, FL 

Los Padres Bank

Solvang, CA

SB 22,198 $866,459 $770,899 $754,140 $120,143 08/20/10 Pacific Western Bank

San Diego, CA

Pacific State Bank

Stockton, CA

SM 9,957 $312,077 $278,832 $254,769 $38,909 08/20/10 Rabobank, N.A.

El Centro, CA

ShoreBank

Chicago, IL

NM 39,039 $2,166,431 $1,547,403 $2,147,161 $570,625 08/20/10 Urban Partnership Bank

Chicago, IL

Sonoma Valley Bank

Sonoma, CA

NM 12,728 $337,113 $255,501 $251,413 $19,076 08/20/10 Westamerica Bank

San Rafael, CA

Horizon Bank

Bradenton, FL

SM 6,284 $187,819 $164,594 $162,893 $68,863 09/10/10 Bank of the Ozarks

Little Rock, AR
APPENDICES 145

FDIC-Insured Institutions Closed During 2010 (continued)

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

Bank of Ellijay

Ellijay, GA

NM 4,524 $168,820 $160,718 $172,102 $60,270 09/17/10 Community & Southern Bank

Carrollton, GA

Bramble Savings Bank

Milford, OH

SI 1,936 $47,523 $41,551 $41,548 $17,588 09/17/10 Foundation Bank

Cincinnati, OH

First Commerce Community Bank

Douglasville, GA

NM 4,173 $248,151 $242,831 $228,416 $77,233 09/17/10 Community & Southern Bank

Carrollton, GA

ISN Bank

Cherry Hill, NJ

NM 1,106 $81,564 $79,652 $76,930 $27,799 09/17/10 New Century Bank

Phoenixville, PA

Maritime Savings Bank

West Allis, WI

SB 12,973 $350,488 $248,134 $344,476 $105,372 09/17/10 North Shore Bank, FSB

Brookfield, WI

The Peoples Bank

Winder, GA

NM 24,437 $447,185 $398,181 $373,755 $100,169 09/17/10 Community & Southern Bank

Carrollton, GA

Haven Trust Bank Florida

Ponte Vedra Beach, FL

NM 2,223 $148,575 $133,561 $130,909 $36,793 09/24/10 First Southern Bank

Boca Raton, FL

North County Bank

Arlington, WA

NM 7,602 $288,776 $276,081 $258,513 $80,531 09/24/10 Whidbey Island Bank

Coupeville, WA

Shoreline Bank

Shoreline, WA

NM 4,649 $92,980 $90,644 $90,930 $40,381 10/01/10 GBC International Bank

Los Angeles, CA

Wakulla Bank

Crawfordville, FL

NM 26,383 $402,205 $367,228 $394,803 $109,487 10/01/10 Centennial Bank

Conway, AR

Premier Bank

Jefferson City, MO

NM 28,804 $989,382 $869,367 $965,935 $404,596 10/15/10 Providence Bank

Columbia, MO

Security Savings Bank

Olathe, KS

SA 18,336 $453,349 $347,080 $339,787 $80,362 10/15/10 Simmons First National Bank

Pine Bluff, AR

Westbridge Bank and Trust

Chesterfield, MO

NM 1,261 $87,782 $70,131 $67,242 $18,588 10/15/10 Midland States Bank

Effingham, IL

First Bank of Jacksonville

Jacksonville, FL

NM 1,814 $73,922 $72,198 $72,037 $16,098 10/22/10 Ameris Bank

Moultrie, GA

First Suburban National Bank

Maywood, IL

N 6,482 $143,451 $135,475 $137,665 $28,974 10/22/10 Seaway Bank and Trust 

Company

Chicago, IL

Hillcrest Bank

Overland Park, KS

NM 38,922 $1,583,611 $1,488,785 $1,476,695 $318,195 10/22/10 Hillcrest Bank, N.A. 

Overland Park, KS

Progress Bank of Florida

Tampa, FL

SM 1,882 $94,823 $86,861 $85,294 $24,996 10/22/10 Bay Cities Bank

Tampa, FL

The First National Bank of Barnesville

Barnesville, GA

N 6,835 $126,622 $122,880 $123,943 $32,885 10/22/10 United Bank

Zebulon, GA

First Vietnamese American Bank

Westminster, CA

NM 721 $48,000 $47,012 $38,028 $9,635 11/05/10 Grandpoint Bank

Los Angeles, CA

K Bank

Randallstown, MD

NM 23,944 $538,258 $500,056 $498,567 $196,706 11/05/10 Manufacturers & Traders Trust 

Co. (M&T Bank) 

Buffalo, NY

Pierce Commercial Bank

Tacoma, WA

SM 3,356 $221,082 $193,473 $181,310 $19,814 11/05/10 Heritage Bank

Olympia, WA

Western Commercial Bank

Woodland Hills, CA

NM 1,241 $98,635 $101,127 $105,176 $24,310 11/05/10 First California Bank

Westlake Village, CA

Cooper Star Bank

Scottsdale, AZ

NM 3,321 $203,955 $190,182 $194,655 $43,169 11/12/10 Stearns Bank, N.A.

St. Cloud, MN 
146 APPENDICES

FDIC-Insured Institutions Closed During 2010 (continued)

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

Darby Bank & Trust Co.

Vidalia, GA

NM 19,886 $654,714 $587,626 $582,144 $129,590 11/12/10 Ameris Bank

Moultrie, GA

Tifton Banking Company

Tifton, GA

NM 2,685 $143,729 $141,573 $132,992 $24,576 11/12/10 Ameris Bank

Moultrie, GA

Allegiance Bank of America

Bala Cynwyd, PA

NM 2,765 $106,595 $91,996 $96,741 $14,235 11/19/10 VIST Bank

Wyomissing, PA

First Banking Center

Burlington, WI

SM 44,356 $750,724 $664,752 $676,743 $139,746 11/19/10 First Michigan Bank

Troy, MI

Gulf State Community Bank

Carrabelle, FL

NM 7,338 $112,144 $112,193 $108,568 $42,279 11/19/10 Centennial Bank

Conway, AR

Earthstar Bank

Southhampton, PA

NM 4,313 $112,643 $104,505 $98,170 $22,926 12/10/10 Polonia Bank

Huntingdon Valley, PA

Paramount Bank

Farmington Hills, MI

SM 4,725 $252,744 $213,550 $187,403 $89,354 12/10/10 Level One Bank

Farmington Hills, MI

Appalachian Community Bank, F.S.B.

McCaysville, GA

SA 2,639 $68,201 $76,360 $68,552 $25,876 12/17/10 Peoples Bank of 

East Tennessee

Madisonville, TN

Chestatee State Bank

Dawsonville, GA

NM 10,740 $244,376 $244,476 $234,908 $75,136 12/17/10 Bank of the Ozarks

Little Rock, AR

Community National Bank

Lino Lakes, MN

N 2,604 $31,569 $28,916 $27,269 $3,717 12/17/10 Farmers & Merchants

Savings Bank

Manchester, IA

First Southern Bank

Batesville, AR

NM 3,746 $191,764 $172,514 $141,827 $22,751 12/17/10 Southern Bank

Poplar Bluff, MO

United Americas Bank, N.A.

Atlanta, GA

N 3,851 $242,339 $244,172 $198,466 $75,294 12/17/10 State Bank and Trust Company

Macon, GA

The Bank of Miami

Coral Gables, FL

N 3,595 $448,150 $374,218 $344,755 $59,267 12/17/10 1st United Bank

Boca Raton, FL

Insured Deposit Transfer

Barnes Banking Company

Kaysville, UT

SM 31,597 $709,171 $697,109 $660,026 $207,813 01/15/10 Deposit Insurance National Bank 

of Kaysville

Kaysville, UT

Insured Deposit Payoff

Centennial Bank

Ogden, UT

NM 3,809 $212,839 $205,076 $222,567 $78,843 03/05/10 Federal Deposit Insurance 

Corporation

Advanta Bank Corp.

Draper, UT

NM 12,975 $1,525,931 $1,519,471 $1,335,574 $606,732 03/19/10 Federal Deposit Insurance 

Corporation

Lakeside Community Bank

Sterling Heights, MI

NM 1,920 $49,173 $52,290 $58,990 $21,471 04/16/10 Federal Deposit Insurance 

Corporation

Arcola Homestead Savings Bank

Arcola, IL

SI 613 $17,028 $18,092 $17,115 $10,829 06/04/10 Federal Deposit Insurance 

Corporation

Ideal Federal Savings Bank

Baltimore, MD

SB 807 $6,177 $5,803 $5,378 $5,370 07/09/10 Federal Deposit Insurance 

Corporation
APPENDICES 147

FDIC-Insured Institutions Closed During 2010 (continued)

Dollars in Thousands

Name and Location

Bank

Class

Number 

of Deposit 

Accounts

Total 

Assets1

Total 

Deposits1

Insured 

Deposit Funding 

and Other 

Disbursements

Estimated 

Loss to 

the DIF2

Date of 

Closing or 

Acquisition

Receiver/Assuming Bank 

and Location

First Arizona Savings, FSB

Scottsdale, AZ

SA 11,574 $255,920 $190,615 $265,711 $32,316 10/22/10 Federal Deposit Insurance 

Corporation

Insured Deposit Transfer/Purchase & Assumption

Waterfield Bank

Germantown, MD

SB 5,987 $155,566 $156,188 $562,273 $41,733 03/05/10 Federal Deposit Insurance 

Corporation

Codes for Bank Class:

NM = State-chartered bank that is not a member of the Federal Reserve System

N = National Bank

SB = Savings Bank

SI = Stock and Mutual Savings Bank

SM = State-chartered bank that is a member of the Federal Reserve System

SA = Savings Association

1 Total Assets and Total Deposits data is based upon the last Call Report filed by the institution prior to failure.

2 Estimated losses are as of 12/31/10. Estimated losses are routinely adjusted with updated information from new appraisals and asset sales, which 

ultimately affect the asset values and projected recoveries. Represents the estimated loss to the DIF from deposit insurance obligations. This 

amount does not include the estimated loss allocable to the Transaction Account Guarantee claim.
148 APPENDICES

Recoveries and Losses by the Deposit Insurance Fund on Disbursements for the 

Protection of Depositors, 1934 – 2010

Dollars in Thousands

Bank and Thrift Failures1

Year2

Number 

of Banks/

Thrifts Total Assets3 Total Deposits3

Insured Deposit 

Funding and Other 

Disbursements Recoveries

Estimated 

Additional 

Recoveries Estimated Losses

2,417 $879,080,555 $653,997,204 $529,207,216 $381,767,253 $31,024,200 $116,415,763 

20104 157 92,084,987 79,548,141 82,015,397 45,848,906 11,342,867 24,823,624 

20094 140 169,709,160 137,067,132 135,769,886 82,055,693 14,902,675 38,811,518 

20084 25 371,945,480 234,321,715 205,407,426 181,587,856 4,199,157 19,620,413 

2007 3 2,614,928 2,424,187 1,914,177 1,364,131 365,827 184,219 

2006 0 0 0 0 0 0 0 

2005 0 0 0 0 0 0 0 

2004 4 170,099 156,733 138,895 134,978 0 3,917 

2003 3 947,317 901,978 883,772 812,933 8,192 62,647 

2002 11 2,872,720 2,512,834 2,126,922 1,689,034 14,415 423,473 

2001 4 1,821,760 1,661,214 1,605,147 1,128,577 166,110 310,460 

2000 7 410,160 342,584 297,313 265,175 0 32,138 

1999 8 1,592,189 1,320,573 1,307,045 685,154 7,557 614,334 

1998 3 290,238 260,675 292,678 58,248 11,600 222,830 

1997 1 27,923 27,511 25,546 20,520 0 5,026 

1996 6 232,634 230,390 201,533 140,918 0 60,615 

1995 6 802,124 776,387 609,043 524,571 0 84,472 

1994 13 1,463,874 1,397,018 1,224,769 1,045,718 0 179,051 

1993 41 3,828,939 3,509,341 3,841,658 3,209,012 0 632,646 

1992 120 45,357,237 39,921,310 14,540,771 10,866,745 14 3,674,012 

1991 124 64,556,512 52,972,034 21,499,236 15,500,130 5,786 5,993,320 

1990 168 16,923,462 15,124,454 10,812,484 8,040,995 0 2,771,489 

1989 206 28,930,572 24,152,468 11,443,281 5,247,995 0 6,195,286 

1988 200 38,402,475 26,524,014 10,432,655 5,055,158 0 5,377,497 

1987 184 6,928,889 6,599,180 4,876,994 3,014,502 0 1,862,492 

1986 138 7,356,544 6,638,903 4,632,121 2,949,583 0 1,682,538 

1985 116 3,090,897 2,889,801 2,154,955 1,506,776 0 648,179 

1984 78 2,962,179 2,665,797 2,165,036 1,641,157 0 523,879 

1983 44 3,580,132 2,832,184 3,042,392 1,973,037 0 1,069,355 

1982 32 1,213,316 1,056,483 545,612 419,825 0 125,787 

1981 7 108,749 100,154 114,944 105,956 0 8,988 

1980 10 239,316 219,890 152,355 121,675 0 30,680 

1934-1979 558 8,615,743 5,842,119 5,133,173 4,752,295 0 380,878 
APPENDICES 149

Recoveries and Losses by the Deposit Insurance Fund on Disbursements for the 

Protection of Depositors, 1934 – 2010 (continued)

Dollars in Thousands

Assistance Transactions

Year2

Number 

of Banks/

Thrifts Total Assets3 Total Deposits3

Insured Deposit 

Funding and Other

Disbursements Recoveries

Estimated 

Additional 

Recoveries Estimated Losses

154 $3,317,099,253 $1,442,173,417 $11,630,356 $6,199,875 $0 $5,430,481 

20105 0 0 0 0 0 0 0 

20095 8 1,917,482,183 1,090,318,282 0 0 0 0 

20085 5 1,306,041,994 280,806,966 0 0 0 0 

2007 0 0 0 0 0 0 0 

2006 0 0 0 0 0 0 0 

2005 0 0 0 0 0 0 0 

2004 0 0 0 0 0 0 0 

2003 0 0 0 0 0 0 0 

2002 0 0 0 0 0 0 0 

2001 0 0 0 0 0 0 0 

2000 0 0 0 0 0 0 0 

1999 0 0 0 0 0 0 0 

1998 0 0 0 0 0 0 0 

1997 0 0 0 0 0 0 0 

1996 0 0 0 0 0 0 0 

1995 0 0 0 0 0 0 0 

1994 0 0 0 0 0 0 0 

1993 0 0 0 0 0 0 0 

1992 2 33,831 33,117 1,486 1,236 0 250 

1991 3 78,524 75,720 6,117 3,093 0 3,024 

1990 1 14,206 14,628 4,935 2,597 0 2,338 

1989 1 4,438 6,396 2,548 252 0 2,296 

1988 80 15,493,939 11,793,702 1,730,351 189,709 0 1,540,642 

1987 19 2,478,124 2,275,642 160,877 713 0 160,164 

1986 7 712,558 585,248 158,848 65,669 0 93,179 

1985 4 5,886,381 5,580,359 765,732 406,676 0 359,056 
150 APPENDICES

Recoveries and Losses by the Deposit Insurance Fund on Disbursements for the 

Protection of Depositors, 1934 – 2010 (continued)

Dollars in Thousands

Assistance Transactions (continued)

Year2

Number 

of Banks/

Thrifts Total Assets3 Total Deposits3

Insured Deposit 

Funding and Other

Disbursements Recoveries

Estimated 

Additional 

Recoveries Estimated Losses

154 $3,317,099,253 $1,442,173,417 $11,630,356 $6,199,875 $0 $5,430,481 

1984 2 40,470,332 29,088,247 5,531,179 4,414,904 0 1,116,275 

1983 4 3,611,549 3,011,406 764,690 427,007 0 337,683 

1982 10 10,509,286 9,118,382 1,729,538 686,754 0 1,042,784 

1981 3 4,838,612 3,914,268 774,055 1,265 0 772,790 

1980 1 7,953,042 5,001,755 0 0 0 0 

1934-1979 4 1,490,254 549,299 0 0 0 0 

1 Institutions closed by the FDIC, including deposit payoff, insured deposit transfer, and deposit assumption cases.

2 For 1990 through 2005, amounts represent the sum of BIF and SAIF failures (excluding those handled by the RTC); prior to 1990, figures are 

only for the BIF. After 1995, all thrift closings became the responsibility of the FDIC and amounts are reflected in the SAIF. For 2006 to 2010, 

figures are for the DIF.

3 Assets and deposit data are based on the last Call Report or TFR filed before failure.

4 Includes amounts related to transaction account coverage under the Transaction Account Guarantee Program (TAG). The estimated losses as of 

12/31/10 for TAG accounts in 2010, 2009, and 2008 are $643 million, $1,689 million, and $16 million, respectively.

5 Includes institutions where assistance was provided under a systemic risk determination. Any costs that exceed the amounts estimated under 

the least cost resolution requirement would be recovered through a special assessment on all FDIC-insured institutions.
APPENDICES 151

FDIC Actions on Financial Institutions Applications 2008 – 2010

2010 2009 2008

Deposit Insurance 16 19 123

Approved1 16 19 123

Denied 0 0 0

New Branches 461 521 1,012

Approved 459 521 1,012

Denied 2 0 0

Mergers 182 190 275

Approved 182 190 275

Denied 0 0 0

Requests for Consent to Serve2 840 503 283

Approved 840 503 283

Section 19 10 20 8

Section 32 830 483 275

Denied 0 0 0

Section 19 0 0 0

Section 32 0 0 0

Notices of Change in Control 33 18 28

Letters of Intent Not to Disapprove 33 18 28

Disapproved 0 0 0

Brokered Deposit Waivers 67 35 38

Approved 66 34 38

Denied 1 1 0

Savings Association Activities3 31 39 45

Approved 31 39 45

Denied 0 0 0

State Bank Activities/Investments4 3 2 11

Approved 3 2 11

Denied 0 0 0

Conversion of Mutual Institutions 2 6 10

Non-Objection 2 6 10

Objection 0 0 0

1 Includes deposit insurance applications filed on behalf of: (1) newly organized institutions, (2) existing uninsured 

financial services companies seeking establishment as an insured institution, and (3) interim institutions established to 

facilitate merger or conversion transactions, and applications to facilitate the establishment of thrift holding companies.

2 Under Section 19 of the Federal Deposit Insurance (FDI) Act, an insured institution must receive FDIC approval 

before employing a person convicted of dishonesty or breach of trust. Under Section 32, the FDIC must approve 

any change of directors or senior executive officers at a state non-member bank that is not in compliance with capital 

requirements or is otherwise in troubled condition. 

3 Amendments to Part 303 of the FDIC Rules and Regulations changed FDIC oversight responsibility in October 1998. 

In 1998, Part 303 changed the Delegations of Authority to act upon applications. 

4 Section 24 of the FDI Act, in general, precludes a federally-insured state bank from engaging in an activity not 

permissible for a national bank and requires notices to be filed with the FDIC.
152 APPENDICES

Compliance, Enforcement, and Other Related Legal Actions 2008 – 2010

2010 2009 2008

Total Number of Actions Initiated by the FDIC 758 551 273

Termination of Insurance

Involuntary Termination

Sec. 8a For Violations, Unsafe/Unsound Practices 

or Conditions 0 0 0

Voluntary Termination

Sec. 8a By Order Upon Request 0 0 1

Sec. 8p No Deposits 4 4 2

Sec. 8q Deposits Assumed 1 2 1

Sec. 8b Cease-and-Desist Actions

Notices of Charges Issued1,2 1 3 1

Consent Orders 372 302 97

Sec. 8e Removal/Prohibition of Director or Officer

Notices of Intention to Remove/Prohibit 10 2 4

Consent Orders 111 64 62

Sec. 8g Suspension/Removal When Charged With Crime 0 0 0

Civil Money Penalties Issued

Sec. 7a Call Report Penalties 0 1 0

Sec. 8i Civil Money Penalties 212 154 98

Sec. 8i Civil Money Penalty Notices of Assessment 8 0 0

Sec. 10c Orders of Investigation 15 10 2

Sec. 19 Waiver Orders

Approved Section 19 Waiver Orders 24 12 2

Denied Section 19 Waiver Orders 0 0 0

Sec. 32 Notices Disapproving Officer/Director’s 

Request for Review 0 0 0

Truth-in-Lending Act Reimbursement Actions

Denials of Requests for Relief 0 0 1

Grants of Relief 0 0 0

Banks Making Reimbursement1 64 94 94

Suspicious Activity Reports (Open and closed institutions)1 126,098 128,973 133,153

Other Actions Not Listed 1 0 3

1 These actions do not constitute the initiation of a formal enforcement action and, therefore, are not included in the total number of 

actions initiated.

2 Correction for 2008.
APPENDICES 153

B. More About the FDIC

FDIC Board of Directors

Sheila C. Bair

Sheila C. Bair was sworn 

in as the 19th Chairman 

of the Federal Deposit 

Insurance Corporation 

(FDIC) on June 26, 

2006. She was appointed 

Chairman for a five-year term, and as a member of 

the FDIC Board of Directors through July 2013.

Chairman Bair has an extensive background in 

banking and finance in a career that has taken 

her from Capitol Hill, to academia, to the highest 

levels of government. Before joining the FDIC 

in 2006, she was the Dean’s Professor of Financial 

Regulatory Policy for the Isenberg School of 

Management at the University of MassachusettsAmherst since 2002. While there, she also 

served on the FDIC’s Advisory Committee on 

Banking Policy. 

Other career experience includes serving as 

Assistant Secretary for Financial Institutions at the 

U.S. Department of the Treasury (2001 to 2002), 

Senior Vice President for Government Relations 

of the New York Stock Exchange (1995 to 2000), 

a Commissioner and Acting Chairman of the 

Commodity Futures Trading Commission (1991 

to 1995), and Research Director, Deputy Counsel 

and Counsel to Senate Majority Leader Robert 

Dole (1981 to 1988). 

As FDIC Chairman, Ms. Bair has presided over a 

tumultuous period in the nation’s financial sector. 

Her innovations have transformed the agency 

with programs that provide temporary liquidity 

guarantees, increases in deposit insurance limits, 

and systematic loan modifications to troubled 

borrowers. Ms. Bair’s work at the FDIC has also 

focused on consumer protection and economic 

inclusion. She has championed the first survey of 

the unbanked by the U.S. Census, the creation of 

an Advisory Committee on Economic Inclusion, 

seminal research on small-dollar loan programs, 

and the formation of broad-based alliances in nine 

regional markets to bring underserved populations 

into the financial mainstream. 

Ms. Bair has served as a member of several 

professional and nonprofit organizations, 

including the Insurance Marketplace Standards 

Association, Women in Housing and Finance, 

Center for Responsible Lending, NASD Aheadof-the-Curve Advisory Committee, Massachusetts 

Savings Makes Cents, American Bar Association, 

Exchequer Club, and Society of Children’s Book 

Writers and Illustrators.

Chairman Bair topped The Wall Street Journal’s 

annual 50 “Women to Watch List” for 2008. In 

2008 and 2009, Forbes Magazine named Ms. Bair 

as the world’s second most powerful woman after 

Germany’s Chancellor Angela Merkel.

Chairman Bair has also received several honors for 

her published work on financial issues, including 

her educational writings on money and finance 

for children, and for professional achievement. 

Among the honors she has received are: 

Distinguished Achievement Award, Association 

of Education Publishers (2005); Personal Service 

Feature of the Year, and Author of the Month 

Awards, Highlights Magazine for Children (2002, 

2003 and 2004); and The Treasury Medal (2002). 

Her first children’s book – Rock, Brock, and the 

Savings Shock, was published in 2006 and her 

second, Isabel’s Car Wash, in 2008.

Chairman Bair received a bachelor’s degree from 

the University of Kansas and a J.D. from the 

University of Kansas School of Law. She is married 

to Scott P. Cooper and has two children.
154 APPENDICES

Martin J. 

Gruenberg 

Martin J. Gruenberg was 

sworn in as Vice Chairman 

of the FDIC Board of 

Directors on August 22, 

2005. Upon the resignation 

of Chairman Donald Powell, he served as Acting 

Chairman from November 15, 2005, to June 26, 

2006. On November 2, 2007, Mr. Gruenberg 

was named Chairman of the Executive Council 

and President of the International Association of 

Deposit Insurers (IADI).

Mr. Gruenberg joined the FDIC Board after 

broad congressional experience in the financial 

services and regulatory areas. He served as 

Senior Counsel to Senator Paul S. Sarbanes 

(D-MD) on the staff of the Senate Committee 

on Banking, Housing, and Urban Affairs from 

1993 to 2005. Mr. Gruenberg advised the 

Senator on issues of domestic and international 

financial regulation, monetary policy and trade. 

He also served as Staff Director of the Banking 

Committee’s Subcommittee on International 

Finance and Monetary Policy from 1987 to 

1992. Major legislation in which Mr. Gruenberg 

played an active role during his service on the 

Committee includes the Financial Institutions 

Reform, Recovery, and Enforcement Act of 

1989 (FIRREA), the Federal Deposit Insurance 

Corporation Improvement Act of 1991 

(FDICIA), the Gramm-Leach-Bliley Act, and the 

Sarbanes-Oxley Act of 2002.

Mr. Gruenberg holds a J.D. from Case Western 

Reserve Law School and an A.B. from Princeton 

University, Woodrow Wilson School of Public and 

International Affairs.

Thomas J. Curry 

Thomas J. Curry took 

office on January 12, 

2004, as a member of the 

Board of Directors of the 

Federal Deposit Insurance 

Corporation for a six-year 

term. Mr. Curry serves as Chairman of the 

FDIC’s Assessment Appeals Committee and Case 

Review Committee.

Mr. Curry also serves as the Chairman of the 

NeighborWorks® America Board of Directors. 

NeighborWorks® America is a national nonprofit organization chartered by Congress to 

provide financial support, technical assistance, 

and training for community-based neighborhood 

revitalization efforts.

Prior to joining the FDIC’s Board of Directors, 

Mr. Curry served five Massachusetts Governors 

as the Commonwealth’s Commissioner of Banks 

from 1990 to 1991 and from 1995 to 2003. He 

served as Acting Commissioner from February 

1994 to June 1995. He previously served as First 

Deputy Commissioner and Assistant General 

Counsel within the Massachusetts Division of 

Banks. He entered state government in 1982 as 

an attorney with the Massachusetts’ Secretary of 

State’s Office.

Director Curry served as the Chairman of the 

Conference of State Bank Supervisors from 2000 

to 2001. He served two terms on the State Liaison 

Committee of the Federal Financial Institutions 

Examination Council, including a term as 

Committee chairman.

He is a graduate of Manhattan College (summa 

cum laude), where he was elected to Phi Beta 

Kappa. He received his law degree from the New 

England School of Law. 
APPENDICES 155

John E. Bowman 

John E. Bowman became 

Acting Director of the 

Office of Thrift Supervision 

(OTS) in March 2009. Mr. 

Bowman joined the OTS in 

June of 1999 as Deputy 

Chief Counsel for Business Transactions. In May 

2004, he was appointed Chief Counsel and in 

April 2007, he was appointed Deputy Director 

and Chief Counsel. Before joining the OTS, Mr. 

Bowman was a partner with the law firm of Brown 

& Wood LLP in its Washington, DC, office, 

where he specialized in government and corporate 

finance, securities and financial services regulation.

Before entering private practice, Mr. Bowman 

served for many years as Assistant General 

Counsel for Banking and Finance at the U.S. 

Department of the Treasury. While at Treasury, 

he provided counsel to the Treasury Under 

Secretary for Domestic Finance, the Assistant 

Secretaries for Financial Institutions Policy, 

Financial Markets and Economic Policy, and 

the Fiscal Assistant Secretary on a broad range 

of issues from financial services legislation to the 

financing of the federal debt.

During his government career, Mr. Bowman 

has been the recipient of numerous awards and 

honors, including the Presidential Rank Award 

and the Secretary of the Treasury’s Distinguished 

Service Award.

John Walsh 

John Walsh became Acting 

Comptroller of the Office 

of the Comptroller of the 

Currency (OCC) on August 

15, 2010, succeeding John 

C. Dugan. He also serves 

on the FDIC Board of Directors and as a board 

member of NeighborWorks® America. Mr. Walsh 

joined the OCC in October 2005 and previously 

served as Chief of Staff and Public Affairs.

Prior to joining the OCC, Mr. Walsh was the 

Executive Director of the Group of Thirty, a 

consultative group that focuses on international 

economic and monetary affairs. He joined the 

Group in 1992, and became Executive Director 

in 1995. Mr. Walsh served on the Senate Banking 

Committee from 1986 to 1992 and as an 

international economist for the U.S. Department 

of the Treasury from 1984 to 1986. Mr. Walsh 

also served with the Office of Management and 

Budget as an international program analyst, with 

the Mutual Broadcasting System, and in the U.S. 

Peace Corps in Ghana.

Mr. Walsh holds a masters’ degree in public 

policy from the Kennedy School of Government, 

Harvard University (1978), and graduated magna 

cum laude from the University of Notre Dame in 

1973. He lives in Catonsville, Maryland, and is 

married with four children.
156 APPENDICES

FDIC Organization Chart/Officials

As of December 31, 2010

Sheila C. Bair

Martin J. Gruenberg

Thomas J. Curry

John E. Bowman

John Walsh

BOARD OF DIRECTORS

Sheila C. Bair

Chairman

OFFICE OF THE CHAIRMAN

Martin J. Gruenberg

VICE CHAIRMAN

Jesse O. Villarreal, Jr.

CHIEF OF STAFF

Michael H. Krimminger

DEPUTY TO THE CHAIRMAN

FOR RESOLUTION AND LEGAL POLICY

Russell G. Pittman

CHIEF INFORMATION OFFICER/

CHIEF PRIVACY OFFICER

Andrew S. Gray

Director

OFFICE OF PUBLIC AFFAIRS

Jason C. Cave

DEPUTY TO THE CHAIRMAN

Jon T. Rymer

Inspector General

OFFICE OF INSPECTOR GENERAL

Steven O. App

DEPUTY TO THE

CHAIRMAN AND

CHIEFFINANCIAL OFFICER

Craig R. Jarvill

Acting Director

DIVISION OF FINANCE

Vacant

Director

OFFICE OF

LEGISLATIVE AFFAIRS

Thom H. Terwilliger

Chief Learning Officer

CORPORATE

UNIVERSITY

Michael H. Krimminger

Acting General Counsel

LEGAL DIVISION

Arleas Upton Kea

Director

DIVISION

OF ADMINISTRATION

Cottrell L. Webster

Ombudsman

OFFICE OF THE

OMBUDSMAN

James H. Angel, Jr.

Director

OFFICE OF ENTERPRISE

RISK MANAGEMENT

Russell G. Pittman

Director

DIVISION OF

INFORMATION

TECHNOLOGY

D. Michael Collins

Director

OFFICE OF DIVERSITY

AND ECONOMIC

OPPORTUNITY

Sandra L. Thompson

Director

DIVISION OF

SUPERVISION AND

CONSUMER PROTECTION

Arthur J. Murton

Director

DIVISION OF

INSURANCE AND

RESEARCH

Bret D. Edwards

Acting Director

DIVISION OF

RESOLUTIONS AND

RECEIVERSHIPS

Fred S. Carns

Director

OFFICE OF

INTERNATIONAL

AFFAIRS

Michael H. Krimminger

ACTING 

GENERAL COUNSEL

Paul M. Nash

DEPUTY TO THE

CHAIRMAN

FOR EXTERNAL AFFAIRS

James Wigand

Director

OFFICE OF

COMPLEX FINANCIAL

INSTITUTIONS

Mark Pearce

Director

DIVISION OF DEPOSITOR

AND CONSUMER

PROTECTION
APPENDICES 157

STAFFING TRENDS 2001 – 2010

2001 2002 2003 0

3,000

6,000

9,000

2004 2005 2006 2007 2008 2009 2010

FDIC YearEnd Staffing 6,167 5,430 5,311 5,078 4,514 4,476 4,532 4,988 6,557 8,150

Corporate Staffing

Note: 2008-2010 staffing totals reflect year-end full time equivalent staff. Prior to 2008, staffing 

totals reflect total employees on board.
158 APPENDICES

Division of Supervision and Consumer Protection2

Division of Resolutions and Receiverships3

Legal Division 

Division of Administration 

Division of Information Technology 

Corporate University 

Division of Insurance and Research 

Division of Finance 

Office of Inspector General 

Executive Offices4

Office of the Ombudsman

Office of Diversity and Economic Opportunity

Office of Enterprise Risk Management 

Total

Total Washington Regional/Field

2010 2009 2010 2009 2010 2009

3,649 3,168 379 222 3,270 2,946

2,110 1,158 155 78 1,955 1,080

805 625 352 302 453 323

430 373 265 217 165 156

328 298 245 227 83 71

207 350 199 52 8 298

203 193 173 150 30 43

165 155 165 145 0 10

128 120 92 84 36 36

55 53 55 53 0 0

31 22 12 11 19 11

26 29 26 29 0 0

13 13 13 13 0 0

8,150 6,557 2,131 1,584 6,019 4,973

Number of Employees by Division/Office 2009 – 2010 

(Year-End)1

1 The FDIC reports staffing totals using a full-time equivalent methodology, which is based on an employee’s scheduled work hours. Totals 

may not foot due to rounding.

2 The Division of Supervision and Consumer Protection staffing count includes one staff member hired to lead the newly created Division of 

Depositor and Consumer Protection (DCP). DCP was not fully recognized as a separate division until January 1, 2011. 

3 The Division of Resolutions and Receiverships staffing count includes one staff member hired to lead the newly created Office of Complex 

Financial Institutions (OCFI). OCFI was not fully recognized as a separate division until January 1, 2011.

4 Includes the Offices of the Chairman, Vice Chairman, Director (Appointive), Chief Operating Officer, Chief Financial Officer, Chief 

Information Officer, Legislative Affairs, Public Affairs, International Affairs and External Affairs.
APPENDICES 159

Sources of Information

FDIC Website

www.fdic.gov

A wide range of banking, consumer and financial 

information is available on the FDIC’s website. This 

includes the FDIC’s Electronic Deposit Insurance 

Estimator (EDIE), which estimates an individual’s 

deposit insurance coverage; the Institution Directory 

– financial profiles of FDIC-insured institutions; 

Community Reinvestment Act evaluations and 

ratings for institutions supervised by the FDIC; Call 

Reports – banks’ reports of condition and income; 

and Money Smart, a training program to help 

individuals outside the financial mainstream enhance 

their money management skills and create positive 

banking relationships. Readers also can access a 

variety of consumer pamphlets, FDIC press releases, 

speeches, and other updates on the agency’s activities, 

as well as corporate databases and customized reports 

of FDIC and banking industry information.

FDIC Call Center

PHONE: 877-275-3342 (877-ASK-FDIC) 

703-562-2222

HEARING

IMPAIRED: 800-925-4618

703-562-2289

The FDIC Call Center in Washington, DC, is 

the primary telephone point of contact for general 

questions from the banking community, the public 

and FDIC employees. The Call Center directly, or 

in concert with other FDIC subject-matter experts, 

responds to questions about deposit insurance and 

other consumer issues and concerns, as well as 

questions about FDIC programs and activities. The 

Call Center also makes referrals to other federal 

and state agencies as needed. Hours of operation 

are 8:00 a.m. to 8:00 p.m., Eastern Time, Monday 

– Friday and 9:00 a.m. to 5:00 p.m., Saturday 

– Sunday. Recorded information about deposit 

insurance and other topics is available 24 hours a 

day at the same telephone number.

As a customer service, the FDIC Call Center has 

many bilingual Spanish agents on staff and has 

access to a translation service able to assist with 

over 40 different languages.

Public Information Center 

3501 Fairfax Drive

Room E-1021

Arlington, VA 22226

PHONE: 877-275-3342 (877-ASK-FDIC), 

703-562-2200

FAX: 703-562-2296

FDIC ONLINE CATALOG:

 https://vcart.velocitypayment.com/

fdic/

E-MAIL: publicinfo@fdic.gov

Publications such as FDIC Quarterly, Consumer 

News and a variety of deposit insurance and 

consumer pamphlets are available at www.fdic.

gov or may be ordered in hard copy through the 

FDIC online catalog. Other information, press 

releases, speeches and congressional testimony, 

directives to financial institutions, policy manuals, 

and FDIC documents are available on request 

through the Public Information Center. Hours 

of operation are 9:00 a.m. to 4:00 p.m., Eastern 

Time, Monday – Friday.

Office of the Ombudsman

3501 Fairfax Drive

Room E-2022

Arlington, VA 22226

PHONE: 877-275-3342 (877-ASK-FDIC)

FAX: 703-562-6057

E-MAIL: ombudsman@fdic.gov

The Office of the Ombudsman (OO) is an 

independent, neutral, and confidential resource 

and liaison for the banking industry and the 

general public. The OO responds to inquiries 

about the FDIC in a fair, impartial, and timely 

manner. It researches questions and fields 

complaints from bankers and bank customers. 

OO representatives are present at all bank 

closings to provide accurate information to bank 

customers, the media, bank employees, and the 

general public. The OO also recommends ways 

to improve FDIC operations, regulations, and 

customer service.
160 APPENDICES

Regional and Area Offices

ATLANTA REGIONAL OFFICE

10 Tenth Street, NE

Suite 800

Atlanta, Georgia 30309

(678) 916-2200

Alabama

Florida

Georgia

North Carolina

South Carolina

Virginia

West Virginia

CHICAGO REGIONAL OFFICE

300 South Riverside Plaza

Suite 1700

Chicago, Illinois 60606

(312) 382-6000 

Illinois

Indiana

Kentucky

Michigan

Ohio

Wisconsin

DALLAS REGIONAL OFFICE

1601 Bryan Street

Dallas, Texas 75201

(214) 754-0098

Colorado

New Mexico

Oklahoma

Texas

MEMPHIS AREA OFFICE

5100 Poplar Avenue

Suite 1900

Memphis, Tennessee 38137

(901) 685-1603

Arkansas

Louisiana

Mississippi

Tennessee

KANSAS CITY REGIONAL OFFICE

1100 Walnut Street

Suite 2100

Kansas City, Missouri 64106

(816) 234-8000

Iowa

Kansas

Minnesota

Missouri

Nebraska

North Dakota

South Dakota
APPENDICES 161

NEW YORK REGIONAL OFFICE

350 Fifth Avenue

Suite 1200

New York, New York 10118

(917) 320-2500

Delaware

District of Columbia

Maryland

New Jersey

New York

Pennsylvania

Puerto Rico

Virgin Islands

BOSTON AREA OFFICE

15 Braintree Hill Office Park

Suite 100

Braintree, Massachusetts 02184

(781) 794-5500

Connecticut

Maine

Massachusetts

New Hampshire

Rhode Island

Vermont

SAN FRANCISCO REGIONAL OFFICE

25 Jessie Street at Ecker Square

Suite 2300

San Francisco, California 94105

(415) 546-0160

Alaska

Arizona

California

Guam

Hawaii

Idaho

Montana

Nevada

Oregon

Utah

Washington

Wyoming
162 APPENDICES

C. Office of Inspector General’s Assessment of the 

Management and Performance Challenges Facing the FDIC

Under the Reports Consolidation Act of 2000, 

the Office of Inspector General (OIG) is required 

to identify the most significant management and 

performance challenges facing the Corporation 

and provide its assessment to the Corporation 

for inclusion in its annual performance and 

accountability report. The OIG conducts this 

assessment annually and identifies specific areas 

of challenge facing the Corporation at the time. 

In identifying the challenges, we keep in mind 

the Corporation’s overall program and operational 

responsibilities; financial industry, economic, 

and technological conditions and trends; areas of 

congressional interest and concern; relevant laws 

and regulations; the Chairman’s priorities and 

corresponding corporate goals; and the ongoing 

activities to address the issues involved. Taking 

time to reexamine the corporate mission and 

priorities as the OIG identifies the challenges 

helps in planning assignments and directing OIG 

resources to key areas of risk.

A significant milestone that will impact multiple 

facets of the FDIC’s programs and operations 

was the enactment of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act 

(Dodd-Frank Act) on July 21, 2010. The stated 

aim of the Dodd-Frank Act is “To promote 

the financial stability of the United States by 

improving accountability and transparency in the 

financial system, to end ‘too big to fail,’ to protect 

the American taxpayer by ending bailouts, to 

protect consumers from abusive financial services 

practices, and for other purposes”.

In looking at the recent past and the current 

environment and anticipating—to the extent 

possible—what the future holds, the OIG believes 

that the FDIC faces challenges in the areas listed 

below. While the Corporation will sustain its 

efforts to restore and maintain public confidence 

and stability, particularly as it implements key 

provisions of the Dodd-Frank Act, challenges will 

persist in other areas as well. We note in particular 

that the Corporation is devoting significant 

additional resources to carrying out its massive 

resolution and receivership workload, brought on 

by 140 financial institution failures during 2009 

and an additional 157 during 2010. At the same 

time, the FDIC will face continuing challenges 

in meeting its deposit insurance responsibilities, 

enhancing its supervision of financial institutions, 

protecting consumers, and managing its expanded 

internal workforce and other corporate resources.

The Corporation can take pride in having 

made great efforts to maintain stability and 

confidence in the nation’s banking system: 

completing or sustaining a number of new 

initiatives, responding to new demands, and 

playing a key part in shaping the future of bank 

regulation over the past year. Passage of the 

Dodd-Frank Act presents new opportunities and 

challenges for the FDIC to continue its efforts in 

restoring the vitality and stability of the financial 

system over the coming months.

Restoring and Maintaining Public 

Confidence and Stability in the 

Financial System

With signs of recovery in the economy and the 

financial services industry, the FDIC and other 

regulators have turned a corner, but much work 

remains. Institutions continue to fail, and the 

economy is still stressed. Public confidence has 

been shaken and still needs to be bolstered. 

Reforms under the Dodd-Frank Act involve 

far-reaching changes designed to restore market 

discipline, internalize the costs of risk-taking, 

protect consumers, and make the regulatory 

process more attuned to systemic risks. The FDIC 

will have significant involvement in this regard 

during the upcoming year.

The Dodd-Frank Act created the Financial 

Stability Oversight Council (FSOC), of which 

the FDIC is a voting member. The FSOC 

will monitor sources of systemic risk and 

promulgate rules that will be implemented by 

the various financial regulators represented on 

the FSOC. In most instances, the FSOC will 

reach decisions based on a simple majority of 
APPENDICES 163

the FSOC’s 10 voting members. In certain 

circumstances, however, a supermajority of seven 

votes will be required, one of which must be cast 

by the Secretary of the Treasury. The Dodd-Frank 

Act also establishes an independent Consumer 

Financial Protection Bureau (CFPB) within the 

Federal Reserve System; abolishes the Office 

of Thrift Supervision (OTS) and transfers its 

supervisory responsibilities for federal and statechartered thrift institutions and thrift holding 

companies to the Office of the Comptroller of 

the Currency (OCC), the FDIC, and the Federal 

Reserve System, respectively; and gives the FDIC 

new authorities to help address the risks in 

systemically important financial companies.

So that the FDIC can best carry out its 

responsibilities under the Dodd-Frank Act, 

the Board of Directors approved a number of 

internal organizational changes, establishing a 

new Office of Complex Financial Institutions 

(OCFI) and a new Division of Depositor and 

Consumer Protection (DCP). In connection 

with these changes, the Division of Supervision 

and Consumer Protection (DSC) has been 

renamed the Division of Risk Management 

Supervision (RMS). New leadership impacting 

these organizations was announced, effective 

December 31, 2010, and those named to 

lead them will face challenges in establishing 

policies, procedures, and practices to guide their 

new efforts.

Taken together, and along with lessons learned 

from the past several years, these changes to 

the FDIC’s responsibilities and organizational 

structure should go a long way toward restoring 

confidence and public trust in the nation’s 

financial system. The coming months will be 

challenging for the FDIC and all of the regulatory 

agencies as they work collaboratively to reposition 

themselves to carry out the mandates of the DoddFrank Act, writing rules to implement key sections 

and undertaking their new responsibilities.

Assuming New Resolution Authority, 

Resolving Failed Institutions, and 

Managing Receiverships

Perhaps the most fundamental reform under the 

Dodd-Frank Act is the new resolution authority 

for large bank holding companies and systemically 

important nonbank financial companies. The 

FDIC has historically carried out a prompt and 

orderly resolution process under its receivership 

authority for insured banks and thrifts. The 

Dodd-Frank Act now gives the FDIC a similar 

set of receivership powers to liquidate failed 

systemically important financial firms.

A new challenge associated with this responsibility 

includes determining how to handle the claims 

process under this new authority. The FDIC has 

proposed a rule to ensure that all creditors—

shareholders and holders of subordinated, 

unsecured, and secured debt—know they are at 

risk of loss in a failure. This proposed rule is an 

important step in implementing the resolution 

authority under the Dodd-Frank Act and ending 

“Too Big to Fail.”

Another challenging key step will be to develop 

requirements for the resolution plans that all 

systemically important financial companies now 

have to establish. These resolution plans are 

essentially blueprints for the orderly unwinding 

of these companies should they run into serious 

problems. Under the Dodd-Frank Act, the FDIC 

and the Federal Reserve can exercise considerable 

authority to shape the content of these plans in 

the interest of ensuring that they are an effective 

means to guide the resolution of these companies.

In addition to the future challenges associated 

with exercising this new resolution authority, the 

Corporation is currently dealing with a daunting 

resolution and receivership workload. Onehundred-forty institutions failed during 2009, 

with total assets, based upon last call reports filed, 

of $171.2 billion and total estimated losses to the 

Deposit Insurance Fund (DIF) of approximately 

$37.1 billion. By year-end 2009, the number 

of institutions on the FDIC’s “Problem List” 

also rose to its highest level in 16 years. During 

2010, an additional 157 institutions failed, 
164 APPENDICES

and there were 884 insured institutions on the 

“Problem List” at the end of the year, indicating 

a probability of more failures to come and an 

increased asset disposition workload. Total assets 

of problem institutions decreased to $390.0 

billion as of year-end 2010. 

Franchise marketing activities are at the heart 

of the FDIC’s resolution and receivership work. 

The FDIC pursues the least costly resolution to 

the DIF for each failing institution. Each failing 

institution is subject to the FDIC’s franchise 

marketing process, which includes valuation, 

marketing, bidding and bid evaluation, and 

sale components. The FDIC is often able to 

market institutions such that all deposits, not 

just insured deposits, are purchased by the 

acquiring institution, thus avoiding losses to 

uninsured depositors.

Of special note, through purchase and assumption 

(P&A) agreements with acquiring institutions, 

the Corporation has entered into 223 loss-share 

agreements covering $193 billion in assets (at 

inception). Under these agreements, the FDIC 

agrees to absorb a portion of the loss—generally 

80-95 percent—which may be experienced by 

the acquiring institution with regard to those 

assets, for a period of up to 10 years. In addition, 

the FDIC has entered into a series of structured 

asset sales to dispose of assets with an unpaid 

principal balance of $22.5 billion (at inception). 

Under these arrangements, the FDIC retains a 

participation interest in future net positive cash 

flows derived from third-party management of 

these assets.

Other post-closing asset management activities 

will continue to require much FDIC attention. 

FDIC receiverships manage assets from failed 

institutions, mostly those that are not purchased 

by acquiring institutions through P&A 

agreements or involved in structured sales. The 

FDIC is managing 344 receiverships holding 

about $27.0 billion in assets, mostly securities, 

delinquent commercial real-estate and singlefamily loans, and participation loans. Post-closing 

asset managers are responsible for managing 

many of these assets and rely on receivership 

assistance contractors to perform day-to-day asset 

management functions. Since these loans are often 

sub-performing or nonperforming, workout and 

asset disposition efforts are more intensive.

The FDIC has increased its permanent 

resolution and receivership staffing and has 

significantly increased its reliance on contractor 

and term employees to fulfill the critical 

resolution and receivership responsibilities 

associated with the ongoing FDIC interest in the 

assets of failed financial institutions. At the end 

of 2008, on-board resolution and receivership 

staff totaled 491, while on-board staffing at the 

end of 2010 was 2,118. As of year-end 2010, 

the FDIC also had about 1,900 active contracts 

valued at $4.5 billion; approximately 1,700 of 

these were related to the receivership function and 

accounted for approximately $3.5 billion of the 

total value. 

The significant surge in failed-bank assets and 

associated contracting activities requires effective 

and efficient contractor oversight management 

and technical monitoring functions. Bringing 

on so many contractors and new employees in 

a short period of time can strain personnel and 

administrative resources in such areas as employee 

background checks, which, if not timely and 

properly executed, can compromise the integrity 

of FDIC programs and operations.

As the Corporation’s workforce responds to 

institution failures and carries out all of the 

resolution and receivership responsibilities 

outlined above, it will face a number of challenges. 

To summarize, first and foremost, it needs to 

ensure that it develops and implements strong and 

effective controls to mitigate the risks involved 

in all of its business dealings with acquirers, 

contractors, and other third parties. It also needs 

to ensure that related processes, negotiations, and 

decisions regarding the future status of the failed 

or failing institutions are marked by fairness, 

transparency, and integrity. Marketing failing 

institutions to qualified and interested potential 

bidders, selling assets, and maximizing potential 

values of failed bank franchises will continue to 

challenge FDIC staff. Over time, these tasks may 
APPENDICES 165

be even more difficult, given concentrations of 

assets in the same geographic area, a decreasing 

pool of interested buyers, and an inventory of less 

attractive, hard-to-sell assets. It is also possible that 

individuals or entities that may have been involved 

in previous institution failures or activities 

contributing to losses to the insurance fund 

could try to reenter the FDIC’s asset purchase 

and management arena. Appropriate safeguards 

must be in place to ensure that the Corporation 

knows the backgrounds of its bidders to prevent 

those parties from profiting at the expense of 

the Corporation. Finally, in order to minimize 

costs, it is important to terminate in a timely 

manner those receiverships not subject to lossshare agreements, structured sales, or other legal 

impediments.

Ensuring and Maintaining the Viability of 

the Deposit Insurance Fund

As of December 31, 2010, there were 7,657 

FDIC-insured banking institutions with FDICestimated insured deposits of $6.2 trillion. A 

critical priority for the FDIC is to ensure that the 

DIF remains viable to protect insured depositors 

in the event of an institution’s failure. The DIF has 

suffered from the failures of the past several years. 

Losses from failures in 2008 and 2009 totaled 

$19.6 billion and $37.1 billion, respectively. 

As of year-end, 2010, failures during 2010 had 

caused losses of approximately $24.2 billion. In 

September 2009, the DIF’s fund balance—or net 

worth—fell below zero for the first time since the 

third quarter of 1992. Although the balance of the 

DIF declined by $38.1 billion during 2009 and 

totaled negative $7.4 billion as of December 31, 

2010, the DIF’s liquidity was enhanced during 

the fourth quarter of 2009 by 3 years of prepaid 

assessments and the DIF has been well positioned 

to fund resolution activity in 2010 and beyond. 

To maintain a sufficient fund balance, the FDIC 

collects risk-based insurance premiums from 

insured institutions and invests DIF funds.

The FDIC Board of Directors recently voted 

in December 2010 to set the DIF’s designated 

reserve ratio at 2 percent of estimated insured 

deposits. The Dodd-Frank Act set a minimum 

designated reserve ratio of 1.35 percent, and 

left unchanged the requirement that the FDIC 

Board set a designated reserve ratio annually. The 

Board sets the reserve ratio according to risk of 

loss to the DIF, economic conditions affecting the 

banking industry, preventing sharp swings in the 

assessment rates, and any other factors it deems 

important. The decision to set the designated 

reserve ratio at 2 percent was based on a historical 

analysis of losses to the DIF. The analysis showed 

that in order to maintain a positive fund balance 

and steady, predictable assessment rates, the 

reserve ratio should be at least 2 percent as a longterm, minimum goal.

The final rule for the reserve ratio is part of 

a comprehensive fund management plan 

proposed by the Board in October 2010. The 

plan is intended to provide insured institutions 

with moderate, steady assessment rates 

throughout economic cycles, and to maintain a 

positive fund balance even during severe economic 

times. The Board acted on other aspects of the 

comprehensive plan—assessments, dividends, 

assessment base, and large bank pricing—during 

the first quarter of 2011.

Importantly, with respect to the largest institutions 

and any potential negative impact of their 

failure on the fund, Title II of the Dodd-Frank 

Act helps to address the notion of “Too Big to 

Fail.” The largest institutions will be subjected 

to the same type of market discipline facing 

smaller institutions. Title II provides the FDIC 

authority to wind down systemically important 

bank holding companies and nonbank financial 

companies as a companion to the FDIC’s 

existing authority to resolve insured depository 

institutions. As noted earlier, the FDIC’s new 

Office of Complex Financial Institutions will play 

a key role in overseeing these new functions.

Ensuring Institution Safety and Soundness 

Through an Effective Examination and 

Supervision Program

The Corporation’s supervision program promotes 

the safety and soundness of FDIC-supervised 

insured depository institutions. The FDIC is 

the primary federal regulator for approximately 

4,700 FDIC-insured, state-chartered institutions 
166 APPENDICES

that are not members of the Federal Reserve 

System—often referred to as “state non-member” 

institutions. The OCC, OTS, and Federal Reserve 

supervise other banks and thrifts, depending on 

the institution’s charter. (Note that the institutions 

under the OTS’s purview will be transferred to 

the other regulators when the OTS is abolished 

pursuant to the Dodd-Frank Act, as referenced 

previously.) As insurer, the Corporation also has 

backup examination authority to protect the 

interests of the DIF for about 2,800 national 

banks, state-chartered banks that are members 

of the Federal Reserve System, and savings 

associations.

In the current environment, efforts to continue 

to ensure safety and soundness and to carry out 

the examination function will be challenging in 

a number of ways. Of particular importance for 

2011 is that the Corporation needs to continue to 

assess the implications of the recent financial and 

economic crisis and to integrate lessons learned 

and any needed changes to the examination 

program into the supervisory process. At the same 

time, it needs to continue to conduct scheduled 

examinations to ensure the safety and soundness 

of the thousands of institutions that it regulates.

The Corporation has developed a comprehensive 

“forward-looking supervision” training program 

and will need to continue to put that training 

into practice going forward. This approach 

involves carefully assessing the institution’s overall 

risks, and basing ratings not on current financial 

condition alone, but rather on consideration 

of possible future risks. These risks should be 

identified by rigorous and effective on-site and offsite review mechanisms and accurate metrics that 

identify risks embedded in the balance sheets and 

operations of the insured depository institutions 

so that steps can be taken to mitigate their impact 

on the institutions.

In all cases, examiners need to continue to bring 

any identified problems to the bank’s board’s 

and management’s attention, assign appropriate 

ratings, and make actionable recommendations 

to address areas of concern. Subsequently, the 

FDIC’s corrective action and follow-up processes 

must be effective to ensure that institutions 

are acting on recommendations and promptly 

complying with any supervisory enforcement 

actions—informal or formal—resulting from the 

FDIC’s risk-management examination process. 

In some cases, to maintain the integrity of the 

banking system, the Corporation will also need to 

aggressively pursue prompt actions against bank 

boards of directors or senior officers who may have 

contributed to an institution’s failure.

The rapid changes in the banking industry, 

increase in electronic and online banking, growing 

sophistication of fraud schemes, and the mere 

complexity of financial transactions and financial 

instruments all create potential risks at FDICinsured institutions and their service providers. 

These risks can negatively impact the FDIC and 

the integrity of the U.S. financial system and 

contribute to institution failures if existing checks 

and balances falter or are intentionally bypassed. 

The FDIC must seek to minimize the extent to 

which the institutions it supervises are involved in 

or victims of financial crimes and other abuses. It 

needs to continue to focus on Bank Secrecy Act 

examinations to prevent banks and other financial 

service providers from being used as intermediaries 

for, or to hide the transfer or deposit of money 

derived from, criminal activity. FDIC examiners 

need to be alert to the possibility of other 

fraudulent activity in financial institutions and 

make full use of reports, information, and other 

resources available to them to help detect 

such fraud.

With the passage of the Dodd-Frank Act, 

the coming months will bring significant 

organizational changes to the FDIC’s current 

supervision program, as well as corresponding 

challenges. As referenced earlier, the FDIC 

Board of Directors approved the establishment 

of the OCFI and DCP. In conjunction with 

these changes, DSC has been renamed RMS, 

and its mandate will be focused on supervision 

rather than consumer protection, the function 

of which is being transferred to DCP. OCFI has 

begun operations and will focus on overseeing 

bank holding companies with more than 

$100 billion in assets and their corresponding 
APPENDICES 167

insured depository institutions. OCFI will also 

be responsible for nonbank financial companies 

designated as systemically important by the 

FSOC. OCFI and RMS will coordinate closely 

on all supervisory activities for state non-member 

institutions that exceed $100 billion in assets; 

RMS will be responsible for the overall Large 

Insured Depository Institution program.

Protecting and Educating Consumers and 

Ensuring an Effective Compliance Program

The FDIC’s efforts to ensure that banks serve 

their communities and treat consumers fairly 

continue to be a priority. The FDIC carries out its 

consumer protection role by educating consumers, 

providing them with access to information about 

their rights and disclosures that are required 

by federal laws and regulations, and examining 

the banks where the FDIC is the primary 

federal regulator to determine the institutions’ 

compliance with laws and regulations governing 

consumer protection, unfair or deceptive acts 

and practices, fair lending, and community 

investment. The FDIC’s compliance program, 

including examinations, visitations, and followup supervisory attention on violations and other 

program deficiencies, is critical to ensuring that 

consumers and businesses obtain the benefits and 

protections afforded them by law. Proactively 

identifying and assessing potential risks associated 

with new and existing consumer products will 

continue to challenge the FDIC. As a further 

means of remaining responsive to consumers, the 

FDIC’s Consumer Response Center investigates 

consumer complaints about FDIC-supervised 

institutions and responds to inquiries from the 

public about consumer laws and regulations, 

consumer products, and banking practices.

Going forward, the FDIC will be experiencing 

and implementing changes related to the DoddFrank Act that have direct bearing on consumer 

protection. The Dodd-Frank Act establishes 

a new Consumer Financial Protection Bureau 

within the Federal Reserve and transfers to this 

bureau the FDIC’s examination and enforcement 

responsibilities over most federal consumer 

financial laws for insured depository institutions 

with over $10 billion in assets and their insured 

depository institution affiliates. However, even 

for these large organizations, the FDIC will have 

backup authority to enforce federal consumer 

laws and address violations. Under the DoddFrank Act, the FDIC will maintain compliance, 

examination, and enforcement responsibility for 

over 4,700 insured institutions with $10 billion or 

less in assets. As previously discussed, during early 

2011, the FDIC established DCP, responsible for 

the Corporation’s compliance examination and 

enforcement program, as well as the depositor 

protection and consumer and community affairs 

activities that support that program.

Effectively Managing the FDIC Workforce 

and Other Corporate Resources

The FDIC must effectively manage and utilize a 

number of critical strategic resources in order to 

carry out its mission successfully, particularly its 

human, financial, information technology, and 

physical resources. These resources have been 

stretched over the past year, and the Corporation 

will continue to face challenges during 2011.

Importantly, and as referenced earlier, in the 

coming months, as the Corporation responds to 

Dodd-Frank Act requirements and continues to 

pursue its long-standing mission in the face of 

lingering financial and economic turmoil, the 

resources of the entire FDIC will be challenged. 

For example, as required by the Dodd-Frank 

Act, the Corporation established an Office of 

Minority and Women Inclusion responsible 

for all agency matters relating to diversity in 

management, employment, and business activities. 

The Corporation has transferred its former Office 

of Diversity and Economic Opportunity staff 

to this new office. Other new responsibilities, 

reorganizations, and changes in senior leadership 

and in the makeup of the FDIC Board will 

greatly impact the FDIC workforce in the months 

ahead. Promoting sound governance and effective 

stewardship of its core business processes and 

human and physical resources will be key to the 

Corporation’s success.

Of particular note, FDIC staffing levels have 

increased dramatically. The Board approved an 

authorized 2011 staffing level of 9,252 employees, 
168 APPENDICES

up about 2.5 percent from the 2010 authorization 

of 9,029. Thirty-nine percent of the total 9,252 

authorized positions for 2011 are temporary 

positions. Temporary employees have been 

hired by the FDIC to assist with bank closings, 

management and sale of failed bank assets, and 

other activities that are expected to diminish 

substantially as the industry returns to more 

stable conditions. To that end, the FDIC opened 

three temporary satellite offices (East Coast, 

West Coast, and Midwest) for resolving failed 

financial institutions and managing the resulting 

receiverships.

The Corporation’s contracting level has also grown 

significantly, especially with respect to resolution 

and receivership work. Over $1.6 billion was 

available for contracting for receivership-related 

services during 2010. To support the increases in 

FDIC staff and contractor resources, the Board 

of Directors approved a $3.9 billion Corporate 

Operating Budget for 2011, down slightly 

from the 2010 budget the Board approved in 

December 2009. The FDIC’s operating expenses 

are paid from the DIF, and consistent with sound 

corporate governance principles, the Corporation’s 

financial management efforts must continuously 

seek to be efficient and cost-conscious.

Opening new offices, rapidly hiring and training 

many new employees, expanding contracting 

activity, and training those with contract oversight 

responsibilities are all placing heavy demands on 

the Corporation’s personnel and administrative 

staff and operations. When conditions improve 

throughout the industry and the economy, a 

number of employees will need to be released 

and staffing levels will move closer to a pre-crisis 

level, which may cause additional disruption 

to ongoing operations and current workplaces 

and working environments. Among other 

challenges, pre- and post-employment checks for 

employees and contractors will need to ensure the 

highest standards of ethical conduct, and for all 

employees, the Corporation will seek to sustain 

its emphasis on fostering employee engagement 

and morale.

From an information technology perspective, 

amidst the heightened activity in the industry 

and economy, the FDIC is engaging in massive 

amounts of information sharing, both internally 

and with external partners. FDIC systems 

contain voluminous amounts of critical data. 

The Corporation needs to ensure the integrity, 

availability, and appropriate confidentiality of 

bank data, personally identifiable information, 

and other sensitive information in an environment 

of increasingly sophisticated security threats 

and global connectivity. Continued attention 

to ensuring the physical security of all FDIC 

resources is also a priority. The FDIC needs 

to be sure that its emergency response plans 

provide for the safety and physical security of its 

personnel and ensure that its business continuity 

planning and disaster recovery capability keep 

critical business functions operational during any 

emergency.

The FDIC is led by a five-member Board of 

Directors, all of whom are appointed by the 

President and confirmed by the Senate, with no 

more than three being from the same political 

party. The FDIC has three internal directors—the 

Chairman, Vice Chairman, and one independent 

Director—and two ex officio directors, the 

Comptroller of the Currency and the Director of 

OTS. With the passage of the Dodd-Frank Act, 

the OTS will no longer exist and the Director of 

OTS will be replaced on the FDIC Board by the 

Director of the CFPB in mid-2011. The FDIC 

Chairman has announced her intention to leave 

the Corporation when her term expires—by the 

end of June 2011. Given the relatively frequent 

turnover on the Board, it is essential that strong 

and sustainable governance and communication 

processes be in place throughout the FDIC 

and that Board members possess and share the 

information needed at all times to understand 

existing and emerging risks and to make sound 

policy and management decisions.

Enterprise risk management is a key component of 

governance at the FDIC. The FDIC’s numerous 

enterprise risk management activities need to 

consistently identify, analyze, and mitigate 

operational risks on an integrated, corporate-
APPENDICES 169

wide basis. Additionally, such risks need to be 

communicated throughout the Corporation, 

and the relationship between internal and 

external risks and related risk mitigation activities 

should be understood by all involved. To further 

enhance risk monitoring efforts, the Corporation 

established six Program Management Offices to 

address risks associated with such activities as lossshare agreements, contracting oversight for new 

programs and resolution activities, the systemic 

resolution authority program, and human 

resource management concerns. Lessons from 

these areas need to be integrated into corporate 

thinking and decision-making. Additionally, 

the FDIC Chairman charged members of her 

senior staff with planning for and presenting 

a case to the Board for the establishment of a 

Chief Risk Officer at the FDIC to better ensure 

that risks to the Corporation are identified and 

mitigated to the fullest extent. In 2011, the 

Chairman announced creation of a new Office of 

Corporate Risk Management to be led by a Chief 

Risk Officer. The addition of such a function is 

another important organizational change that 

will require carefully thought-out and effective 

implementation in order to be successful.
2010

Federal Deposit Insurance Corporation

This Annual Report was produced by talented 

and dedicated staff. To these individuals, we 

would like to offer our sincere thanks and 

appreciation. Special recognition is given to the 

following individuals for their contributions.

• Jannie F. Eaddy

• Barbara Glasby

• David Kornreich

• Robert Nolan

• Patricia Hughes

• Meredith Robinson
F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N

5 5 0 1 7 T H S T R E E T , N W

W A S H I N G T O N , D C 2 0 4 2 9 - 9 9 9 0

F D I C - 0 0 3 - 2 0 1 1

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