1

The Year in Review

The year 2004 marked continued

changes within the FDIC, but 

maintaining stability of the nation’s

financial services industry remained

a primary focus. The FDIC continued

to lead and participate in many 

interagency initiatives in an effort 

to meet the demands of an ever

evolving financial services industry.

During 2004, the FDIC continued 

its emphasis on reducing regulatory

burden, and also enhanced its 

examination program while promoting

measures to improve its efficiency.

Studies were conducted in various

areas, identifying risks and promoting

best practices among the regulatory

and banking industries. In 2004, the

FDIC actively contributed to efforts

to address money laundering and

terrorist financing risks as well 

as other financial crimes such as

identity theft.

Highlights of the Corporation’s 2004

accomplishments are presented in

this section for each of the FDIC’s

three major business lines – Insurance,

Supervision and Consumer Protection,

and Receivership Management – as

well as its program support functions.

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 funds.

I. Management’s

Discussion

and Analysis

Deposit Insurance Reform

The FDIC again gave priority attention

to enactment of comprehensive

deposit insurance reform legislation

in 2004. 

The FDIC’s reform recommendations

include: ● Merging the Bank Insurance Fund

(BIF) and the Savings Association 

Insurance Fund (SAIF).

● Granting the FDIC’s Board of

Directors the flexibility to manage 

a combined deposit insurance 

fund. Under the present system, 

statutorily mandated methods of 

managing the size of the BIF and 

SAIF may cause large premium 

swings and could force the FDIC 

to charge the highest premiums 

during difficult economic times 

when the industry can least afford 

it. Currently, safer institutions 

subsidize riskier institutions 

unnecessarily, while new entrants 

and growing institutions avoid 

paying premiums. To address these

problems, the FDIC recommended

that Congress give the Board of 

Directors the discretion to: ● Manage the combined fund 

within a range.

● Price deposit insurance 

according to risk at all times 

for all insured institutions.

● Grant a one-time initial 

assessment credit to 

recognize institutions’ past 

contributions to the deposit 

insurance funds and create 

an ongoing system of 

assessment credits and 

rebates to prevent the fund 

from growing too large.

● Indexing the level of deposit insurance coverage to ensure that basic 

account coverage is neither eroded 

over time by inflation nor made

subject to irregular adjustments.
The House passed H.R. 522, the

Federal Deposit Insurance Reform

Act of 2003, on April 22, 2003, by 

a vote of 411 to 11. Although the

Senate Banking Committee held a

hearing on deposit insurance reform

in February 2003, it did not act on 

a deposit insurance bill before the

108th Congress adjourned.The FDIC

provided information and analysis 

to Congress in support of deposit

insurance reform legislation. 

Support was obtained for a proposed

assessment credit and rebate 

system as well as a new deposit

insurance pricing system. Enactment

of deposit insurance reform will

remain a priority of the FDIC during

2005.

Improvements to the FDIC’s 

Loss Reserve Methodology

Discrepancies between projected

failed assets and actual assets 

and projected and actual losses

at failed financial institutions were

reviewed at Financial Risk Committee

meetings in March and September.

No deficiencies in the methodology

for projecting losses were noted.

During 2004, enhancements to 

the FDIC’s reserving process and

methodology were also implemented,

in accordance with recommendations

from a comprehensive 2003 study.

The Financial Risk Committee adopted

new guidelines for deviating from

actual historical failure rates and

enhanced coefficients contained in

the research model which is used to

develop loss given failure estimates.

In addition, a working prototype 

of an integrated fund model was

developed to better measure 

and manage risk to the deposit 

insurance funds.

New International Capital

Standards

The FDIC continues to actively 

participate in efforts to align capital

standards with advances in financial

institutions’ risk measurement 

and management practices, while 

ensuring that such institutions and

the industry as a whole maintain

adequate capital and reserves. 

During 2004, the FDIC was active 

on a number of global and domestic

supervisory and policy groups 

and subgroups including the Basel

Committee on Banking Supervision

(BCBS), the Capital Task Force, and

the Accord Implementation Group.

The FDIC also participated in various

U.S. regulatory efforts aimed at

interpreting international standards

and establishing sound policy and

procedures for implementing these

standards.

The BCBS published the “International

Convergence of Capital Measurement

and Capital Standards” in June 2004,

which is more commonly referred 

to as “Basel II” or the “Revised

Framework.” These broad international

standards will provide the underpinnings for a U.S. revised capital rule,

which is currently anticipated to be

finalized by domestic bank and thrift

regulatory authorities in mid-2006 

for implementation in January 2008.

Ensuring the adequacy of insured

institutions’ capital under Basel II

remains a key objective for the FDIC.

In 2004, the FDIC actively participated

in domestic and international policy

and implementation efforts to ensure

these new rules are designed 

appropriately. These efforts included

the development of examination

guidance, which is intended to 

provide the industry with regulatory

perspectives for implementation,

and the performance of a fourth

quantitative impact study (QIS)

begun in 2004 to assess the potential

impact of the Revised Framework 

on financial institution and industrywide capital levels. 

The FDIC invested significant

resources on several fronts in 2004

to ensure that the Revised Framework

will be compatible with the

Corporation’s roles as both deposit

insurer and supervisor. Significant

work was performed, both internationally and domestically, to assure

that Basel II will be implemented

efficiently, that effective supervisory

oversight will continue, and that

these new rules will not create 

unintended and potentially harmful

consequences. To that end, the 

FDIC began to identify, hire and train

personnel to ensure that a strong

infrastructure will exist to meet the

many challenges posed by adoption

of the complex risk management

standards put forth under Basel II.

Regulatory Burden Reduction

Initiatives 

During 2004, under the leadership 

of Vice Chairman John Reich, the

federal bank and thrift regulatory

agencies continued a cooperative

three-year effort to review all of their

regulations (129 in all) that impose

some burden on the industry. 

The purpose of the review, which 

is mandated by the Economic

Growth and Regulatory Paperwork

Reduction Act of 1996 (EGRPRA), 

is to identify and eliminate any 

outdated, unnecessary or unduly 

burdensome regulatory requirements,

while ensuring safety and soundness

and consumer protections remain

strong.

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For the purposes of this review, 

the agencies categorized their 

regulations into 12 separate groups.

Every six months, new groups 

of regulations are published for 

comment, giving bankers, community

groups and others an opportunity 

to identify regulatory requirements

they believe are no longer needed,

as well as consumer protections that

must be preserved. Comments on

the first group of regulations, which

included Applications and Reporting,

Powers and Activities and International

Banking, were solicited in 2003, 

and were analyzed during 2004.

The agencies issued notices for

comment on two more groups of

regulations in 2004:

● Lending-related consumer 

protection regulations, which 

include Truth-In-Lending 

(Regulation Z), Equal Credit 

Opportunity (Regulation B), 

Home Mortgage Disclosure Act 

(HMDA); and 

● Deposit-related and other 

consumer protection regulations, 

which include Privacy of Consumer

Financial Information, Truth-InSavings, and Deposit Insurance 

Coverage. 

The agencies received over 700

responses to the request for 

comments on these two groups 

of regulations.

The agencies also held six outreach

meetings in 2004, three for bankers

and three for consumer and community groups. These outreach sessions

were intended to increase industry

awareness of the EGRPRA project

and obtain feedback.

The FDIC and the other financial 

regulatory agencies undertook several

initiatives in 2004 that are expected

to relieve regulatory burden, improve

operational efficiencies of banks, or

assist financial institutions in assessing potential risk. They published

additional interagency guidance and

examination procedures on the USA

PATRIOT Act. The FDIC also sought

comments on proposed changes 

to its Community Reinvestment 

Act regulations and its regulations

governing certain international 

activities. (Final regulations in both

areas are expected in early 2005.)

The FDIC also redesigned the 

EGRPRA Web site to make it more

comprehensive and user-friendly 

and redesigned its Financial Institution

Letter (FIL) format to make it easier

for financial institutions to identify

whether the subject of the FIL

applies to their specific institution

and the area of the institution to

which the FIL is most relevant. 

In 2005, the agencies will continue

to analyze the comments and other

feedback that have been received

and expect to propose legislative 

or regulatory changes, where 

appropriate, to address certain 

regulatory burdens and needed 

consumer protections.

Center for Financial Research

The Corporation established the

FDIC Center for Financial Research

(CFR) in late 2003 to promote

research that provides meaningful

insights regarding developments 

in deposit insurance, the financial

sector, prudential supervision, risk

measurement and management, 

regulatory policy and related topics

that are of interest to the FDIC, the

financial services industry, academia

and policymakers. The CFR is a 

partnership between the FDIC and

the academic community with 

prominent scholars actively engaged

in administering and carrying out its

research program. The CFR carries

out its mission through an agenda 

of research, analysis, forums and

conferences that encourage and

facilitate an ongoing dialogue 

incorporating industry, academic 

and public-sector perspectives.

The CFR supports high-quality original

research by sponsoring relevant

research program lines and soliciting

rigorous analysis of the issues 

within five program areas. These

programs benefit from the leadership of program coordinators who 

are drawn largely from the outside

academic community. Input is 

also obtained from six prominent

economists who serve as Senior

Fellows. The CFR sponsors a Visiting

Research Fellows Program to 

provide support for in-residence

scholars for defined time periods. 

In 2004, the CFR funded 17 research

proposals, the results of which 

will be published in the new CFR

Working Papers Series. The CFR

also engaged leading scholars in

banking and finance to collaborate

with FDIC staff on subjects of 

mutual interest.

The CFR and The Journal for 

Financial Services Research (JFSR)

sponsored their fourth annual

research conference, “Risk Transfer

and Governance in the Financial

System,” in September 2004. 

The conference, which included 

21 presentations selected from more

than 60 submissions, attracted more

than 100 researchers and included

both domestic and international 

participants. The CFR held two 

workshops during the year for authors

to present their interim results on

CFR-sponsored research. 
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Identifying and Addressing 

Risks to the Insurance Funds

The FDIC prepares summary analyses

each quarter on the condition of

large insured financial entities, based

primarily on information provided 

by their primary Federal regulators.

These analyses assist the FDIC in

identifying risk trends and potential

exposure to the insurance funds.

Identified risks are highlighted in 

various reports and communicated

throughout the Corporation in 

both written format and by oral 

presentations. 

All institution-specific concerns 

identified through this ongoing 

analytical process in 2004 were

referred to FDIC regional offices 

for appropriate follow-up action. 

In most cases, these concerns were

resolved in connection with the 

institution's primary Federal regulator.

The FDIC also conducted numerous

outreach activities during 2004 on

matters of economic and banking

risk analysis with community groups,

other regulators, and the banking

industry. Among them were a series

of internal and public roundtables

that included a 2004 banking outlook

roundtable in New York City, our

third annual Washington, DC 

economic outlook roundtable, and 

an economics luncheon featuring 

Dr. Catherine Mann of the Institute

for International Economics.

The Corporation also released four

issues of FDIC Outlook during the

year, along with a number of FYI

electronic bulletins. Featured Outlook

articles addressed topics such as

emerging risks in mortgage and home

equity lending, trends in commercial

lending, and the challenges to banks

facing rural depopulation. FYI reports

published during the year featured

an FDIC assessment of banking

industry exposure to debt obligations

of government-sponsored enterprises

(GSEs) and a series of articles on the

evolving nature of banking in America,

including a look at the changing role

of community banks, bank branching

trends, and challenges from changing

payment systems. Four quarterly

issues of FDIC State Profiles were

released for each state during 2004,

and the results of those reports were

discussed at regularly scheduled

press briefings.

FFIEC Central Data Repository

The FDIC continued to provide 

leadership for an interagency 

initiative to implement the Central

Data Repository (CDR). This effort

includes the Federal Reserve Board

and the Office of the Comptroller of

the Currency. The CDR is designed

to consolidate the collection, validation

and publication of quarterly bank

financial reports. The CDR will be

accessible to regulators, financial

institutions and the public. This 

initiative is being undertaken in 

cooperation with the Call Report

software vendors and the banking

industry, and will employ new 

technology that uses XBRL (Extensible

Business Reporting Language) data

standard to streamline the collection,

validation and publication of Call

Report data. Originally scheduled 

for implementation in October 2004,

rollout of the CDR was postponed to

address industry feedback and allow

more time for system testing and

enrollment of financial institutions.

As a result, a two-phased implementation of the CDR during the second

and third quarters of 2005 is now

planned. 

Risk Analysis Center

The Risk Analysis Center (RAC) 

was established in 2003 to provide

information about current and

emerging supervisory issues. The

RAC brings together economists,

bank examiners, financial analysts

and others to monitor and analyze

economic, financial, regulatory and

supervisory trends, and their potential

implications for the continued financial

health of the banking industry and

the deposit insurance funds.

Comprehensive solutions are 

developed to address risks identified

Members of the RAC Management Committee and Liaisons –

Seated (l to r): 

Miguel Browne, Steve Fritts, Michael Jackson, and Don Inscoe.

Standing (l to r) :

Bill Stark, Jim Meyer, Sylvia Plunkett, and Tom Dujenski. 
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during the process. Guided by the

FDIC’s National Risk Committee and

the RAC Management Committee,

the RAC serves as a clearinghouse

for information generated by the

FDIC’s six regional offices and 

sponsors a number of projects

involving risk-related issues. 

Two initiatives were implemented 

in 2004 to improve the dissemination

of risk-related information. First, the

Supervisory Discussion Room was

initiated to provide interactive 

nationwide audio and video-conferences on various topics. Each session

includes a presentation on a bank

supervision matter. Second, the

Examiner Forum was developed in

conjunction with the Field Supervisor

(FS) Council to increase examiner

awareness of the RAC and to share

information about emerging issues

among the field examination staff.

Both initiatives provide examiners an

opportunity to exchange information

across regions and with technical

specialists in the Washington office. 

RAC activities also include regular

monitoring and analysis of economic

and financial developments and 

communication of these issues with

FDIC staff and management. Staff

conducts a weekly conference call 

to discuss recent developments, 

and daily Economic Data Releases 

are sent by email to FDIC subscribers

summarizing intra-day economic

news. The RAC website also serves

as a clearinghouse for internal 

analyses of emerging risks. Initial

findings on emerging issues are

often followed by more in-depth

analysis in formal RAC projects.

Resolving Institution Failures

See Receivership Management

Section (page 19)

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. At year-end 2004,

the Corporation was the primary 

federal regulator for 5,272 FDICinsured, state-chartered institutions

that are not members of the Federal

Reserve System (generally referred

to as “state non-member” institutions).

Through safety and soundness, 

consumer compliance and Community

Reinvestment Act (CRA) examinations

of these FDIC-supervised institutions,

the FDIC assesses their operating

condition, management practices

and policies, and their compliance

with applicable laws and regulations.

The FDIC also educates bankers 

and consumers on matters of interest

and addresses consumers’ questions

and concerns.

Safety and Soundness

Examinations 

During 2004, the Corporation 

conducted all 2,515 statutorily

required safety and soundness

examinations. The number and 

total assets of FDIC-supervised 

institutions identified as “problem”

institutions (defined as having a 

composite CAMELS1

rating of “4” 

or “5”) decreased during 2004. As 

of December 31, 44 institutions 

with total assets of $5.3 billion 

were identified as problem institutions

compared to 73 institutions 

with total assets of $8.2 billion on

December 31, 2003. These changes

represent a decrease of 39.7 percent

and 35.4 percent, respectively, in 

the number and assets of problem

institutions. During 2004, 57 institutions were removed from problem

institution status due to composite

rating upgrades, mergers, consolidations or sales, and 28 were newly

identified as problem institutions. 

The FDIC is required to conduct 

follow-up examinations of all 

designated problem institutions within

12 months of the last examination. As

of December 31, 2004, all follow-up

examinations for problem institutions

had been performed on schedule.

Compliance and Community

Reinvestment Act (CRA)

Examinations 

The FDIC conducted 1,459 

comprehensive compliance-CRA

examinations, 673 compliance-only

examinations,2 and four CRA-only 

examinations in 2004, compared 

to 1,610 joint compliance-CRA 

examinations, 307 compliance-only

examinations, and two CRA-only 

examinations in 2003. The FDIC 

conducted all joint and comprehensive

examinations within established time

frames. As of December 31, 2004,

five institutions were assigned a 

“4” rating for compliance, and no

institutions were rated “5.” Of 

the five institutions rated “4” as of

December 31, 2004, four are within

the 12 month window following

issuance of an enforcement action.

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).

Compliance-only examinations are conducted for most institutions at or near the mid-point between joint complianceCRA 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.”

1

2
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Of these four, two entered into

Memorandums of Understanding

with the FDIC and two are subject 

to outstanding Cease and Desist

Orders. A Cease and Desist Order

for the fifth institution will likely be

issued during the first quarter of

2005.

Examination Program Efficiencies 

The FDIC continued in 2004 to

implement measures to improve

examination efficiency by maximizing

the use of risk-focused examination

procedures at well-managed banks.

Based on experience with the

Maximum Efficiency Risk-Focused

Institution Target (MERIT) Program

implemented in 2002, the FDIC

raised the threshold for well-rated,

well-capitalized banks qualifying 

for streamlined examinations under

the MERIT Program to $1 billion, up

from $250 million. Use of the MERIT

Program allows the FDIC to direct

more examination resources to 

institutions posing the most risks 

to the insurance funds. The FDIC

also implemented more risk-focused

examinations for the trust and 

information technology specialty areas.

The FDIC continued to emphasize

the revised compliance examination

approach implemented during the

second half of 2003. During 2004,

the FDIC convened six focus groups

with bankers across the country 

to discuss their experience with the

revised compliance examination

process. The bankers strongly 

supported the new process, reporting

that it had resulted in a more efficient

examination and that compliance

examiners provided more constructive

feedback than in the past.

In keeping with other recent strategic

initiatives to enhance supervisory

processes, the FDIC conducted a

pilot program to test a new approach

to bank supervision. The primary 

purpose of the “relationship manager

program” pilot was to determine 

the extent to which designation of 

a relationship manager for each bank

would enhance risk-focused assessments and improve communications

with financial institutions.

The pilot explored alternatives to the

traditional point-in-time examination

by allowing supervisory activities to

be conducted over the appropriate

12- or 18-month supervisory cycle at

selected institutions, based on their

risk profiles. Relationship managers

developed supervisory plans for their

designated banks and served as the

institution's local primary point-ofcontact. Benefits of the pilot included

ongoing “real time” assessments,

as well as improved communications

with financial institutions. Preliminary

results of the pilot were favorable.

Results will be further evaluated 

in 2005 to determine the feasibility

of implementing some or all aspects

of the program nationwide.

New Supervisory Journal

The FDIC released in June the 

inaugural issue of Supervisory Insights,

a professional journal providing a

forum for discussing how bank 

regulation and policy are put into

practice in the field, sharing best

practices, and communicating about

the emerging issues bank supervisors

are facing. A second issue was 

published in December. Supervisory

Insights is available on the FDIC’s

internal and external Web sites. 

The journal, which will be published

twice yearly, includes regular features,

such as “Accounting News” and

“From the Examiner's Desk,” as

well as articles discussing areas 

of current supervisory focus at 

the FDIC. 

2004 2003 2002

Safety and Soundness:

State Nonmember Banks 2,276 2,182 2,290

Savings Banks 236 231 229

Savings Associations 0 0 0

National Banks 0 5 10

State Member Banks 3 3 5

Subtotal - Safety and Soundness Examinations 2,515 2,421 2,534

CRA/Compliance Examinations:

Compliance-Community Reinvestment Act 1,459 1,610 1,334

Compliance-only 673 307 493

CRA-only 4 2 13

Subtotal CRA/Compliance Examinations 2,136 1,919 1,840

Specialty Examinations:

Trust Departments 534 501 524

Data Processing Facilities 2,570 2,304 1,681

Subtotal-Specialty Examinations 3,104 2,805 2,205

Total 7,755 7,145 6,579

FDIC Examinations 2002-2004
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Shared National Credit

Modernization

The Shared National Credit (SNC)

program is an interagency effort

designed to provide a review and

credit quality assessment of many 

of the largest and most complex

(syndicated) bank credits. The 

purpose of the program is to gain

efficiencies and consistencies in the

review of credits shared by multiple

institutions under a formal lending

agreement. The program is governed

by an interagency agreement between

the Federal Reserve Board, the FDIC,

and the Office of the Comptroller 

of the Currency (OCC). 

During 2004, the agencies initiated 

a SNC Data Collection Modernization

project (SNC Modernization). The

project seeks to enhance and streamline this effective supervision program

by standardizing the SNC data 

collection system, applying more

advanced credit risk analytics and

benchmarking techniques across

bank portfolios, and providing 

participating banks with feedback 

on their SNC portfolios across those

metrics. In December, the agencies

published a Notice for Public Comment

in the Federal Register requesting

the industry's feedback on the SNC

Modernization project. The notice

describes the changes to the 

reporting system the agencies

contemplate and identifies new data

elements the agencies propose to

collect. In the notice, the agencies

present a series of questions to elicit

comment on the expanded program

and to help the agencies refine 

the design of the expanded data 

collection system.

Homeland Security 

The financial sector is a critical 

component of the infrastructure 

in the United States, and the FDIC

has taken a leadership role in 

assisting part of the financial sector

in preparing for emergencies. As a

member of the Financial and Banking

Information Infrastructure Committee

(FBIIC), the FDIC sponsored a series

of outreach meetings in 21 cities

across the United States in 2004 

on Protecting the Financial Sector: 

A Public and Private Partnership.

These meetings provided financial

sector leaders with the opportunity

to communicate with senior government officials, law enforcement

members, and emergency management and private sector leaders

about protecting the financial sector.

Additional outreach meetings will 

be scheduled for 2005.

Bank Secrecy Act

The FDIC is also fully committed 

to assisting in efforts designed to

thwart the inappropriate use of the

banking system through activities

conducted by criminals and terrorists.

Our supervisory program, in conjunction with strong law enforcement

efforts, creates an environment

where criminals and terrorists who

use the U.S. financial system to 

fund their operations will risk being

discovered. 

Since the passage of the USA 

PATRIOT Act (Uniting and Strengthening America by Providing Appropriate

Tools Required to Intercept and

Obstruct Terrorism Act of 2001), 

the FDIC has been actively engaged

in a number of Bank Secrecy Act

(BSA), anti-money laundering (AML),

and counter-financing of terrorism

(CFT) initiatives. During the past

year, the FDIC contributed to joint

industry and interagency working

groups for the development of rules

and interpretive guidance; incorporated

rules and guidance into examination

procedures and industry resources;

refined the process for referring 

BSA violations and other significant

matters to the U.S.Department 

of the Treasury’s FinCEN; assisted 

in global AML and CFT efforts; 

dedicated more staff to BSA/AML

oversight; provided BSA/AML/CFT

training to all risk management 

professionals; and participated in

numerous industry outreach sessions.

In September 2004, the FDIC, 

the other Federal banking agencies,

and FinCEN entered into an 

information-sharing Memorandum 

of Understanding to enhance 

communication and coordination 

to help financial institutions identify,

detect, and interdict terrorist financing

and money laundering. The FDIC

also issued 20 formal actions and

entered into 83 informal agreements

that contained provisions regarding

BSA compliance. 

International Stability

The FDIC serves as a member of 

the Consultative Group (CG) with

respect to Middle East North Africa

Partnership for Financial Excellence

(PFE) initiative sponsored by the

State Department (State) and the

Department of the Treasury (Treasury).

Under the PFE, the federal banking

agencies in the U.S. (the FDIC, the

Federal Reserve and the OCC) are

working with Treasury, State and 

the U.S. Agency for International

Development (USAID) in developing

a training initiative to assist in the

development of bank supervision 
15 

in the Middle East and North Africa

(MENA) region. The CG consists 

of representatives from the bank

supervisory bodies in the MENA

region, training institutions and banker

associations in that region, and the

U.S. supervisory and regulatory

community. The CG serves as the

advisory body and coordinating entity

to facilitate the design, development

and implementation of the training

initiative. The objective of this 

initiative is to help foster economic

growth in the region through the

implementation of sound financial

supervisory systems. The federal

banking agencies are delivering 

technical assistance programs to

meet needs in the MENA region.

The FDIC is scheduled to deliver

training focused on bank supervision

and resolutions in 2005. 

As a member of the Association 

of Supervisors of Banks of the

Americas (ASBA) Strategic Planning

Implementation Committee, the

FDIC helped develop specific action

plans for ASBA’s 2004 – 2008 strategic

plan. This plan will help ASBA

deliver more relevant and timely 

support to its member countries. The

strategic plan is focused on ensuring

ASBA member countries effectively 

implement legal and regulatory

frameworks, as well as bank 

supervisory policies, procedures 

and programs that are in line with

the Basel core principles. 

The FDIC fulfilled 16 technical 

assistance missions in 2004.

Beneficiaries of these missions

included Morocco, Kyrgyz Republic,

Iraq, Georgia, Russia, Jordan,

Argentina, Serbia, Romania, several

countries in Latin America, and 

countries involved in the Partnership

for Financial Excellence Program in

the Middle East and North Africa.

In 2004, the FDIC also held 51 

meetings with representatives from

foreign countries. The visitors usually

represented a country's central bank

or deposit insurance agency. The

most frequent visitors were: China (7),

Korea (6), Russia (4), Indonesia (3),

Jamaica (3), Taiwan (3), and Japan (3).

Accounting Policy

During 2004, the FDIC was active 

in addressing several complex

accounting issues of interest to

depository institutions. In February,

the FDIC, in conjunction with the

other financial institution regulators,

issued guidance on the proper

accounting and regulatory reporting

for certain types of deferred compensation arrangements. In order 

to address the industry’s concerns

about potential changes in the

accounting for allowances for loans

and lease losses, the FDIC joined

other financial institution regulators

in March to advise the industry on

the status of the American Institute

of Certified Public Accountants’ 

work on this important subject and

to remind institutions of the current

accounting and regulatory reporting

guidance in this area. In addition, 

in an effort to avoid adverse changes

in the accounting for loan participations, the FDIC worked extensively

with the Financial Accounting

Standards Board (FASB) to ensure

FASB fully understood the treatment

of loan participations in receiverships

for its consideration and further

deliberation on the proper accounting

for this critical lending activity.

Financial Education and

Community Development

During 2004, the Corporation 

continued to expand the scope and

impact of its efforts to increase the

availability of financial services to lowand moderate-income populations,

as well as to those outside the 

financial mainstream. 

The Corporation has worked diligently

to form partnerships with financial

institutions, bank trade associations,

non-profit organizations, community

and consumer-based groups and 

federal, state and local agencies 

to promote financial education. 

In 2004, the FDIC added over 200

partners to its Money Smart alliance,

increasing its total to over 900 

partnerships nationally. Through 

its Money Smart financial education

program, the FDIC has provided

training to an estimated 8,300 

volunteer instructors, reached 

more than 294,000 consumers, 

disseminated an additional 20,000

copies of the Money Smart curriculum, and seen the establishment 

of more than 40,000 bank accounts.

The Money Smart curriculum is 

available in five languages: English,

Spanish, Chinese, Korean, and

Vietnamese. The FDIC launched 

a new interactive computer-based

version of Money Smart in English

and Spanish in September 2004.

The target to conduct and participate

in 125 outreach and technical 

assistance activities in 2004 was

exceeded.
16

The FDIC is one of 20 agencies 

that are members of the Financial

Literacy Education Commission,

which was established by Congress

in 2003 to educate Americans 

about the importance of personal

finances. The FDIC chairs one of 

two subcommittees formed by the

Commission, a subcommittee to

develop a national toll-free hotline 

(1-888-mymoney) that consumers

can use to obtain information 

on personal finance topics. The

Commission launched the hotline 

in late 2004. 

During 2004, the FDIC also continued

to lead a Chicago-based pilot project

called the New Alliance Task Force

(NATF), which is focused on increasing

access to bank products and services

for Latino immigrants. NATF is a

broad-based coalition of 63 member

organizations, comprised of the

Mexican Consulate, banks, communitybased organizations, federal bank

regulatory agencies, government

agencies, and representatives from

the secondary market and private

mortgage insurance companies. In

2004, NATF-member banks opened

50,000 new accounts throughout the

Midwest, totaling about $100 million

in new deposits, with an average

account balance of $2,000.

Consumer Privacy and 

Identity Theft

The FDIC has taken a leading role 

in helping banks combat identity

theft. In November 2004, the FDIC

published a study entitled Stop,

Thief! Putting an End to AccountHijacking Identity Theft. The study

took an in-depth look at identity

theft, focusing on account hijacking

(the unauthorized use of deposit

accounts). The study found account

hijacking fraud could be significantly

reduced if banks upgraded the 

security measures they use to

authenticate customers who access

their accounts remotely via computers

and used specialized software to

proactively detect and defend against

account hijacking. The study also

concluded that increased consumer

education and information-sharing

could reduce identity theft. The FDIC

is currently investigating the most

appropriate ways to follow up on 

the study’s findings.

The FDIC conducted a study on 

offshore outsourcing following

Chairman Powell's March 4, 2004,

testimony before the House

Subcommittee on Oversight and

Investigations on Financial Services

and the Senate Banking Committee.

The purpose of the study was to

identify risks to consumer privacy 

and identity theft from foreign outsourcing. The study also identified

best practices that financial institutions

can use to mitigate the risk inherent

in foreign outsourcing relationships.

The study recommended that the

banking agencies expand the scope

of examination procedures to include

identification of undisclosed thirdparty contracting arrangements and

conduct an analysis of the feasibility

of using the FFIEC as a central 

location for the Bank Service

Company Act notices filed by 

financial institutions. This information

could then be used for analysis,

monitoring and tracking by the

supervisory agencies. The FDIC 

is working with the other banking

agencies to implement these 

recommendations.

The FDIC is one of several federal

agencies charged with implementing

the provisions of the Fair and Accurate

Credit Transactions Act of 2003

(FACT Act), which substantially

amended the Fair Credit Reporting

Act, particularly in the areas of 

consumer access to and quality 

of credit information, privacy, and

identity theft. The FACT Act:

● preserves uniform national 

standards for the content of 

consumer report information 

and creditor access to such 

information,

● improves consumer access 

to credit information,

Leaders gather at Commission’s first meeting (l to r):

Federal Reserve Board Chairman Alan Greenspan, 

FDIC Chairman Donald E. Powell, 

National Credit Union Administration Chairman Dennis Dollar 

and Treasury Secretary John Snow.
17 

● improves the quality of reported 

credit information,

● protects privacy,

● combats identity theft, and

● promotes financial literacy.

Consistent with the privacy 

requirements of the FACT Act, 

the FDIC worked with other federal

agencies to issue draft rules in 2004:

(1) permitting creditors to obtain, 

use and share medical information

only to the degree necessary to 

facilitate legitimate operational

needs; and (2) providing consumers

with the ability to limit the circumstances under which affiliated 

financial institutions may use certain

information in connection with 

marketing activities. These rules 

will be issued in final form once 

the agencies fully consider the 

comments received in response 

to the proposals. In the meantime,

the FDIC is training its examiners 

on the concepts underlying these

rules, and is developing examination

procedures to evaluate industry 

compliance.

Consistent with the identity theft

provision of the FACT Act, the FDIC

worked with other federal agencies

in 2004 to propose rules that would

require banks to implement a written

identity theft protection program

which includes procedures to evaluate

red flags that might indicate identity

theft. The FDIC, with the other 

agencies, also finalized rules requiring

institutions to properly dispose of

consumer information derived from

credit reports in order to prevent

identity theft and other fraud. The

rules on disposal of consumer 

information become effective on

July 1, 2005.

Curbing Unfair and 

Deceptive Practices

In March 2004, the FDIC and the

Federal Reserve Board (FRB) jointly

published guidance for state-chartered

institutions on unfair or deceptive acts

or practices prohibited by Section 5

of the Federal Trade Commission

(FTC) Act. This guidance explains

how institutions may avoid engaging

in practices that might be viewed 

as unfair or deceptive. The FDIC 

also joined with the FFIEC agencies 

to propose guidance on overdraft

protection programs in June 2004.

The proposed guidance discusses: 

● approaches to providing consumers

with protection against account 

overdrafts; 

● existing and potential concerns 

about offering and administering 

overdraft protection services; 

● key legal issues, including 

compliance with the FTC Act 

and other applicable federal and 

state laws;

● safety and soundness considerations, such as whether institutions

offering overdraft protection 

services have adopted adequate 

policies and procedures to address

the credit, operational and other 

risks associated with these 

services; and

● best practices in use or 

recommended by the industry, 

including those relating to 

marketing overdraft protection 

services and communicating 

with customers about the 

features of such programs.

The agencies received about 300

comments on the proposed guidance.

We expect the final guidance to be

issued in 2005. 

Consumer Complaints 

and Inquiries 

The FDIC investigates and responds

to complaints and inquiries from 

consumers, financial institutions and

other parties about potential violations

of consumer protection and fair 

lending laws, as well as deposit

insurance matters. The FDIC’s 

centralized Consumer Response

Center (CRC) is responsible for

investigating all types of consumer

complaints about FDIC-supervised

institutions and for answering

inquiries about consumer protection

laws and banking practices. During

2004, the FDIC received 8,804 

complaints, of which 3,791 were

against state-chartered nonmember

banks. Approximately 41 percent 

of the state nonmember bank 

consumer complaints concerned

credit card accounts, with the most

frequent complaints involving loan

denials, billing disputes and account

errors, terms and conditions, collection

practices, reporting of erroneous

information, identity theft, and 

credit card fees and service charges.

The FDIC also responded to 2,947

deposit insurance and 5,087 consumer

protection inquiries from consumers

and members of the banking 

community. The FDIC responded to

over 90 percent of written complaints

on a timely basis.
18

Deposit Insurance Education

An important part of the FDIC’s role

in insuring deposits and protecting

the rights of depositors is its responsibility to ensure that bankers and

consumers have access to accurate

information about FDIC deposit

insurance rules. To that end, the

FDIC has an expansive deposit 

insurance education program 

consisting of seminars for bankers,

electronic tools for calculating

deposit insurance coverage, and

written and electronic information

targeting both bankers and 

consumers. During 2004, the FDIC

completed a digital video for bank

employees and customers explaining

how FDIC deposit insurance works

and issued a new edition of our

Electronic Deposit Insurance

Estimator (EDIE) for Bankers. The

video, which is available on DVD 

and can also be viewed through 

the FDIC’s Web site, provides an

overview of deposit insurance 

coverage rules and requirements,

with specific emphasis on the most

common account ownership categories used by individuals and families.

The EDIE software update met a

2004 performance target to provide

improved resources to bankers on

deposit insurance rules. It allows

bankers to calculate their customers’

insurance coverage for nearly all types

of deposit accounts an individual or

business may have at an insured bank

or savings association. Consumers

can also access EDIE directly through

the FDIC’s Web site.

In 2004, the FDIC continued to expand

its educational tools for consumers

by issuing two new brochures 

for bank customers. Insuring Your

Deposits describes insurance coverage rules for deposit accounts most

commonly owned by individuals 

and families. Your Insured Deposits -

FDIC’s Guide to Deposit Insurance

Coverage, an update of the 1999

version, provides an in-depth 

explanation of the FDIC’s account

ownership categories and includes

the FDIC’s new rules for insurance

coverage of living trust accounts that

became effective on April 1, 2004. 

The FDIC also conducted 38 deposit

insurance seminars for financial 

institution employees, consumer

organizations, and bank regulatory

agencies. These seminars, which

were conducted in a variety of 

formats, including internet, phone

conference, and classroom, provided

an in-depth review of how FDIC

insurance works, including the FDIC’s

rules for coverage of different types

of deposit accounts. 

Office of the Ombudsman (OO)

Services to the Banking Industry

The OO was established by federal

statute to serve as a confidential,

neutral, and independent resource

and liaison for bankers with the 

FDIC on regulatory matters. The 

OO ensures the fair and consistent

application of FDIC rules and 

regulations, and the fair treatment 

of institutions throughout the FDIC’s

examination, assessment, application,

enforcement, rule-making and other

processes. The OO works with

financial institutions and the FDIC 

to informally resolve problems and

disputes at the earliest possible

stages. During 2004, bankers and 

members of the public contacted the

OO, voicing questions and seeking

problem or complaint resolution.

Cumulatively, these contacts provided

the FDIC with an important perspective on general and specific matters

of importance, concern, or uncertainty

to bankers.

High school senior Christopher Perry (with Chairman Don Powell, left, and Chief of Staff 

Jodey Arrington, right) said “he left with a positive outlook on the role of the FDIC and its 

duty to insure depositors’ money.” 
19 

Protecting Insured Depositors

Through Asset Marketing

The FDIC’s ability to attract healthy

FDIC-insured institutions to assume

deposits and purchase the assets of

failed banks and savings associations

ensures that depositors have prompt

access to their insured deposits,

minimizes the disruption to the 

customers and the community, and

allows a fair portion of the failed

institution’s assets to be returned to

the private sector almost immediately.

Assets remaining after the resolution

transaction are liquidated by the

FDIC in an orderly manner, and the

proceeds are used to pay creditors

and uninsured depositors (depositors

whose accounts exceed the $100,000

deposit insurance limits), and to

reimburse the insurance fund that

funded the resolution transaction. 

In 2004, the FDIC again met its goal

of marketing 85 percent of a failed

institution's marketable assets within

90 days of the institution's failure.

Receivership Management

The FDIC has the unique mission of

protecting the depositors of insured

banks and savings associations.

Since the FDIC’s inception over 

70 years ago, no depositor has 

ever experienced a loss of insured

deposits at an FDIC-insured institution

due to a failure. The FDIC protects

insured depositors by prudently 

managing the BIF and the SAIF and

using the assets of the funds to pay

insured deposits at the time of the

institution failure. Once an institution

is closed by its chartering authority –

the state for state-chartered 

institutions, the OCC for national

banks, or the Office of Thrift

Supervision (OTS) for federal savings

associations–the FDIC is responsible

for the resolution of the failed bank

or savings association. FDIC staff

gathers data about the troubled 

institution, estimates the potential

loss due to its failure, solicits and

evaluates bids from all known 

qualified and interested bidders, 

and then recommends the least

costly resolution transaction to 

the FDIC’s Board of Directors. 

Resolving Financial Institution

Failures

During 2004, the FDIC resolved three

BIF-insured institution failures and

one SAIF-insured institution failure.

The SAIF - insured institution, Dollar

Savings Bank, Newark, New Jersey,

with total assets of $15 million, was

closed on February 14, and depositors

received their insured funds by check.

Guaranty National Bank of Tallahassee,

Tallahassee, Florida, with total 

assets of $77 million, was closed on

March 12. All of Guaranty’s deposits

and a large portion of its assets 

were sold to another FDIC-insured

institution. Reliance Bank, White

Plains, New York, with total assets of

$27 million, was closed on March 19.

All of Reliance’s deposits and a large

portion of its assets were also sold

to another FDIC - insured institution.

The Bank of Ephraim, Ephraim, Utah,

with total assets of $46 million, was

closed on June 25. In all cases, the

target time frame was met for giving

depositors access to their funds.

Ephraim’s insured deposits were sold

to another FDIC-insured institution.

(See the accompanying table above

for details about liquidation activities.)

During 2004, the FDIC completed

investigations and decisions regarding

closure or pursuit of claims for all 

five receiverships that had failed

within the prior 18 months. This

exceeded the performance target 

of reaching decisions on closure 

or pursuit of professional liability

claims for 80 percent of failed 

institutions within 18 months of 

the failure date. 

2004 2003 2002

Total Resolved Banks 3 3 10

Assets of Resolved Banks $ 0.15 $ 1.10 $ 2.50

Total Resolved Savings Associations 1 0 1

Assets of Resolved Savings Associations $ 0.01 $ 0.00 $ 0.05

Net Collections from Assets in Liquidation●$ 0.38 $ 1.70 $ 1.84

Total Assets in Liquidation●$ 0.61 $ 0.81 $ 1.24

Total Dividends Paid●$ 0.38 $ 1.06 $ 2.12

Includes activity from thrifts resolved by the former Federal Savings and Loan Insurance Corporation and the Resolution

Trust Corporation. 

Dollars in billions

Liquidation Highlights 2002-2004

●
20

Customer Service Center

In order to help consumers needing

assistance with matters arising 

from failed financial institutions, the

FDIC operates a Customer Service

Call Center with staff dedicated 

to handling records research and 

collateral releases. During 2004, 

the FDIC staff responded to 36,791

inquiries. The records research staff

reviews the historical records of

failed financial institutions in order 

to answer customer questions on

deposit accounts, loan transaction

histories, tax suits for delinquent 

real estate and other issues. 

The collateral release staff researches

and determines ownership of collateral

securing loans of failed financial 

institutions in order to provide 

a release of lien, assignment or

reconveyance to the borrower. This

staff successfully handled 13,494

collateral release inquiries in 2004. 

The Customer Service Call Center

handled 76,217 calls asking for 

information or assistance. The FDIC

Customer Service Center also 

supported the Federal Emergency

Management Agency (FEMA) in 

its effort to help the people affected

by hurricanes in Florida and other

parts of the country. More than 100

FDIC employees assisted FEMA in

fielding calls and processing FEMA

applications associated with these

emergencies. 

Receivership Terminations

The FDIC, as receiver, manages 

the receivership estate and the 

subsidiaries of failed financial 

institutions with the goal of achieving

an expeditious and orderly termination.

The oversight and prompt termination

of receiverships help to preserve

value for the uninsured depositors

and creditors by reducing overhead

and other holding costs. For that 

reason, the FDIC has established 

a target of terminating 75 percent 

of receiverships within three years 

of the failure date. This goal was

met at year-end 2004, with only 

one of four 2001 receiverships still

active. The single remaining receivership could not be terminated due to

the existence of ongoing professional

liability litigation and other impediments. These cases continue to 

be vigorously pursued through 

appropriate negotiations and litigation

proceedings. In 2004, there were 30

pre–2001 receiverships terminated;

59 remain to be terminated.

Effective Management 

of Strategic 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, and

information technology (IT) resources.

Major accomplishments in improving

the Corporation's operational efficiency

and effectiveness are outlined below.

Although the FDIC is not subject to

the President's Management Agenda,

many of these efforts are consistent

with that agenda.

Human Capital Management

The FDIC’s employees are its most

important strategic resource. For 

that reason, it seeks to continue 

to be the employer of choice within

the financial regulatory community

and to operate a human resources

program that attracts, develops, 

evaluates, rewards and retains a high

quality, results-oriented workforce.

This was a difficult challenge over

the past 12 years because the

Corporation was in a continuous

downsizing mode as it completed

the residual workload from the 

banking and thrift crises of the late

1980s and early 1990s. FDIC staffing

declined from approximately 23,000

(including employees assigned to 

the Resolution Trust Corporation) 

in 1992 to fewer than 5,100 at 

year-end 2004.

At the President’s Quality Award Ceremony (l to r):

Deputy OMB Director Clay Johnson, FDIC CFO Steve App, 

DRR’s Sharon Allen, Kevin Sheehan, Director Mitchell Glassman, 

Dan Walker, Nancy Champagne, Richard Salmon, OPM Director 

Kay Coles James, and FDIC Deputy to the Chairman John Brennan.
21 

During 2004, the Corporation undertook a comprehensive analysis of its

future staffing needs and formulated

a human capital strategy to guide the

FDIC through the rest of this decade.

This strategy is based upon the

implementation of a new Corporate

Employee Program that will become

the foundation for the establishment

of a smaller more adaptable permanent workforce that reflects a more

collaborative and corporate approach

to meeting critical mission functions.

This workforce will be capable 

of adapting quickly to significant

unexpected events or changes in

workload priorities in the future. 

The FDIC’s future workforce will 

also require a somewhat different

mix of skill sets than are available 

in the current workforce. The

Corporation initiated steps in late

2004 to begin reshaping its workforce

to be consistent with these concepts,

including changes to current training

programs administered by its

Corporate University. The Corporation

also began the development of a

new human capital framework that,

when implemented, will provide a

methodology for future workforce

planning and succession management.

The FDIC will require more flexibility

in its management of human resources

in order to realize its vision of its

future workforce. To that end, the

Corporation worked with the Office

of Personnel Management to obtain

expanded delegations of administrative

authority. It also submitted to the

Congress in late 2004 proposed 

legislation that would provide the FDIC

with additional personnel authorities

that are tied directly to the FDIC’s

unique mission responsibilities. 

These included independent hiring

authority, greater flexibility in the use

of term appointments, the ability to

re-employ annuitants and waive dual

compensation restrictions, authority

to establish a separate appeals

process for disciplinary actions, 

and the ability to hire experts and

consultants in the same manner 

as other federal agencies.

During the past year, the Corporation

continued to emphasize the linkage

of individual pay to concrete 

accomplishment and contributions.

Approximately 400 managers and

supervisors were converted to a

new Corporate Manager Program in

April 2004. This program is similar to

the Executive Manager classification

and pay program instituted in 2002

and replaces the old program of fixed

annual pay increases with a new 

pay and bonus program in which 

pay increases and bonuses vary by 

individual and are not guaranteed.

More than 1,000 non-bargaining unit

employees were also converted 

to a new Contributions-Based

Compensation Program that provides

a wider range of possible rewards

than the Corporate Success Award

program established in 2002.

The Corporation also initiated a new

buyout and early retirement program

in late 2004. This program is targeted

to reduce identified staffing surpluses

and to support the realignment of

the current workforce, consistent with

identified future workforce needs. 

The Corporation also announced

planned reductions-in-force in 2005

and 2006, if necessary, to eliminate

employee surpluses and support

realignment of the FDIC workforce.

Reducing Costs and Improving

Financial Management

The FDIC’s operating expenses are

largely paid from the insurance funds,

and the Corporation continuously 

seeks to improve its operational

efficiency in fulfillment of its fiduciary

responsibilities to the funds. To that

end, the Corporation engages annually

in a rigorous planning and budgeting

process to ensure that budgeted

resources are properly aligned with

workload. That is particularly true with

respect to staffing, since personnel

costs constitute well over 60 percent

of the Corporation's annual administrative expenses. In late 2004, the

FDIC Board of Directors approved

management recommendations to

reduce authorized staffing by 674

positions, to 4,750, by year-end

2005.

Authorized year-end 2005 staffing 

is substantially lower than previous

authorized staffing levels for the 

resolutions and receivership business

line as well as the IT and administrative support functions. Staffing

reductions were approved for 

the Division of Resolutions and

Receiverships and the Legal Division

following a lengthy analysis of current

and projected future workload in 

the resolutions and receivership

management area and reflect the

smaller number of financial institution

failures for the past several years.

Staffing reductions in the Division of

Information Resources Management

and the Division of Administration

reflect improved business processes,

savings from contract consolidation,

and outsourcing of functions where

cost effective.
22

The FDIC adopted significant changes

in 2004 to the sourcing strategy for

obtaining contractor support for its IT

functions. These changes incorporate

the concept of partnering with the

private sector and other federal

agencies; the use of performancebased, results-driven contracts; the

consolidation of nearly 100 support

contracts into several large multi-year,

all-encompassing contracts; and the

appointment of full-time professional

oversight managers to manage 

and administer these contracts. 

The structure of the new contracts

places the emphasis on contractor

performance and links contractor

compensation to results achieved

rather than costs incurred. The 

Board of Directors approved the 

consolidation of contracts supporting

both the IT infrastructure and 

applications support.

Several years ago, the Corporation

separated its investment expenses

from its annual operating budget 

in order to ensure a more rigorous

approach to the approval and 

management of major investment

initiatives. The single most significant

current initiative is the construction

of additional FDIC office and multipurpose buildings adjacent to the

existing facilities at Virginia Square.

This project will eliminate the 

need for the Corporation to lease

commercial space in downtown

Washington, DC, and will substantially

reduce future facility costs. The 

project remains on target for occupancy in the first quarter of 2006.

Management processes have been

implemented to ensure adherence 

to the project budget and schedule.

Construction of the new building will

provide estimated cost savings of

approximately $78 million (net present

value) over 20 years, when compared

to the projected costs associated

with the current headquarters leasing

arrangements.

Improving the FDIC’s Use 

of Information Technology

The Corporation established a new

Chief Information Office (CIO) Council

in February 2004. The overall mission

of the Council is to serve as an 

executive-level advisory group to the

CIO, and to help shape Corporate IT

strategy and activities. Establishing

the CIO Council is part of a multipronged approach to re-engineering

the Corporation's IT program. The

CIO Council advises the CIO on all

aspects of adoption and use of IT 

at the FDIC. Accomplishing the

Corporation’s strategic goals and

business objectives depends on

achieving successful results from IT

initiatives. One of the first initiatives

of the Council was to conduct an

analysis of FDIC's current applications

portfolio. An estimated 30 existing

applications were retired in 2004,

with a larger number of retirements

expected to occur over the next

year.

The FDIC also greatly expanded 

its use of its e-government portal,

FDICconnect (a secure Web site 

that allows FDIC-insured institutions

to conduct business and exchange

information with the FDIC, other 

federal regulatory agencies and 

various state banking departments),

in 2004. FDICconnect will enable 

the FDIC to comply with the

Government Paperwork Elimination

Act of 1998 (GPEA) and address

Presidential guidelines that direct

government agencies to establish

electronic alternatives to current

paper processes where feasible.

Nearly 44 percent of FDIC-insured

institutions have registered to use

FDICconnect.

Members of the CIO Council (l to r):

Seated, CIO Council Chair Mike Bartell and Sandra Thompson.

Standing: (l to r): Jerry Russomano, Eric Spitler, Gail Verley, Rus Rau, 

Ann Bridges Steely and Doug Jones.

Not shown: Ron Bieker, Maureen Sweeney, Janet Roberson, and 

Gail Patelunas.
23

In 2004, the FDIC expanded the

capabilities of FDICconnect to allow

institutions to submit applications 

seeking extensions of time for 

completing a transaction or condition

related to previously approved 

applications; prior FDIC consent 

to reduce or retire capital stock 

or capital notes or debentures; and

approval to make golden parachute

payments or excess non-discriminatory severance plan payments. In

November, the FDIC Board approved

use of FDICconnect as the vehicle

for all insured financial institutions 

to receive their quarterly insurance

assessment invoices and eliminated

the requirement for institutions 

to sign and return correct certified

statements, thus eliminating burden

on the institutions.