public confidence in the nations

financial system by insuring

deposits, examining and supervising

financial institutions, and managing

receiverships.

financial system and the insured depository

institutions by identifying, monitoring, and

addressing risks to the deposit insurance

funds.

The FDIC promotes public understanding

and the development of sound public policy

by providing timely and accurate financial

and economic information and analyses. 

It minimizes disruptive effects from the 

failure of banks and savings associations.

It assures fairness in the sale of financial

products and the provision of financial 

services.

The FDIC’s long and continuing tradition 

of excellence in public service is supported

and sustained by a highly skilled and diverse

workforce that continuously monitors 

and responds rapidly and successfully 

to changes in the financial environment.

To view the complete 2004 Annual Report, 

visit our Web site at: www.fdic.gov
nations financial system, and

effectively carrying out its 

insurance, supervisory, and

receivership management 

responsibilities.

Integrity

FDIC employees adhere to the

highest ethical standards in the

performance of their duties and

responsibilities.

Competence

The FDIC maintains a highly

skilled, dedicated and diverse

workforce.

Teamwork

FDIC employees work cooperatively

with one another and with

employees in other regulatory

agencies to accomplish the

Corporation’s mission.

Effectiveness

The FDIC responds quickly and

successfully to identified risks in

insured financial institutions and

in the broader financial system.

Financial Stewardship

The FDIC acts as a responsible

fiduciary, consistently operating 

in an efficient and cost-effective

manner on behalf of insured

financial institutions and other

stakeholders.

Fairness

The FDIC treats all employees,

insured financial institutions, 

and other stakeholders with

impartiality and mutual respect.
of the nation’s financial system,

developing and articulating sound

policy positions, and meeting our

stewardship obligations to the

deposit insurance funds. 

Meeting the FDIC’s mission is an increasingly complex responsibility,

but the FDIC made exceptional progress during 2004. I am proud 

of the dedication and hard work of the FDIC’s employees over the

past year. 

I am pleased to highlight in this report some of our major accomplishments in 2004:

● We worked to ensure that adequate capital standards would be 

maintained in the new Basel Capital Accord.

● We continued our efforts to reduce regulatory burden on financial

institutions as mandated by the Economic Growth and Regulatory

Paperwork Reduction Act of 1996 (EGRPRA). With other federal 

bank and thrift regulatory agencies, we solicited and received 

over 700 comments on consumer protection and deposit-related 

regulations, and we requested comment on proposed changes 

to the FDIC’s Community Reinvestment Act regulations.

● We aggressively refined our supervisory strategies consistent 

with changes to the Bank Secrecy Act included in the USA 

PATRIOT Act. The FDIC, the Department of Treasury’s Financial 

Crimes Enforcement Network (FinCEN), and the other federal 

banking agencies also 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.

● We funded 17 research proposals to produce the first working 

papers to be published by our new Center for Financial Research.

● We reached approximately 300,000 consumers with our Money 

Smart financial education program, resulting in the formation 

of over 40,000 new banking relationships, and expanded 

our Money Smart program alliance to include five Hispanic 

organizations. In addition, we released the Money Smart

curriculum in an interactive computer-based instruction format. 

The Money Smart curriculum is a training program to help 

adults outside the financial mainstream enhance their moneymanagement skills and establish positive banking relationships.
3

py () pg 

and other regulatory reporting, in cooperation with our Federal 

Financial Institutions Examination Council (FFIEC) partners. 

Targeted for implementation in 2005, the CDR will employ 

state-of-the-art technology and the XBRL (Extensible Business 

Reporting Language) data standard. This system will further 

enhance the FDIC’s ability to provide high-quality, timely data 

about the banking industry to regulators, financial institutions 

and the public.

● We continued to realign our workforce to meet future workload 

requirements. The 2005 budget approved by the Board reflects 

a reduction of 674 authorized positions over the next year. 

● A new Corporate Employee Program was announced that will 

allow us to create a more flexible workforce in the future.

● We initiated a two-year effort to improve our information 

technology (IT) program by modernizing our IT infrastructure 

and applying an enterprise architecture approach to guide future 

IT decision-making. 

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 is considered to be complete and reliable. 

I am very proud of our achievements over the past year and look

forward to continued successes next year. The FDIC stands firm 

in its commitment to promoting stability, pursuing sound policy and

meeting our stewardship responsibilities for the deposit insurance

funds.

It is a privilege and an honor to serve as Chairman of the FDIC, 

and I look forward to the many opportunities that lie ahead.

Sincerely,

Donald E. Powell
gqp

for all three funds administered by the

Corporation (Bank Insurance Fund, Savings

Association Insurance Fund, and the Federal

Savings and Loan Insurance Corporation (FSLIC) Resolution Fund).

This marks the 13th consecutive year that we received unqualified

opinions, and demonstrates our continued dedication to sound

financial management and the reliability of the financial data upon

which we make critical decisions. I would like to extend my sincere

appreciation to the many individuals whose hard work allowed the

FDIC to achieve this milestone.

Financial highlights during 2004 include:

● The Bank Insurance Fund (BIF) increased by $1.0 billion to 

$34.8 billion, and the Savings Association Insurance Fund (SAIF) 

increased by $480 million to $12.7 billion, compared to increases

of $1.7 billion and $493 million respectively, in 2003.

● Comprehensive income for BIF was $1 billion. This was substantially lower than the $1.7 billion reported last year. This reduction 

was primarily due to a significant deceleration in the rate at which 

the provision for insurance losses declined during 2004 when 

compared to 2003. For 2003, the reduction in the provision for 

insurance losses added $931 million to comprehensive income, 

while for 2004 it added only $269 million–a $662 million difference.

Earnings on U.S. Treasury obligations were also $80 million lower 

than in 2003.

● Comprehensive income for SAIF was $480 million. This was 

slightly lower than the $493 million reported last year. This 

reduction was primarily due to lower earnings on U.S. Treasury 

obligations of $6 million in 2004 compared to 2003. 

● Both the BIF and the SAIF reported unrealized losses on availablefor-sale securities in 2004 of $112 million and $36 million, respectively. The deposit insurance funds experienced such unrealized 

losses two years in a row. These unrealized losses were largely 

due to the fact that U.S. Treasury yields generally increased throughout much of the latter half of 2003 and 2004, after dropping sharply 

in 2002 and early 2003. Despite the modest unrealized losses in 

2004, cumulative unrealized gains in the funds remained high at 

$690 million in the BIF and $238 million in the SAIF.

We continued our efforts to reduce operating costs in 2004. The

Board of Directors approved a 2005 Corporate Operating Budget

that was virtually unchanged from the 2004 Corporate Operating

Steven O. App
5

IT-related projects as well as improvements in the management of

investment spending. Several major IT projects were re-baselined

in 2004, and the Corporation is committed to completing these

projects within their revised schedules and budgets.

The FDIC also made considerable progress in 2004 in enhancing 

its information security programs, taking positive actions in a 

number of key security program areas. The FDIC provided security

awareness training to its employees and contractors, and is working

diligently to address recent and emerging IT security standards 

and guidelines developed by the National Institute of Standards 

and Technology (NIST). Information technology and systems 

security remain high priorities at the FDIC, and we are continuously

working to strengthen controls in these areas. The Office of

Inspector General (OIG) recently completed its annual evaluation

of information systems security at the FDIC, as mandated by 

the Federal Information Security Management Act of 2002, and

identified no significant deficiencies that warrant consideration 

as potential material weaknesses.

The FDIC evaluated its risk management and internal control systems

in accordance with the reporting requirements of the Federal

Managers’ Financial Integrity Act of 1982 (FMFIA) and GAO internal

control standards. We have identified no material weaknesses that

would affect the accuracy of the financial statements. This report

describes our continuing efforts to provide timely and useful performance information to FDIC managers, OMB, and the Congress.

Based on these internal management evaluations, and in conjunction

with the results of GAO’s independent financial statements 

audits, I can certify with reasonable assurance that the FDIC’s risk

management and internal control systems, taken as a whole, 

are in conformance with the standards prescribed by GAO and 

that we are in compliance with the requirements of FMFIA. 

In 2005, the FDIC will continue to focus on effective cost 

management, produce timely and reliable financial information, 

and maintain a strong enterprise-wide risk management and 

internal control program. 

Sincerely,

Steven O. App
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. 

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. 

● 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.
7

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

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 industry-wide capital levels.
8

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. 

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-In-Savings, 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.)
9

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. 

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. 
10

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 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. 

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
11

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 CRAonly examinations in 2004, compared to 1,610 joint complianceCRA examinations, 307 compliance-only examinations, and two 

CRA-only examinations in 2003. The FDIC conducted all joint and

comprehensive examinations within established timeframes. 

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).

2

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.”
12

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 greatest 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.

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
13

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-of-contact. 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.

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.
14

members, and emergency management and private sector leaders

about protecting the financial sector. 

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. 

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

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).
15

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

curricula, 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.

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, 

community-based 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 Account-Hijacking 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 informationsharing 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.
16

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.

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.

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
17

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

with total assets of $150 million, and one SAIF-insured institution

failure with total assets of $15 million. In all cases, the target time

frame was met for giving depositors access to their funds. (See the

accompanying table below for details about liquidation activities.)

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

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

●
18

the insurance fund that funded the resolution transaction. 

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. 

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
19

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. 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 more

adaptable permanent workforce that reflects a more collaborative

and corporate approach to meeting critical mission functions. 

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.

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 multi-pronged approach to re-engineering the

Corporation’s IT program.

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.
Corporation (RTC). The following summarizes the condition of

the FDIC’s insurance funds.

The BIF reported comprehensive income (net income plus current

period unrealized gains/losses on available-for-sale securities) 

of $1 billion for the twelve months ending December 31, 2004, 

compared to $1.7 billion for the same period in the prior year. This

reduction was primarily due to an increase in unrealized losses 

on available-for-sale securities of $102 million and a reduction in 

net income of $625 million. The decline in net income primarily

resulted from a smaller negative adjustment of $269 million to the

provision for losses at December 31, 2004, compared to a negative

$931 million adjustment for the same period last year. BIF’s provision

for losses negative adjustments were mostly attributable to the 

reduction of estimated losses for future and actual failures. As of

December 31, 2004, the fund balance was $34.8 billion, up from

$33.8 billion at year-end 2003. 

The SAIF reported comprehensive income of $480 million for the

twelve months ending December 31, 2004, compared to $493 million

for the same period in the prior year. This reduction of $13 million

was primarily due to slightly lower earnings on U.S. Treasury 

obligations whereby a $30 million increase in unrealized losses 

was partially offset by a $23 million increase in interest revenue.

As of December 31, 2004, the SAIF fund balance was $12.7 billion,

up from $12.2 billion at year-end 2003.

Operating Expenses

Corporate Operating Budget expenses totaled $1.004 billion in

2004, including $986 million in ongoing operations and $18 million

for receivership funding. This represented approximately 97 percent

of the approved budget on ongoing operations and 24 percent of

the approved budget for receivership funding. Receivership funding

expenses were down significantly from 2003 because the four

financial institution failures in 2004 were relatively small banks.

In December 2004, the Board of Directors approved a 2005

Corporate Operating Budget of approximately $1.1 billion, including

just over $1.0 billion for ongoing operations. The level of approved

spending in the 2005 budget remains virtually the same as that in

2004 due to continuing efforts to identify operational efficiencies 

and control costs. The Corporate Operating Budget includes funding 
21

for a number of major new initiatives, including funding for a

Hispanic financial literacy program, and hiring additional financial

analysts and risk modeling specialists to prepare for implementation

of the Basel Capital Accord. 

Investment Spending

The FDIC has a disciplined process for reviewing proposed new

capital investment projects and managing the implementation of

approved projects. Most of the projects in the current investment

portfolio are major IT system initiatives.

Proposed projects are carefully reviewed to ensure that they are

consistent with the Corporation’s enterprise architecture and include

an appropriate return on investment for the insurance funds. The

process also enables the FDIC to be aware of risks to the major

capital investment projects and facilitates appropriate, timely 

intervention to address these risks throughout the development

process. An investment portfolio performance review of the major

capital investments is provided to the FDIC’s Board of Directors

quarterly. During 2004, the Board of Directors approved only one

new investment project, a new Web-based time and attendance

reporting system. Additional spending was also approved for three

existing investment projects: (1) Legal Integrated Management

System increased by $1.4 million to $5.06 million, (2) New Financial

Environment increased $17 million to $51.8 million, and (3) ViSION

Phase-IV increased $6.2 million to $12.7 million.

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Source: Commercial Bank Call Reports and Thrift Financial Reports
Fund

Savings 

Association

Insurance

Fund

FSLIC

Resolution

Fund

2004 2003

Assets

Cash and cash equivalents $ 1,822,005 $ 2,544,281

Investment in U.S. Treasury obligations, net: 

Held-to-maturity securities 22,637,330 16,293,073

Available-for-sale securities 9,470,605 14,209,773

Interest receivable on investments and other assets, net 601,498 550,999

Receivables from bank resolutions, net 375,303 511,089

Property and equipment, net 357,106 287,380

Total Assets $ 35,263,847 $ 34,396,595

Liabilities

Accounts payable and other liabilities $ 268,680 $ 231,441

Contingent liabilities for: 

Anticipated failure of insured institutions 8,261 178,266

Litigation losses and other 200,301 204,693

Total Liabilities 477,242 614,400

Commitments and off-balance-sheet exposure 

Fund Balance

Accumulated net income 34,096,676 32,979,898

Unrealized gain on available-for-sale securities, net 689,929 802,297

Total Fund Balance 34,786,605 33,782,195

Total Liabilities and Fund Balance $ 35,263,847 $ 34,396,595
23

2004 2003

Revenue

Interest on U.S. Treasury obligations $ 1,552,576 $ 1,530,014 

Assessments 95,268 80,159

Other revenue 27,553 15,831

Total Revenue 1,675,397 1,626,004

Expenses and Losses

Operating expenses 822,381 805,496

Provision for insurance losses (269,368) (931,164)

Insurance and other expenses 5,606 9,945

Total Expenses and Losses 558,619 (115,723)

Net Income 1,116,778 1,741,727

Unrealized loss on available-for-sale securities, net (112,368) (9,872)

Comprehensive Income 1,004,410 1,731,855

Fund Balance - Beginning 33,782,195 32,050,340

Fund Balance - Ending $ 34,786,605 $ 33,782,195
24

2004 2003

Operating Activities

Net Income: $ 1,116,778 $ 1,741,727

Adjustments to reconcile net income to net cash 

provided by operating activities:

Amortization of U. S. Treasury obligations 737,439 455,628

Treasury inflation-indexed securities (TIIS) inflation 

adjustment (181,650) (115,150)

Depreciation on property and equipment 54,424 54,947

Provision for losses (269,368) (931,164)

Terminations/adjustments of work-in-process accounts 817 92

Change In Operating Assets and Liabilities:

(Increase) in interest receivable and other assets (36,433) (69,826)

Decrease in receivables from bank resolutions 218,693 102,663

Increase in accounts payable and other liabilities 15,819 85,577

(Decrease) in contingent liabilities for litigation losses 

and other (1,047) (25,367)

Net Cash Provided by Operating Activities 1,655,472 1,299,127

Investing Activities

Provided by:

Maturity of U.S. Treasury obligations, held-to-maturity 3,365,000 3,890,000

Maturity of U.S. Treasury obligations, available-for-sale 5,810,000 1,690,000

Used by:

Purchase of property and equipment (104,502) (41,804)

Purchase of U.S.Treasury obligations, held-to-maturity (10,026,597) (3,659,868)

Purchase of U.S.Treasury obligations, available-for-sale (1,421,649) (5,240,070)

Net Cash Used by Investing Activities (2,377,748) (3,361,742)

Net Decrease in Cash and Cash Equivalents (722,276) (2,062,615)

Cash and Cash Equivalents - Beginning 2,544,281 4,606,896

Cash and Cash Equivalents - Ending $ 1,822,005 $ 2,544,281
25

2004 2003

Assets

Cash and cash equivalents $ 644,346 $ 827,141

Cash and other assets: Restricted for SAIF-member 

exit fees (Includes cash and cash equivalents 

of $56.5 million and $231.9 million at December 31, 2004 

and 2003, respectively) 328,394 319,286

Investment in U.S. Treasury obligations, net: 

Held-to-maturity securities 8,835,964 6,823,709

Available-for-sale securities 2,720,315 4,152,048

Interest receivable on investments and other assets, net 200,204 188,189

Receivables from thrift resolutions, net 346,923 273,242

Total Assets $ 13,076,146 $ 12,583,615

Liabilities

Accounts payable and other liabilities $ 25,568 $ 20,540

Contingent liabilities for: 

Anticipated failure of insured institutions 1,957 3,192

Litigation losses 39 532

SAIF-member exit fees and investment proceeds 

held in escrow 328,394 319,286

Total Liabilities 355,958 343,550

Commitments and off-balance-sheet exposure 

Fund Balance

Accumulated net income 12,482,227 11,965,776

Unrealized gain on available-for-sale securities, net 237,961 274,289

Total Fund Balance 12,720,188 12,240,065

Total Liabilities and Fund Balance $ 13,076,146 $ 12,583,615
26

2004 2003

Revenue

Interest on U.S. Treasury obligations $ 555,592 $ 532,474 

Assessments 8,891 14,594

Other revenue 292 192

Total Revenue 564,775 547,260

Expenses and Losses

Operating expenses 120,282 129,584

Provision for insurance losses (72,162) (82,489)

Insurance and other expenses 204 105

Total Expenses and Losses 48,324 47,200

Net Income 516,451 500,060

Unrealized loss on available-for-sale securities, net (36,328) (6,733)

Comprehensive Income 480,123 493,327

Fund Balance - Beginning 12,240,065 11,746,738

Fund Balance - Ending $ 12,720,188 $ 12,240,065
27

2004 2003

Operating Activities

Net Income: $ 516,451 $ 500,060

Adjustments to reconcile net income to net cash 

provided by operating activities:

Amortization of U. S. Treasury obligations 262,317 155,992

Treasury inflation-indexed securities (TIIS) inflation 

adjustment (61,431) (38,943)

Provision for losses (72,162) (82,489)

Change In Operating Assets and Liabilities:

Decrease in unamortized premium and discount 

of U. S. Treasury Obligations (restricted) 2,443 931

(Increase) in entrance and exit fees receivable, including

interest receivable on investments and other assets (16,288) (32,810)

(Increase)/Decrease in receivables from thrift resolutions (2,635) 8,699

Increase in accounts payable and other liabilities 5,028 13,440

(Decrease) in contingent liabilities for litigation losses 0 (209)

Increase in exit fees and investment proceeds held in escrow 9,107 7,422

Net Cash Provided by Operating Activities 642,830 532,093

Investing Activities

Provided by:

Maturity of U.S. Treasury obligations, held-to-maturity 1,690,000 1,170,000

Maturity of U.S. Treasury obligations, available-for-sale 1,360,000 575,000

Used by:

Purchase of U.S. Treasury obligations, held-to-maturity (4,051,084) (2,305,056)

Purchase of U.S. Treasury obligations, available-for-sale 0 (1,008,066)

Net Cash Used by Investing Activities (1,001,084) (1,568,122)

Net Decrease in Cash and Cash Equivalents (358,254) (1,036,029)

Cash and Cash Equivalents - Beginning 1,059,052 2,095,081

Unrestricted Cash and Cash Equivalents - Ending 644,346 827,141

Restricted Cash and Cash Equivalents - Ending 56,452 231,911

Cash and Cash Equivalents - Ending $ 700,798 $ 1,059,052
28

2004 2003

Assets

Cash and cash equivalents $ 3,501,387 $ 3,278,532

Receivables from thrift resolutions and other assets, net 82,275 198,432

Total Assets $ 3,583,662 $ 3,476,964

Liabilities

Accounts payable and other liabilities $ 5,606 $ 19,381

Contingent liabilities for litigation losses and other 410 1,169

Total Liabilities 6,016 20,550

Resolution Equity 

Contributed capital 126,382,877 126,377,851

Accumulated deficit (122,805,158) (122,962,936)

Unrealized (loss)/gain on available-for-sale securities, net (73) 41,499

Accumulated deficit, net (122,805,231) (122,921,437)

Total Resolution Equity 3,577,646 3,456,414

Total Liabilities and Resolution Equity $ 3,583,662 $ 3,476,964
29

2004 2003

Revenue

Interest on U.S. Treasury obligations $ 40,076 $ 32,902

Realized gain on investment in securitization-related 

assets acquired from receiverships 66,708 756

Other revenue 21,114 16,849

Total Revenue 127,898 50,507

Expenses and Losses

Operating expenses 22,932 27,828

Provision for losses (6,911) (33,306)

Expenses for goodwill settlements and litigation 31,632 15,324

Recovery of tax benefits (82,937) (19,609)

Other expenses 5,404 7,933

Total Expenses and Losses (29,880) (1,830)

Net Income 157,778 52,337

Unrealized loss on available-for-sale securities, net (41,572) (1,258)

Comprehensive Income 116,206 51,079

Accumulated Deficit - Beginning (122,921,437) (122,972,516)

Accumulated Deficit - Ending $ (122,805,231) $ (122,921,437)
30

2004 2003

Operating Activities

Net Income: $ 157,778 $ 52,337

Adjustments to reconcile net income to net cash 

provided by operating activities:

Provision for losses (6,911) (33,306)

Change in Assets and Liabilities:

(Increase)/Decrease in receivables from 

thrift resolutions and other assets (35,238) 80,339

(Decrease)/Increase in accounts payable 

and other liabilities (13,775) 4,973

Net Cash Provided by Operating Activities 101,854 104,343

Investing Activities 

Investment in securitization-related assets 

acquired from receiverships 115,975 5,829

Net Cash Provided by Investing Activities 115,975 5,829

Financing Activities 

Provided by:

U.S. Treasury payments for goodwill settlements 5,026 30

Used by:

Payments to Resolution Funding Corporation 0 (450,000)

Net Cash Provided/(Used) by Financing Activities 5,026 (449,970)

Net Increase/(Decrease) in Cash and Cash Equivalents 222,855 (339,798)

Cash and Cash Equivalents - Beginning 3,278,532 3,618,330

Cash and Cash Equivalents - Ending $ 3,501,387 $ 3,278,532
To the Board of Directors

The Federal Deposit Insurance Corporation

We audited the Federal Deposit Insurance Corporation’s (FDIC) balance sheets 

as of December 31, 2004 and 2003, for the three funds administered by FDIC 

(the Bank Insurance Fund, the Savings Association Insurance Fund, and the FSLIC 

Resolution Fund), the related statements of income and fund balance (accumulated 

deficit), and the statements of cash flows for the years then ended, and in our report 

dated January 31, 2005, we expressed an unqualified opinion on those statements.

In that report, we stated that we found the following:

● the financial statements of each fund are presented fairly, in all material respects, 

in conformity with U.S. generally accepted accounting principles;

● FDIC had effective internal control over financial reporting and compliance with 

laws and regulations for each fund; and

● no reportable noncompliance with the laws and regulations we tested.

In our opinion, the information set forth in the accompanying condensed financial 

statements is presented fairly, in all material respects, in relation to the financial 

statements from which it has been derived.

We performed our work in accordance with U.S. generally accepted auditing

standards.

David M. Walker

Comptroller General

of the United States

January 31, 2005

31
32

February 7, 2005

Mr. David M. Walker 

Comptroller General of the United States

U.S. Government Accountability Office

441 G Street, NW

Washington, DC 20548

Re: FDIC Management Response on the 

GAO 2004 Financial Statements Audit Report

Dear Mr. Walker:

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

(GAO) draft audit report titled, Financial Audit: Federal Deposit Insurance Corporation

Funds’ 2004 and 2003 Financial Statements, GAO-05-281. The report presents GAO’s 

opinions on the calendar year 2004 financial statements of the Bank Insurance Fund (BIF),

the Savings Association Insurance Fund (SAIF), and the Federal Savings and Loan

Insurance Corporation Resolution Fund (FRF). The report also presents GAO’s opinion 

on the effectiveness of FDIC’s internal controls as of December 31, 2004, and GAO’s 

evaluation of FDIC’s compliance with applicable laws and regulations.

We are pleased to accept GAO’s unqualified opinions on the BIF, SAIF, and FRF financial

statements and to note that there were no material weaknesses identified during the 2004

audits. The GAO reported that the funds’ financial statements were presented fairly, in 

all material respects, in conformity with U.S. generally accepted accounting principles;

FDIC had effective internal control over financial reporting and compliance with laws 

and regulations; and there were no instances of noncompliance with laws and regulations

that were tested.

Also, we are pleased that GAO recognized the significant improvements that have 

been made during the past year and acknowledged our progress in fully implementing 

a comprehensive information security (IS) program. As always, management is committed 

to ensuring the continued success of an effective and strong IS program. We will remain

focused on accomplishing the work needed to face the new security challenges in the 

coming year. 

If you have any questions or concerns, please let me know.

Sincerely,

Steven O. App

Deputy to the Chairman 

and Chief Financial Officer
33

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)

202-736-0000

Hearing 

Impaired: 800-925-4618

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. Information is also available in Spanish. Recorded information

about deposit insurance and other topics is available 24 hours a day

at the same telephone number.

Public Information Center Phone: 877-275-3342 (877-ASK FDIC)

801 17th Street, NW 202-416-6940

Room 100 Fax: 202-416-2076

Washington, DC 20434 E-mail: publicinfo@fdic.gov

FDIC publications, press releases, speeches and Congressional 

testimony, directives to financial institutions, policy manuals and

other documents are available on request or by subscription

through the Public Information Center. These documents include

the Quarterly Banking Profile, FDIC Consumer News and a variety

of deposit insurance and consumer pamphlets.

Office of the Ombudsman Phone: 877-275-3342 (877-ASK FDIC)

550 17th Street, NW Fax: 202-942-3040, 202-942-3041

Washington, DC 20429 E-mail: ombudsman@fdic.gov

The Office of the Ombudsman responds to inquiries about the FDIC

in a fair, impartial and timely manner. It researches questions and

complaints from bankers and the public. The office also recommends

ways to improve FDIC operations, regulations and customer service.
Deputy 

to the Chairman

John M. Brennan

Division of 

Finance

Frederick S. Selby

Director

Office of Enterprise 

Risk Management

James H. Angel, Jr.

Director

Deputy to the Chairman 

and Chief Financial Officer

Steven O. App 

34

Office of 

Public Affairs

Stan Ivie

Interim Director
35

Chairman

Office of Inspector 

General

Gaston L. Gianni, Jr.

Inspector General

Chief 

Information Officer

Michael E. Bartell

Chief of Staff

Jodey C. Arrington

Deputy to the Chairman 

and Chief Operating Officer

John F. Bovenzi

Division of Insurance 

and Research

Arthur J. Murton

Director

Division of Resolutions 

and Receiverships

Mitchell L. Glassman

Director

Division of 

Administration

Arleas Upton Kea

Director

Legal

Division 

William F. Kroener, III

General Counsel

Division of Supervision 

and Consumer Protection

Michael J. Zamorski

Director

Division of Information 

Resources Management

Michael E. Bartell

Director

Office of Diversity and 

Economic Opportunity

D. Michael Collins

Director

Office of the 

Ombudsman

Cottrell L. Webster

Ombudsman

General

Counsel

William F. Kroener, III

Corporate 

University

David C. Cooke

Chief, Leaning Officer

Office of Legislative 

Affairs

Alice C. Goodman

Director
36

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