2018

5

Since my appointment as the 21st Chairman, I 

have been honored to serve alongside the dedicated 

and passionate men and women of the Federal 

Deposit Insurance Corporation. Our mission is 

vital to the economy of the United States, and our 

accomplishments serve as a bulwark to financial 

stability around the world. 

The United States banking industry continued its 

strong performance in 2018. The industry posted 

record profits, net interest margins increased, loan 

balances grew, and loan performance improved. 

There were no bank failures in 2018, and the number 

of banks on the FDIC’s problem bank list declined to 

the lowest level since third quarter 2007. The Deposit 

Insurance Fund increased to over $100 billion, and 

the reserve ratio increased to 1.36 percent in third 

quarter 2018, exceeding the statutorily required 

minimum reserve ratio of 1.35 percent two years 

ahead of the required date. 

FDIC supervision programs continued to protect 

our Nation’s financial institutions and consumers. 

Our examiners started all examinations within 

established statutory or FDIC requirements, and 

examination results indicate that the vast majority of 

FDIC-supervised institutions are operating in a safe 

and sound manner and effectively managing their 

consumer protection responsibilities. 

One of my top priorities as FDIC Chairman is 

to encourage more de novo formation, and we are 

hard at work to make this a reality. Among other 

initiatives, the FDIC has requested public comment 

on the deposit insurance application process to 

identify potential improvements. We are also working 

to streamline our evaluation of deposit insurance 

applications, and have launched a process to receive 

and review draft deposit insurance proposals. Through 

these initiatives, we seek to improve the quality of 

submissions and reduce the time necessary to review 

and process applications, particularly those involving 

complex proposals. De novo banks are a key source of 

new capital, talent, ideas, and ways to serve customers, 

and the FDIC will do its part to support this segment 

of the industry.

The FDIC also took robust steps this year to reduce 

the regulatory burden on community banks, without 

sacrificing safety and soundness or consumer 

protections. We eliminated over one-half of the more 

than 800 pieces of supervisory guidance outstanding. 

We also launched a pilot program to use technology to 

reduce the number of onsite days needed to conduct 

an examination, and took other steps to reduce the 

costs of examinations to our regulated institutions. 

As part of this effort, the FDIC has worked toward 

quickly implementing many provisions of the 

Economic Growth, Regulatory Relief, and Consumer 

Protection Act. This includes proposed rulemakings 

to establish a community bank leverage ratio for 

MESSAGE FROM THE CHAIRMAN

MESSAGE FROM THE CHAIRMAN
MESSAGE FROM THE CHAIRMAN

ANNUAL REPORT 

6

highly capitalized community banks, tailor the 

application of existing capital and liquidity rules 

for regional banks, modify the capital treatment 

of certain commercial real estate loans, modify 

the threshold for mortgage loans to be exempt 

from appraisal requirements, simplify reporting 

requirements for community banks with less than $5 

billion in assets, and exempt community banks from 

the Volcker Rule. The FDIC has also issued a final 

rule to extend the exam cycle to 18 months for banks 

with less than $3 billion in assets. 

The FDIC continued to evaluate firm-developed 

resolution plans, and to develop our own strategies 

and capabilities to facilitate, if necessary, the orderly 

resolution of large, complex financial institutions 

without taxpayer support or market breakdowns. 

To support this effort, the FDIC and Federal Reserve 

Board provided feedback regarding Title I resolution 

plans submitted by 23 foreign banking organizations 

and two domestic regional bank holding companies, 

and assessed plans submitted by another 16 domestic 

regional bank holding companies. The agencies 

also released for public comment revised guidance 

for the eight largest domestic firms. The FDIC also 

worked to enhance our preparedness to use backup 

Title II Orderly Liquidation Authority, including 

strengthening our working relationships with 

international authorities. 

Traditional resolution activity for insured depository 

institutions in 2018 included the monitoring of 

several institutions near failure, the execution of 

deposit insurance processing system improvements, 

the liquidation of more than $1 billion in legacy 

assets, the termination of 66 receiverships, and the 

processing of almost $3 billion in dividend payments 

to creditors. Substantial progress was made in the 

evaluation of the resolution plans of 41 large banks, 

and in the development of the FDIC’s capabilities 

around bridge bank governance, including executive 

search and onboarding, bridge bank exit strategies, 

human capital transitioning, crisis communication, 

claims administration, and large transaction 

accounting.

In October, I announced my first public initiative as 

Chairman, “Trust through Transparency,” an agencywide effort that unites the FDIC behind the goals 

of being accessible, understandable, responsive, and 

accountable. Transparency is pivotal to maintaining 

the public’s trust in the safety and soundness of the 

entire banking system and in our ability to accomplish 

our mission. The first step in this initiative was 

to launch a new section of our website (https://

www.fdic.gov/transparency/) where we publish 

FDIC performance metrics. These are quantifiable 

measurements of performance, such as turnaround 

times for examinations and applications, call center 

response rates, and guidelines and decisions related to 

appeals of material supervisory determinations and 

deposit insurance assessments. In the same place on 

our website, we posted other policies and procedures 

regarding how we conduct our work. 

Publishing this information provides transparency 

to the banking industry and the public on our 

performance. In its first two months, our new 

“Trust through Transparency” website received more 

than 34,000 page views. During the remainder of 

my chairmanship, we will continue to update this 

information, provide more data, and make it easier for 

the public to hold us accountable. We will provide 

information that anyone – not just technical experts – 

can understand. We will solicit and respond to public 

feedback, and continue to provide real, quantifiable 

performance measures. If you like what we are doing, 

or if you have concerns, we also established an email 

account to gather your feedback: Transparency@

FDIC.gov. 

Looking forward to 2019, we have set forth a robust 

agenda for the agency. 

We will continue to focus on reducing unnecessary 

regulatory burdens for community banks without 

sacrificing consumer protections or prudential 

requirements. My “Back to Basics” initiative is 

designed to tailor regulatory requirements to the risk 

presented by these smaller institutions, thus reducing 

their cost of compliance. When we make these 
MESSAGE FROM THE CHAIRMAN

2018

7

adjustments, we allow banks to focus on the business 

of banking, not on the unraveling of red tape. 

In addition, we are in the process of establishing an 

Office of Innovation that will partner with banks and 

non-banks to understand how technology is changing 

the business of banking. The Office will be tasked 

with addressing four fundamental questions: 

1. How can the FDIC provide a safe regulatory 

environment to promote the technological 

innovation that is already occurring?

2. How can the FDIC promote technological 

development at community banks that often have 

limited research and development funding to 

support independent efforts?

3. What changes in policy – particularly in the 

areas of identity management, data quality and 

integrity, and data usage or analysis – must occur 

to support innovation while promoting safe and 

secure financial services and institutions?

4. How can the FDIC transform – in terms of our 

technology, examination processes, and culture 

– to enhance the stability of the financial system, 

protect consumers, and reduce the compliance 

burden on our regulated institutions?

Through increased collaboration with FDIC-regulated 

institutions, consumers, and financial services 

innovators, we will help increase the velocity of 

innovation in our business.

As the banking industry evolves, so must the FDIC. 

That is why I have directed FDIC leadership to 

conduct a comprehensive review of our current 

supervisory processes, as well as the organization, 

workforce structure, and capabilities supporting our 

supervisory mission. Through focused adoption of 

new technologies and processes, we can improve 

the transparency, efficiency, and effectiveness of our 

consumer and prudential examinations. We look 

forward to working with experts in information 

technology and banking – from the private sector, 

academia, and government – for input on how the 

FDIC can improve our supervision efforts.

In 2019, we will also increase our focus on 

underserved or unbanked communities. We will 

expand our engagement with Minority Depository 

Institutions (MDIs), so that they are in a better 

position to serve their communities. At the same 

time, we will work with all FDIC-supervised 

institutions to promote the safe adoption of additional 

products and services that bring these underserved 

communities more fully into the banking fold. The 

FDIC has issued a request for information soliciting 

feedback on steps the agency can take to better enable 

FDIC-supervised banks to offer small dollar credit 

to consumers.

The current positive economic cycle will not last 

forever. The actions that the FDIC has taken in 2018 

and our planned agenda for 2019 will strengthen the 

stability of our institutions should a downturn occur 

sooner than expected.

I am genuinely honored to serve as your FDIC 

Chairman, and I look forward to working with all 

of you to ensure that our Nation’s banks remain 

strong and that the FDIC maintains its longstanding 

tradition of distinguished public service.

Sincerely,

Jelena McWilliams