12

I. Management’s Discussion and Analysis

The Year in Review

In 2007, the FDIC continued its work 

on high-profile policy issues, ranging 

from implementation of deposit 

insurance reform to finalizing capital 

reform. In addressing these and other 

issues, the Corporation published 

numerous Notices of Proposed 

Rulemaking (NPRs) throughout the 

year, seeking comment from the 

public. The Corporation also continued 

to focus on a strong supervisory 

program and reorganized examination 

teams that inspected financial 

institutions that originate significant 

volumes of subprime loans and nontraditional loan products. The FDIC 

continued expansion of financial 

education programs, providing Money

Smart training to hundreds of public 

school teachers. It also sponsored 

and co-sponsored major conferences 

and participated in local and global 

outreach initiatives. 

Highlighted in this section are the 

Corporation’s 2007 accomplishments 

in each of its three major business 

lines – Insurance, Supervision 

and Consumer Protection, and 

Receivership Management – as 

well as its program support areas. 

Insurance

The FDIC insures bank and savings 

association deposits. As insurer, the 

FDIC must continually evaluate and 

effectively manage how changes in 

the economy, the financial markets 

and the banking system affect the 

adequacy and the viability of the 

Deposit Insurance Fund.

Implementation of 

Deposit Insurance Reform 

On November 2, 2006, the FDIC 

Board of Directors adopted a final 

rule on assessments as part of 

the implementation of the Federal 

Deposit Insurance Reform Act of 

2005 (Reform Act). The new rule 

enables the FDIC to more closely 

tie each bank’s assessments to 

the risk that it poses to the Deposit 

Insurance Fund.

Effective January 1, 2007, assessment 

rates ranged from 5 to 7 basis points 

for Risk Category I institutions, 

10 basis points for Risk Category II 

institutions, 28 basis points for Risk 

Category III institutions and 43 basis 

points for Risk Category IV institutions. 

These rates are uniformly 3 basis 

points greater than the base assessment rates also adopted by the 

Board in November 2006. The Board 

retains the flexibility to adjust rates 

without further notice-and-comment 

rulemaking, provided that no such 

adjustment can be greater than 

3 basis points in any quarter; that 

these adjustments cannot result in 

rates more than 3 basis points above 

or below the base rates; and that 

rates cannot be negative. The table 

on the following page shows the 

distribution of institutions among the 

risk categories as well as within Risk 

Category I.

Within Risk Category I, the FDIC 

determines an assessment rate from 

three primary sources of information –

the supervisory component ratings 

for all insured institutions, the financial 

ratios for most institutions, and the 

long-term debt issuer ratings for 

large institutions that have them. 

Generally, for those institutions 

in Risk Category I with less than 

$10 billion in assets and those with 

$10 billion or more in assets that 

do not have long-term debt issuer 

Some members of the Deposit Insurance Reform Implementation Team, with Chairman Sheila Bair, 

Vice Chairman Martin Gruenberg and Director Thomas Curry.
13

ratings, assessment rates are based 

on a combination of financial ratios 

and CAMELS1 component ratings. 

Generally, for those institutions in 

Risk Category I with $10 billion or 

more in assets that have long-term 

debt issuer ratings, assessment 

rates are determined from weighted 

average CAMELS component ratings 

and long-term debt issuer ratings. 

For all large Risk Category I institutions, 

additional risk factors are considered 

to determine whether the assessment 

rates should be adjusted. This additional information includes market 

data, financial performance measures, 

considerations of the ability of an 

institution to withstand financial 

stress, and loss severity indicators. 

Any adjustment is limited to no more 

than 1/2 basis point up or down. In 

February 2007, the FDIC released for 

public comment proposed guidelines 

on how it would determine such 

adjustments. The FDIC Board approved 

final guidelines in May 2007. 

Institutions that contributed to the 

build-up of the insurance funds 

through 1996 received an aggregate 

$4.7 billion in one-time credits under 

the Reform Act to offset future 

deposit insurance assessments. 

These credits were allocated to 

institutions based on their 1996 

assessment base shares.

The average annualized assessment 

rate (weighted by each institution’s 

assessment base), before accounting 

for the use of credits, was approximately 5.4 basis points for the first 

three quarters of 2007. Approximately 

68 percent of all institutions (71 percent of institutions in Risk Category I) 

were able to offset their first, 

second, and third quarter 2007 

assessments entirely using credits. 

During the first half of 2007, 

the FDIC completed substantial 

modifications to its information 

systems in order to implement the 

changes to risk-based assessment 

rates, track credit use and availability 

for each institution, incorporate 

changes to the calculation and 

reporting of the assessment base, 

and deliver the invoices for the 

first quarter assessments by the 

June 2007 deadline.

In September 2007, the FDIC issued 

an Advance Notice of Proposed 

Rulemaking (ANPR), seeking comments on alternative methods for 

allocating dividends as part of a 

permanent final rule to implement 

the dividend requirements of the 

Reform Act. In October 2006, the 

Board adopted a temporary rule 

governing dividends, which expires 

at the end of 2008. The comment 

period for the Dividend ANPR closed 

on November 19, 2007. 

International Capital Standards 

The FDIC, as insurer, has a substantial 

interest in ensuring that bank capital 

regulation effectively safeguards 

the federal bank safety net against 

excessive loss. During 2007, the 

FDIC participated in the Basel 

Committee on Banking Supervision 

(BCBS) and many of its subgroups. 

The FDIC also participated in various 

U.S. regulatory efforts aimed at 

interpreting international capital 

standards and establishing sound 

policy and procedures for 

implementing these standards. 

D o l l a r s i n b i l l i o n s

 Annual Percent

 Rate in Percent of Total

Risk Basis Number of of Total Assessment Assessment

Category Points Institutions Institutions Base Base

I - Minimum 5 2,709 32% $ 3,872 56%

I - Middle 5.01– 6 .00 3,088 36% 2,078 30%

I - Middle 6.01–6.99 1,422 17% 456 7%

I - Maximum 7 859 10% 296 4%

II 10 422 5% 163 2%

III 28 64 1% 14 0%

IV 43 7 0% 1 0%

Total 8,571 100% $ 6,880 100%

 Distribution of Institutions and Assessment Base Among Risk Categories Quarter Ending September 30, 2007

Note: Institutions are categorized based on supervisory ratings, debt ratings and financial data as of September 30, 2007. 

Rates do not reflect the application of assessment credits. Percentages may not add to 100 percent due to rounding.

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). 
1

Ensuring the adequacy of insured 

institutions’ capital under Basel II 

remained a key objective for the FDIC. 

In 2007, the FDIC devoted substantial 

resources to domestic and international efforts to ensure these new 

rules are designed and implemented 

appropriately. These efforts, in conjunction with other federal financial 

regulators, included publishing a final 

rule for the implementation of the 

advanced approaches of Basel II 

as well as proposed examination 

guidance. This guidance is intended 

to provide the industry with regulatory 

perspectives for implementation. In 

concert with regulators from other 

U.S. banking agencies and other 

Basel Committee member countries, 

the FDIC also participated in a 

review of supervisory and regulatory 

supplemental capital measures 

currently being used to ensure 

bank capital adequacy. 

The Basel II Final Rule was published in the Federal Register on 

December 7, 2007, with an effective 

date of April 1, 2008. The findings of 

the fourth quantitative impact study 

(QIS-4), which were completed 

in 2005, suggested that, without 

modification, the Basel II framework 

could result in an unacceptable 

decline in minimum risk-based 

capital requirements. As a result, 

the agencies have included 

safeguards against the possibility 

that the new rules do not work as 

intended. For instance, the agencies 

have agreed, by regulation, not to 

allow any bank to exit its transitional 

risk-based capital floors unless and 

until the agencies publish a study 

giving the new rules a clean bill of 

health or unless identified defects 

are remedied. If any agency allows 

its banks to exit the floors in a way 

that departs from this consensus 

approach, the rule requires that 

agency to publish a report explaining 

its reasoning. In addition, the agencies 

have retained the U.S. leverage 

ratio and Prompt Corrective Action 

requirements. 

Through its supervisory program, the 

FDIC continues to work with certain 

insured state non-member bank 

subsidiaries of banking organizations 

that plan to operate under the new 

capital accord, to review and assess 

implementation plans and progress 

towards meeting qualification 

requirements.

Domestic Capital Standards 

The FDIC is involved in efforts to 

revise the existing risk-based capital 

standards for banks that will not be 

subject to the advanced approaches 

of Basel II. As such, the FDIC has 

taken a lead role in developing a 

proposed rule that would implement 

the standardized approach of Basel II 

(Basel II Standardized NPR). The proposed rule is intended to modernize 

the risk-based capital rules for banks 

that do not use the advanced 

approaches of Basel II, and minimize 

potential competitive inequities that 

may arise between banks that adopt 

Basel II and banks that remain under 

the existing rules. The agencies have 

indicated that they expect to issue 

the Basel II Standardized NPR during 

the first quarter of 2008.

Identifying and Addressing Risks 

to the Deposit Insurance Fund

During 2007, the FDIC continued to 

research and analyze trends in the 

banking sector, financial markets 

and the overall economy to identify 

emerging risks to the banking 

industry and the Deposit Insurance 

Fund. The identified risks were 

highlighted throughout the year in 

presentations and written reports. 

The FDIC redesigned its Large 

Insured Depository Institution (LIDI) 

program to ensure uniform reporting 

of critical risks posed by institutions 

with assets over $10 billion. The 

information captured through this 

program is used to support business 

line activities related to supervision,

insurance and resolutions. Institutionspecific concerns were directed to 

FDIC regional offices for appropriate 

action. The FDIC continued to 

analyze the regional economies 

affected by hurricanes Katrina 

and Rita throughout the year. 

Center for Financial Research 

During 2007, the FDIC’s Center 

for Financial Research (CFR) 

co-sponsored two major research 

conferences: the 17th Annual 

Derivatives Securities and Risk 

Management Conference and the 

seventh Annual Bank Research 

Conference.

The 17th Annual Derivatives 

Securities and Risk Management 

Conference, which the FDIC cosponsored with Cornell University’s 

Johnson Graduate School of 

Management and the University of 

Houston’s Bauer College of Business, 

was held in April 2007 at FDIC‘s 

Virginia Square facility and attracted 

over 100 researchers from around 
1

of Chicago, the University of Kansas 

School of Business, and The Journal 

of Financial Services Research, 

co-sponsored the Mergers and 

Acquisitions of Financial Institutions 

Conference in November. 

Ten CFR working papers were 

published in 2007 on topics including 

risk measurement, exchange rate 

exposure, and financial institution 

credit and retail banking relationships. 

Other Risk Identification Activities 

The FDIC researched and analyzed 

emerging risks and trends in the 

banking sector, financial markets 

and the overall economy to identify 

issues affecting the banking industry 

and the DIF. During 2007, the FDIC 

focused significant attention on the 

condition of housing markets and 

the problems facing subprime mortgage borrowers and their lenders. 

The FDIC also continued to analyze 

the regional economies adversely 

affected by hurricanes Katrina and 

Rita throughout the year. A consumer 

finance research section was formed 

in late 2007 to examine a variety of 

consumer-related issues, including 

fair lending, consumer credit access, 

small business credit access, new 

consumer financial services, and 

home mortgage finance. 

 In 2007, the FDIC began publishing 

FDIC Quarterly, which incorporates 

information previously available in the 

Quarterly Banking Profile and other 

FDIC publications. FDIC Quarterly

discusses current conditions, trends 

and changes in the performance 

of insured institutions, and issues 

affecting the economy and the 

banking system. In 2007, FDIC 

the world. Conference presentations 

focused on technical and mathematical

aspects of risk measurement and 

securities pricing, and included several 

presentations on Basel II-related 

topics. 

The CFR and The Journal of 

Financial Services Research (JFSR) 

hosted the seventh Annual Bank 

Research Conference in September 

with over 100 attendees. The conference included the presentation of 

12 papers, a nationally recognized 

guest speaker, Francis A. Longstaff – 

Allstate Professor of Insurance 

and Finance, Anderson School of 

Management, UCLA, an expert panel, 

and discussions on timely issues 

affecting the financial system. 

The conference theme focused 

on liquidity in the financial system. 

Experts discussed analyses on such 

topics as asset prices and liquidity, 

liquidity in the equity and options 

markets, and issues involving 

commercial bank liquidity and 

bank lending.

The CFR also hosted the Basel 

Research Task Force Annual 

Workshop in May. The workshop 

included a two-day session with 

research paper presentations and 

discussions by staff members 

of Basel Committee institutions. 

Approximately 85 researchers and 

policy makers attended the workshop. 

Many represented foreign central 

banks and financial supervisory 

agencies. Additionally, the FDIC 

along with the Federal Reserve Bank 

Quarterly analyzed such topics as the 

case for subprime loan modifications, 

the privatization of deposit insurance, 

the effectiveness of financial education programs, and the popularity 

of individual development accounts 

(matched savings accounts that 

enable low-income families to save 

money for a particular financial goal, 

such as buying a home, paying for 

post-secondary education, or starting 

or expanding a small business). In 

addition, quarterly FDIC State Profiles 

were released for each state during 

2007. 

Throughout the year, the FDIC 

conducted numerous outreach 

activities addressing economic and 

banking risk analyses. Presentations 

were made to financial institutions 

and related trade groups, bank 

directors’ colleges, community 

groups, foreign visitors and other 

regulators. 

Supervision and Consumer 

Protection

Supervision and consumer protection 

are cornerstones of the FDIC’s efforts 

to ensure the stability of and public 

confidence in the nation’s financial 

system. The FDIC’s supervision 

program promotes the safety and 

soundness of FDIC-supervised 

insured depository institutions, 

protects consumers’ rights, and 

promotes community investment 

initiatives. 
1

Examination Program 

The FDIC’s strong bank examination 

program is the core of its supervisory 

program. At year-end 2007, the 

Corporation was the primary federal 

regulator for 5,257 FDIC-insured 

state-chartered institutions that are 

not members of the Federal Reserve 

System (generally referred to as 

“state nonmember” institutions). 

Through safety and soundness, 

consumer compliance and Community 

Reinvestment Act (CRA), and other 

specialty examinations, 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.

In 2007, the Corporation conducted 

2,258 statutorily-required safety and 

soundness examinations, including 

a review of Bank Secrecy Act compliance, and all required follow-up 

examinations for FDIC-supervised 

problem institutions within prescribed 

time frames. The FDIC also conducted 

1,773 CRA/Compliance examinations 

(1,241 joint CRA/compliance 

examinations, 528 compliance-only 

examinations,2 and four CRA-only 

examinations) and 2,941 specialty 

examinations. All CRA/compliance 

examinations were also conducted 

within the time frames established 

by FDIC policy, including required 

follow-up examinations of problem 

institutions. The accompanying table 

compares the number of examinations, 

by type, conducted in 2005, 2006 

and 2007. 

As of December 31, 2007, there 

were 77 insured institutions with 

total assets of $22.2 billion designated 

as problem institutions for safety and 

soundness purposes (defined as those 

institutions having a composite 

CAMELS3 rating of “4” or “5”), 

compared to the 51 problem 

institutions with total assets of 

$8.5 billion on December 31, 2006. 

This constituted a 51 percent yearover-year increase in the number of 

problem institutions and a 161 percent increase in problem institution 

assets. During 2007, 38 institutions 

with aggregate assets of $6.4 billion 

were removed from the list of 

problem financial institutions, while 

64 institutions with aggregate assets 

of $26.5 billion were added to the list 

of problem financial institutions. The 

FDIC is the primary federal regulator 

for 47 of the 77 problem institutions.

During 2007, the Corporation issued 

the following formal and informal 

corrective actions to address safety 

and soundness concerns: 48 Cease 

and Desist Orders, three Temporary 

Cease and Desist Orders, one 

modified Cease and Desist Order, 

and 158 Memoranda of Understanding. 

Of these actions issued, 25 Cease 

and Desist Orders and 31 Memoranda 

of Understanding were issued based, 

in part, on apparent violations of the 

Bank Secrecy Act.

As of December 31, 2007, 43 FDICsupervised institutions were assigned 

a “4” rating for safety and soundness 

and four institutions were assigned a 

“5” rating. Forty-two of the “4”- rated 

institutions were examined in 2007,

and formal or informal enforcement 

actions have been finalized to address 

the FDIC’s examination findings. All 

“5”-rated institutions were examined 

in 2007.

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” on their most recent examination. 

3

 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).

2007 2006 2

Safety and Soundness:

State Nonmember Banks 2,039 2,184 2,19

Savings Banks 213 201 199

Savings Associations 3 2 1

National Banks 0 0 0

State Member Banks 3 1 1

Subtotal - Safety and Soundness Examinations 2,258 2,388 2,3

CRA/Compliance Examinations:

Community Reinvestment Act - Compliance 1,241 777 81

Compliance-only 528 1,177 1,1

CRA-only 5 

Subtotal CRA/Compliance Examinations 1,773 1,959 2,020

Specialty Examinations:

Trust Departments 418 468 4

Data Processing Facilities 2,523 2,584 2,70

Subtotal-Specialty Examinations 2,941 3,052 3,1

Total 6,972 7,399 7,5

FDIC Examinations 2005-2007
17

The JET concept evolved from the 

FDIC’s examination of state nonmember banks that were conducting 

payday lending activities through 

third-party vendors. Payday lending 

involved unique and complex products 

with significant safety and soundness 

and consumer protection risks for 

the institutions involved in this activity. 

Joint examination teams were 

subsequently used in the examination 

of credit card lenders that were 

targeting subprime customers. 

As with the payday lenders, such 

products present a myriad of safety 

and soundness and consumer 

protection risks for these lenders. 

In 2007, the FDIC has used JETs 

in institutions involved in significant 

subprime or nontraditional mortgage 

activities; institutions affiliated with 

or utilizing third parties to conduct 

significant lending activities, especially 

in the credit card area; and institutions 

for which the FDIC has received a 

high volume of consumer complaints 

or complaints with serious allegations 

of improper conduct by banks.

Subprime Hybrid Adjustable Rate 

Mortgages 

In 2007, the FDIC continued to closely 

monitor the expansion of subprime 

hybrid adjustable rate mortgages 

(ARMs), typically offered to subprime 

borrowers. Hybrid ARMs start with 

a low fixed interest rate for an initial 

period, which often lasts for two 

to three years, and then resets to 

a variable rate. Mortgage lenders 

typically qualified borrowers based 

on the low introductory payment 

As of December 31, 2007, eight 

FDIC-supervised institutions were 

assigned a “4” rating for compliance; 

no institutions were assigned a “5” 

rating. In total, three of the “4”-rated 

institutions were examined in 2007; 

three were examined prior to 2007 

but are currently in various stages 

of appealing the ratings, and the 

remaining two were examined 

in 2006. With regard to the two 

for which examinations were last 

conducted in 2006, an informal 

enforcement action for one was 

issued in September 2007; therefore, 

an examination is not due until 2008. 

The other institution is operating 

under a Cease and Desist Order 

and the examination remains open. 

The Corporation has issued 

enforcement actions to address 

the examination findings for all five 

of the institutions that were not 

in the process of an appeal. These 

actions include one Cease and 

Desist Order as noted above and 

four Memoranda of Understanding.

Revisions to Compliance 

Examination Guidance

The FDIC conducted an internal 

analysis of compliance examination 

reports to determine if appropriate 

follow-up action is initiated on 

significant violations cited during 

compliance examinations. The review 

revealed that a change was needed 

to clarify guidance to ensure that 

the most problematic weaknesses 

and significant violations cited in 

examination reports are promptly 

addressed by bank management. 

In response, a Regional Director 

Memorandum entitled, Compliance 

Examination Process: Clarification 

of “Significant” Violations and 

Amendments to Enforcement Action 

and Post-Examination Processes was 

issued in 2007. The post-examination 

follow-up process was formalized, 

through which state nonmember 

banks will be required to respond to 

examination staff in writing, outlining 

actions planned and taken to address 

identified deficiencies including 

significant violations. This process 

will enable the FDIC to more 

consistently assess an institution’s 

success or failure in addressing the 

issues during the interim period 

between examinations.

Joint Examination Teams 

The FDIC used joint compliance/risk 

management examination teams 

(JETs) to assess risks associated 

with new, nontraditional and/or 

high-risk products being offered by 

FDIC-supervised institutions. The 

JET approach recognizes that to fully 

understand the potential risks inherent 

in certain products and services, the 

expertise of both compliance and risk 

management examiners is required. 

The JET approach has three primary 

objectives: 

• To enhance the effectiveness 

of the FDIC’s supervisory 

examinations in unique 

situations;

• To leverage the skills of examiners 

 who have experience with 

 emerging and alternative loan 

 and deposit products; and

• To ensure that similar supervisory 

issues identified in different areas 

of the country are addressed 

consistently.
1

amount rather than at the fully 

indexed interest rate, assuming a 

fully amortizing repayment schedule. 

Such underwriting standards and 

loan terms can cause payment 

shock, the consequences of which 

may not have been fully explained 

to borrowers. In addition, many 

lenders combined these loans with 

other potentially risky features, such 

as requiring little or no documentation 

of income, high loan-to-value ratios, 

and simultaneous second-lien 

mortgages, which could compound 

the risk to both borrowers and 

lenders. 

To address these concerns, the 

FDIC joined the other federal financial 

institution regulatory agencies in 

issuing the Statement on Subprime 

Mortgage Lending (Subprime 

Guidance) on July 10, 2007. The 

guidance covers three primary areas: 

risk management practices, consumer 

protection principles, and control 

systems. The risk management 

section focuses on avoiding predatory 

lending, following prudent underwriting standards for qualifying borrowers, 

and encouraging institutions to 

work constructively with residential 

borrowers who are in default or whose 

default is reasonably foreseeable. 

The consumer protection principles 

section recommends that communications with consumers, including 

advertisements, oral statements 

and promotional materials, provide 

borrowers with full and balanced 

information about the costs, terms, 

features and risks of subprime hybrid 

ARMs in a timely manner. The FDIC 

joined the other regulatory agencies in 

providing illustrations for disclosures 

for public comment. The control 

systems section specifies that institutions should develop and implement 

strong control systems to monitor 

whether their subprime lending 

activities are performing as expected, 

and whether actual practices are 

consistent with their policies and 

procedures. These systems should 

monitor both the institution’s personnel 

and third party originators, such as 

mortgage brokers or correspondents. 

Working through Mortgage Resets

The FDIC became increasingly 

concerned about borrowers’ ability to 

service the higher debt load resulting 

from payment shock when their 

hybrid ARMs payments reset. Many 

borrowers, especially those who 

were qualified at a low introductory 

payment amount rather than the fully 

indexed interest rate and on a fully 

amortizing repayment schedule, may 

not have sufficient financial capacity 

to make the higher contractual 

payments owed on their home loans. 

To address this concern, the 

FDIC led the agencies in issuing 

the Statement on Working with 

Mortgage Borrowers in April 2007. 

This guidance primarily addresses 

those instances when a financial 

institution has retained a residential 

mortgage loan on its books. The 

agencies issued the Statement 

on Loss Mitigation Strategies for 

Servicers of Residential Mortgages

in September 2007 to provide 

guidance to entities that service 

residential mortgage loans for 

others. In addition, the FDIC 

joined the Conference of State 

Bank Supervisors and the American 

Association of Residential Mortgage 

Regulators in issuing the Supplemental 

Information for Loss Mitigation 

Strategies. This guidance encourages 

servicers to consider the borrower’s 

ability to repay modified obligations, 

taking into account the borrower’s 

total monthly housing-related 

payments as a percentage of the 

borrower’s gross monthly income.

The FDIC is encouraging servicers 

to adopt a streamlined approach to 

making the decision to grant loan 

modifications where necessary. 

Where the homeowner generally has 

been current at the starter rate, but 

cannot refinance in today’s market 

or make the higher payments after 

the interest rate resets, then the 

loan should be modified to keep it 

at the starter rate for a long-term 

sustainable period. Such modification 

arrangements would also benefit 

lenders and investors who would not 

only have a higher level of performing 

loans, but would also avoid administrative expenses associated with servicing delinquent debts or foreclosing 

on the property. In addition, financial 

institutions may receive favorable 

CRA consideration for programs that 

transition low-to moderate-income 

borrowers from higher cost credit to 

lower cost credit, provided that the 

loan modifications are made in a 

prudent manner. 

Regulatory Relief

On October 13, 2006, the President 

signed Public Law No. 109-351, the 

Financial Services Regulatory Relief 

Act of 2006 (FSRRA). The law required 

the FDIC and other federal regulatory 

agencies to revise certain rules and 

regulations and supervisory processes. 

All required regulatory changes, 

except revisions to part 359 and FDIC 

policy on applications for deposit 

insurance, were completed during 

2007. In 2007, the GAO began a 

review of Currency Transaction 

Reports as required under FSRRA. 

The FDIC has provided the GAO with 

requisite information to support this 

review. 
1

Regulation R 

The FDIC joined the Office of the 

Comptroller of the Currency (OCC), 

the Federal Reserve Board (FRB), 

the Office of Thrift Supervision (OTS), 

and the Securities and Exchange 

Commission (SEC) in drafting 

and finalizing the joint FRB/SEC 

Regulation R - Definitions of Terms 

and Exemptions Relating to the 

“Broker” Exceptions for Banks. The 

FSRRA required the Federal Reserve, 

in consultation with the other federal 

banking regulatory agencies, and 

the SEC to develop a regulation 

implementing the exceptions for 

banks from the definition of broker 

contained in the Gramm-Leach-Bliley 

Act of 1999. The final Regulation R 

was published in the Federal Register

on October 3, 2007, and became 

effective on December 3, 2007. 

Regulation R sets forth the circumstances and conditions under which 

banks can continue to effect securities 

transactions for customers without 

being subject to registration as a 

broker under the Securities Exchange 

Act of 1934.

Model Privacy Notices

The FDIC also worked with the 

other federal banking agencies, the 

National Credit Union Administration, 

the SEC and the Federal Trade 

Commission to develop model privacy 

notices that financial institutions have 

the option of using.

Review of the Reports of Condition

Section 604 of the Financial Services 

Regulatory Relief Act of 2006 requires 

the federal banking agencies to review 

the content of bank Call Reports and 

Thrift Financial Reports (TFR). The 

objective of Section 604 is for the 

agencies to use the results of the 

review as a basis for eliminating or 

reducing any information collected 

in Call Reports and TFRs found to 

be unnecessary or inappropriate. 

The Federal Financial Institution 

Examination Council's (FFIEC) Task 

Force on Reports surveyed various 

Call Report user groups to identify 

the purposes for which each group 

uses each Call Report item, the 

extent of usage for each item, and 

the frequency with which each data 

item is needed. There were 165 

survey participants from the four 

banking agencies and the Conference 

of State Bank Supervisors (CSBS). 

The survey was completed in August 

and the results were evaluated and 

reported to the FFIEC principals in 

October 2007.

FDIC Rules and Regulations

The FDIC also revised the following 

rules and regulations:

• Part 348

To raise the threshold allowing 

depository organizations with 

total assets of $50 million 

(previously $20 million) to be 

exempt from the prohibition 

against having interlocking 

management officials, if the 

depositories are located, or 

have an affiliate located, in 

the same metropolitan statistical 

area, primary metropolitan 

statistical area, or consolidated 

metropolitan statistical area.

• Part 337.12

To expand the examination cycle 

for “1” and “2”-rated community 

banks to 18 months by raising 

the asset threshold eligibility 

from $250 million to $500 million.

• Statement of Policy on Bank 

Mergers Transactions and 

Applicable Sections of Part 303 

To eliminate the competitive 

factors report from other banking 

agencies, and the post-approval 

waiting period for mergers with 

affiliates. 

• Applicable Sections of Part 308 

and the Application Process

To extend the time for review 

of a change-in-control notice 

to address issues arising from 

so-called “stripped charters.” 

In addition, Part 308 was 

amended to clarify that the 

appropriate federal banking 

agency may suspend or 

prohibit individuals charged 

with certain crimes from 

participating in the affairs 

of any relevant depository 

institution.

• Part 309

To reflect broad authority for 

the FDIC to provide confidential 

supervisory information to any 

other federal or state agency 

or authority with supervisory 

or regulatory authority over the 

depository institution that is 

determined to be appropriate.

• Statement of Policy on 

Section 19 of the FDI Act

To reflect amendments made 

by the Financial Services 

Regulatory Reform Act of 2006.
20

Disaster Relief

Recognizing that many communities 

and families may need an extended 

period of time to recover from the 

devastation caused by Hurricane 

Katrina, the FDIC and the other 

federal banking agencies issued a 

reminder to examiners and financial 

institutions to consider the principles 

outlined in the Hurricane Katrina 

Examiner Guidance. In addition, 

during the year the FDIC issued 

12 financial institution letters that 

provided regulatory relief to financial 

institutions and facilitated recovery 

in areas damaged by fire, flood and 

other natural disasters.

Protection of Federal Benefit 

Payments 

The FDIC, along with the other 

federal financial institution regulators, 

proposed guidance that encourages 

federally regulated financial institutions to follow best practices to 

protect federal benefit payments 

from garnishment orders. Federal law 

protects federal benefit payments –

such as Social Security benefits 

and Veterans’ benefits – from 

garnishment orders and the claims 

of judgment creditors, subject to 

certain exceptions. Creditors and 

debt collectors are often able to 

obtain orders from state courts 

garnishing funds in a consumer’s 

account that do not meet the 

requirements of exempt funds. 

To comply with state court garnishment orders, financial institutions 

often place a temporary freeze or 

hold on an account upon receipt of a 

garnishment order, which can cause 

significant hardship for the account 

holder. The agencies developed 

proposed guidance, which includes 

best practices, to encourage financial 

institutions to minimize the hardships 

encountered by federal benefit 

funds recipients and to do so while 

remaining in compliance with applicable laws. The comment period closed 

in November 2007 and the agencies 

have reviewed the comments and 

will determine the best course of 

action during 2008. 

Large Complex Financial 

Institution Program

The FDIC’s Large Complex Financial 

Institution Program addresses the 

unique challenges associated with the 

supervision, insurance and potential 

resolution of large and complex 

financial institutions. A significant 

share of the banking industry’s assets 

and insured deposits are held in a 

small number of large institutions. 

This program ensures a consistent 

approach to large-bank supervision 

and risk analysis on a national basis. 

This is achieved by compiling key 

data and performing analyses of 

large-bank operations for use by 

various FDIC divisions and offices, 

and by providing specialists with 

information to support supervisory 

activities for large banks. 

In 2007, the FDIC led a comprehensive initiative to standardize data 

capture and reporting through the 

Large Insured Depository Institution 

(LIDI) Program. Under this Program, 

supervisory staff throughout the 

nation performs comprehensive quantitative and qualitative risk analysis on 

institutions with assets over $10 billion, 

or under this threshold at regional 

discretion. This information is used 

by various business lines to perform 

critical functions related to insurance, 

resolutions and supervision.

In 2007, the LIDI Program supported 

the insurance function in analyzing 

and setting appropriate insurance 

premiums for large insured financial 

institutions. The Corporation also 

led and supported various initiatives 

designed to better understand potential 

resolution challenges posed by 

complex insured financial institutions.

The FDIC continued to assess internal 

and industry preparedness relative 

to Basel II capital rules and was 

actively involved in domestic and 

international discussions intended 

to ensure effective implementation 

of the New Capital Accord. This 

included participation in numerous 

supervisory working group meetings 

with foreign regulatory authorities to 

address Basel II home-host issues.

Bank Secrecy Act/Anti-Money 

Laundering 

The FDIC pursued a number of Bank 

Secrecy Act (BSA), Counter-Financing 

of Terrorism (CFT) and Anti-Money 

Laundering (AML) initiatives in 2007. 

International AML/CFT Initiatives

The FDIC conducted three training 

sessions in 2007 for 57 central 

bank representatives from Algeria, 

Bosnia, Egypt, Indonesia, Jordan, 

Kuwait, Morocco, Pakistan, Paraguay, 

Philippines, Tanzania, and Turkey. 

The training focused on AML/CFT 

controls, the AML examination 

process, customer due diligence, 

suspicious activity monitoring, 

and foreign correspondent 

banking. The sessions also 
21

The manual has been updated to 

further clarify supervisory expectations 

and incorporate regulatory changes 

since its 2006 release. The revisions 

also reflect feedback from the banking 

industry and examination staff. 

Additionally, the FDIC had the manual 

translated into Spanish and responses 

to the Spanish language version of 

the manual have been positive.

Enforcement Actions 

The FDIC, along with the other 

federal banking agencies, released 

the Interagency Statement on 

Enforcement of BSA/AML 

Requirements on July 19, 2007. 

The statement provides for greater 

consistency in BSA enforcement 

decisions and offers insight into 

how those decisions were made. 

The statement describes the circumstances and provides examples under 

which the federal banking agencies 

will issue a cease and desist order. 

Applicable statutes mandate that 

the appropriate agency shall issue a 

cease and desist order if a regulated 

institution fails to establish and 

maintain a BSA compliance program 

or correct a previously identified 

problem with its BSA compliance 

program. 

Promoting Economic Inclusion

The FDIC pursued a number of 

initiatives in 2007 to promote inclusion 

of traditionally underserved populations 

in banking services and to ensure 

protection of consumers in the 

provision of these services.

included presentations from the 

Federal Bureau of Investigation 

on combating terrorist financing, 

and the Financial Crimes Enforcement 

Network (FinCEN) on the role of 

financial intelligence units in detecting 

and investigating illegal activities.

In addition to hosting onsite 

AML/CFT instruction, the FDIC 

provided guidance and resources 

for international AML/CFT financial 

system assessments and training. 

In 2007, the FDIC provided technical 

assistance in Yemen and Senegal 

to evaluate AML controls and 

each country’s AML statutory and 

legislative framework. Also, the FDIC 

delivered an AML presentation at 

the U.S.-Middle East/North Africa 

Private Sector Dialogue conference 

in Dubai, United Arab Emirates. Finally, 

the FDIC met with representatives 

from the Deposit Insurance 

Corporation of Japan, the Korean 

Financial Intelligence Unit, the Banco 

Central del Uruguay and the Bank 

of Al-Maghrib, Morocco, to discuss 

the AML examination process, 

enforcement authority and the FDIC’s 

supervisory role in combating money 

laundering and other illicit financial 

activities.

Certification of Specialists

The FDIC continued to increase 

regulatory knowledge to keep abreast 

of current issues related to money 

laundering and terrorist financing as 

an additional 10 percent of BSA/AML 

subject matter experts nationwide 

earned the designation of Certified 

Anti-Money Laundering Specialists. 

As of December 31, 2007, 38 BSA 

subject matter experts had completed 

the AML certification process by 

passing the certification examination 

given by the Association of Certified 

Anti-Money Laundering Specialists.

Money Services Businesses Project

The FDIC developed an action plan 

to gain a better understanding of 

state regulators’ AML supervision 

and enforcement of money services 

businesses (MSBs). As part of the 

project, the FDIC partnered with 

the Money Transmitter Regulators 

Association (MTRA), the Conference 

of State Bank Supervisors and FinCEN. 

MTRA surveyed state MSB agencies 

to gather BSA/AML compliance, 

licensing, supervision and enforcement information. The FDIC then 

conducted several interviews with 

state MSB regulators to better 

understand the MSB supervision 

process. The FDIC also conducted a

pilot review to assess the feasibility

of incorporating state MSB AML 

examination findings into FDIC risk 

management examinations.

2007 FFIEC BSA/AML Examination 

Manual 

The FDIC coordinated the revision 

and issuance of the 2007 FFIEC 

BSA/AML Examination Manual. The 

manual was released by the FFIEC 

for publication and distribution on 

August 24, 2007. It reflects the 

ongoing commitment of the federal 

banking agencies to provide current 

and consistent guidance on riskbased policies, procedures and 

processes for banking organizations 

to comply with the BSA and safeguard operations from money 

laundering and terrorist financing. 
22

The Advisory Committee 

for Economic Inclusion 

The FDIC Advisory Committee 

on Economic Inclusion (ComE-IN) 

was established by Chairman 

Sheila C. Bair and the FDIC Board 

of Directors pursuant to the Federal 

Advisory Committee Act. The ComEIN was chartered in November 2006, 

and provides the FDIC with advice 

and recommendations on important 

initiatives focused on expanding 

access to banking services by 

underserved populations.

Three ComE-IN meetings were held 

during 2007. The inaugural meeting 

addressed access to affordable small 

dollar loans. One recommendation 

that resulted was to launch a small 

dollar loan pilot program. The Board 

of Directors of the FDIC subsequently 

approved a two-year pilot project to 

review affordable and responsible 

small-dollar loan programs in financial 

institutions. The purpose of the study 

is to identify effective and replicable 

business practices to help banks 

incorporate affordable small-dollar 

loans into their other mainstream 

banking service offerings. Best 

practices resulting from the pilot 

will be identified and become a 

resource for other institutions.

The second meeting addressed the 

subprime mortgage situation, how it 

developed and possible solutions. The 

third meeting covered ways to ensure 

safe, available services for the money 

services businesses and examined 

their access to the banking system.

Alliance for Economic Inclusion 

In 2007, the FDIC formally launched 

the Alliance for Economic Inclusion 

(AEI), a broad-based coalition of 

banks, community organizations, 

foundations, educators, and local, 

state and federal agencies in nine 

underserved markets across the 

nation – the Greater Boston area; 

Wilmington, DE; Baltimore, MD; 

South Texas (Houston/Austin); 

Chicago; the Louisiana and Mississippi 

Gulf Coast; Alabama's Black Belt; 

Kansas City; and Los Angeles. These 

diverse markets include low- and 

moderate-income neighborhoods, 

urban neighborhoods, minority 

communities and rural areas. The 

goal of the AEI initiative is to work 

with financial institutions and other 

partners in select markets to bring 

those who are unbanked and underserved into the financial mainstream. 

More than 700 banks and other 

organizations have joined the AEI. 

Under the auspices of the AEI, 

approximately 28,000 bank accounts 

have been opened; 29,000 consumers 

have received financial education; 

41 banks are developing small dollar 

loan programs; and 21 banks now 

offer remittance products allowing 

customers to send money to friends 

or family members outside the U.S. 

The FDIC has also included a component of its foreclosure prevention 

efforts within the AEI. An AEI 

partnership with NeighborWorks®

America to promote foreclosure 

prevention and education was 

announced on July 13, 2007. Since 

July, both NeighborWorks® America 

and FDIC have conducted more than 

28 local outreach and training events. 

These events were designed to 

provide assistance to NeighborWorks®

Centers for Foreclosure Solutions and 

other local organizations in developing 

and implementing strategies to 

educate at-risk homeowners about 

the availability of foreclosure prevention counseling services and other 

Members of the FDIC Advisory Committee on Economic Inclusion and speakers discuss money services 

businesses and the problem of access to banks.
23

resources. Each of the nine AEI 

coalitions is also coordinating foreclosure prevention efforts to provide 

support and expand local foreclosure 

prevention programs already underway 

within their communities.

Additionally, FDIC reviewed its supervisory guidance and determined that the 

Case Managers Manual and the Risk 

Management Manual of Examination 

Policies should be revised to ensure 

that they encourage economic inclusion consistent with safe and sound 

banking practices.

Affordable Small-Dollar Loan 

Guidelines and Pilot Program

Many consumers with bank accounts 

turn to high-cost payday or other 

non-bank lenders because they are 

accessible and can quickly provide 

small loans to cover unforeseen 

circumstances. To help enable 

insured institutions to better serve 

an underserved and potentially 

profitable market while helping 

consumers avoid, or transition away 

from, reliance on high-cost debt, 

the FDIC issued its Affordable 

Small-Dollar Loan Guidelines on 

June 19, 2007. The guidelines 

explore several aspects of product 

development, including affordability 

and streamlined underwriting. 

They also discuss tools, such as 

financial education and linked savings 

accounts that may address longterm financial issues that concern 

borrowers. The guidelines also note 

that FDIC-supervised institutions 

offering products that comply with 

consumer protection laws, and are 

structured in a responsible, safe and 

sound manner, may receive favorable 

consideration under the Community 

Reinvestment Act (CRA).

Additionally, on June 19, 2007, the 

FDIC Board approved a two-year 

pilot project to review affordable 

and responsible small-dollar loan 

programs in financial institutions and 

assist bankers by identifying and disseminating information on replicable 

business models for small-dollar 

loans. The pilot project with banks 

near military installations that was 

planned for 2007 will be included in 

this effort. A web site was developed 

to provide information on the pilot 

and participant banks were recruited 

for the study. Participants applied and 

twenty-nine were selected in 2007. 

During 2008, participating institutions 

will be asked to provide summary 

data to the FDIC about the loans in 

the program, the overall value and 

profitability of the program, and the 

benefit to consumers. Information 

collected will be highlighted in FDIC 

publications and speeches. A final 

report is planned for 2010.

Home Mortgage Disclosure Act

The winter 2007 edition of Supervisory 

Insights contained the article “Using 

the HMDA Pricing Data to Identify 

and Analyze Outliers.” The article 

describes the process used by the 

FDIC for loan review and analysis 

at institutions that, based on an 

initial screening of Home Mortgage 

Disclosure Act (HMDA) data, have 

pricing practices that are potentially 

discriminatory. The article offers 

suggestions to bankers and examiners 

gleaned from analyses of two years 

of HMDA pricing data.

Economic Inclusion Surveys

During 2007, the FDIC also 

commenced work on two surveys 

intended to provide extensive new 

data regarding economic inclusion. 

Both of these survey efforts are 

related to a mandate in section 7 

of the Federal Deposit Insurance 

Reform Conforming Amendments 

Act of 2005 requiring the FDIC to 

conduct a survey of FDIC-insured 

institutions every two years regarding 

their efforts to serve the unbanked. 

The first of these surveys, the 

Michael Krimminger, FDIC Special Advisor for Policy, offers 

details of a proposed pilot project to expand availability of 

reasonably priced small-dollar loans as CFO Steve App looks on.
2

Survey of Banks’ Efforts to Serve 

the Unbanked and Underbanked, 

will be conducted during 2008 and is 

expected to yield significant insight 

about bank efforts to serve unbanked 

and underbanked populations. The 

FDIC is also exploring the feasibility 

of conducting a survey of U.S. 

households to estimate the percentage of the U.S. population that is 

unbanked and underbanked. The 

survey is scheduled to be conducted 

in January 2009 as a supplement to 

the Bureau of the Census’s Current 

Population Survey. It is expected 

to yield significant new data on 

the extent of the population that is 

unbanked and/or underbanked and 

the reasons why some households 

do not make greater use of traditional 

banking services.

Overdraft Protection Programs 

Study

Over the last few years, the use 

of automated overdraft protection 

programs has significantly risen. The 

banking regulators published guidance 

on these programs in 2005. The 

Federal Reserve amended Regulation 

DD in 2006 to encompass additional 

disclosure and advertising requirements for certain types of automated 

overdraft protection programs.

With little empirical data on these 

programs, the FDIC has initiated 

a two-part Study of Overdraft 

Protection Programs to systematically 

gather information about the types, 

characteristics and usage of overdraft 

programs offered by FDIC-supervised 

banks. This effort will help the FDIC 

more fully understand this rapidly 

growing and changing product. The 

study results should help the industry 

develop more effective overdraft 

programs that better serve customers. 

Information is being gathered through 

a survey instrument and a download 

of account and transaction level data 

requested from banks. Using the 

survey instrument, field staff is gathering information at 500 randomly 

selected institutions. The survey will 

gather information on how overdraft 

protection is offered to the public 

as well as how banks manage nonsufficient funds (NSF) items and 

programs. A data download is being 

requested from up to 100 institutions 

to gather 12 months of customerlevel micro data on NSF and overdraft 

activity. 

This study will continue through 2008 

and once it has been completed, the 

FDIC plans to make the findings and 

aggregate information public. (No 

personally identifiable information 

will be gathered and no individual 

bank information will be published.) 

The FDIC will use this information 

to better formulate future policy 

decisions. 

Minority Depository Institutions

The FDIC has long recognized the 

importance of minority depository 

institutions (MDIs), particularly in 

promoting the economic viability 

of minority and under-served communities. As a reflection of the 

FDIC’s commitment to MDIs, on 

April 9, 2002, the FDIC issued the 

Policy Statement Regarding Minority 

Depository Institutions. The policy 

statement implements an outreach 

program designed to preserve and 

encourage minority ownership of 

financial institutions. 

Since the adoption of the policy 

by the Board, the FDIC’s National 

Coordinator for MDIs has maintained 

contact with various MDI trade 

associations and has met periodically 

with the other federal banking regulators to discuss the initiatives underway 

at the FDIC. The coordinator has 

worked to identify opportunities 

where the federal banking agencies 

might work together to assist minority 

institutions. Since the adoption of 

the policy statement, all of the FDIC 

regional offices have held annual MDI 

outreach programs, have annually 

contacted each FDIC-supervised MDI 

to offer to meet with bank boards to 

discuss issues of interest, and have 

offered to make return visits to these 

institutions following the examination 

process.

The FDIC’s Minority Bankers’ 

Roundtable series is a forum 

designed to, among other things, 

explore possible partnerships 

between the MDI community and 

the FDIC, as well as to seek input 

on how the FDIC can better promote 

the availability of technical assistance 

to the MDI segment of the industry. 

From the 2006 Roundtable sessions 

evolved ideas for two partnerships 

that were piloted during 2007. 

The first initiative, a “University 

Partnerships” pilot, is designed 

to do the following:

• Promote financial literacy at 

Historically Black Colleges and 

Universities (HBCUs) or other 

schools with a significant minority 

population;
2

Other FDIC MDI accomplishments 

for 2007 include the following: 

• Updating the examiner guidance 

memorandum “Minority 

Depository Institution Program”;

• Inviting minority bankers to speak 

at regional examiner training 

conferences to foster a better 

understanding by the examiners 

of the unique challenges MDIs 

face; 

• Making improvements to the 

FDIC’s external website to better 

organize and provide easier 

access to MDI information; and

• Developing a survey that was sent 

to all MDIs on December 21, 2007, 

to provide all MDIs, including 

those not supervised by the 

FDIC, an opportunity to rate 

the effectiveness of the FDIC’s 

MDI program, FDIC-sponsored 

conferences and roundtables, 

outreach efforts, and technical 

and general assistance. The survey 

results and comments will be 

used to improve our current 

efforts and to develop MDI 

initiatives going forward.

Homeland Security 

The FDIC has taken a leadership role 

in ensuring that the financial sector – 

a critical part of the infrastructure of 

the United States – is prepared for a 

financial emergency. As a member of 

the Financial and Banking Information 

Infrastructure Committee (FBIIC), 

the FDIC has sponsored a series of 

outreach meetings titled “Protecting 

the Financial Sector: A Public and 

Private Partnership.” 

Information Technology, Cyber 

Fraud and Financial Crimes 

The FDIC and other FFIEC regulatory 

agencies jointly issued guidance 

requiring financial institutions to 

strengthen account access credentials 

in an effort to curb online fraud 

and protect both consumer and 

commercial Internet banking 

customers. The guidance required 

the implementation of stronger 

authentication for most institutions 

on or before January 1, 2007. FDIC 

examiners tracked and reported on 

compliance with the guidance during 

various examination activities in 2007. 

Details collected suggest that an 

overwhelming majority (94 percent) 

of the institutions have complied with 

the provisions of the guidance. Most 

of the remaining institutions have 

plans to comply. Industry feedback 

suggests that stronger authentication 

has reduced online Internet bankingrelated fraud through more secure 

access credential management 

practices.

Other major accomplishments during 

2007 in combating identity theft 

included the following:

• Assisted financial institutions 

in identifying and shutting down 

approximately 1,400 “phishing” 

Web sites. The term “phishing” – 

as in fishing for confidential 

information – refers to a scam 

that encompasses fraudulently 

obtaining and using an individual’s 

personal or financial information.

• Issued 323 Special Alerts to FDICsupervised institutions of reported 

cases of counterfeit or fraudulent 

bank checks.

• Provide the partnering MDI and 

the FDIC an opportunity to keep 

the business school deans aware 

of current industry issues and to 

build goodwill on campus; and

• Offer both the MDI and the FDIC 

an opportunity to showcase their 

respective career opportunities. 

The second 2007 Roundtable initiative 

involved partnering with the Puerto 

Rico Bankers Association to deliver 

a high-level specialized Compliance 

School. This event took place from 

November 6-9, 2007, in San Juan, 

Puerto Rico, and was attended by 

150 bankers. This type of partnership 

was the first for the FDIC and was 

consistent with the goal of increasing 

usage of FDIC technical assistance.

In July 2007, the FDIC hosted the 

second annual National Minority 

Depository Institution Conference 

in Miami, Florida. This event was 

coordinated on an interagency 

basis and drew approximately 

170 attendees. In addition to 

presentations by senior officials 

from all of the federal banking 

regulatory authorities, the program 

covered these topics: Broadening 

Access to the Financial Mainstream, 

Opportunities for NeighborWorks®

America and Minority Community 

Bankers, and Capital Enhancement 

and Investment Opportunities, 

including a presentation on the 

Community Development Financial 

Institution Fund. The program also 

included workshops on Information 

Technology, BSA Emerging Issues, 

Compliance and CRA Hot Topics, 

and the Revised Interagency Policy 

Statement on the Allowance for Loan 

and Lease Losses. Feedback from 

the attendees was overwhelmingly 

positive. A third annual interagency 

conference is planned for 2008.
2

• Participated on the President’s 

Identity Theft Task Force and 

five of its primary subgroups. 

The FDIC was one of seventeen 

federal agencies that participated. 

The Task Force submitted its 

report to the President on 

April 11, 2007. The report contains

a comprehensive description of 

the problem as well as numerous 

recommendations concerning 

what the federal government 

and private industry can do to 

mitigate this serious problem. 

Since the report was submitted 

to the President, the FDIC 

continues to participate in 

several Task Force subgroups 

that are performing additional 

research on specific aspects of 

identity theft and plan to submit 

additional recommendations to 

the President in the spring of 

2008.

• The FDIC, in addition to the other 

federal banking agencies and 

the Federal Trade Commission, 

published a final identity theft 

red flag regulation and guidelines 

on November 9, 2007. The 

regulation and guidelines 

implement sections 114 and 

315 of the Fair and Accurate 

Credit Transactions Act of 

2003. Compliance is expected 

by November 1, 2008.

Consumer Complaints 

and Inquiries 

The FDIC investigates consumer 

complaints about FDIC-supervised 

institutions and answers inquiries 

from the public about consumer 

protection laws and banking practices. 

In 2007, the FDIC received 11,624 

written complaints, of which 4,457 

were against state nonmember 

institutions. The Corporation responded 

to over 93 percent of these complaints 

within timeliness standards established by corporate policy. The FDIC 

also responded to 3,656 written and 

3,321 telephone inquiries from consumers regarding state nonmember 

institutions. Overall in 2007, the FDIC 

handled 5,856 consumer telephone 

calls from the public and members 

of the banking community about 

consumer protection issues not 

including deposit insurance inquiries 

which are discussed on the following 

page. 

Deposit Insurance Education

An important part of the FDIC's role 

in insuring deposits and protecting 

the rights of depositors is ensuring 

that bankers and consumers have 

access to accurate information about 

the FDIC's deposit insurance rules. 

The FDIC has an extensive deposit 

insurance education program 

consisting of seminars for bankers, 

electronic tools for estimating deposit 

insurance coverage, and written and 

electronic information targeted for 

both bankers and consumers. The 

FDIC also responds to thousands of 

telephone and written inquiries each 

year from consumers and bankers 

regarding FDIC deposit insurance 

coverage.

Effective October 12, 2006, the FDIC 

Board of Directors adopted final rules 

that implemented provisions of the 

Federal Deposit Insurance Reform 

Act of 2005 pertaining to deposit 

insurance coverage. Following the 

adoption of the final rule changes, 

the FDIC completed a multi-pronged 

effort in 2007 to update numerous 

publications and educational tools 

for consumers and bankers on 

FDIC insurance coverage, including 

consumer brochures, banker resource 

guides, videos and the Electronic 

Deposit Insurance Estimator. 

To address current questions and 

issues relating to changes in the 

FDIC insurance coverage of deposit 

accounts, the FDIC hosted two 

identical series of telephone seminars 

for bankers on the FDIC’s rules 

for deposit insurance coverage – 

one series in October and one in 

November. Each series consisted of 

topics on Basic Concepts of Deposit 

Insurance Coverage, Coverage for 

Retirement and Employee Benefit 

Plan Accounts, Trust Account 

Coverage, and Coverage for Business 

and Government Accounts. The 

seminars were designed to provide 

bankers with a comprehensive 

review of the FDIC’s rules for deposit 

insurance coverage. These free 

seminars were open to employees 

of all FDIC-insured banks and savings 

associations. The telephone conferences were attended by bankers 

in approximately 11,000 locations. 

Many of these locations represent 

bank branch offices where multiple 

employees took part in the training. 
27

The FDIC coordinated with bank 

trade associations to conduct seven 

comprehensive seminars for financial 

institution employees on the rules 

for deposit insurance coverage. These 

seminars, which were conducted in 

classroom settings throughout the 

United States, provided a comprehensive review of how FDIC insurance 

works, including the 2006 changes 

to the FDIC’s final rules for insurance 

coverage. 

The FDIC also completed a comprehensive and authoritative resource 

guide for bankers, attorneys, financial 

advisors and similar professionals on 

the FDIC’s rules and requirements 

for deposit insurance coverage 

of revocable and irrevocable trust 

accounts. The new trust guidebook 

will be published on the FDIC’s Web 

site in the first quarter of 2008. 

In 2007, the FDIC received over 

119,000 telephone and written 

inquiries from consumers and bankers 

regarding federal insurance coverage 

of bank deposits. Of these inquiries, 

4,125 required formal written 

responses, 98 percent of which 

were completed within timeliness 

standards established by corporate 

policy.

Financial Education and 

Community Development

In 2001, the FDIC – recognizing the 

need for enhanced financial education 

across the country – inaugurated 

its award-winning Money Smart

curriculum, which is now available 

in six languages, large print and 

Braille versions for individuals with 

visual impairments and a computerbased instruction version. Since its 

inception, over 1.4 million individuals 

(including approximately 200,000 

in 2007) have participated in Money 

Smart classes and self-paced 

computer-based instruction. 

Approximately 163,000 of these 

participants have subsequently 

established new banking relationships. 

During 2007, the FDIC updated 

and enhanced the Money Smart

curriculum and training tools. These 

changes included guidance on 

consumer-related concerns such as 

identity theft, remittances and how 

to assess mortgage product options. 

In recognition that public schools are 

one of the best venues for reaching 

the next generation of consumers of 

all income levels, the FDIC embarked 

on a pilot project to expand its outreach and enhance the availability of 

the Money Smart financial curriculum 

in high schools. Over 339 schools, 

school systems and related entities 

have been contacted regarding the 

availability of Money Smart. Several 

hundred secondary school teachers 

and volunteers have been trained to 

deliver Money Smart. The FDIC also 

began work on developing a Money 

Smart curriculum for young adults.

The FDIC completed a major multiyear study in 2007 to evaluate the 

effectiveness of the Money Smart

curriculum. The study, A Longitudinal 

Evaluation of the Intermediateterm Impact of the Money Smart 

Financial Education Curriculum 

upon Consumers' Behavior and 

Confidence, shows that the training 

can positively influence how people 

manage their finances. The survey 

examines the impact of financial 

education on the behavior of a broad 

audience up to one year after completing the training. The goal was to 

measure, over time, not only whether 

trainees’ knowledge of financial 

matters improved, and whether they 

intended to change their financial 

behaviors, but also whether, months 

after the training, they had actually 

acted on their intentions. Survey 

results indicate that those who took 

the Money Smart course were more 

likely to open deposit accounts, save 

money, use and adhere to a budget, 

and have increased confidence in 

their financial abilities when contacted 

6 to 12 months after completing the 

course. A majority of those surveyed 

reported an increase in personal 

savings, a decrease in debt, a better 

understanding of financial principles, 

and an increased willingness to 

comparison shop for financial 

services.

During 2007, the FDIC also undertook 

over 195 community development, 

technical assistance and outreach 

activities. These activities were 

designed to promote awareness of 

investment opportunities to financial 

institutions, access to capital within 

communities, knowledge-sharing 

among the public and private sector, 

and wealth-building opportunities for 

families. Representatives throughout 

the financial industry and their stakeholders collaborated with the FDIC on 

a broad range of initiatives structured 

to meet local and regional needs for 

financial products and services, credit, 

asset-building, affordable housing, 

small business and micro-enterprise 

development and financial education.
2

International Outreach

During 2007, the FDIC focused its 

international programs and activities 

toward the goal of helping to build 

strong and effective systems for 

protecting depositors, supervising 

financial institutions and resolving 

failures. Efforts included arranging 

and conducting training sessions, 

technical assistance missions and 

foreign visits, leadership roles in 

international organizations, bilateral 

consultations with foreign regulators, 

and many other activities and 

consulting services. 

The FDIC’s strengthened international 

leadership role paved the way for the 

election of the FDIC’s Vice Chairman 

to the position of President of the 

International Association of Deposit 

Insurers (IADI) and Chair of the IADI 

Executive Council. In addition, the 

Vice Chairman, as Chair of the IADI 

Training and Conference Standing 

Committee, developed and led the 

first-ever Executive Training Program, 

providing training to 35 IADI members 

from 27 countries. The FDIC was 

elected for the first time to serve 

on the Board of Directors for the 

Association of Supervisors of Banks 

in the Americas (ASBA) and to 

represent the North American Region. 

The FDIC’s leadership within ASBA 

included providing technical training 

to ASBA members on operational risk 

management and leading two working 

groups in developing ASBA guidance 

on key supervisory issues. The FDIC 

also established strong working 

relationships and presented at several 

European Forum of Deposit Insurers 

(EFDI) meetings, including the EFDI/

IADI Joint Symposium on Cross 

Border Issues. 

The FDIC continued to enhance 

the effectiveness and broaden the 

scope and impact of its three primary 

international programs – technical 

assistance, foreign visitors and 

training. The FDIC provided technical 

assistance to 12 central banks, bank 

supervisors and deposit insurers from 

11 countries. A highlight of this assistance was an expanded partnership 

with the Financial Services Volunteer 

Corp (FSVC) in supporting the Central 

Bank of Egypt in developing an 

examiner commissioning program. 

The FDIC also provided critical 

technical assistance to Albania on 

resolution practices and the legal 

framework for establishing the backup 

financial support from the government 

to strengthen the deposit insurance 

safety net. In addition, the FDIC 

hosted 66 foreign country visits, 

including 417 foreign visitors from 

28 countries. Noteworthy among 

these visits was the second U.S.-

China Seminar on Bank Supervision, 

delegations representing parliament 

officials from South Africa, United 

Kingdom, Sweden and Italy, and an 

extended visit by board members 

and staff of the Nigerian Deposit 

Insurance Corporation. Lastly, 168 

foreign students from 17 countries 

received training in examinations, 

financial institution analysis, loan 

analysis, examination management, 

information technology examination, 

and anti-money laundering and 

counter-terrorism financing.

The FDIC expanded relationships 

with key international banking and 

deposit insurance organizations by 

expanding the secondment program 

Deposit insurers from an array of countries gathered at Virginia Square for the Strategic Planning and 18th Meeting of the 

Executive Council of the International Association of Deposit Insurers. Chairman Sheila C. Bair and Jean Pierre Sabourin, 

past Chairman of IADI, are in the front row, near the center. 
2

(detailing staff from one country 

to another), technical assistance 

agreements and initiating new 

supervisory information sharing 

agreements. Secondment Memoranda 

of Understanding (MOU) were 

entered into with Japan, Albania, 

Poland, Nicaragua, and Korea to allow 

for selected employees from these 

countries to come to the FDIC to 

receive training and gain expertise 

in areas of supervision, resolution 

management and deposit insurance. 

Technical assistance agreements 

were executed with the People‘s 

Bank of China and the U.K. Financial 

Services Authority, providing FDIC 

subject matter expertise in promoting 

deposit insurance best practices. 

Notable examples of forging strong 

relationships with key countries 

included the FDIC Chairman’s visits 

to China, Japan and South Korea, the 

Vice Chairman’s visits to Malaysia, 

Turkey and other IADI- and EFDImember countries and the Chief 

Operating Officer’s visits to Russia, 

China and the United Kingdom. The 

FDIC also entered into supervisory 

information sharing MOUs with 

Brazil, Argentina, the Netherlands, 

and Australia. 

Receivership Management

The FDIC has the unique mission 

of protecting depositors of insured 

banks and savings associations. No 

depositor has ever experienced a 

loss on the insured amount of his 

or her deposit in an FDIC-insured 

institution due to a failure. Once an 

institution is closed by its chartering 

authority – the state for state-chartered 

institutions, the Office of the 

Comptroller of the Currency (OCC) 

for national banks and the Office of 

Thrift Supervision (OTS) for federal 

savings associations – and the FDIC 

is appointed receiver, it is responsible 

for resolving the failed bank or savings 

association. The FDIC gathers data 

about the troubled institution, 

estimates the potential loss to 

the insurance fund from various 

resolution alternatives, solicits 

and evaluates bids from potential 

acquirers (if any), and recommends 

the least-costly resolution method 

to the FDIC’s Board of Directors for 

approval.

Resolving Financial Institutions 

Failures

During 2007, three FDIC-insured 

institutions failed. The accompanying 

chart provides liquidation highlights 

and trends for the past three years. 

No federally-insured financial 

institution failures occurred in 

either 2005 or 2006.

Metropolitan Savings Bank in 

Pittsburgh, Pennsylvania, was the 

first FDIC-insured institution closed 

since June 2004. This institution 

was closed by the Pennsylvania 

Department of Banking on February 

2, 2007. At the time of closure, 

Metropolitan had total assets of 

$15.3 million and total deposits of 

$17.5 million with $925 thousand 

in deposits that exceeded the 

federal deposit insurance limit. 

Allegheny Valley Bank of Pittsburgh, 

Pennsylvania, paid the FDIC a premium 

of six percent on assumed deposits 

of approximately $12.3 million and 

purchased certain assets in the form 

of cash equivalents, securities, and 

loans secured by deposits for 

$1.9 million. The estimated cost 

to the DIF is $2.5 million.

At an August 2, 2007 press conference in Beijing, FDIC Chairman Sheila C. Bair and Governor Zhou

of the People's Bank of China (PBC) formalized the international working relationship between the 

FDIC and the PBC by signing a Memorandum of Understanding. 
30

NetBank of Alpharetta, Georgia, 

was closed by the Office of Thrift 

Supervision on September 28, 2007. 

NetBank was an Internet bank and 

had no physical branches. At the time 

of closure, NetBank had total assets 

of $2.2 billion and total deposits of 

$1.94 billion with $94.5 million in 

deposits that exceeded the federal 

deposit insurance limit. Uninsured 

depositors received an immediate 

dividend of 50 percent of their 

uninsured balance. ING Bank, FSB, 

Wilmington, Delaware, assumed 

$1.38 billion of the failed bank’s 

insured non-brokered deposits for a 

one percent premium and purchased 

$464 million of NetBank’s assets. 

The estimated cost to the DIF is 

$107.7 million. 

Miami Valley Bank of Lakeview, 

Ohio, was closed by the Ohio 

Superintendent of Financial 

Institutions on October 4, 2007. At 

the time of closure, Miami Valley had 

total assets of $92.6 million and total 

deposits of $65 million with $3.9 million in deposits that exceeded the 

federal deposit insurance limit. The 

Citizens Banking Company, Sandusky, 

Ohio, assumed $56.4 million of the 

failed bank’s insured deposits for a 

two percent premium and purchased 

$9 million of Miami Valley’s assets. 

The estimated cost to the DIF is 

$3 million.

Receivership Management 

Activities

The FDIC, as receiver, manages the 

failed banks and their subsidiaries 

with the goal of expeditiously winding 

up their affairs. The oversight and 

prompt termination of receiverships 

help to preserve value for the uninsured depositors and other creditors 

by reducing overhead and other 

holding costs. Once the assets of a 

failed institution have been sold and 

the final distribution of any proceeds 

is made, the FDIC terminates the 

receivership estate. In 2007, the 

number of receiverships under management was reduced by 22 percent 

(from 55 to 43), while the book 

value of assets under management 

increased by 158 percent (from 

$352 million to $907 million). 

For the institutions that failed in 

2007, the FDIC successfully contacted 

all known qualified and interested 

bidders to market these institutions. 

Additionally, the FDIC marketed 

90 percent of the marketable assets 

of these institutions at the time 

of failure and made insured funds 

available to all depositors within 

one business day of the failure.

Receivership-Related Securities 

Disposition and Cash Collections

A total of 56 securities, including 

mortgage-backed securities, swap 

agreements, corporate bonds and 

common stock, were managed 

throughout the year or were sold, 

with cash collections from sales and 

management totaling approximately 

$29 million.

Claims Administration System 

and Related Notice of Proposed 

Rulemaking

During 2007, the FDIC identified 

requirements and completed the 

high-level design of a new insurance 

determination system called 

the Claims Administration System, 

targeted to be implemented in 2009. 

The FDIC also issued a Notice of 

Proposed Rulemaking that, in the 

event of a financial institution failure, 

would require all insured institutions,

regardless of size to assist in the 

insurance determination process and 

to provide the FDIC with depositor 

data in a standard format. In both 

2005 and 2006, the FDIC had issued 

Advance Notices of Proposed 

Rulemaking on this topic.

2007 2006 2

Total Institutions Resolved 3 0 0

Assets of Resolved Institutions $ 2.34 $ 0.00 $ 0.0

Net Collections from Assets in Liquidation●$ 1.25 $ 0.17 $ 0.3

Total Assets in Liquidation●$ 0.91 $ 0.35 $ 0.4

Total Dividends Paid●$ 1.65   0.17   0.

Savings Over Cost of Liquidation■$ .36 $ 0 $ 

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

Resolution Trust Corporation.

Least Cost Test Savings. The least cost test is performed prior to resolution to rank order the various resolution 

alternatives by estimated cost to the Deposit Insurance Fund.

D o l l a r s i n b i l l i o n s

Liquidation Highlights 2005-2007

●

■
31

Asset Servicing Technology 

Enhancement Project

In 2007, the Asset Servicing 

Technology Enhancement Project 

(ASTEP) implemented a new asset 

management system called 4C. 

This effort takes advantage of new 

technology and replaces several 

outdated systems. The 4C system 

currently supports the management 

of receivership loans, real estate, 

securities, and other assets. It 

also provides a data warehouse. 

On May 8, 2007, the FDIC Board of 

Directors approved funding for the 

inclusion of the institution franchise 

and the asset marketing functions in 

the 4C system. 4C will be completed 

in late 2008 allowing the FDIC to 

more efficiently market financial 

institution franchises, manage and 

sell the assets of failed banks, and to 

easily report on these activities.

Protecting Insured Depositors 

Although the FDIC’s focus in recent 

years has shifted from resolving 

large numbers of failed institutions 

to addressing existing and emerging 

risks in insured depository institutions, the FDIC continues to protect 

deposits in institutions that fail. 

The FDIC’s ability to attract healthy 

institutions to assume deposits and 

purchase assets of failed banks and 

savings associations at the time of 

failure minimizes the disruption to 

customers and allows some assets 

to be returned to the private sector

immediately. Assets remaining 

after resolution are liquidated by the 

FDIC in an orderly manner and the 

proceeds are used to pay creditors, 

including depositors whose accounts 

exceeded the $100,000 (or $250,000) 

insurance limit. During 2007, the 

FDIC paid dividends of $64.3 million to 

depositors whose accounts exceeded 

the insured limit(s). 

Professional Liability Recoveries

The FDIC staff works to identify 

potential claims against directors 

and officers, accountants, appraisers, 

attorneys and other professionals who 

may have contributed to the failure 

of an insured financial institution. 

Once a claim is deemed meritorious 

and cost effective to pursue, the 

FDIC initiates legal action against the 

appropriate parties. During the year, 

the FDIC recovered approximately 

$47.1 million from these professional 

liability claims. In addition, as part 

of the sentencing process for those 

convicted of criminal wrongdoing 

against institutions that later failed, 

a court may order a defendant to 

pay restitution or to forfeit funds or 

property to the receivership. The 

FDIC, working in conjunction with 

the U.S. Department of Justice, 

collected more than $5.3 million in 

criminal restitution during the year. 

At the end of 2007, the FDIC’s 

caseload was comprised of nine 

professional liability lawsuits (up 

from 8 at year-end 2006), 34 open 

investigations (up from 2), and 

93 active settlement collections 

(down from 97). At year end, there 

were 687 active restitution and 

forfeiture orders (down from 814). 

This includes 357 Resolution Trust 

Corporation orders that the FDIC 

inherited on January 1, 1996.

Effective Management 

of Strategic Resources

The FDIC recognizes that it must 

effectively manage its human, financial, 

and technological resources in order 

to successfully carry out its mission 

and meet the performance goals 

and targets set forth in its annual 

performance plan. The Corporation 

must align these strategic resources 

with its mission and goals and deploy 

them where they are most needed 

in order to enhance its operational 

effectiveness and minimize potential 

financial risks to the Deposit Insurance 

Fund. Major accomplishments 

in improving the Corporation’s 

operational efficiency and effectiveness during 2007 follow. 
32

Human Capital Management

The FDIC’s human capital management program is designed to attract, 

develop, reward and retain a highly 

skilled, cross-trained, diverse and 

results-oriented workforce. In 2007, 

the FDIC continued to implement 

workforce planning and development initiatives, as well as strategies 

to more fully engage employees in 

advancing the Corporation’s mission.

Succession Management 

Strategies

Over the next decade, the FDIC 

expects to reshape its workforce 

in light of the projected retirements 

of a large proportion of its current 

employee base. In 2006, Corporation 

leadership developed several programs

to plan for and address those 

retirements. These programs were 

designed to assess executive 

leadership bench strength, identify 

potential skill-set shortages or gaps, 

and institute strategies for closing 

these gaps. 

During 2007, the FDIC began implementing a number of initiatives 

aimed at strengthening our human 

capital capabilities. First, senior 

leadership distributed a summary 

report of the findings of the 2006 

Executive Manager (EM) talent review 

to all EMs. As a result of the review, 

several recommended succession 

planning initiatives are being pursued, 

and the talent review process will be 

cascaded down to capture Corporate 

Manager (CM) II leaders in the first 

quarter of 2008. Second, the Office 

of Personnel Management’s management competency assessment tool 

was administered to all EMs and 

CMs to establish a baseline for 

identifying and closing leadership 

competency gaps. Finally, the 

Corporate Executive Development 

Program was launched with the 

selected high potential employees 

beginning an 18-month program of 

rotational assignments, mentoring 

and training that will prepare them 

to assume leadership roles in the 

Corporation as part of the succession 

plan. The FDIC will continue to pursue 

these and other succession management initiatives in 2008 and the years 

to come.

Employee Engagement 

The FDIC continually evaluates its 

human capital programs and strategies to ensure that the Corporation 

remains an employer of choice and 

all employees are engaged and 

aligned with its mission. The 2006 

Federal Human Capital Survey provided the FDIC with a baseline for 

employee satisfaction and engagement in a number of areas associated 

with working for the federal government and the FDIC, in particular. In 

reviewing the results released in 

early 2007, the Chairman established 

broad objectives for addressing areas 

of concern. She also launched an 

employee engagement initiative to 

include an employee survey that was 

more narrowly targeted to issues 

of importance to the FDIC and its 

employees. The 2007 employee 

engagement survey had an exceptional overall response rate of 77 

percent, and focus groups were 

conducted to glean insights on causal 

factors underlying the 2007 survey 

results that highlighted areas needing 

improvement. Dialogues regarding 

the 2007 survey results will continue 

into 2008 and an action plan to implement recommendations will be developed. A principal benefit derived from 

this initiative and others is enhanced 

communication among employees 

and leadership in the Corporation. 

Senator Bob Dole was guest speaker at the FDIC's Veteran's Day Program. 
33

Corporate Employee Program

During 2007, the FDIC continued 

its focus on new employee development through the Corporate 

Employee Program, which is the 

pipeline for new employees into 

the Corporation's business line 

divisions. The program provides a 

foundation across the full spectrum 

of the Corporation’s business lines, 

allowing for greater flexibility to 

respond to changes in the financial 

services industry and in meeting the 

Corporation’s staffing needs. At the 

end of 2007, 364 employees had 

entered the multi-year, multi-disciplined program. 

Employee Learning and Growth

The FDIC implemented its 

Professional Learning Account 

Program, which emphasizes continuous employee learning and growth. 

It provides employees a greater role 

in planning their career development.

Also, to further enhance the FDIC’s 

readiness and flexibility, the internal 

certificate program was expanded 

during 2007 to include the areas 

of Bank Secrecy Act, Receivership 

Claims, Franchise and Asset 

Marketing, and Basic Compliance 

Examination functions. In addition, 

the FDIC continued its sponsorship of industry-recognized professional certifications such as 

Certified Anti-Money Laundering 

Specialist (CAMS); Certified Fraud 

Examiner (CFE); Certified Information 

Systems Auditor® (CISA®); Certified 

Regulatory Compliance Manager 

(CRCM); Chartered Financial Analyst®

(CFA®); and Financial Risk Manager®

(FRM®). 

With the Corporation’s increased 

focus on consumer protection, the 

Advanced Compliance Examination 

School (ACES) for commissioned 

compliance examiners was launched 

to address current and complex 

consumer compliance issues. 

The content of the online Examiner 

Continuing Education Program, 

which provides examiners access 

to a variety of risk management 

and compliance technical training 

offerings, was also expanded. 

Information Technology 

Management

Information technology (IT) resources 

are one of the most valuable assets 

available to the FDIC in fulfilling its 

corporate mission. The FDIC continued to improve its IT administration 

and management practices in 2007. 

Enterprise Architecture

The Corporation is committed to 

using IT to improve the operational 

efficiency of its business processes. 

In 2007, the IT program focused on 

establishing an economical enterprise 

architecture that supports effective 

IT systems portfolio management 

as well as security and privacy 

programs. This architecture, which 

is being implemented over a threeto five-year time frame, will provide 

for better accountability and transparency while offering service delivery 

efficiencies.

Internet Program

The FDIC’s public Web site, www.

fdic.gov, is a key communication 

delivery method for the FDIC. 

Each of the three major business 

lines – Insurance, Supervision, and 

Receivership Management – utilizes 

the Web site extensively. A Brown 

University research study released 

in July 2007 ranked the FDIC’s Web 

site eighth in federal government 

Web sites, up from 27th last year. 

The FDIC’s Web site was the highest 

ranked among all federal bank regulators. During a typical weekday, www.

fdic.gov hosts approximately 30,000 

user sessions. On October 5, 2007, 

a day after the Miami Valley Bank 

closing, the FDIC logged 157,986 

user sessions. This was the largest 

single day usage for the Web site, 

representing a 500 percent increase 

in traffic and resulting in over 2.6 million hits to www.fdic.gov in a 24-hour 

period. To ensure the continued availability of this facility, the robustness 

and security of the Web site were 

improved during 2007. 

Securing the FDIC

During 2007, many IT initiatives were 

undertaken to provide a more secure 

environment within the FDIC, including implementation of tools to combat the increasing levels of Internet 

and e-mail scams, conducting disaster recovery tests and updating the 

Corporation’s disaster recovery plan, 

and conducting privacy and sensitive 

data walk-about inspections.