FDII 

Federal Deposit Insurance Corporation Deputy to the Chairman 550 17th Street NW, Washington, D.C, 20429-9990 

May 27, 2009 

TO: The Board \jireÑY 

FROM: Paul M. Nash 

Deputy to the C airman for External Affairs

Deputy Genera 

SUBJECT: Establishment ofthe FDIC Advisory Committee on Community Banking 

EXECUTIVE SUMMARY 

In order to provide the FDIC with a useful mechanism to promote dialogue and obtain advice or 

recommendations from regulated entities and others impacted by FDIC activities, the Chairman 

is seeking Board approval for the establishment of a new advisory committee at the FDIC, to be 

called the FDIC Advisory Committee on Community Banking (hereinafter the "Community 

Banking Committee" or "CBC"). On November 2,2006, the FDIC Board approved the 

the FDIC Advisory Committee on Economic Inclusion (the "ComE IN"), which 

has provided a valuable forum for the exchange of views on important initiatives focused on 

expanding access to banking services by underserved populations. 

establishment of 

Like the ComE IN, the proposed Community Banking Committee would be consistent with the 

FDIC's mission as insurer, supervisor and receiver and would provide the FDIC with the 

opportunity to obtain advice or recommendations on a broad range of policy issues that have a 

particular impact on small community bans and the communities served by such banks, 

including a focus on rural areas. The CBC will provide a forum for the exchange of views 

through discussion and debate on current and emerging issues facing the community banking 

industry and consumers served by the industry. The CBC wil serve solely in an advisory 

capacity and will have no final decision-making authority. 

To establish an advisory committee, the FDIC must comply with applicable Federal laws, 

including the Federal Advisory Committee Act ("F ACA"). Under F ACA, an advisory 

committee can be created only when it is determined by the agency head that it is essential to the 

performance of a duty or responsibility required by law. F ACA requires that this determination 

be made as a matter of formal record after consultation with the General Services Administration 

("GSA"), the agency charged by Congress with overseeing the administration of F ACA. In its 

"consultation" with GSA, the agency is required to submit a proposed charter outlining the 

committee's mission and duties along with a letter explaining why the committee is necessary 

and how the agency plans to attain a balanced membership on the committee. GSA concurrence 

or approval regarding the establishment of the committee is not required under F ACA; an agency 

head may stil establish the committee if a formal determination is made that it is in the public 
interest and necessar to the performance of agency duties imposed by law. Following a 

required public notification period, the charter is filed with the House and Senate committees 

with legislative jurisdiction over the agency, and other required entities. F ACA requires the 

House and Senate committees to make a continuing review of the activities of the advisory 

committee. Once the charter is filed, the committee can begin operation. 

F ACA sets out many administrative requirements for advisory committees, including, 

designations of individuals for committee oversight and administration, recordkeeping, and 

reporting and disclosure requirements. FDIC Executive Secretary Robert Feldman is the 

agency's Committee Management Officer (CMO"), who is charged with overseeing the 

administration of F ACA for all FDIC advisory committees established under the Act and thus 

will do so for the CBC. In addition, F ACA requires the Chairman to appoint a Designated 

Federal Official ("DFO") to oversee and coordinate the operations of each individual advisory 

committee. With respect to the CBC, the Chairman is proposing to appoint Paul M. Nash, 

Deputy to the Chairman for External Affairs, to be the DFO for the advisory committee. Under 

F ACA, meetings are required to be open to the public, and can only be closed in limited 

circumstances in accordance with applicable law. 

In order to make the CBC function effectively, it is proposed that the Board delegate to the 

the FDIC all authorities necessary to establish and operate the CBC (and any 

appropriate subcommittees), including the selection of CBC members, the establishment of 

administrative and operational procedures, as well as budgetary authority. The CBC will operate 

on a continuing basis, subject to a two-year term and renewal under F ACA, until the Chairman, 

with the concurrence of the Board, determines that its continuance is no longer in the public 

interest. 

Chairman of 

members It is proposed that the CBC meet at least two times per year, with a majority of 

representing community bans of various sizes and charter types, both rural and urban, including 

a cross-section of institutions from different regions of the country. Other members of the 

Community Baning Committee will include representatives of individuals, small businesses, 

not-for-profit community organizations or other entities that rely on community banks to provide 

credit and other banking services in their communities, as well as one or more representatives of 

academic institutions. Members selected for the CBC, because of their representation of diverse 

groups and their intimate knowledge of baning-related issues, will be in a unique position to

provide guidance and valuable input on issues of importance to the FDIC that are not generally 

available through other sources within the FDIC or the Federal government. It is recommended 

that CBC members be reimbursed for reasonable expenses relating to travel, meals and 

accommodations in connection with advisory committee business. There would be no other 

compensation. 

BACKGROUND 

The Federal Advisory Committee Act 

The F ACA applies to any committee that is established or utilized by a Federal agency and 

which furnishes "advice or recommendations" to an agency. Under the Act, an "advisory 

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committee" is defined as "any committee, board, commission, council, conference, panel, task 

force, or other similar group, or any subcommittee or other subgroup thereof. . . which is . . . (A) 

. . .established by statute. . . or (B) established or utilized by the President, or . . . (C) . . . by one 

or more agencies, in the interest of obtaining advice or recommendations for. . . one or more 

agencies ... of the Federal Governent." 

F ACA establishes requirements for creating, managing, operating and terminating advisory 

committees. Only the Federal Reserve System and the CIA are exempt by statute from its 

requirements. The FDIC is subject to FACA and the regulations promulgated by GSA, the 

Federal agency charged with oversight of Federal advisory committees.l 

In establishing advisory committees, F ACA sets out certain guidelines for agencies to follow: the committee must (1) the committee has to have a clearly defined purpose; (2) the members of

represent a fair balance in terms of points of view represented; (3) the committee must exercise

independent judgment and not be inappropriately influenced by the appointing authority or any 

special interest; and (4) the committee must be adequately funded and staffed. If an advisory 

committee is not established by statute or the President, the head of an agency may authorize an 

advisory committee to be formed if he or she makes a determination that the establishment of the 

committee is in the public interest in connection with the performance of duties imposed on the 

agency by law. This determination must be made as a matter of formal record after consultation 

with the GSA Administrator. Even if GSA does not concur with an agency's proposal to 

establish an advisory committee, F ACA does not prohibit the agency from establishing the 

committee. The agency, however, must stil comply with GSA regulations. 

F ACA also imposes certain recordkeeping and reporting requirements on Federal agencies that 

establish Federal advisory committees. An agency is required to report information anually to 

GSA on its advisory committees including the name of each committee, the date and authority 

for its creation, its functions, a list of reports it has submitted, dates of meetings, names of 

members, its termination date, and the estimated annual cost of maintaining the committee. Any 

reports prepared by an advisory committee must be fied with the Library of Congress. 

Under F ACA, agencies are required to retain all documents and records relating to advisory 

committees and make them available for public inspection and duplication. Such documents and 

records also are subject to applicable Federal disclosure laws. Detailed minutes of each 

committee must be maintained. Agencies also are required to keep records that fully disclose the 

i There have been a number of presidential directives on the establishment of advisory committees in recent years. 

In 1993, President Clinton issued an executive order that limits Federal agencies from establishing any new advisory 

committees unless the agency head finds compellng considerations necessitating the committee's creation and 

Management and Budget ("OMB"). Although the executive order was issued 

under the authority of F ACA, which applies to the FDIC, the order does not direct but instead merely "requests" that 

all independent regulatory commissions and agencies comply with the order. Subsequently, OMB issued a circular 

receives approval from the Offce of 

requiring OMB review and approval of new advisory committees. The OMB circular derives its authority from the

executive order. The Legal Division has opined that as an independent regulatory agency, the FDIC is not legally 

bound by the provisions of the executive order or the OMB circular, but is merely requested to comply. Although the establishment of the advisory the FDIC is not bound by these directives, the FDIC intends to notify OMB of 

committee after fiing its charer. 

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the committee. The Comptroller General is 

authorized to have access to these latter records for the purose of audit and examination. 

disposition of funds that are "at the disposal" of 

The applicability of F ACA to a paricular group depends upon the structure of the group, the 

type of work it is expected to produce, and how the group's work is utilized. Groups or 

committees that may not be subject to the Act include: committees exempted by an Act of full-time employees of the Federal governent; Congress; committees composed entirely of 

meetings initiated by an agency official solely to exchange facts or information; meetings 

initiated by a non-governmental group with agency officials to express the group's views 

provided the agency does not use the group recurrently as a preferred source of advice; 

committees that are established to perform primarily operational as opposed to advisory 

functions; and meetings initiated by agency offcials for the purpose of obtaining the advice of 

individual attendees and not for consensus advice or recommendations. Formal, structured 

groups with a limited or fixed number of members that are operated with a specific purpose with 

regularly scheduled meetings generally are subject to F ACA. On the other hand, F ACA may not 

be triggered for a focus group or roundtable discussion format if discussions are held on an 

infrequent basis to hear various ideas expressed by individuals where no group policy or 

recommendations are made to the agency. 

ESTABLISHMENT OF AN ADVISORY COMMITTEE AT THE FDIC 

Establishment of FDIC Advisory Committee on Community Banking 

A. Committee's Puæose 

The establishment of the FDIC Advisory Committee on Community Banking is consistent with

the FDIC. The FDIC's mission, mandated by statute, is to maintain public 

confidence in, and promote, a stable baning system by the efficient and effective supervision of

the mission of 

the deposit state non-member bans and other FDIC-insured institutions, management of 

insurance funds, and effecting resolutions of failed or failing insured institutions. The purpose of 

the CBC would be to provide advice and recommendations on a broad range of policy issues that 

have a particular impact on small community bans throughout the United States and the local 

communities that are served by community banks, including a focus on rural areas. The CBC 

wil review various issues that may include, but not be limited to, the latest examination 

policies/procedures, credit/lending practices, deposit insurance assessments, insurance coverage 

issues, regulatory compliance matters, as well as any obstacles to the continued growth and 

stability of community bans to extend financial services in their local markets in the curent 

environment. 

The CBC would be utilized to gather information and promote discussion on a variety of current 

and emerging issues impacting community banks and wil help the FDIC to better identify and 

necessary, to develop and implement strategies and methods 

to remove obstacles to the continued growth and prosperity of community banks. 

prioritize issues of concern, and if 

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The CBC may explore policy options for changes in statutes, regulations or supervisory practices 

or procedures that will assist community banks in better serving their communities while 

assuring the continued safety and soundness of the institutions. 

F ACA requires that an advisory committee be subject to a two-year term, unless earlier renewed 

for successive two-year periods with the filing of a new charter. Subject to these requirements of the FDIC, with the FACA, the CBC would operate on an ongoing basis until the Chairman of 

concurrence of the Board, determines that its continuance is no longer in the public interest. The 

duties ofthe CBC would be solely advisory to the FDIC. Determinations of actions to be taken 

or policies to be adopted with respect to any matters upon which the CBC provides advice or 

recommendations would be made only by the FDIC. 

B. Legal Requirements to Establish an Advisory Committee at the FDIC 

If the FDIC forms an advisory committee, it would generally be governed by F ACA and the 

rules promulgated by GSA, which require the FDIC to do the following: 

. Identify as a matter of public record that the committee is in the public interest and is 

the FDIC; consistent with the mission of 

. Consult with the GSA on the establishment of the advisory committee by explaining the 

need for the committee, stating the reasons why the agency canot perform the functions 

of the committee and describing the FDIC's plan to attain a fairly balanced membership 

for the committee; 

. Utilize the committee for advisory purposes only; 

. File a committee charter with the Congressional baning committees with jurisdiction 

over the agency (i.e., U.S. Senate Committee on Banking, Housing and Urban Affairs, 

Representatives Committee on Financial Services), GSA, and the 

Library of Congress; 

and the U.S. House of 

. Establish uniform administrative guidelines and controls for the committee; 

. Comply with recordkeeping, reporting and disclosure requirements; 

the Act's . Designate a Committee Management Officer to oversee the administration of 

requirements and a Designated Federal Official to supervise the committee; 

. Select advisory committee members who will be broadly representative of diverse groups, 

which are impacted by baning-related issues; 

. Open the committee's meetings to the public, unless properly closed pursuant to the 

Governent in the Sunshine Act.; and 

. Terminate the committee after two years, unless renewed with a new charter. 

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C. Delegation of Authority to Establish and Operate Advisory Committee 

formal record, to FACA requires the "agency head" to make a determination, as a matter of 

establish an advisory committee. Therefore, to be consistent with F ACA, it is proposed that the 

Chairman be delegated authority by the Board of Directors to formally establish the CBC. It is 

further recommended that the Chairman, or her designee, be delegated authority to take such 

other actions as may be necessary to properly form and organize the CBC, including the 

establishment of subcommittees. Such other actions include, among other things, consultation 

with GSA, fiing of the committee charter with the appropriate committees of Congress and other 

the Committee Management Officer and the Designated Federal 

Officer, selection of committee members, establishment of administrative guidelines and 

management controls, budgeting authority for establishing and operating the committee, and 

other requirements mandated by F ACA, or the rules promulgated thereunder. The CBC would 

report directly to the FDIC Chairman, or her designee. 

required entities, designations of 

D. Composition of Committee 

It is proposed that the CBC be composed of various individuals from inside and outside the

Federal governent who would be representative of a broad and diverse range of interests, 

perspectives and expertise on baning-related issues and who would provide unique insights and 

their diverse interests and knowledge of guidance to the FDIC on such issues. Because of 

banking, bank regulation, and deposit insurance, the members of the CBC would provide 

valuable information and perspectives that are not generally available through other sources 

within the FDIC or the Federal governent. The CBC would provide a forum for public 

discussion and debate on a broad range of policy issues that have a particular impact on small, 

independent community banks throughout the United States and the local communities that are 

served by community banks, as well as provide valuable advice to the FDIC. 

It is proposed that the CBC not be any larger than a group consisting of 20 individuals. The various sizes and charter the CBC wil represent community bans of majority ofthe members of 

types, both rural and urban, including a cross-section of institutions from different regions of the 

country. Other members of the CBC will include representatives of individuals, small 

businesses, not-for-profit community organizations or other entities that rely on community 

banks to provide credit and other baning services in their communities, as well as one or more 

representatives of academic institutions. 

It is proposed that CBC members not be compensated for their services, but instead be 

reimbursed for reasonable expenses for travel, meals and accommodations in connection with 

advisory committee meetings. 

E. FDIC Staffing 

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It is proposed that the CBC use FDIC personnel from various divisions and offices to assist in 

the administration of the advisory committee. Staff support would be necessary from those 

FDIC divisions that are more closely aligned with the proposed mission of the advisory 

committee, i.e., the Division of Supervision and Consumer Protection, the Division of 

Resolutions and Receiverships, and the Division of Insurance and Research. The Legal Division 

also would be involved for legal support for the operation of the CBC and for assisting in the 

administration of the CBC, for example, preparation of minutes of committee meetings, 

Federal Register notices regarding meetings, consultation regarding any 

applicable conflict of interest provisions or standards applied to advisory committee members, 

and other ministerial duties related to the CBC. The Division of Administration wil likely be 

involved in coordinating all of the logistics for CBC meetings. Staff from other divisions also 

may be tasked to perform certain functions for the CBC for their particular expertise on an aspreparation of 

needed basis. We anticipate that employees from each ofthe above-mentioned divisions would 

be necessary on a collateral-duty basis. In addition to tasks related to the administrative would likely be necessary to operations of the CBC, it is also contemplated that FDIC staff 

gather, read, and analyze information that is prepared for each committee meeting and brief 

Board members. 

F. Costs to Agency 

It is anticipated that the cost to establish and operate this advisory committee, including FDIC 

staffing and resources, overhead, and reimbursements to committee members, should not exceed 

$300,000 per year. 

Other Advisory Committees at the FDIC 

The FDIC currently has one other advisory committee, the ComE IN. Over the years, the FDIC 

has had only a few other advisory committees. In 1977, the FDIC established the Advisory Banks; it was dissolved in 1979. In addition, the Committee on State and Federal Regulation of 

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRRA") required the 

creation of the Savings Association Insurance Fund Industry Advisory Committee; it was 

exempted by Congress from the requirements of F ACA. Moreover, Congress required the 

establishment of an Affordable Housing Advisory Board in the RTC Completion Act of 1992. these The Affordable Housing Advisory Board, however, was subject to FACA. All of 

committees have been terminated. Moreover, in 2002, Chairman Powell established an advisory 

committee at the FDIC, namely, the FDIC Advisory Committee on Banking Policy. The 

committee charter was renewed once in 2004, but in February 2006, the charter expired. 

Use of Advisory Committees at Other Baning Agencies 

A. The Federal Reserve 

which are required The Federal Reserve Board currently has three advisory committees, two of 

by statute. All are exempt from F ACA. 

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The Federal Advisory Council is required by statute to advise the Board of Governors on the 

general affairs of the Federal Reserve baning system, including discount rates, rediscount

business, note issues, reserve conditions, purchase and sale of gold or securities by the reserve twelve representatives of the bans, and the banks' open market operations. It is composed of 

banking industry and consults with the Board on all matters within the Board's jurisdiction. 

Meetings are generally held four times per year. Member terms are for one year, but can be 

renewed. 

In 1976, Congress required the Board of Governors to establish the Consumer Advisory Council 

to advise and consult with the Board concerning its responsibilities under the Consumer Credit 

Protection Act and on other matters in the area of consumer financial services. It has 30 

members representing a cross-section of interests, each appointed by the Board of Governors to 

serve a staggered three-year term. The Council meets three times per year. Council meetings are 

generally open to the public. 

The Thrift Institutions Advisory Council was established by the Board of Governors in 1980 to 

provide information and views on the special needs and problems of thrift institutions. The

Council consists of 12 members selected by the Board of Governors representing thrifts, mutual 

savings bans, and credit unions. Members serve staggered two-year terms. The Council meets 

three times per year. The meetings ofthe Federal Advisory Council and the Thrift Institutions 

Advisory Council are closed to the public. 

B. Other Federal Banking or Banking-Related Agencies 

In December 2008, the Offce of Thrift Supervision established a Mutual Savings Association 

Advisory Committee to provide OTS informed advice and recommendations regarding current 

and future circumstances affecting mutually-owned savings associations. This advisory 

committee is still in the formation stages (they expect to hold the first meeting in early June 

the Currency and the National Credit Union 

Administration do not currently have any advisory committees. The Treasury Department, 

2009). The Office of the Comptroller of 

including its various bureaus and offices, maintains nine advisory committees subject to F ACA. 

RECOMMENDATION 

It is recommended that the Board approve the establishment ofthe FDIC Advisory Committee 

on Community Banking as detailed in the attached resolution. The proposed advisory committee 

should enhance the operations and mission ofthe FDIC by providing the FDIC with a forum for 

the exchange of views and public debate on current and emerging issues that have a particular 

impact on small community banks throughout the United States and the local communities that 

are served by those banks. 

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