Mr. Chairman, Congressman LaFalce, and members of the Committee, I appreciate the opportunity to testify on behalf of the Federal Deposit Insurance Corporation.
Banks are in the business of managing risks.
Not all will be successful. Some bank managements have not been up to the job. All three of the high loss institutions had concentrations in subprime lending - so let's turn to subprime first. With proper safeguards, subprime lending can be an acceptable activity for insured institutions, and can be beneficial for consumers and the economy. Because these safeguards are not always maintained, subprime lenders represent a disproportionate share of problem institutions.