Annual Report 2012 - ffiec

26
Federal Deposit Insurance
Corporation
Congress created the Federal
Deposit Insurance Corporation
(FDIC or Corporation) in 1933 to
promote stability and public confidence
in our nation’s banking
system. The FDIC accomplishes
its mission by insuring deposits,
examining and supervising financial
institutions for safety and
soundness and consumer protection,
and managing receiverships.
In its unique role as deposit
insurer, the FDIC works in cooperation
with other federal and
state regulatory agencies to identify,
monitor, and address risks
to the Deposit Insurance Fund
(DIF) posed by insured depository
institutions.
Management of the FDIC is vested
in a five-member Board of Directors.
No more than three board
members may be of the same
political party. Three of the directors
are appointed by the President,
with the advice and consent
of the Senate, for six-year terms.
One of the three appointed directors
is designated by the President
as Chairman for a five-year
term and another is designated
as Vice Chairman. The other two
board members are the Comptroller
of the Currency and the Director
of the CFPB. The Chairman also
serves as a member of the Financial
Stability Oversight Council.
Operational Structure
The FDIC’s operations are organized
into three major program
areas: insurance, supervision,
and receivership management. A
description of each of these areas
follows:
Insurance: The FDIC maintains stability
and public confidence in the
U.S. financial system by providing
deposit insurance. As insurer, the
Corporation must continually evaluate
and effectively manage how
changes in the economy, financial
markets, and banking system
affect the adequacy and viability of
the DIF. When an insured depository
institution fails, the FDIC
ensures that the financial institution’s
customers have timely access
to their insured deposits and other
services.
The FDIC provides the public with
a sound deposit insurance system
by supplying comprehensive statistical
information on banking;
identifying and analyzing emerging
risks; conducting research that
supports deposit insurance, banking
policy, and risk assessment;
assessing the adequacy of the DIF;
and maintaining an effective and
fair risk-based premium system.
The Dodd-Frank Act revised the
statutory authorities governing the
FDIC’s management of the DIF.
As a result, the FDIC developed a
comprehensive, long-range management
plan for the DIF to reduce
pro-cyclicality in the deposit insurance
system and maintain a positive
fund balance even during a
banking crisis. The plan sets an
appropriate target fund size and a
strategy for assessment rates and
dividends. Pursuant to the comprehensive
plan, the FDIC adopted a
Restoration Plan to ensure that the
reserve ratio reaches the statutory
mandates required by the Dodd-
Frank Act in a timely manner. Also
pursuant to the Dodd-Frank Act,
the FDIC amended its regulations
to define the assessment base as
average consolidated total assets
minus average tangible equity,
rather than domestic deposits
(which, with minor adjustments, it
has been since 1935).
The FDIC also continued its efforts
to improve risk differentiation
by issuing a rule that revised the
assessment system applicable to
large insured depository institu-