FDIC Supervisory Insights Summer 2009

Subject Summary
Use of Volatile or Special Funding
Sources by Financial Institutions That
Are in a Weakened Condition (FIL-13-
2009, March 3, 2009)
Interim Final Rule on Mandatory
Convertible Debt Under the TLGP (FIL-
11-2009, March 2, 2009)
Final Rule on Deposit Assessments;
Amended FDIC Restoration Plan;
Interim Rule on Emergency Special
Assessment (PR-30-2009, February
27, 2009; FIL-12-2009, March 2, 2009;
Federal Register, Vol. 74, No. 41, p.
9564, March 4, 2009)
Commencement of Forward-Looking
Economic Assessments (PR-25-2009,
February 25, 2009)
Interagency Statement on the Financial
Stability Plan (February 10, 2009)
Release of First National Survey of
Banks’ Efforts to Serve the Unbanked
and Underbanked (PR-15-2009, February
5, 2009)
The FDIC issued guidance emphasizing that FDIC-supervised institutions rated “3,” “4,” or “5” are
expected to implement a plan to stabilize or reduce their risk exposure and limit growth. This plan
should not include the use of volatile liabilities or temporarily expanded FDIC insurance or liability
guarantees to fund aggressive asset growth or otherwise materially increase the institution’s risk
profile. Institutions in a weakened financial condition that engage in material growth strategies
pose a significant risk to the deposit insurance fund and will be subject to heightened supervisory
review and enforcement. Continuation of prudent lending practices generally would not be
considered as increasing the risk profile.
See http://www.fdic.gov/news/news/financial/2009/fil09013.html.
The FDIC adopted an interim rule that allows entities participating in the debt guarantee portion
of the Temporary Liquidity Guarantee Program to issue certain mandatory convertible debt
(MCD). No FDIC-guaranteed MCD may be issued without the FDIC’s prior written approval.
See http://www.fdic.gov/news/news/financial/2009/fil09011.html.
The FDIC Board of Directors voted to amend the restoration plan for the Deposit Insurance Fund
(DIF), extending from five years to seven the time horizon to restore the DIF reserve ratio to 1.15
percent. The Board also took action to ensure the continued strength of the insurance fund by
implementing changes to the risk-based assessment system, setting rates beginning the second
quarter of 2009, and adopting an interim rule with request for comments imposing an emergency
20 basis-point special assessment on June 30, 2009, to be collected on September 30, 2009.
Comments on the interim rule were due by April 3, 2009.
See http://www.fdic.gov/news/news/financial/2009/fil09012.html.
The federal bank regulatory agencies announced they will begin conducting forward-looking
economic assessments of large U.S. banking organizations as the Capital Assistance Program
gets under way. Supervisors will work with institutions to estimate the range of possible future
losses and the resources to absorb such losses over a two-year period.
See http://www.fdic.gov/news/news/press/2009/pr09025.html.
The federal bank and thrift regulatory agencies announced a comprehensive set of measures to
restore confidence in the strength of U.S. financial institutions and restart the critical flow of
credit to households and businesses. This program will help lay the groundwork for restoring the
flow of credit necessary to support recovery.
See http://www.fdic.gov/news/news/press/2009/pr_fsb.html.
In the first national survey of banks’ efforts to serve unbanked and underbanked individuals and
families in their market areas, the FDIC found that improvement may be possible in the areas of
focus, outreach, and commitment. The majority of banks (63 percent) offer basic financial education
materials, but fewer participate in the types of outreach efforts viewed by the industry as
most effective to attract and maintain unbanked and underbanked individuals as long-term
customers. See http://www.fdic.gov/news/news/press/2009/pr09015.html.
Supervisory Insights Summer 2009
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