Remarks
by
Andrew C. Hove, Jr.
Chairman
Federal Deposit Insurance Corporation
Before the
Heartland Community Bankers Association
Omaha, Nebraska
October 20, 1997
Thank you.
The last several months, I have been thinking a lot about luck. Growing up, I heard
teachers and coaches tell me again and again, "You make your own luck." I also heard
a number of educators tell fellow students, "If you do nothing else in life, you can serve
others as a bad example."
Certainly, a few counterfeiters I heard about recently have borne both observations out.
One fellow, in Baton Rouge, Louisiana, was convicted of trying to pass a single bogus
$20 bill. He had cut the corners off a $20 bill and pasted them over the ones on a one-
dollar bill. His sentencing judge said this was, quote, "the most inept counterfeiter I have
ever heard of," and I am inclined to agree with him. A second fellow was arrested in a
printing-supply store in Madison, Wisconsin, after alert employees notified the police of
a suspicious customer. He had lingered for a long time beside a color chart, holding
dollar bills up to it until he was sure which shade of green ink to order. After he placed
the order and left, store employees copied down his car's license plate number and
notified the authorities. A third counterfeiter was convicted in 1990 in Orlando, Florida,
as the first U.S. citizen ever convicted of counterfeiting Polish currency -- the zloty. His
work -- done on a Canon color copier, came to three million zlotys -- which the court
valued at $316. The federal agent who arrested the counterfeiter said that he could
have printed a boxcar full of them and still he would not have had enough money to
have bought an expensive suit.
Clearly, these guys created their own bad luck -- and serve as bad examples to all of
us.
I think that you would agree, however, that for most of us, luck is a combination of what
we do and the circumstances in which we find ourselves. As luck would have it, I'm
serving my third round as acting Chairman of the Federal Deposit Insurance
Corporation.
My first time as acting Chairman lasted days. My second time lasted years. This third
time I have already been Chairman for more than four months -- and I intend to serve in
office for as long as it is necessary.
by
Andrew C. Hove, Jr.
Chairman
Federal Deposit Insurance Corporation
Before the
Heartland Community Bankers Association
Omaha, Nebraska
October 20, 1997
Thank you.
The last several months, I have been thinking a lot about luck. Growing up, I heard
teachers and coaches tell me again and again, "You make your own luck." I also heard
a number of educators tell fellow students, "If you do nothing else in life, you can serve
others as a bad example."
Certainly, a few counterfeiters I heard about recently have borne both observations out.
One fellow, in Baton Rouge, Louisiana, was convicted of trying to pass a single bogus
$20 bill. He had cut the corners off a $20 bill and pasted them over the ones on a one-
dollar bill. His sentencing judge said this was, quote, "the most inept counterfeiter I have
ever heard of," and I am inclined to agree with him. A second fellow was arrested in a
printing-supply store in Madison, Wisconsin, after alert employees notified the police of
a suspicious customer. He had lingered for a long time beside a color chart, holding
dollar bills up to it until he was sure which shade of green ink to order. After he placed
the order and left, store employees copied down his car's license plate number and
notified the authorities. A third counterfeiter was convicted in 1990 in Orlando, Florida,
as the first U.S. citizen ever convicted of counterfeiting Polish currency -- the zloty. His
work -- done on a Canon color copier, came to three million zlotys -- which the court
valued at $316. The federal agent who arrested the counterfeiter said that he could
have printed a boxcar full of them and still he would not have had enough money to
have bought an expensive suit.
Clearly, these guys created their own bad luck -- and serve as bad examples to all of
us.
I think that you would agree, however, that for most of us, luck is a combination of what
we do and the circumstances in which we find ourselves. As luck would have it, I'm
serving my third round as acting Chairman of the Federal Deposit Insurance
Corporation.
My first time as acting Chairman lasted days. My second time lasted years. This third
time I have already been Chairman for more than four months -- and I intend to serve in
office for as long as it is necessary.
There are four goals that I want to accomplish as Chairman -- four ways that I am
working to leave the Corporation as strong or stronger than I found it when I became
Chairman last June.
The first is to underscore the enduring value of deposit insurance for the American
people. The second is to preserve the FDIC's independence. The third is to continue to
prepare the agency to meet the challenges of the future. And the fourth is to make the
FDIC the acknowledged leader in assessing risk in the banking industry. Bankers will
benefit from these efforts just as much as the FDIC will itself.
It is no secret to any of you here in America's heartland that deposit insurance has
anchored public confidence in the banking system for the past three generations. In one
critical way, it puts the smallest bank in Nebraska on the same competitive footing as
the largest banks in New York, or California, or North Carolina -- insured depositors
never have to worry about the safety of their funds if their banks fail. The guarantee that
their funds will be returned is an absolute certainty. There is not much that is certain in
life -- and all of us know how little is certain in the financial world -- but tens of millions of
Americans have been able to sleep peacefully at night with the knowledge that -- come
what may -- their savings are not in doubt. As important as it is to protect the saver,
however, deposit insurance has a wider benefit -- a benefit for all the people touched by
our economy, and that means everyone.
Agriculture, industry and commerce depend on a source of finance and a reliable
system of exchanging payments. The lawmakers who created deposit insurance more
than 60 years ago had witnessed a meltdown in the financial system that brought the
rest of the economy to the edge of collapse. That meltdown had been triggered by runs
on banks and banking panics. In restoring confidence in the banking system, federal
deposit insurance assured that the farmers and business people, the local governments
and the manufacturers of America, would never have to worry that uncertainty about the
soundness of banks would again disrupt their lives.
Deposit insurance is a means to an end: a stable economy. Banks of all sizes --
community banks, regional banks and money center banks -- benefit from that stability
along with everyone else.
Recently, a number of people have suggested that deposit insurance be scaled back
dramatically, or eliminated entirely. If we did so, they argue, the regulatory burden on
the industry will be lessened. Well, the federal government got into bank regulation in
1864, but did not get around to deposit insurance until 1933.
There is more to regulation than a desire to protect the insurance fund from loss -- there
is the desire to assure a source of finance and a payments system, the very same goals
that led to the creation of deposit insurance. Experience underscores that regulation
won't end if deposit insurance is eliminated.
working to leave the Corporation as strong or stronger than I found it when I became
Chairman last June.
The first is to underscore the enduring value of deposit insurance for the American
people. The second is to preserve the FDIC's independence. The third is to continue to
prepare the agency to meet the challenges of the future. And the fourth is to make the
FDIC the acknowledged leader in assessing risk in the banking industry. Bankers will
benefit from these efforts just as much as the FDIC will itself.
It is no secret to any of you here in America's heartland that deposit insurance has
anchored public confidence in the banking system for the past three generations. In one
critical way, it puts the smallest bank in Nebraska on the same competitive footing as
the largest banks in New York, or California, or North Carolina -- insured depositors
never have to worry about the safety of their funds if their banks fail. The guarantee that
their funds will be returned is an absolute certainty. There is not much that is certain in
life -- and all of us know how little is certain in the financial world -- but tens of millions of
Americans have been able to sleep peacefully at night with the knowledge that -- come
what may -- their savings are not in doubt. As important as it is to protect the saver,
however, deposit insurance has a wider benefit -- a benefit for all the people touched by
our economy, and that means everyone.
Agriculture, industry and commerce depend on a source of finance and a reliable
system of exchanging payments. The lawmakers who created deposit insurance more
than 60 years ago had witnessed a meltdown in the financial system that brought the
rest of the economy to the edge of collapse. That meltdown had been triggered by runs
on banks and banking panics. In restoring confidence in the banking system, federal
deposit insurance assured that the farmers and business people, the local governments
and the manufacturers of America, would never have to worry that uncertainty about the
soundness of banks would again disrupt their lives.
Deposit insurance is a means to an end: a stable economy. Banks of all sizes --
community banks, regional banks and money center banks -- benefit from that stability
along with everyone else.
Recently, a number of people have suggested that deposit insurance be scaled back
dramatically, or eliminated entirely. If we did so, they argue, the regulatory burden on
the industry will be lessened. Well, the federal government got into bank regulation in
1864, but did not get around to deposit insurance until 1933.
There is more to regulation than a desire to protect the insurance fund from loss -- there
is the desire to assure a source of finance and a payments system, the very same goals
that led to the creation of deposit insurance. Experience underscores that regulation
won't end if deposit insurance is eliminated.