TESTIMONY OF
ANDREW C. HOVE, JR., ACTING CHAIRMAN
FEDERAL DEPOSIT INSURANCE CORPORATION
ON
FDIC’S IMPLEMENTATION OF THE
GOVERNMENT PERFORMANCE AND RESULTS ACT
BEFORE THE
COMMITTEE ON BANKING AND FINANCIAL SERVICES
UNITED STATES HOUSE OF REPRESENTATIVES
10:00 A.M.
JULY 29, 1997
ROOM 2128, RAYBURN HOUSE OFFICE BUILDING
Summary
The Federal Deposit Insurance Corporation strongly supports the Government
Performance and Results Act which takes effect this year. We are proud of our planning
accomplishments over the past several years. While the Act applies the principles of
sound business management to the Federal government, the FDIC has been using
strategic planning and performance measurement principles for years prior to the
enactment of the Results Act.
The FDIC's draft Strategic Plan for 1997-2002 reflects our increasing emphasis on risk
management rather than resolving and liquidating failed institutions. The Plan includes
vision, values and mission statements that reflect our commitment to risk management,
ensuring the safety and soundness of our banking system, assuring fairness in the
provision of financial services, and providing a positive environment for our employees
to achieve our mission.
The Strategic Plan includes goals, objectives and strategies for the FDIC's three major
program areas: Insurance; Supervision; and Policy, Regulation and Outreach. The
Insurance program area comprises three functional areas identified as Risk
Assessment; Resolution of Failing Institutions; and Receivership Management. This
program area reflects the FDIC's role as deposit insurer in assessing potential risks to
the insurance funds and proactively minimizing risks and costs to the insurance funds.
In addition, the Insurance program area reflects the Corporation's role of minimizing
costs to the funds through the orderly and "least costly" resolution of failed or failing
institutions, and by effectively managing receivership operations.
The Supervision program area encompasses two functions identified as Risk
Management-Safety and Soundness, and Risk Management-Compliance and
Enforcement. The Supervision program area enables the FDIC to fulfill its role of
ANDREW C. HOVE, JR., ACTING CHAIRMAN
FEDERAL DEPOSIT INSURANCE CORPORATION
ON
FDIC’S IMPLEMENTATION OF THE
GOVERNMENT PERFORMANCE AND RESULTS ACT
BEFORE THE
COMMITTEE ON BANKING AND FINANCIAL SERVICES
UNITED STATES HOUSE OF REPRESENTATIVES
10:00 A.M.
JULY 29, 1997
ROOM 2128, RAYBURN HOUSE OFFICE BUILDING
Summary
The Federal Deposit Insurance Corporation strongly supports the Government
Performance and Results Act which takes effect this year. We are proud of our planning
accomplishments over the past several years. While the Act applies the principles of
sound business management to the Federal government, the FDIC has been using
strategic planning and performance measurement principles for years prior to the
enactment of the Results Act.
The FDIC's draft Strategic Plan for 1997-2002 reflects our increasing emphasis on risk
management rather than resolving and liquidating failed institutions. The Plan includes
vision, values and mission statements that reflect our commitment to risk management,
ensuring the safety and soundness of our banking system, assuring fairness in the
provision of financial services, and providing a positive environment for our employees
to achieve our mission.
The Strategic Plan includes goals, objectives and strategies for the FDIC's three major
program areas: Insurance; Supervision; and Policy, Regulation and Outreach. The
Insurance program area comprises three functional areas identified as Risk
Assessment; Resolution of Failing Institutions; and Receivership Management. This
program area reflects the FDIC's role as deposit insurer in assessing potential risks to
the insurance funds and proactively minimizing risks and costs to the insurance funds.
In addition, the Insurance program area reflects the Corporation's role of minimizing
costs to the funds through the orderly and "least costly" resolution of failed or failing
institutions, and by effectively managing receivership operations.
The Supervision program area encompasses two functions identified as Risk
Management-Safety and Soundness, and Risk Management-Compliance and
Enforcement. The Supervision program area enables the FDIC to fulfill its role of
promoting the safety and soundness of insured depository institutions and fairness in
the provision of financial services.
The Policy, Regulation, and Outreach program area comprises three functional areas:
Consumer Affairs; Community Affairs and Outreach; and Outreach-Safety and
Soundness. In addition to the Supervision program area, this program area is the way
the FDIC fulfills its role of implementing statutes related to consumer protection, fair
lending, and deposit insurance.
The FDIC's draft Strategic Plan addresses the resource strategies that will assist the
FDIC in meeting its goals and objectives. In the staffing area, the FDIC is continuing to
transfer staff from the failing institution resolution and liquidation areas into risk
assessment, supervision, and compliance, in accordance with our increased emphasis
on risk management. We also are pursuing technological initiatives that will improve
examiners' ability to evaluate the financial condition of institutions and their compliance
with fair lending and other laws. The Strategic Plan also includes annual performance
measures that tie to the Plan's long- term goals and objectives.
While the Strategic Plan describes measures in general terms, the FDIC's Annual
Performance Plan (which we referred to in prior years as our Corporate Business Plan)
specifies performance goals or target levels for each measure. Performance is
compared to these targets to determine achievement of our objectives. The FDIC's first
Business Plan was developed in 1996 for calendar year 1997 and included performance
targets for each of the FDIC's program and functional areas in the Strategic Plan. The
1998 Annual Performance Plan will set forth our target levels of performance for the
year for each of the eight functions of the three major program areas in the Strategic
Plan and include all of the elements required by the Results Act for Annual Performance
Plans. We do not expect the performance measures or targets to change significantly
over those that are in place in 1997.
The Strategic Plan outlines key external factors that could affect achievement of the
FDIC's strategic goals. Examples of external factors are domestic or international
economic developments, especially as they relate to the banking industry; the likely
actions of Congress and other regulators of financial institutions; and the general
business environment in which financial institutions operate.
With regard to program evaluation, the FDIC evaluates its program performance
through a Quarterly Performance Reporting process. In May of this year, the FDIC
initiated the reporting of our progress toward the performance targets established in the
1997 Business Plan. This report measures the FDIC's progress in meeting 27
performance targets in the FDIC's eight functional areas in the Strategic Plan and is
reviewed quarterly by the FDIC's Operating Committee, which is comprised of the
Chairman and officers of the Corporation. Beginning in 1998, the Quarterly Performance
Report will be presented to the FDIC Board of Directors. This process holds managers
accountable for achievement of their goals and provides feedback, which, in turn, allows
us to revise goals, objectives and performance measures as appropriate.
the provision of financial services.
The Policy, Regulation, and Outreach program area comprises three functional areas:
Consumer Affairs; Community Affairs and Outreach; and Outreach-Safety and
Soundness. In addition to the Supervision program area, this program area is the way
the FDIC fulfills its role of implementing statutes related to consumer protection, fair
lending, and deposit insurance.
The FDIC's draft Strategic Plan addresses the resource strategies that will assist the
FDIC in meeting its goals and objectives. In the staffing area, the FDIC is continuing to
transfer staff from the failing institution resolution and liquidation areas into risk
assessment, supervision, and compliance, in accordance with our increased emphasis
on risk management. We also are pursuing technological initiatives that will improve
examiners' ability to evaluate the financial condition of institutions and their compliance
with fair lending and other laws. The Strategic Plan also includes annual performance
measures that tie to the Plan's long- term goals and objectives.
While the Strategic Plan describes measures in general terms, the FDIC's Annual
Performance Plan (which we referred to in prior years as our Corporate Business Plan)
specifies performance goals or target levels for each measure. Performance is
compared to these targets to determine achievement of our objectives. The FDIC's first
Business Plan was developed in 1996 for calendar year 1997 and included performance
targets for each of the FDIC's program and functional areas in the Strategic Plan. The
1998 Annual Performance Plan will set forth our target levels of performance for the
year for each of the eight functions of the three major program areas in the Strategic
Plan and include all of the elements required by the Results Act for Annual Performance
Plans. We do not expect the performance measures or targets to change significantly
over those that are in place in 1997.
The Strategic Plan outlines key external factors that could affect achievement of the
FDIC's strategic goals. Examples of external factors are domestic or international
economic developments, especially as they relate to the banking industry; the likely
actions of Congress and other regulators of financial institutions; and the general
business environment in which financial institutions operate.
With regard to program evaluation, the FDIC evaluates its program performance
through a Quarterly Performance Reporting process. In May of this year, the FDIC
initiated the reporting of our progress toward the performance targets established in the
1997 Business Plan. This report measures the FDIC's progress in meeting 27
performance targets in the FDIC's eight functional areas in the Strategic Plan and is
reviewed quarterly by the FDIC's Operating Committee, which is comprised of the
Chairman and officers of the Corporation. Beginning in 1998, the Quarterly Performance
Report will be presented to the FDIC Board of Directors. This process holds managers
accountable for achievement of their goals and provides feedback, which, in turn, allows
us to revise goals, objectives and performance measures as appropriate.