Remarks by
Ricki Helfer
Chairman
Federal Deposit Insurance Corporation
before the
Annual Meeting
of the
Conference of State Bank Supervisors
San Diego, CA
May 3, 1997
When I grew up in a small town in Tennessee, nothing seemed as stable and as
enduring as the bank on Main Street, and my early experience was probably the same
as many of yours. In small towns across the state, banks anchored the town squares. In
brick and stone, each sought to assure the public that its financial condition was as
impressive as its solid architecture. Often, the vault was visible from the lobby to
underscore the security that the bank offered. One of the cliches of the time was to say
that something "was as solid as the bank on the corner."
Historically, that stability could have been an anomaly. From the founding of the
Republic until the early 1930s, American banking -- and consequently bank supervision
-- was frequently transformed by dramatic, and sometimes tumultuous, events: The
births and deaths of the First and Second Banks of the United States, "wildcat" banking,
and waves of failures associated with periodic financial panics, to name just a few.
While we have not returned to the turmoil that characterized the American banking
system before 1933, in the past twenty years banking has changed beyond recognition
from what it was when many of us were growing up and going to college. Technology is
redefining the business of banking from the largest institutions in the country to the
smallest. Many of the old limits -- and the old certainties -- are fading or are gone.
I addressed the Conference of State Bank Supervisors in Washington in December
1994 -- two months after becoming Chairman of the Federal Deposit Insurance
Corporation. It was my first public speech as Chairman -- and I pledged to enhance the
working relationship among state supervisors, the CSBS, and the FDIC to prepare
ourselves for the changes that we all faced. I wanted to have a closer working
relationship than we had ever had.
I said we needed to work closely with state supervisors in adapting to new realities -- in
banking structure, banking supervision, and technology -- and we stayed true to this
goal. As a result, today we have a framework for dealing with change that is based on
communication, cooperation, coordination, and consistency -- a framework that enables
us to look to the future with confidence and assurance.
Ricki Helfer
Chairman
Federal Deposit Insurance Corporation
before the
Annual Meeting
of the
Conference of State Bank Supervisors
San Diego, CA
May 3, 1997
When I grew up in a small town in Tennessee, nothing seemed as stable and as
enduring as the bank on Main Street, and my early experience was probably the same
as many of yours. In small towns across the state, banks anchored the town squares. In
brick and stone, each sought to assure the public that its financial condition was as
impressive as its solid architecture. Often, the vault was visible from the lobby to
underscore the security that the bank offered. One of the cliches of the time was to say
that something "was as solid as the bank on the corner."
Historically, that stability could have been an anomaly. From the founding of the
Republic until the early 1930s, American banking -- and consequently bank supervision
-- was frequently transformed by dramatic, and sometimes tumultuous, events: The
births and deaths of the First and Second Banks of the United States, "wildcat" banking,
and waves of failures associated with periodic financial panics, to name just a few.
While we have not returned to the turmoil that characterized the American banking
system before 1933, in the past twenty years banking has changed beyond recognition
from what it was when many of us were growing up and going to college. Technology is
redefining the business of banking from the largest institutions in the country to the
smallest. Many of the old limits -- and the old certainties -- are fading or are gone.
I addressed the Conference of State Bank Supervisors in Washington in December
1994 -- two months after becoming Chairman of the Federal Deposit Insurance
Corporation. It was my first public speech as Chairman -- and I pledged to enhance the
working relationship among state supervisors, the CSBS, and the FDIC to prepare
ourselves for the changes that we all faced. I wanted to have a closer working
relationship than we had ever had.
I said we needed to work closely with state supervisors in adapting to new realities -- in
banking structure, banking supervision, and technology -- and we stayed true to this
goal. As a result, today we have a framework for dealing with change that is based on
communication, cooperation, coordination, and consistency -- a framework that enables
us to look to the future with confidence and assurance.
In 1994, the issue of banking structure demanded our attention. Our most urgent task
was to adapt to the new interstate banking environment created by the Interstate
Banking and Branching Act, which Congress enacted earlier that year. Our goal was to
build a structure for interstate banking that would permit the state charter to remain
relevant and dynamic. Within two months of becoming FDIC Chairman, I created a Task
Force within the FDIC to analyze the impact of the interstate banking law on the FDIC,
the banking industry, and the financial system.
The Task Force looked at issues ranging from the adequacy of off-site supervisory
information to the effect of interstate banking on the Bank Insurance Fund. The work of
that Task Force supported our common effort to establish a seamless regulatory
structure that would harmonize supervision among the states.
At the annual meeting of CSBS in the spring of 1995, state supervisors unanimously
approved the historic protocol that would allow state-chartered banks that operate
across state lines to work with a single state regulator, while providing other state and
federal regulators the information necessary to monitor safety and soundness. Five
months later, the FDIC joined colleagues from the Federal Reserve System and state
regulators from California, New York, Utah and Washington state in a State-Federal
Working Group -- under the aegis of CSBS -- to iron out the details of creating a system
of seamless state supervision for interstate banking operations. Last November, state
supervisors reached agreement among themselves, and separately, with federal
supervisors, on how seamless supervision will operate in practice -- based on
designating a point of contact with a single state regulator.
At the FDIC, we have changed our own approach to interstate supervision in a way that
dovetails into the host state/home state protocols of the CSBS. Under our new
approach, case managers will oversee all the risk analysis and examination functions
for an entire bank or banking company, regardless of the number of regions in which its
subsidiary banks and branches operate. This approach differs from the past where
supervision of multi-state banking organizations was broken down by geographic region
and where more than one FDIC regional office often was responsible for oversight and
supervision of those organizations.
Developing a comprehensive structure for state supervision in an interstate environment
in so short a time could not have been achieved without the dedication of all of us to
that goal. We at the FDIC have worked with state supervisors every step of the way to
assure that the new system of interstate supervision will be effective, that it will provide
the greatest possible degree of responsiveness to the needs of banks, and that it will
recognize the individual, local, and regional differences in the banking industry. I have
no doubt that the FDIC will continue to devote considerable resources to assuring that
the structure works in practice.
In 1994, it was also clear to us that our traditional approach to banking supervision had
to be enhanced so that we would be able to respond to new and emerging risks more
quickly and more effectively.
was to adapt to the new interstate banking environment created by the Interstate
Banking and Branching Act, which Congress enacted earlier that year. Our goal was to
build a structure for interstate banking that would permit the state charter to remain
relevant and dynamic. Within two months of becoming FDIC Chairman, I created a Task
Force within the FDIC to analyze the impact of the interstate banking law on the FDIC,
the banking industry, and the financial system.
The Task Force looked at issues ranging from the adequacy of off-site supervisory
information to the effect of interstate banking on the Bank Insurance Fund. The work of
that Task Force supported our common effort to establish a seamless regulatory
structure that would harmonize supervision among the states.
At the annual meeting of CSBS in the spring of 1995, state supervisors unanimously
approved the historic protocol that would allow state-chartered banks that operate
across state lines to work with a single state regulator, while providing other state and
federal regulators the information necessary to monitor safety and soundness. Five
months later, the FDIC joined colleagues from the Federal Reserve System and state
regulators from California, New York, Utah and Washington state in a State-Federal
Working Group -- under the aegis of CSBS -- to iron out the details of creating a system
of seamless state supervision for interstate banking operations. Last November, state
supervisors reached agreement among themselves, and separately, with federal
supervisors, on how seamless supervision will operate in practice -- based on
designating a point of contact with a single state regulator.
At the FDIC, we have changed our own approach to interstate supervision in a way that
dovetails into the host state/home state protocols of the CSBS. Under our new
approach, case managers will oversee all the risk analysis and examination functions
for an entire bank or banking company, regardless of the number of regions in which its
subsidiary banks and branches operate. This approach differs from the past where
supervision of multi-state banking organizations was broken down by geographic region
and where more than one FDIC regional office often was responsible for oversight and
supervision of those organizations.
Developing a comprehensive structure for state supervision in an interstate environment
in so short a time could not have been achieved without the dedication of all of us to
that goal. We at the FDIC have worked with state supervisors every step of the way to
assure that the new system of interstate supervision will be effective, that it will provide
the greatest possible degree of responsiveness to the needs of banks, and that it will
recognize the individual, local, and regional differences in the banking industry. I have
no doubt that the FDIC will continue to devote considerable resources to assuring that
the structure works in practice.
In 1994, it was also clear to us that our traditional approach to banking supervision had
to be enhanced so that we would be able to respond to new and emerging risks more
quickly and more effectively.