Remarks by
Donald E. Powell
Chairman
Federal Deposit Insurance Corporation
Before the
Institute of International Banker's Membership Luncheon
Waldorf-Astoria Hotel
New York, NY
September 9, 2002
Good afternoon.
Thank you for inviting me to speak today. I'm honored to be here. I'm especially
honored to be in the great city of New York.
Today is September 9th. In two days we will pause our daily routines to commemorate
the tragedies that occurred here, in Pennsylvania, and at the Pentagon on last
September 11. What befell our nation that day was truly like nothing we have ever seen
in our history.
Yet, out of that terrible day has grown a renewed sense of what it means to be an
American. It has reminded us of the commitment to freedom, openness, and justice that
unites us all, regardless of what we look like, what we believe, and where we were born.
It has reminded us again of our obligation to honor these things. And to defend them.
Those who are no longer with us have left their legacy - in the lives they lived, in their
families' memories, in their bravery, and in their commitment to the every day work that
makes our country so prosperous. We remember them and we do them honor.
But the legacy of the living remains to be written. It will be tested on the defining crucible
of two simple questions: What did you learn? And can you do your utmost to make sure
it never happens again?
I'd like to focus my remarks today on how the events of September 11, 2001 have
impacted the banking industry and the regulators. In particular I'd like to concentrate on
how we all managed to come together and fashion an effective response to these
attacks.
As the magnitude of the disaster sank in, we were forced to work quickly to return life to
normal - realizing, of course, that life would never be the same. 9/11 changed our
priorities. Overnight, these events elevated the importance of three values that have
guided us in the year since: vigilance, preparedness, and teamwork. We have worked
these past 12 months to work these values into the way we conduct ourselves as bank
regulators - and how we interact with the industry we serve.
Donald E. Powell
Chairman
Federal Deposit Insurance Corporation
Before the
Institute of International Banker's Membership Luncheon
Waldorf-Astoria Hotel
New York, NY
September 9, 2002
Good afternoon.
Thank you for inviting me to speak today. I'm honored to be here. I'm especially
honored to be in the great city of New York.
Today is September 9th. In two days we will pause our daily routines to commemorate
the tragedies that occurred here, in Pennsylvania, and at the Pentagon on last
September 11. What befell our nation that day was truly like nothing we have ever seen
in our history.
Yet, out of that terrible day has grown a renewed sense of what it means to be an
American. It has reminded us of the commitment to freedom, openness, and justice that
unites us all, regardless of what we look like, what we believe, and where we were born.
It has reminded us again of our obligation to honor these things. And to defend them.
Those who are no longer with us have left their legacy - in the lives they lived, in their
families' memories, in their bravery, and in their commitment to the every day work that
makes our country so prosperous. We remember them and we do them honor.
But the legacy of the living remains to be written. It will be tested on the defining crucible
of two simple questions: What did you learn? And can you do your utmost to make sure
it never happens again?
I'd like to focus my remarks today on how the events of September 11, 2001 have
impacted the banking industry and the regulators. In particular I'd like to concentrate on
how we all managed to come together and fashion an effective response to these
attacks.
As the magnitude of the disaster sank in, we were forced to work quickly to return life to
normal - realizing, of course, that life would never be the same. 9/11 changed our
priorities. Overnight, these events elevated the importance of three values that have
guided us in the year since: vigilance, preparedness, and teamwork. We have worked
these past 12 months to work these values into the way we conduct ourselves as bank
regulators - and how we interact with the industry we serve.
We now know the U.S. economy was in recession for months before 9/11. The terrorist
attacks, without question, deepened and prolonged the duration of this downturn.
Yet, given the scale of destruction that occurred at the heart of our nation's financial
system, global financial markets showed remarkable resilience after the attacks.
Despite an unspeakable chain of events - the market was up and running in less than a
week. Commercial banks and the regulators remained open. There was no loss of
confidence in the U.S. financial system, here or abroad. These are true testaments to
the success of the public and private sectors working closely together to address a wide
range of unprecedented and significant problems in a very short period of time.
That's not to say the attacks had no consequences. The stock market closure resulted
in some large banks reporting capital markets and investment losses due to their
inability to execute transactions. Many institutions experienced greater pressure on
revenues as equity investing, venture capital, trading, asset management, and fiduciary
activities income declined.
These disruptions caused investors and businesses to become more cautious in making
longer-term investment decisions. Financial firms exposed to market sensitive revenues
saw greater downward pressure on their net income as a result.
We saw problems arise among insurance companies, lodging and gaming companies,
and air transportation enterprises. And, consequently financial institutions were
suddenly exposed to elevated credit risk in these sectors.
If there was good news to be had from the tragedy, it is that we haven't seen any issues
arise that threaten the viability of banks or the system as a whole. Indeed, what we have
seen in the last year is many important initiatives that have made our industry even
stronger - better prepared and more resilient to the remaining threats.
Earlier this year, after the immediate aftermath of the attacks had subsided, I asked our
staff at the FDIC to focus their efforts on learning the lessons of this tragedy and
implementing effective solutions to the problems we'd identified. I also asked them to
work closely with their colleagues in other government agencies to make this happen. I
am proud of how they responded.
The first task was to become more adept at impeding the flow of terrorists' funds.
Headlines in the last couple of weeks have reminded us - via a United Nations report -
that the terrorists still have the financial ability to inflict more harm on the American
people. The General Accounting Office recently released a report indicating that
ordinary credit cards may be a vehicle for laundering money. So the possibilities are out
there. Our job - yours and ours - is to make sure those terrorist resources are never
deployed in another terrorist attack. This is a tall order, but we have to be up to the task.
The stakes are just too high.
attacks, without question, deepened and prolonged the duration of this downturn.
Yet, given the scale of destruction that occurred at the heart of our nation's financial
system, global financial markets showed remarkable resilience after the attacks.
Despite an unspeakable chain of events - the market was up and running in less than a
week. Commercial banks and the regulators remained open. There was no loss of
confidence in the U.S. financial system, here or abroad. These are true testaments to
the success of the public and private sectors working closely together to address a wide
range of unprecedented and significant problems in a very short period of time.
That's not to say the attacks had no consequences. The stock market closure resulted
in some large banks reporting capital markets and investment losses due to their
inability to execute transactions. Many institutions experienced greater pressure on
revenues as equity investing, venture capital, trading, asset management, and fiduciary
activities income declined.
These disruptions caused investors and businesses to become more cautious in making
longer-term investment decisions. Financial firms exposed to market sensitive revenues
saw greater downward pressure on their net income as a result.
We saw problems arise among insurance companies, lodging and gaming companies,
and air transportation enterprises. And, consequently financial institutions were
suddenly exposed to elevated credit risk in these sectors.
If there was good news to be had from the tragedy, it is that we haven't seen any issues
arise that threaten the viability of banks or the system as a whole. Indeed, what we have
seen in the last year is many important initiatives that have made our industry even
stronger - better prepared and more resilient to the remaining threats.
Earlier this year, after the immediate aftermath of the attacks had subsided, I asked our
staff at the FDIC to focus their efforts on learning the lessons of this tragedy and
implementing effective solutions to the problems we'd identified. I also asked them to
work closely with their colleagues in other government agencies to make this happen. I
am proud of how they responded.
The first task was to become more adept at impeding the flow of terrorists' funds.
Headlines in the last couple of weeks have reminded us - via a United Nations report -
that the terrorists still have the financial ability to inflict more harm on the American
people. The General Accounting Office recently released a report indicating that
ordinary credit cards may be a vehicle for laundering money. So the possibilities are out
there. Our job - yours and ours - is to make sure those terrorist resources are never
deployed in another terrorist attack. This is a tall order, but we have to be up to the task.
The stakes are just too high.