Remarks By
Chairman Don Powell
Federal Deposit Insurance Corporation
Before the
Annual Meeting of the Conference of State Bank Supervisors
May 30, 2002
Thank you very much. It's a pleasure to be with you in Salt Lake City for the 101st
annual meeting of the Conference of State Bank Supervisors.
Everyone in this room knows that the American banking system is admired and
respected throughout the world. Of course, we, at the FDIC, like to think that federal
deposit insurance is one of the main reasons that the American banking system is so
highly valued. But we also know that the dual banking system, with state and federal
regulators working to promote safe, efficient and innovative banks, has also brought
great benefits to the American people and to the American economy.
The FDIC became part of the dual banking system in 1933, when our agency was
created in response to the banking problems of the late '20s and early '30s. The federal
and state supervisory structure of that age proved unable to provide long term financial
stability. The FDIC has been able to fill that role - in good times and bad - ever since.
The days of depositor panic and bank runs have never reappeared on the American
economic scene - even during the worst moments of the last banking crisis. I'm very
proud of the FDIC for this often unsung accomplishment - and of the role we play in
America's financial stability.
I am also proud that for nearly 70 years, we have enjoyed a very successful relationship
with state banking departments. That solid relationship has aided the FDIC in every
aspect of our job - as federal insurer of deposits, as primary federal regulator of state
nonmember banks, and occasionally, as backup supervisor for all insured banks and
savings institutions.
Let me share with you a few examples where the FDIC and the states have worked
together to promote a safe, efficient and innovative banking system.
The FDIC currently has formal working agreements with 44 state banking departments
that have resulted in such initiatives as alternate examination programs, common
examination forms, and joint enforcement actions. We rely on the examination reports of
46 state banking departments to help us protect the deposit insurance funds.
In addition, the coordination and cooperation of state and federal regulators in matters
involving state-chartered banks operating across state lines has resulted in a single
point of contact for these institutions and a seamless supervisory process. But in today's
world, the business of banking isn't just interstate -- it's international. That's why the
Chairman Don Powell
Federal Deposit Insurance Corporation
Before the
Annual Meeting of the Conference of State Bank Supervisors
May 30, 2002
Thank you very much. It's a pleasure to be with you in Salt Lake City for the 101st
annual meeting of the Conference of State Bank Supervisors.
Everyone in this room knows that the American banking system is admired and
respected throughout the world. Of course, we, at the FDIC, like to think that federal
deposit insurance is one of the main reasons that the American banking system is so
highly valued. But we also know that the dual banking system, with state and federal
regulators working to promote safe, efficient and innovative banks, has also brought
great benefits to the American people and to the American economy.
The FDIC became part of the dual banking system in 1933, when our agency was
created in response to the banking problems of the late '20s and early '30s. The federal
and state supervisory structure of that age proved unable to provide long term financial
stability. The FDIC has been able to fill that role - in good times and bad - ever since.
The days of depositor panic and bank runs have never reappeared on the American
economic scene - even during the worst moments of the last banking crisis. I'm very
proud of the FDIC for this often unsung accomplishment - and of the role we play in
America's financial stability.
I am also proud that for nearly 70 years, we have enjoyed a very successful relationship
with state banking departments. That solid relationship has aided the FDIC in every
aspect of our job - as federal insurer of deposits, as primary federal regulator of state
nonmember banks, and occasionally, as backup supervisor for all insured banks and
savings institutions.
Let me share with you a few examples where the FDIC and the states have worked
together to promote a safe, efficient and innovative banking system.
The FDIC currently has formal working agreements with 44 state banking departments
that have resulted in such initiatives as alternate examination programs, common
examination forms, and joint enforcement actions. We rely on the examination reports of
46 state banking departments to help us protect the deposit insurance funds.
In addition, the coordination and cooperation of state and federal regulators in matters
involving state-chartered banks operating across state lines has resulted in a single
point of contact for these institutions and a seamless supervisory process. But in today's
world, the business of banking isn't just interstate -- it's international. That's why the
FDIC and other federal banking officials regularly meet with our state counterparts to
address areas of mutual concern involving U.S. banks and branches with active
operations abroad.
There are many more examples of how cooperative efforts of state and federal banking
supervisors are paying off.
Examination software developed by the FDIC with assistance from CSBS and the
states.
FDIC training of state examiners.
The development of common forms that eliminate duplication and reduce regulatory
burden for the industry.
I could go on and on. Let me simply say, however, that when state and federal
regulators share and coordinate resources in ways like those I've described, the results
are clear. We can expect, and we have achieved, more efficient and more effective
supervision, and that can only benefit state-chartered institutions, state banking
supervisors, the FDIC, as well as the American people and economy we serve.
On May 10th, I gave a speech at a conference held by the Federal Reserve Bank of
Chicago. My main message was that federal banking regulators need to find new ways
to improve our own efficiency and effectiveness. I gave the example of how the federal
agencies could pass on to the industry millions of dollars each year by reducing the
costs of backroom operations to support our supervisory activities. I noted that the FDIC
is in discussions with the Office of Thrift Supervision to provide back-office services like
training, library resources, and economic analysis. I also said the federal banking
agencies must identify the important regulatory questions of the day, communicate with
one another, digest the arguments with mutual respect, and move toward consensus.
Let's think about these issues for a minute. Become more efficient and cost-effective.
Communicate better. Move toward consensus. Sounds an awful lot like the results of
our efforts over the years with you all in the state supervisory arena. My point is this: My
regulatory colleagues in Washington and I can learn a great deal from the FDIC's
partnership with the state supervisors. And we should.
It is also safe to say that when we do business with the states, there are no turf battles.
We have far too much in common and I would suggest our relationship could be a
model in this area, too.
One area of common ground is our mutual desire to promote a healthy competitive
environment for all banks -- from large conglomerates operating nationwide to small,
independent banks devoted to serving rural communities. As we look at the trends in
this area, they indicate continued challenges for the small, community-based institutions
that we know to be such a vital part of the American banking system.
Here's a very telling and troubling situation, based on research by the FDIC's Kansas
City Regional Office. Our analysts have been studying U.S. Census Bureau data for
address areas of mutual concern involving U.S. banks and branches with active
operations abroad.
There are many more examples of how cooperative efforts of state and federal banking
supervisors are paying off.
Examination software developed by the FDIC with assistance from CSBS and the
states.
FDIC training of state examiners.
The development of common forms that eliminate duplication and reduce regulatory
burden for the industry.
I could go on and on. Let me simply say, however, that when state and federal
regulators share and coordinate resources in ways like those I've described, the results
are clear. We can expect, and we have achieved, more efficient and more effective
supervision, and that can only benefit state-chartered institutions, state banking
supervisors, the FDIC, as well as the American people and economy we serve.
On May 10th, I gave a speech at a conference held by the Federal Reserve Bank of
Chicago. My main message was that federal banking regulators need to find new ways
to improve our own efficiency and effectiveness. I gave the example of how the federal
agencies could pass on to the industry millions of dollars each year by reducing the
costs of backroom operations to support our supervisory activities. I noted that the FDIC
is in discussions with the Office of Thrift Supervision to provide back-office services like
training, library resources, and economic analysis. I also said the federal banking
agencies must identify the important regulatory questions of the day, communicate with
one another, digest the arguments with mutual respect, and move toward consensus.
Let's think about these issues for a minute. Become more efficient and cost-effective.
Communicate better. Move toward consensus. Sounds an awful lot like the results of
our efforts over the years with you all in the state supervisory arena. My point is this: My
regulatory colleagues in Washington and I can learn a great deal from the FDIC's
partnership with the state supervisors. And we should.
It is also safe to say that when we do business with the states, there are no turf battles.
We have far too much in common and I would suggest our relationship could be a
model in this area, too.
One area of common ground is our mutual desire to promote a healthy competitive
environment for all banks -- from large conglomerates operating nationwide to small,
independent banks devoted to serving rural communities. As we look at the trends in
this area, they indicate continued challenges for the small, community-based institutions
that we know to be such a vital part of the American banking system.
Here's a very telling and troubling situation, based on research by the FDIC's Kansas
City Regional Office. Our analysts have been studying U.S. Census Bureau data for