CHAIRMAN DONALD E. POWELL
FEDERAL DEPOSIT INSURANCE CORPORATION
REMARKS BEFORE THE
WOMEN IN HOUSING AND FINANCE
WASHINGTON, DC
JUNE 12, 2003
FOR IMMEDIATE RELEASE Media Contact:
PR-62-2003 (6-12-2003) David Barr (202) 898-6992
Good afternoon. I appreciate the opportunity to speak to such a distinguished audience.
I particularly want to thank Kathy James, of the FDIC, for her good work on behalf of
Women in Housing and Finance. She makes a valuable contribution to the work we do
at the FDIC, and I am glad she’s taken time to help your group over the past year as
well.
This afternoon, I want to share with you some of my impressions after almost two years
in Washington, DC. This has been an eventful time for our country. I think it is useful,
from time to time, to pause and consider what the experiences of the past teach us –
and especially consider how best to use that knowledge to continue moving forward.
Those of us in the banking regulatory arena are given a high calling. We’re here to
safeguard confidence in the American banking system by protecting the savings of
ordinary Americans. Another important duty is to ensure problems in the financial sector
are recognized and handled with the least disruption possible. We owe it to the
American people to be vigilant and to get it right.
I’ve noticed that when progress is made in Washington – on just about any subject you
can name – it often comes as a result of crisis. We have seen this sort of change many
times in the life of our nation. The FDIC itself was created during the most profound
banking crisis this nation has ever seen. Many of the supervisory powers we have today
came as a result of the difficulties we faced in the late 1980s and early 1990s. There is
nothing wrong with this. Often, dramatic events can point out weaknesses in our system
that need addressing – and can provide the impetus to enact much-needed reforms.
In the past two years, we’ve seen several examples of this sort of change. The Patriot
Act and the Sarbanes-Oxley legislation are two important laws that come readily to
mind. The horrible events of 9/11, and the corporate governance scandals, convinced
even the most skeptical policymakers that something had to be done. And these events
convinced many of us that the status quo was not sufficient to handle the newly
recognized threats to our economic system and our way of life.
FEDERAL DEPOSIT INSURANCE CORPORATION
REMARKS BEFORE THE
WOMEN IN HOUSING AND FINANCE
WASHINGTON, DC
JUNE 12, 2003
FOR IMMEDIATE RELEASE Media Contact:
PR-62-2003 (6-12-2003) David Barr (202) 898-6992
Good afternoon. I appreciate the opportunity to speak to such a distinguished audience.
I particularly want to thank Kathy James, of the FDIC, for her good work on behalf of
Women in Housing and Finance. She makes a valuable contribution to the work we do
at the FDIC, and I am glad she’s taken time to help your group over the past year as
well.
This afternoon, I want to share with you some of my impressions after almost two years
in Washington, DC. This has been an eventful time for our country. I think it is useful,
from time to time, to pause and consider what the experiences of the past teach us –
and especially consider how best to use that knowledge to continue moving forward.
Those of us in the banking regulatory arena are given a high calling. We’re here to
safeguard confidence in the American banking system by protecting the savings of
ordinary Americans. Another important duty is to ensure problems in the financial sector
are recognized and handled with the least disruption possible. We owe it to the
American people to be vigilant and to get it right.
I’ve noticed that when progress is made in Washington – on just about any subject you
can name – it often comes as a result of crisis. We have seen this sort of change many
times in the life of our nation. The FDIC itself was created during the most profound
banking crisis this nation has ever seen. Many of the supervisory powers we have today
came as a result of the difficulties we faced in the late 1980s and early 1990s. There is
nothing wrong with this. Often, dramatic events can point out weaknesses in our system
that need addressing – and can provide the impetus to enact much-needed reforms.
In the past two years, we’ve seen several examples of this sort of change. The Patriot
Act and the Sarbanes-Oxley legislation are two important laws that come readily to
mind. The horrible events of 9/11, and the corporate governance scandals, convinced
even the most skeptical policymakers that something had to be done. And these events
convinced many of us that the status quo was not sufficient to handle the newly
recognized threats to our economic system and our way of life.
Having made the tough policy calls on the corporate governance issue, we are now
moving toward the next very important phase of this recovery process. We have
reached a time when good governance, solid accounting, and strong internal controls
should be hardwired into the DNA of American business. We’ve seen many firms treat
improving governance like a line of business – with all the determination and singular
focus that implies. Now it must become a way of life.
This is vitally important work. If businesses do not accomplish the basic threshold tests
of good governance, good accounting, and solid internal controls, they will not be
around to enjoy the recovery. The marketplace is littered with examples of companies
that were punished mercilessly for failing the basic tests of good corporate citizenship.
Cleaning house is also necessary if we are to ensure a stable business environment
going forward and if we are to provide investors with the incentive to return.
But it is also important to remember that good corporate governance is not an end unto
itself. The purpose of all this housecleaning is to reorient American business to today’s
environment, and to begin the long road toward sustained profit and investment,
improving customer service, and hiring staff.
So I would offer some thoughts to American businesses: If you haven’t fixed your
accounting, governance, and controls – do it now. The market has not been kind to
those companies who are late entrants to the ranks of good corporate citizenship.
However, if you have taken responsible steps to solidify your boards, your governance,
and your internal systems and controls, then I encourage you to employ the same
passion and drive you brought to that effort in the service of revitalizing your core
business model and improving your economic performance. This, too, is critical if we
are to get our economy moving again.
There are real opportunities in today’s market. The benefits of the recovery will flow to
those companies that address their problems and position themselves to take full
advantage of the emerging rebound. Those who allow their attention to wander will be
left behind.
We’ve found this to be true before. In fact, it reminds me of my own experience as a
banker. When our industry was in crisis a decade ago, bankers and policymakers could
easily have embarked on an all-consuming spiral of recrimination, blame, and perpetual
reorganization. It was a very difficult time for our industry, and there were plenty of
opportunities for posturing and endless tinkering. Certainly, some of that did occur. But
our industry, in fairly short order, implemented sound policies, cleaned up its act, and
got on with the business of good banking. I don’t have to outline the benefits of this
approach. They are evident in the unprecedented decade-long run of success for the
financial services industry.
So it is important to remember that crisis can be profoundly difficult – and even can
provide the opportunity to implement much-needed reforms. But if our ultimate goal is a
healthy, thriving business sector that innovates, invests, grows and hires, then we must
moving toward the next very important phase of this recovery process. We have
reached a time when good governance, solid accounting, and strong internal controls
should be hardwired into the DNA of American business. We’ve seen many firms treat
improving governance like a line of business – with all the determination and singular
focus that implies. Now it must become a way of life.
This is vitally important work. If businesses do not accomplish the basic threshold tests
of good governance, good accounting, and solid internal controls, they will not be
around to enjoy the recovery. The marketplace is littered with examples of companies
that were punished mercilessly for failing the basic tests of good corporate citizenship.
Cleaning house is also necessary if we are to ensure a stable business environment
going forward and if we are to provide investors with the incentive to return.
But it is also important to remember that good corporate governance is not an end unto
itself. The purpose of all this housecleaning is to reorient American business to today’s
environment, and to begin the long road toward sustained profit and investment,
improving customer service, and hiring staff.
So I would offer some thoughts to American businesses: If you haven’t fixed your
accounting, governance, and controls – do it now. The market has not been kind to
those companies who are late entrants to the ranks of good corporate citizenship.
However, if you have taken responsible steps to solidify your boards, your governance,
and your internal systems and controls, then I encourage you to employ the same
passion and drive you brought to that effort in the service of revitalizing your core
business model and improving your economic performance. This, too, is critical if we
are to get our economy moving again.
There are real opportunities in today’s market. The benefits of the recovery will flow to
those companies that address their problems and position themselves to take full
advantage of the emerging rebound. Those who allow their attention to wander will be
left behind.
We’ve found this to be true before. In fact, it reminds me of my own experience as a
banker. When our industry was in crisis a decade ago, bankers and policymakers could
easily have embarked on an all-consuming spiral of recrimination, blame, and perpetual
reorganization. It was a very difficult time for our industry, and there were plenty of
opportunities for posturing and endless tinkering. Certainly, some of that did occur. But
our industry, in fairly short order, implemented sound policies, cleaned up its act, and
got on with the business of good banking. I don’t have to outline the benefits of this
approach. They are evident in the unprecedented decade-long run of success for the
financial services industry.
So it is important to remember that crisis can be profoundly difficult – and even can
provide the opportunity to implement much-needed reforms. But if our ultimate goal is a
healthy, thriving business sector that innovates, invests, grows and hires, then we must