Remarks By
Sheila Bair Chairman,
U.S. Federal Deposit Insurance Corporation;
at
People’s Bank of China, Beijing, China
July 23, 2007
Good afternoon, I’m happy and very honored to be making my third trip to mainland
China.
The first time was nine years ago when President Clinton visited China for talks with
President Jiang and other officials to promote economic cooperation and understanding
between our countries.
At the time I was a senior executive with the New York Stock Exchange. We had been
working with the Shanghai exchange, and I was part of the group that was sent to
Shanghai in conjunction with the President’s trip.
During our visit to the Shanghai stock exchange, I was impressed by the enthusiasm
and energy I saw for China’s growing capital markets. I was also impressed by the
strong work ethic, entrepreneurial spirit and the eagerness to engage with your
colleagues across the globe.
In short, I fell in love with China. I’ll be visiting the Pudong financial district and the stock
exchange again when I’m in Shanghai on Friday. I’m anxious to see the results of the
change going on there and throughout China.
I fell in love with China for a second time a few years later and in a very personal way. I
saw the kindness, warmth and very deep love for children when my husband Scott, and
I adopted our daughter Colleen.
So I am delighted to be here again ... this time working on banking issues that I believe
are critical to developing a strong financial system in China ... a system that brings
stability, confidence and ultimately raises the standard of living for all Chinese people no
matter where they live ... in the city or in rural communities.
My agenda
I’ll be meeting with government officials and bankers during my trip. We’ll be talking
about the U.S. experience in building a deposit insurance system that gives confidence
in the banking system and the economy as a whole. We’ll also be talking about how
people save and spend their money, and about how they borrow it.
We have 8,600 banks in the United States. Many of these banks are in rural
communities, where they serve as the gateway into the financial system.
Sheila Bair Chairman,
U.S. Federal Deposit Insurance Corporation;
at
People’s Bank of China, Beijing, China
July 23, 2007
Good afternoon, I’m happy and very honored to be making my third trip to mainland
China.
The first time was nine years ago when President Clinton visited China for talks with
President Jiang and other officials to promote economic cooperation and understanding
between our countries.
At the time I was a senior executive with the New York Stock Exchange. We had been
working with the Shanghai exchange, and I was part of the group that was sent to
Shanghai in conjunction with the President’s trip.
During our visit to the Shanghai stock exchange, I was impressed by the enthusiasm
and energy I saw for China’s growing capital markets. I was also impressed by the
strong work ethic, entrepreneurial spirit and the eagerness to engage with your
colleagues across the globe.
In short, I fell in love with China. I’ll be visiting the Pudong financial district and the stock
exchange again when I’m in Shanghai on Friday. I’m anxious to see the results of the
change going on there and throughout China.
I fell in love with China for a second time a few years later and in a very personal way. I
saw the kindness, warmth and very deep love for children when my husband Scott, and
I adopted our daughter Colleen.
So I am delighted to be here again ... this time working on banking issues that I believe
are critical to developing a strong financial system in China ... a system that brings
stability, confidence and ultimately raises the standard of living for all Chinese people no
matter where they live ... in the city or in rural communities.
My agenda
I’ll be meeting with government officials and bankers during my trip. We’ll be talking
about the U.S. experience in building a deposit insurance system that gives confidence
in the banking system and the economy as a whole. We’ll also be talking about how
people save and spend their money, and about how they borrow it.
We have 8,600 banks in the United States. Many of these banks are in rural
communities, where they serve as the gateway into the financial system.
As the primary regulator for the majority of these banks, I especially look forward to
comparing notes with local officials and bankers.
The FDIC and the People’s Bank of China have been consulting on banking issues for a
number of years.
To formalize ... and I hope expand ... the relationship, Governor Zhou and I plan to sign
a memorandum of understanding that will support this ongoing work as China moves
forward on setting up a deposit insurance system.
Today, I’ll start with a short history and description of deposit insurance in the United
States. Based on this experience, I’ll highlight the key features we think make for a
successful system.
I also want to touch on rural finance. I know this is a recent focus for China’s leaders.
And it is an area of great interest to me because of growing up in rural Kansas, in the
middle of America’s heartland.
Finally, I’ll talk about the U.S. efforts to provide basic banking services to low-income
people.
A short history of U.S. deposit insurance
As China begins the establishment and development of its own deposit insurance
system, I thought it might be of interest to recap the history of our own.
The FDIC was created in 1933 during the Great Depression, as one of a number of
measures designed to restore confidence in the U.S. financial system and to protect
small depositors.
After some twists and turns, the deposit insurance system that resulted covered 98
percent of depositors in commercial banks. The FDIC administered an insurance fund,
and assessed banks a flat-rate premium on domestic deposits.
The FDIC was also given additional roles. It became the “receiver” for failed banks
(meaning it took them over), and joined the Federal Reserve and the Comptroller of the
Currency as a federal supervisor of commercial banks.
Following the Great Depression, there were very few bank failures for several decades.
Deposit insurance ended bank runs, which threatened small banks in particular. These
are the primary lenders to small businesses, which can be the engine of job creation
and development throughout an economy.
Deposit insurance provided a solid foundation supporting sustainable growth in all areas
of the U.S., both urban and rural.
comparing notes with local officials and bankers.
The FDIC and the People’s Bank of China have been consulting on banking issues for a
number of years.
To formalize ... and I hope expand ... the relationship, Governor Zhou and I plan to sign
a memorandum of understanding that will support this ongoing work as China moves
forward on setting up a deposit insurance system.
Today, I’ll start with a short history and description of deposit insurance in the United
States. Based on this experience, I’ll highlight the key features we think make for a
successful system.
I also want to touch on rural finance. I know this is a recent focus for China’s leaders.
And it is an area of great interest to me because of growing up in rural Kansas, in the
middle of America’s heartland.
Finally, I’ll talk about the U.S. efforts to provide basic banking services to low-income
people.
A short history of U.S. deposit insurance
As China begins the establishment and development of its own deposit insurance
system, I thought it might be of interest to recap the history of our own.
The FDIC was created in 1933 during the Great Depression, as one of a number of
measures designed to restore confidence in the U.S. financial system and to protect
small depositors.
After some twists and turns, the deposit insurance system that resulted covered 98
percent of depositors in commercial banks. The FDIC administered an insurance fund,
and assessed banks a flat-rate premium on domestic deposits.
The FDIC was also given additional roles. It became the “receiver” for failed banks
(meaning it took them over), and joined the Federal Reserve and the Comptroller of the
Currency as a federal supervisor of commercial banks.
Following the Great Depression, there were very few bank failures for several decades.
Deposit insurance ended bank runs, which threatened small banks in particular. These
are the primary lenders to small businesses, which can be the engine of job creation
and development throughout an economy.
Deposit insurance provided a solid foundation supporting sustainable growth in all areas
of the U.S., both urban and rural.