FDICFederal Deposit Insurance Corporation
55017th Street, NW, Washington, DC 20429 Deputy to the Chairman and Chief Financial Officer
December 12, 2019
MEMORANDUM TO: Board of Directors
FROM: Bret D. Edwards
Deputy to the Chairman and
and Chief Financial Officer
SUBJECT: Proposed 2020 FDIC Operating Budget
Proposal
This memorandum requests that the Board of Directors approve the proposed 2020 FDIC
Operating Budget totaling $2,017,421,937. The proposed budget includes $1,899,439,750 for
ongoing operations, $75,000,000 for receivership funding, and $42,982,187 for the Office of the
Inspector General (SIG). The total proposed operating budget is $26,024,068 (1.3 percent)
lower than the 2019 FDIC Operating Budget due to substantially reduced resource requirements
for the receivership funding budget component. The proposed ongoing operations component of
the budget is $73,975,932 (4.1 percent) higher than in 2019. The proposed receivership funding
component of the budget is $100,000,000 (57.1 percent) lower than in 2019. The 2020 OIG
budget is unchanged from 2019.1
Approval is also requested for a total authorized 2020 staffing level of 5,755 full-time equivalent
(FTE) positions (5,750 permanent, 5non-permanent), down 160 positions (net) from the
currently authorized 2019 staffing level of 5,915 positions? This reflects a decrease from 2019
of 156 permanent positions and 4non-permanent positions.
Baclt.~round
Structure of the FDIC Operating Budget
The FDIC's proposed annual operating budget is composed of three separate and distinct
components: ongoing operations, receivership funding, and the OIG budget. Funds approved for
each individual budget component catuzot be reprogrammed from one budget component to
another component. The segregation of annual operating expenditures into these three
components facilitates more effective cost management by isolating the FDIC's more stable
ongoing operational expenses from the highly variable annual expenses associated with bank
closings and subsequent receivership management activities and the separate appropriations
process applicable to the OIG.
'The discussion in this case of the OIG budget component is for informational purposes only, since the OIG budget
is separately appropriated by the Congress.
zThe requested approval encompasses the proposed individual division and office staffing authorizations shown in
Exhibit 5.
55017th Street, NW, Washington, DC 20429 Deputy to the Chairman and Chief Financial Officer
December 12, 2019
MEMORANDUM TO: Board of Directors
FROM: Bret D. Edwards
Deputy to the Chairman and
and Chief Financial Officer
SUBJECT: Proposed 2020 FDIC Operating Budget
Proposal
This memorandum requests that the Board of Directors approve the proposed 2020 FDIC
Operating Budget totaling $2,017,421,937. The proposed budget includes $1,899,439,750 for
ongoing operations, $75,000,000 for receivership funding, and $42,982,187 for the Office of the
Inspector General (SIG). The total proposed operating budget is $26,024,068 (1.3 percent)
lower than the 2019 FDIC Operating Budget due to substantially reduced resource requirements
for the receivership funding budget component. The proposed ongoing operations component of
the budget is $73,975,932 (4.1 percent) higher than in 2019. The proposed receivership funding
component of the budget is $100,000,000 (57.1 percent) lower than in 2019. The 2020 OIG
budget is unchanged from 2019.1
Approval is also requested for a total authorized 2020 staffing level of 5,755 full-time equivalent
(FTE) positions (5,750 permanent, 5non-permanent), down 160 positions (net) from the
currently authorized 2019 staffing level of 5,915 positions? This reflects a decrease from 2019
of 156 permanent positions and 4non-permanent positions.
Baclt.~round
Structure of the FDIC Operating Budget
The FDIC's proposed annual operating budget is composed of three separate and distinct
components: ongoing operations, receivership funding, and the OIG budget. Funds approved for
each individual budget component catuzot be reprogrammed from one budget component to
another component. The segregation of annual operating expenditures into these three
components facilitates more effective cost management by isolating the FDIC's more stable
ongoing operational expenses from the highly variable annual expenses associated with bank
closings and subsequent receivership management activities and the separate appropriations
process applicable to the OIG.
'The discussion in this case of the OIG budget component is for informational purposes only, since the OIG budget
is separately appropriated by the Congress.
zThe requested approval encompasses the proposed individual division and office staffing authorizations shown in
Exhibit 5.
The receivership funding component provides funding for expenses incurred in connection with
the failure or near failure ofFDIC-insured institutions and the management of receiverships
established in connection with these failures.3 The separation of the receivership funding
component is an acknowledgement that the number of failures and the expenses associated with
those failures in any given year are to a large extent outside of the control of the FDIC and that
the actual expenses incurred for resolutions and receivership management activities may,
therefore, vary considerably from the estimates made during the annual planning and budget
process. The FDIC recovers most receivership funding expenditures through the billing of failed
institution receiverships for the services it provides, although those recoveries are largely ofFset
by reductions in recoveries on subrogated claims.
2020 WorkloadAnalysis and Projections
The proposed 2020 budget and staffing authorizations are based on an analysis of projected
workload associated with the FDIC's major ongoing mission responsibilities. These include the
FDIC's risk management and consumer protection supervision programs, its resolution and
receivership management program, its large bank resolution planning activities, and its deposit
insurance and research programs.
The FDIC's risk management supervision workload varies based upon the number, size, and
complexity of the institutions it supervises and the number of those institutions with composite
CAMELS (risk management) ratings of 3, 4, and 5. The number of risk management
examinations is projected to decline by 5.9 percent, from 1,476 in 2019 to 1,389 in 2020, due
primarily to continuing institutional consolidation. The reduction in workload resulting from the
smaller number of examinations is partially offset by the additional work associated with the
continuing growth in the average size and complexity of FDIC-supervised institutions,
particularly those with more than $10 billion in assets.
The FDIC's compliance supervision program workload largely reflects the number of institutions
supervised by the FDIC. Compliance and CRA ratings have only a limited impact on this
workload. Compliance and CRA examination workload is projected to decline by 2.9 percent,
from 1,1.80 in 2019 to 1,146 in 2020. Although the number of compliance and CRA exams has
been declining gradually each year due to institutional consolidation, the impact of consolidation
is partially offset in some yeaxs by variation in the number of exams that must be conducted from
year to year under FDIC policy.
The primary drivers of the FDIC's resolutions and receivership management workload are the
number and complexity of failures ofFDIC-insured institutions, the number of active
receiverships being managed by the FDIC, and the amount ofpost-failure workload remaining
for those receiverships. Four insured financial institutions have failed thus far in 2019.
3Expenses for salaries and benefits for the permanent in-house staff associated with the FDIC's Receivership
Management business line (primarily in the Division of Resolutions and Receiverships and the Legal Division) and
for the maintenance of other base resolution and receivership management capabilities, such as fixed vendor costs
and information systems development and maintenance costs, are funded from the ongoing operations component of
the budget because they would be incurred regardless of whether any failures actually occurred.
the failure or near failure ofFDIC-insured institutions and the management of receiverships
established in connection with these failures.3 The separation of the receivership funding
component is an acknowledgement that the number of failures and the expenses associated with
those failures in any given year are to a large extent outside of the control of the FDIC and that
the actual expenses incurred for resolutions and receivership management activities may,
therefore, vary considerably from the estimates made during the annual planning and budget
process. The FDIC recovers most receivership funding expenditures through the billing of failed
institution receiverships for the services it provides, although those recoveries are largely ofFset
by reductions in recoveries on subrogated claims.
2020 WorkloadAnalysis and Projections
The proposed 2020 budget and staffing authorizations are based on an analysis of projected
workload associated with the FDIC's major ongoing mission responsibilities. These include the
FDIC's risk management and consumer protection supervision programs, its resolution and
receivership management program, its large bank resolution planning activities, and its deposit
insurance and research programs.
The FDIC's risk management supervision workload varies based upon the number, size, and
complexity of the institutions it supervises and the number of those institutions with composite
CAMELS (risk management) ratings of 3, 4, and 5. The number of risk management
examinations is projected to decline by 5.9 percent, from 1,476 in 2019 to 1,389 in 2020, due
primarily to continuing institutional consolidation. The reduction in workload resulting from the
smaller number of examinations is partially offset by the additional work associated with the
continuing growth in the average size and complexity of FDIC-supervised institutions,
particularly those with more than $10 billion in assets.
The FDIC's compliance supervision program workload largely reflects the number of institutions
supervised by the FDIC. Compliance and CRA ratings have only a limited impact on this
workload. Compliance and CRA examination workload is projected to decline by 2.9 percent,
from 1,1.80 in 2019 to 1,146 in 2020. Although the number of compliance and CRA exams has
been declining gradually each year due to institutional consolidation, the impact of consolidation
is partially offset in some yeaxs by variation in the number of exams that must be conducted from
year to year under FDIC policy.
The primary drivers of the FDIC's resolutions and receivership management workload are the
number and complexity of failures ofFDIC-insured institutions, the number of active
receiverships being managed by the FDIC, and the amount ofpost-failure workload remaining
for those receiverships. Four insured financial institutions have failed thus far in 2019.
3Expenses for salaries and benefits for the permanent in-house staff associated with the FDIC's Receivership
Management business line (primarily in the Division of Resolutions and Receiverships and the Legal Division) and
for the maintenance of other base resolution and receivership management capabilities, such as fixed vendor costs
and information systems development and maintenance costs, are funded from the ongoing operations component of
the budget because they would be incurred regardless of whether any failures actually occurred.