Supervision Program

The FDIC’s Supervision Program promotes the safety and soundness of FDIC-supervised insured depository institutions, protects consumers’ rights and promotes community investment initiatives by FDIC-supervised insured depository institutions. In 2009, the FDIC will continue its efforts to increase the effectiveness and efficiency of all of its supervisory programs. Ongoing industry consolidation, new technologies and product innovation have resulted in larger, more complex organizations. The FDIC will continue to increase the resources dedicated to analyzing the risks posed to the DIF by these larger, more complex financial institutions, particularly those that are systemically important. The FDIC will also continue to assess and modify, as appropriate, its examination procedures for all institutions in light of changing risk profiles for the industry and for individual institutions.

The FDIC is the primary federal regulator for state-chartered banks that are not members of the Federal Reserve System, generally known as state non-member banks, and includes state-licensed insured branches of foreign banks and state-chartered savings institutions. As insurer, the FDIC also has special examination authority for state member banks that are supervised by the Federal Reserve Board (FRB), national banks that are supervised by the Office of the Comptroller of the Currency (OCC) and savings associations that are supervised by the Office of Thrift Supervision (OTS). The FDIC’s roles as an insurer and primary supervisor are complementary, and many activities undertaken by the FDIC support both the insurance and supervision programs. Through the review of examination reports, offsite monitoring tools, participation in examinations conducted by other federal regulators, and, where appropriate, special (backup) examination activities, the FDIC regularly monitors the potential risks at all insured institutions, including those for which it is not the primary federal supervisor.

As the primary federal regulator of all insured state non-member banks, the FDIC performs periodic examinations of these institutions to assess their overall financial condition, management policies and practices, and compliance with applicable laws and regulations. Through the examination process, the FDIC also assesses the adequacy of management and internal control systems to identify and control risks and to detect the risks of fraud or insider abuse. In addition, the FDIC has staff dedicated to offsite monitoring programs and enhancing the Corporation’s ability to identify emerging safety-and-soundness issues in a timely manner. The FDIC conducts separate examinations to assess institutions’ programs for compliance with consumer protection, fair lending, privacy, and Community Reinvestment Act (CRA) statutes. As part of the compliance examination process, the FDIC reviews substantive issues as well as the information and disclosures that are provided to consumers by the institutions.

If weaknesses are identified through the examination process, the FDIC promptly takes appropriate supervisory action. Formal and informal enforcement actions may be issued for institutions identified as having significant weaknesses or operating in a deteriorated financial condition. The institution must operate under the action until these weaknesses are remedied. Noncompliance with consumer protection or fair lending laws can result in civil liability and negative publicity as well as the imposition of formal or informal actions by the FDIC to correct the identified violations.

The FDIC also investigates consumer complaints about FDIC-supervised insured depository institutions. Consumers write or electronically submit to the FDIC complaints and inquiries regarding consumer protection and fair lending issues. The FDIC attempts, through its investigation of and response to consumer complaints and inquiries, to help consumers better understand their rights under federal consumer protection and fair lending laws. The FDIC monitors the level of public satisfaction with its responses to consumer complaints and inquiries. Information on complaints is also reviewed as part of the supervisory process.

In addition, the FDIC acts on applications from FDIC-supervised insured depository institutions to undertake new or expanded business activities. When institutions apply for expansion of existing activities or locations, various factors are evaluated, including capital adequacy, quality of management, financial condition and compliance with applicable laws and regulations. An institution's compliance with consumer protection, fair lending and privacy laws and its performance under the CRA are also considered when an institution applies to expand its business activities within the insured depository institution system.

Information about the FDIC’s supervisory program is available at www.FDIC.gov, which includes information about current laws and regulations and regulatory guidance. The FDIC’s semiannual Supervisory Insights journal provides information about bank supervision for bankers, bank examiners and other practitioners.

The following table depicts the strategic goal, strategic objective and annual performance goals for the Risk Management component of the Supervision Program.

The following table depicts the strategic goal, strategic objectives and annual performance goals for the Compliance and Consumer Affairs components of the Supervision Program.

Strategic Goal 2:
FDIC-insured institutions are safe and sound.

Strategic Objective 2.1
The FDIC exercises its statutory authority, in cooperation with primary financial regulators and state agencies, to ensure that all FDIC-insured institutions appropriately manage risk.

Annual Performance Goal 2.1-1
Conduct onsite risk management examinations to assess the overall financial condition, management practices and policies, and compliance with applicable laws and regulations of FDIC-supervised depository institutions.

Indicator and Target
Percentage of required examinations conducted in accordance with statutory requirements and FDIC policy

• 100 percent of required risk management examinations are conducted on schedule.

Means and Strategies

Operational Processes (initiatives and strategies):
Risk management examinations assess the overall financial condition, management practices and policies, and compliance with applicable regulations of FDIC-supervised depository institutions. The FDIC performs safety and soundness, Bank Secrecy Act, and information technology (IT) reviews at each risk management examination of an FDIC-supervised insured depository institution. As applicable, the FDIC also conducts reviews of trust, registered transfer agent, municipal securities dealer and government security dealer activities at these examinations. In 2009, the FDIC projects that it will conduct over 2,400 risk management examinations required under statute, FDIC policy, or agreement with state supervisors. The FDIC follows a risk-focused approach to examinations, which allows examiners to focus resources on those areas with the greatest potential risk. The FDIC has several analytical models to identify higher-risk financial institutions by considering factors such as rapid growth, fluctuating earnings, economic downturns and concentrations in vulnerable industry sectors. Examiners use these offsite tools to help them risk-focus during onsite examinations. These models are also used to identify the need for inquiries or onsite visits to FDIC supervised institutions outside of the regular examination cycle.

The FDIC also continues to focus on risks posed by technology. Onsite examinations review technology-related activities to determine how each FDIC-supervised depository institution manages IT risks. The FDIC proactively monitors indicators of technology risks that may impact FDIC-supervised institutions and provides information to the industry about risks associated with technology outsourcing practices (e.g., contracting for computer services).

The FDIC is engaged in an ongoing dialogue with technology vendors, bank trade associations, and standards and rule-setting entities to identify effective risk management practices for emerging technologies.

During 2008, the FDIC worked closely with state and other federal agencies to monitor institutions most impacted by the downward trend in the real estate market through onsite and offsite programs. Commercial Real Estate concentrations, particularly in Construction and Development (C&D) loans, have grown considerably in recent years, in part due to robust real estate markets and development of nontraditional mortgage products, which made home buying accessible to more consumers. Declines in the subprime and nontraditional mortgage lending areas have adversely affected C&D loan portfolios, which are concentrated in 1- to 4-family residential development loans at numerous institutions. Commercial property markets are also showing signs of overbuilding and weakness, with high concentration levels at many institutions.

Resource constraints at the state level may impact the completion of examinations in accordance with this annual goal. If a state supervisor responsible for completing an examination experiences scheduling, staffing, or other resource constraints, the statutory examination requirement may not be met. In such cases, the FDIC will work with the state supervisor to ensure that any delinquent examination is expeditiously scheduled and completed. When appropriate, the FDIC may conduct the examination in lieu of the state supervisor.

The number of risk management examinations conducted during 2009 may fluctuate as the number of FDIC-supervised insured depository institutions changes due to mergers, closings, newly approved charters and other actions. Increases in asset size or changes to condition or capital levels may accelerate examination cycles and increase the number of required examinations.

Human Resources (staffing and training):
The FDIC’s authorized risk management examination workforce will increase from 1,423 in 2008 to 1,819 in 2009. Staffing and training needs are reviewed on an ongoing basis to ensure that the staff resources supporting the examination program are adequate and that employees possess the skills and knowledge to effectively and successfully examine emerging risks.

Information Technology:
The FDIC employs various automated tools, such as the General Examination System, Examination Documentation modules, Interest Rate Risk Sensitivity Analysis software, and the Automated Loan Examination and Review Tool, to improve the efficiency of its examinations.

Verification and Validation
The actual number of examinations conducted and adherence to required examination timeframes is tracked through the ViSION system and reported through established management processes.

2008 Performance Results
This annual performance goal and the associated performance indicator and target are unchanged from 2008. In 2008, the FDIC successfully met this performance target.

Annual Performance Goal 2.1-2
Take prompt and effective formal or informal supervisory action to address unresolved problems identified during the examination of FDIC supervised institutions that receive a composite Uniform Financial Institutions Rating of “3,” “4” or “5.” Monitor FDIC-supervised insured depository institutions’ compliance with formal and informal enforcement actions.

Indicator and Target

1. Percentage of follow-up examinations of 3-, 4- and 5-rated institutions conducted within required time frames
• 100 percent of follow-up examinations are conducted within 12 months of completion of the prior examination to confirm that identified problems have been corrected.

Means and Strategies

Operational Processes (initiatives and strategies):
Troubled institutions (those with a composite rating of 3, 4, or 5) are identified primarily through the examination process. While reason and moral suasion are the primary corrective tools, the FDIC has broad enforcement powers to correct practices, conditions or violations of law that threaten an insured depository institution's safe and sound condition. The FDIC may use informal and formal enforcement actions against an institution or responsible individuals to address identified problems. Follow-up examinations will be conducted for all 4- and 5-rated institutions to review compliance with supervisory actions, and additional follow-up action will be taken where corrective action is insufficient.

The responsible case manager and senior regional officials will closely monitor troubled depository institutions. Progress in complying with enforcement actions will be assessed through progress reports from institutions, offsite monitoring tools, and direct communication with financial institution management and/or onsite visits.

Human Resources (staffing and training):
Case managers and other regional office officials are primarily responsible for finalizing and monitoring compliance with enforcement programs. Follow-up examinations are conducted by field examination staff. The FDIC has increased the number of authorized case managers as well as field examination positions in 2009. Staffing and training needs are reviewed on an ongoing basis to ensure that resources available for this function are adequate and that employees possess the required skills and knowledge.

Information Technology:
The ViSION system is used to monitor all enforcement action activity and other significant events at troubled institutions and to schedule follow-up examinations of 4- and 5-rated institutions.

Verification and Validation
The examination report identifies corrective actions to be taken. If deemed necessary, a formal or informal enforcement action is transmitted to the financial institution along with the report of examination. To ensure that supervisory actions are taken promptly, the FDIC monitors the time it takes to provide examination reports to FDIC-supervised institutions after the completion of an examination. The ViSION system is used to track enforcement actions and the timeframe for required follow-up examinations.

The FDIC will also continue to use the Regional Office Internal Control Review program to ensure that regions are effectively monitoring FDIC-supervised insured depository institutions’ compliance with formal and informal enforcement actions. This review incorporates various components of the supervisory process, including assessment of the appropriateness, implementation and follow-up of formal and informal corrective actions. Any material exceptions noted during the reviews are raised to management’s attention for appropriate action.

2008 Performance Results
This annual performance goal and the associated performance indicator and target are unchanged from 2008. The FDIC successfully met the 2008 performance target.

Annual Performance Goal 2.1-3
Assist in protecting the infrastructure of the U.S. banking system against terrorist financing, money laundering and other financial crimes.

Indicator and Target

1. Percentage of required examinations conducted in accordance with statutory requirements and FDIC policy
• 100 percent of required Bank Secrecy Act examinations are conducted on schedule.

Means and Strategies

Operational Processes (initiatives and strategies):
Bank Secrecy Act/Anti-Money Laundering (BSA/AML) examinations and Office of Foreign Assets Control (OFAC) reviews assess an institution’s overall BSA/AML and OFAC compliance programs. These reviews encompass sound risk management, compliance with recordkeeping requirements, and the ability of the institution to identify and report suspicious activity. The FDIC performs BSA/AML and OFAC reviews as a part of all risk management examinations of FDIC-supervised insured depository institutions. In 2009, the FDIC projects that it will conduct over 2,400 BSA/AML examinations concurrent with risk management examinations (required by §10 of the Federal Deposit Insurance Act), FDIC policy, or agreement with state supervisors.

The FDIC will also perform BSA/AML examinations in conjunction with risk management examinations conducted by state regulators for the small number of state bank regulatory agencies (currently six) that do not incorporate BSA/AML examination procedures into their own examinations. The FDIC follows a risk-focused approach to BSA/AML examinations and OFAC reviews, which allows examiners to focus resources on those areas with the greatest potential risk.

In 2009, the FDIC will work with the other federal banking agencies, the Financial Crimes Enforcement Network (FinCEN) and the Conference of State Bank Supervisors to update the Federal Financial Institutions Examination Council (FFIEC) BSA/AML Examination Manual to ensure that the guidance remains current for existing laws, regulations, and policy interpretations. Further guidance will be provided to risk management staff through written memoranda, participation in the FFIEC BSA/AML Examination Workshop, and attendance at the Advanced BSA/AML Specialists Conference.

Human Resources (staffing and training):
The FDIC currently has 320 examiners who are designated as BSA/AML subject matter experts, including 85 with advanced certifications for this discipline. Staffing and training needs are reviewed on an ongoing basis to ensure that the staff resources supporting the BSA/AML examination program are adequate and that employees possess the skills and knowledge to effectively and successfully assess compliance with BSA/AML requirements and detect any emerging risks.

Information Technology:
BSA/AML reference materials are available on the FDIC’s external website at www.fdic.gov/regulations/examinations/bsa/index.html. This link provides the banking industry and the regulatory community with centralized and expanded access to BSA/AML resources. The link also provides updated information and instruction related to BSA/AML examination procedures, interpretive guidance, websites of related agencies, instructions for reporting suspicious activity and terrorist-financing activity, and an overview of governing rules and regulations. In concert with the release of the interagency FFIEC BSA/AML Examination Manual, the Federal banking agencies have also made available through the FFIEC website (www.ffiec.gov) a BSA/AML Examination Manual InfoBase. It includes the interagency BSA/AML Examination Manual, BSA regulations, and guidance provided by each federal banking agency. BSA/AML examinations are tracked in the ViSION system.

Verification and Validation
The actual number of examinations conducted and adherence to required examination timeframes are tracked in the ViSION system through established management processes.

2008 Performance Results
This annual performance goal and its associated performance indicator and target are unchanged from 2008. The FDIC successfully met this performance target in 2008.

Annual Performance Goal 2.1-4
More closely align regulatory capital with risk and ensure that capital is maintained at prudential levels.

Indicator and Targets

1. Preliminary results of new capital requirements
   • Conduct analyses of early results of the performance of new capital rules in light of recent financial turmoil as information becomes available.


2. Improvements to capital requirements
   • Working domestically and internationally, develop improvements to regulatory capital requirements based on the experience of the recent financial market turmoil.

Means and Strategies

Operational Processes (initiatives and strategies):
The FDIC continues to focus on ensuring that banks’ capital is adequate to weather the stresses of a more difficult financial environment. These efforts include revising the capital framework, enhancing offsite monitoring capabilities, and bolstering examination support.

The objective of Basel II is to more closely align regulatory capital with risk in large or multinational banks. Under the Basel II Advanced Approaches final rule, these banks are required to use the most advanced approaches of Basel II for determining their risk-based capital requirements. Implementation of the Basel II Advanced Approaches requires these banks to develop complex internal models to estimate capital requirements. Supervisors will evaluate these processes during a “parallel run” and a minimum three-year transition period during which the agencies will apply floors that limit the amount by which each bank's risk-based capital could decline. One U.S. institution has begun the parallel run. The FDIC will assess the capital adequacy of this institution and other banks that commence the parallel run phase and determine whether the models appropriately reflect the loss experiences of the recent financial turmoil. The agencies also intend to issue a series of reports that will provide timely and relevant information on the implementation of the advanced approaches.

The agencies issued the Supervisory Review Process of Capital Adequacy (Pillar 2) under the Basel II Advanced Capital Framework in 2008. This guidance provides clarification to support the implementation of the Advanced Approaches final rule. The FDIC intends to monitor banks’ progress in implementing the supervisory guidance.

Domestically, the FDIC will seek to improve or strengthen regulatory capital requirements for all banks by directly monitoring bank capital adequacy based on experience with the financial turmoil during this period of stress. This includes tracking institutions whose reported financial data and market indicators are indicative of a heightened risk of capital or liquidity stresses.

Other strategies include supporting field examiners involved in determining the appropriate capital levels for securitizations, particularly those securitizations that have been downgraded by the credit rating agencies, and revisions to the domestic capital frameworks for banks, including incorporating proposed revisions to the Basel II Accord and the Market Risk Amendment of 1996.

The FDIC will continue to work with the Department of the Treasury and the other federal bank regulatory agencies to facilitate the implementation of the Capital Purchase Program. This includes analyzing the appropriateness of proposed capital instruments for inclusion in regulatory capital. The FDIC will also continue to participate in the FFIEC and other supervisory groups to emphasize the importance of adequate bank and financial institution capital.

Internationally, through the FDIC’s participation on the Basel Committee on Banking Supervision, the FDIC will continue to work to promote strong international bank capital standards. To accomplish this goal, the FDIC will participate in the Basel Committee’s various groups and sub-groups, including the Policy Development Group, the Definition of Capital subgroup, the Trading Book Group, and other international groups and forums.

Although this annual performance goal will be pursued over a multi-year time frame, 2009 will be a year of intensive work. Key efforts include revising and strengthening the capital adequacy framework for securitizations and re-securitizations, reviewing core capital, re-evaluating regulatory capital for the trading book, revising Pillar 2, and developing new disclosures for securitization exposures. The FDIC also will participate in the Basel efforts to explore supplementary capital requirements for international banks, including a leverage ratio requirement.

Human Resources (staffing and training):
The FDIC will continue in 2009 to expand the number of staff with expertise on bank capital. The breadth and depth of knowledge among FDIC staff on bank capital matters has expanded, due in part to the continued participation and active involvement of these staff in policy development groups. The FDIC will also continue to strengthen its ability to participate actively in the dialogue on capital adequacy through the use of internal and external training to augment current staff skill sets.

Information Technology:
The FDIC will use existing technology to accomplish this annual performance goal.

Verification and Validation
Progress in meeting this annual performance goal will be tracked through periodic meetings and established reporting processes.

2008 Performance Results
This annual performance goal and its associated performance indicators and targets have been updated from 2008 and represent the consolidation of several performance goals. The FDIC successfully met each of the 2008 performance targets for this goal.

Strategic Goal 3:
Consumers’ rights are protected and FDIC-supervised institutions invest in their communities.

Strategic Objective 3.1
FDIC-supervised institutions comply with consumer protection, Community Reinvestment Act and fair lending laws and do not engage in unfair or deceptive practices.

Annual Performance Goal 3.1-1
Conduct onsite CRA and compliance examinations to assess compliance with applicable laws and regulations by FDIC-supervised depository institutions.

Indicator and Target

1. Percentage of examinations conducted in accordance with statutory requirements and FDIC policy
• 100 percent of required examinations are conducted on schedule.

Means and Strategies

Operational Processes (initiatives and strategies):
The FDIC conducts CRA and compliance examinations of FDIC-supervised depository institutions in order to determine compliance with consumer protection and fair lending laws and performance under CRA. The frequency of these examinations is specified by applicable law and FDIC policy. For CRA examinations, the FDIC's examination frequency policy conforms to applicable provisions of the Gramm-Leach-Bliley Act (GLBA), which establishes the CRA examination cycle for most small banks. In 2009, the FDIC estimates that it will conduct approximately 2,000 compliance and/or CRA examinations.

The FDIC’s compliance examination approach places great emphasis on an institution’s compliance risk-management practices as opposed to exhaustive transactional testing. This approach involves an expanded review of an institution’s systems and compliance policies so that transaction testing can be better targeted and focused on areas of greatest risk exposure. This approach creates a more efficient and effective use of examination resources, especially in financial institutions with high compliance risk profiles.

Human Resources (staffing and training):
The FDIC’s authorized compliance examination workforce will increase from 385 in 2008 to 462 in 2009. Staffing and training needs are reviewed on an ongoing basis to ensure that staff resources supporting the compliance examination program are adequate and that employees possess the skills and knowledge to effectively implement this program.

Information Technology:
The System of Uniform Reporting of Compliance and CRA Examinations (SOURCE) is used to schedule and track financial institution compliance examinations, support pre-examination planning and provide management information.

Verification and Validation
The FDIC will analyze examination-related data collected in SOURCE to determine whether targeted performance levels were achieved during the reporting period. Results will be reported through established management processes.

2008 Performance Results
This annual performance goal and the associated performance indicator and target are essentially unchanged from 2008. In 2008, the FDIC successfully met this performance target.

Annual Performance Goal 3.1-2
Take prompt and effective supervisory action to monitor and address problems identified during compliance examinations of FDIC-supervised institutions that receive an overall “3”, “4” or “5” rating for compliance with consumer protection and fair lending laws.

Indicator and Target

1. Percentage of follow-up examinations or visitations of 3-, 4-, and 5-rated institutions conducted within required time frames
• 100 percent of follow-up examinations or visitations are conducted within 12 months from the date of an enforcement action to confirm compliance with the prescribed enforcement action.

Means and Strategies

Operational Processes (initiatives and strategies):
Institutions with compliance deficiencies are identified primarily through the examination process. While discussions with bank management are usually sufficient to correct these deficiencies, the FDIC has broad enforcement powers to correct practices, conditions or violations of law that threaten an institution's compliance with consumer protection and fair lending laws or a consumer's rights under those laws. The FDIC may address identified problems through the use of formal or informal enforcement actions against the institution or responsible individuals. Follow-up examinations are conducted to review compliance with supervisory actions, and additional follow-up action will be taken where the initial corrective action is insufficient.

Human Resources (staffing and training):
Monitoring and follow-up on enforcement actions is primarily the responsibility of compliance field examination staff and managers. Staffing and training needs are reviewed on an ongoing basis to ensure that resources supporting these functions are adequate and that employees possess the required skills and knowledge.

By the end of 2009, all field compliance examiners will have completed a post-commissioning training program, the Advanced Compliance Examination School. This training program was initially implemented in 2007, and approximately two-thirds of field compliance examiners completed this training in 2007 and 2008. The program ensures that they have sufficient knowledge to assess compliance with increasingly complex consumer regulations and consumer products.

Information Technology:
The SOURCE system is used for examination scheduling and processing. The ViSION system is used to monitor all enforcement action activity.

Verification and Validation
The examination report identifies required corrective actions. If deemed necessary, a formal or informal enforcement action is transmitted to the financial institution with the report of examination. To ensure that supervisory actions are taken promptly, the FDIC monitors the time it takes to provide examination reports to FDIC-supervised institutions after the completion of an examination.

The FDIC will also continue to use the Regional Office Internal Control Review program to ensure that regions are effectively monitoring FDIC-supervised insured depository institutions’ compliance with formal and informal enforcement actions. This review incorporates various components of the supervisory process, including an assessment of the appropriateness, implementation and follow-up on formal and informal corrective actions. Any material exceptions noted during the reviews are raised to management’s attention for appropriate action.

2008 Performance Results
This annual performance goal and the associated performance indicator and target are unchanged from 2008. In 2008, the FDIC successfully met this performance target.

Annual Performance Goal 3.1-3
Scrutinize evolving consumer products, analyze their current or potential impact on consumers and identify potentially harmful or illegal practices. Promptly institute a supervisory response program across FDIC-supervised institutions when such practices are identified.

Indicator and Target

1. Establishment of supervisory response programs to address potential risks posed by new consumer products
• Proactively identify and respond to harmful or illegal practices associated with evolving consumer products.

Means and Strategies

Operational Processes (initiatives and strategies):
The FDIC conducts consumer compliance examinations at all state non-member banks. As part of this process, examiners review bank products and practices to ensure that they do not harm consumers and/or violate applicable laws. In addition, the FDIC uses information from consumer and industry groups, and other external sources, to identify product-related trends and practices that may be unlawful and/or harmful to consumers. When such issues are identified, the FDIC will assess the effects on consumers and promptly institute a consistent supervisory policy response across FDIC-supervised institutions, where appropriate.

Human Resources (staffing and training):
Staffing and training needs will be reviewed on an ongoing basis to ensure that the resources supporting its compliance examination and offsite monitoring programs are adequate to identify, recommend, develop and implement a consistent policy response.

Information Technology:
Various data systems, including SOURCE, ViSION, and the Specialized Tracking and Reporting System (STARS), as well as publicly available information, will be used to help identify and monitor evolving consumer products/practices.

Verification and Validation
Progress in meeting this annual performance goal will be tracked through periodic meetings and established management reporting processes.

2008 Performance Results
This annual performance goal and the associated performance indicator are unchanged from 2008. The performance target has been updated for 2009. The FDIC successfully met the established 2008 performance targets for this goal.

Strategic Objective 3.2
Consumers have access to easily understood information about their rights and the disclosures due them under consumer protection and fair lending laws.

Annual Performance Goal 3.2-1
Educate consumers about their rights and responsibilities under consumer protection laws and regulations.

Indicator and Target

1. Communication tools used to educate consumers.
   • Expand use of media, such as the Internet, videos and MP3 downloads, to disseminate information to the public on their rights and responsibilities as consumers.

Means and Strategies

The FDIC participates in a variety of consumer education efforts to increase financial literacy and provide information to consumers about their rights and responsibilities under consumer protection laws. This information is provided in brochures and through other media, including the FDIC’s website (www.FDIC.gov). The FDIC also develops publications, such as the FDIC Consumer News, specifically for consumers to increase awareness and improve understanding of consumer rights and responsibilities. As a member agency of the Financial Literacy Education Commission, the FDIC works to promote financial literacy on an interagency basis.

Operational Processes (initiatives and strategies):
The FDIC plans to promote financial education in 2009 by developing additional resources for consumers to learn about current consumer protection issues and their rights and responsibilities under consumer protection laws. The FDIC will develop recorded messages to be accessed by telephone, the Internet, or MP3 download. Companion fact sheets for the recorded messages will be developed to provide consumers with more detailed information and resources about the topics. The FDIC also plans the development of tutorials or other education resources for the public on current financial education issues. Additionally, the FDIC will release an MP3 (Podcast) version of Money Smart in 2009.

Human Resources (staffing and training):
Staff resources responsible for consumer education and outreach are located in the FDIC’s Washington, D.C., office and in the regional and area offices.

Information Technology:
The FDIC uses its website to disseminate consumer education materials to the public.

Verification and Validation
Progress in meeting this annual performance goal will be tracked through periodic meetings and established management reporting processes.

2008 Performance Results
This annual performance goal is new for 2009.

Annual Performance Goal 3.2-2
Effectively investigate and respond to consumer complaints about FDIC-supervised financial institutions.

Indicator and Target

1. Timely responses to written complaints and inquiries
• Responses are provided to 95 percent of written complaints and inquiries within time frames established by policy, with all complaints and inquiries receiving at least an initial acknowledgement within two weeks.

Means and Strategies

Operational Processes (initiatives and strategies):
The FDIC investigates and responds to written complaints regarding consumer protection and fair lending issues, including those received electronically through the Customer Assistance Form on the FDIC’s website. The FDIC projects that it will receive approximately 17,000 written complaints and 5,700 written inquiries in 2009. Complaints regarding FDIC-supervised institutions are investigated by FDIC staff; those regarding institutions with other primary regulators are referred to those agencies. Target response times vary by the type of complaint. The Corporation also provides consumer protection information to financial institutions and the public. When performed effectively, these activities help consumers better understand their rights under consumer protection and federal fair lending laws.

Human Resources (staffing and training):
The FDIC’s Consumer Response Center responds to consumer complaints and inquiries about consumer protection matters. This centralized program helps maintain staff knowledge and expertise and provides greater flexibility in balancing staff resources and workload.

Information Technology:
The FDIC uses STARS to capture and report information, including response time, about complaints.

Verification and Validation
The FDIC will closely monitor the timeliness of its acknowledgment letters and responses using its STARS tracking system. Results will be reported through established management processes. Additionally, the FDIC surveys a sample of consumers who have filed written consumer protection and fair lending complaints in order to assess their satisfaction with the FDIC’s investigations and responses. Accepted survey research methods have been employed to ensure the validity of the customer satisfaction survey instrument and to verify the accuracy of the survey results.

2008 Performance Results
This annual performance goal and its associated performance indicator are unchanged from 2008. However, the performance target has been changed from 90 to 95 percent, since the FDIC has regularly exceeded the 90 percent performance target in past years. In 2008, the FDIC responded to over 96 percent of the 14,169 written consumer complaints it received within the timeframes established by FDIC policy.

Annual Performance Goal 3.2-3
Provide effective outreach related to CRA, fair lending and community development.

Indicator and Targets

1. Number of outreach activities conducted, including technical assistance activities
   • Conduct 50 technical assistance (examination support) efforts or banker/community outreach activities related to CRA, fair lending and community development.


2. Expanded access to high quality financial education through the Money Smart curriculum
   • Evaluate the MoneySmart initiatives and curricula for necessary updates and enhancements, such as games for young people, information on elder financial abuse, and additional language versions, if needed.
   • Initiate a longitudinal survey project to measure the effectiveness of the Money Smart for Young Adults curriculum.

3. Support for expanded foreclosure prevention efforts for consumers at risk of foreclosure (in partnership with NeighborWorks® America and other organizations)
   • Provide technical assistance, support and consumer outreach activities in all six FDIC regions to at least eight local NeighborWorks® America affiliates or local coalitions that are providing foreclosure mitigation counseling in high need areas.

Means and Strategies

Operational Processes (initiatives and strategies):
The FDIC participates in a variety of community outreach activities designed to increase awareness of community and economic development; increase knowledge of CRA regulations and fair lending laws; enhance lending, investment and service performance; and assist FDIC-supervised insured depository institutions in developing strategies to respond to credit, investment and service opportunities. To facilitate compliance, the FDIC provides supervised insured depository institutions with updated information on laws, regulations and guidance through brochures and through other media, including the FDIC’s website (www.fdic.gov). Through community outreach efforts and technical assistance, the FDIC encourages lenders to work with members of their local communities in meeting the communities’ credit needs.
In 2009, the FDIC has reduced the number of outreach and technical assistance activities it plans to undertake in order to focus attention on the urgent problems affecting the banking industry. However, the Corporation will continue to pursue loan modification and foreclosure prevention activities as well as initiatives to promote the extension of financial institutions’ services and programs to traditionally underserved communities. These initiatives will primarily address affordable housing, remittances, small business and micro-lending and asset-building.

The FDIC will also continue to refine its Money Smart financial literacy program. Money Smart is a highly praised, well-received mechanism for promoting both economic inclusion and financial literacy. The FDIC will continue to update and promote Money Smart in response to market demand. Recent changes in law and industry practice will also necessitate substantive changes to the Money Smart curriculum.

Human Resources (staffing and training):
Staff responsible for assistance and outreach is located in the FDIC’s Washington office as well as its regional and area offices.

Information Technology:
The FDIC uses the Community Affairs Database System (CARDS) to capture and report information about activities related to Money Smart, technical assistance, community development, outreach, CRA and fair lending.

Verification and Validation
Progress in meeting this annual performance goal will be tracked through periodic meetings and established management reporting processes.

2008 Program Results
This annual performance goal and the associated performance indicators are unchanged from 2008. Performance indicator #3 from 2008 has been dropped for 2009 because the unbanked survey was completed. The performance targets for each of these three performance indicators have been updated for 2009. The FDIC successfully met all of the 2008 performance targets for this goal.

Strategic Objective 3.3
The public has fair access to banking services and is treated equitably by FDIC-supervised institutions.

Annual Performance Goal 3.3-1
Continue to expand the FDIC’s national leadership role in developing and implementing programs and strategies to encourage and promote broader economic inclusion within the nation’s banking system.

Indicator and Targets

1. Degree of success achieved in bringing the unbanked/underserved into the financial mainstream through the Alliance for Economic Inclusion
   • Expand the number of AEI coalitions by two.


2. Results of pilot small-dollar lending program conducted by participating financial institutions
   • Analyze quarterly data submitted by participating institutions to identify trends and best practices.

Means and Strategies

Operational Processes (initiatives and strategies):
Through community outreach efforts and technical assistance, the FDIC encourages lenders to work with members of their local communities in meeting the communities’ credit needs. In 2009, the FDIC will continue to facilitate eleven broad-based coalitions of financial institutions, community-based organizations, researchers, employers, faith-based organizations, state and local governmental agencies, and federal bank regulators to address the specific financial service needs of each local community. The FDIC provides ongoing leadership, encouragement and support for these coalitions. In addition to the ten existing coalitions, the Corporation plans to expand to two additional markets in 2009. The pilot small dollar lending program is a two-year study with 30 diverse participating institutions to identify best practices and replicable business models for small dollar lending. FDIC research and supervision staff compiles and analyzes data from the pilot program. The pilot will be completed and the results published by the FDIC in 2010.

Human Resources (staffing and training):
Staffing responsible for technical assistance and outreach are located in the FDIC’s Washington office as well as its regional and area offices. These resources ensure that the FDIC can respond to outreach needs in communities nationwide.

Information Technology:
The FDIC uses CARDS and the Community Affairs Reporting System to capture and report information about activities related to technical assistance, community development, outreach, and Money Smart.

Verification and Validation
Progress in meeting this annual performance goal will be tracked through periodic meetings and established management reporting processes.

2007 Program Results
This annual performance goal and its associated performance indicators are unchanged from 2008. The performance targets for performance indicator #1 have been updated for 2009, but the performance target for performance indicator #2 is the same as in 2008. The FDIC successfully met all of the 2008 performance targets for this goal.