The FDIC Wants in on Bank Regulation. Please.
Anyone remember the supposed true goal of financial reform and hiding consumer protection at the Fed? If you believe Congress, legislators wanted an easier, more streamlined regulatory environment that would cut down on inter-agency noise and complications from our current Wild West of Banking Supervision, whereupon the FDIC insures the deposits of OCC-supervised banks but does not get to actively participate in regulation of these institutions.
Of course, that's not what's actually going to happen in financial reform and we have the FDIC over here clamoring for more access. Poor Sheila, it must be hard taking the blame without being able to bask in any of the glory.
U.S. bank regulators would have more power to examine the largest and riskiest institutions, under a new interagency memorandum approved on Monday.
The agreement gives the Federal Deposit Insurance Corp a more prominent, on-site presence at the nation's largest banks, but seeks to ensure the agency does not add another burdensome set of eyes and ears at the firms.
The agreement seeks to remedy problems seen in 2008 when the FDIC was left scrambling for access to information about Washington Mutual, as the nation's then-largest thrift was failing. The Office of Thrift Supervision was Washington Mutual's primary regulator.
"The FDIC needs to have a more active on-site presence," FDIC Chairman Sheila Bair said at a meeting of the agency.
The FDIC insures more than $7 trillion of deposits at the almost-8,000 U.S. banks and thrifts.
However, it is only the direct supervisor at about 4,900 mostly smaller banks, meaning the FDIC has to safeguard deposits at thousands of banks for which it is not primary supervisor.
Meanwhile, there are some questions surrounding the FDIC's alleged overzealous seizure of failing banks, leading a reasonable person to wonder why more isn't, well, more in this case.
I say let the FDIC stick its nose so far up these bank's assets they can smell the CRE rotting before the bank lets out its last rancid 10-K. Just my $0.000002.