FDIC Forms Office Of Complex Financial Institutions

by Glen Shapiro, LawAndTax-News.com, New York

13 August 2010

The United States Federal Deposit Insurance Corporation (FDIC) is to create a new Office of Complex Financial Institutions (CFI) and Division of Depositor and Consumer Protection (DCP) to help carry out its responsibilities under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

"The FDIC plans to vigorously implement its new authorities under the Dodd-Frank Act, which ends the presumption of 'too big to fail' for the largest and most complex financial institutions," FDIC Chairman, Sheila C. Bair, stated. "The creation of our new CFI is a critical first step in this process.”

The CFI will perform continuous review and oversight of bank holding companies with more than USD100bn in assets, as well as non-bank financial companies designated as systemically important by the new Financial Stability Oversight Council.

CFI will also be responsible for carrying out the FDIC's new authority under the Act to implement orderly liquidations of bank holding companies and non-bank financial companies that fail. It was said that the absence of such authority exacerbated the recent financial crisis, when such firms as AIG, Lehman Brothers, and Bear Stearns became insolvent.

The establishment of the DCP will provide increased visibility to the FDIC's compliance examination and enforcement programme. That programme ensures that banks comply with a myriad of consumer protection and fair lending statutes and regulations.

The FDIC maintains the responsibility to enforce consumer protection rules for banks with USD10bn or less in assets, and to perform its traditional depositor protection function. The DCP will also house FDIC staff and resources devoted to answering questions and promoting public understanding of deposit insurance and use of FDIC-insured bank accounts.

"Our depositor protection and compliance examination and enforcement responsibilities are integral to our unique responsibilities as deposit insurer and supervisor of thousands of community banks," said Bair. "The creation of this new division emphasizes the importance we place on these responsibilities and is directly responsive to Congress's intent in the new legislation.”

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