FDIC can now step in regardless of primary regulator (part 1)

According to a memorandum of understanding just signed by all the primary federal regulators (FDIC, OTS, OCC and Fed), the FDIC now has the authority to step in whenever they feel the DIF (deposit insurance fund) is in jeopardy. Although this is primarily targeted at larger (>$10b) institutions, it also applies to smaller (<$10b) institutions as well, and applies to ANY threat to the DIF, not just under-capitalization (i.e. any safety and soundness concerns).

There are several potential implications for this, but I think the primary one is that since the opinion of the FDIC examiner will prevail, all other primary regulators will follow their lead when it comes to interpretation of FFIEC guidance. We all know that certain regulators (FDIC) are more stringent than others (OTS, OCC) when it comes to both the interpretation of federal guidance, and the way that is reflected in examination procedures.

Compliance officers would be well advised to be proactive by following FDIC examination procedures regardless of your primary regulator.

Article by Tom Hinkel

As author of the Compliance Guru website, Hinkel shares easy to digest information security tidbits with financial institutions across the country. With almost twenty years’ experience, Hinkel’s areas of expertise spans the entire spectrum of information technology. He is also the VP of Compliance Services at Safe Systems, a community banking tech company, where he ensures that their services incorporate the appropriate financial industry regulations and best practices.