The FDIC is Looking Forward to a Very Busy New Year

image by twolf1
image by twolf1

I’ve been watching the Careers at the FDIC webpage for a while, and for over a year they’ve been ramping up their hiring. As I noted in August after looking at housing foreclosure data from California,

Click on “View All Vacancies” [at the FDIC’s list of job postings], and scroll down about a quarter of the page, and you’ll see that the FDIC is looking to fill 24 mid-to-upper level “Resolution and Receivership Specialist” positions in their Irvine CA office. The window for submitting an application opened last Thursday and closes next Wednesday — a fast two-week period — and the jobs are open only to current FDIC employees as a “temporary promotion opportunity.”

In the year or so I’ve been watching the FDIC job board fairly regularly, I’ve never seen postings like these. To me, these job announcements translate like this: “We’ve think we’ve got a sh*tload of trouble coming fast in CA, we don’t have time to train a bunch of outsiders to handle the mess, so we’ll give anyone who’s up for a challenge a temporary bump in rank and pay if they’ll pick up a shovel, grab a wheelbarrow, and move west for a while. You’ve got two weeks to decide if you want to take this offer.”

That was in August, and things haven’t tailed off at all since then. Indeed, they’re picking up steam. Yesterday seven more banks with combined assets of $14.4 billion got seized, bringing the total seized for the year to 140 banks.

As bad as the latest edition of Bank Failure Friday was, the big news came last Tuesday. The FDIC Board met, and then put out this press release:

The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today approved a $4.0 billion Corporate Operating Budget for 2010. The Board also revised the current 2009 budget to $2.6 billion.

“The 2010 budget is a prudent and measured response to current conditions in the banking industry,” said FDIC Chairman Sheila Bair. “It will ensure that we are prepared to handle an even-larger number of bank failures next year, if that becomes necessary, and to provide regulatory oversight for an even larger number of troubled institutions.”

The 2010 operating budget will increase more than $1.4 billion (55%) from 2009, primarily due to the cyclical nature of bank failures. The receivership funding component of the 2010 budget, the vast majority of which is funded by receiverships, will be $2.5 billion, up from $1.3 billion in 2009. This includes funding for the continuing work associated with bank failures that have occurred over the past two years. The budget also contains contingency funding for the possible continuation of an elevated number of bank failures in 2010. The 2010 budget increase also is partially attributable to increased supervisory activity related to the rising number of troubled banks which the FDIC oversees.

In conjunction with its approval of the 2010 operating budget, the Board also approved an authorized 2010 staffing level of 8,653 employees, up from 7,010 in 2009. Almost all the additional staff will be hired on a temporary basis. They will be hired primarily to assist with bank closings; to perform follow-on work related to the management and sale of failed bank assets; and to conduct bank examinations and perform other bank supervisory activities.

If you are looking for a job in the field of banking regulation and oversight, Uncle Sam wants you. Badly. In addition to the many, many postings for jobs with titles like “compliance examiner,” “compliance analyst,” and “risk management examiner,” they are looking for a bunch of other folks. If you are a lawyer, they appear to be setting up a new office in Dallas, with a “counsel (section chief)” opening,  seven “counsel” positions, and fifteen “regional attorney/senior attorney” openings.

On the other hand, if you are looking to the FDIC for signs of recovery in the financial world, you are out of luck.

Let’s review that press release: 1600 new employees to be hired in 2010 to handle bank closings, and a increase in the overall FDIC operating budget of 55% over the revised-up-in-mid-year 2009 budget, with most of that increase due to an almost doubling of the Receivership portion of the budget, from $1.3B to $2.5B.

Note: this is the operating budget, not the Deposit Insurance Fund which covers depositor losses when banks are seized. We’re talking about the day to day expenses of winding down a sizeable portion of an overexended banking system.

It’s going to be a busy, busy 2010 for Sheila Bair. Look at it this way: you don’t double your receivership budget if you think bank failures are slowing down.

Happy New Year, everyone.

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