The FDIC Makes Financial Returns Predictable at the Cost of Growth
The U.S. financial regulator protects households and financial elites alike from the worst downsides of economic crashes. But in achieving stability, it also slows the development of new industries.
With just under 6000 staff and a budget of $2.3 billion as of 2022, the Federal Deposit Insurance Corporation (FDIC) is one of the key government regulators of the U.S. financial system.1 The corporation’s core purpose is to administer the Deposit Insurance Fund (DIF), a mandatory financial insurance product for U.S. consumer-facing banks, which guarantees the first $250,000 of every bank account in case of a bank collapse. It is also tasked with the messy technocratic work of administering the management and dissolution of collapsed banks, the details of which it can outsource to favored financial contractors like BlackRock, and has a host of supervisory responsibilities and emergency powers to prevent such collapses in the first place.
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The primary mechanism the FDIC uses to accomplish this is the fees it charges banks for insurance. All banks are required by law to purchase this insurance, and the corporation varies the fees it charges according to how “risky” it judges the bank’s behavior to be, allowing it to financially penalize those who deviate from accepted best practices. This means the corporation also plays a large role in defining what those practices are. In addition, the corporation is empowered to levy arbitrary fees on banks in order to finance the emergency operations it undertakes to preserve financial stability. The Deposit Insurance Fund stands at $117 billion as of June 2023, and in case of emergency is empowered to borrow directly from the government to meet its obligations.2 Most recently, after the 2023 bank collapses prompted the FDIC to invoke a “systemic risk exception” and bail out depositors at the failed banks in excess of the de jure $250,000 limit, the FDIC levied an $8.9 billion “special assessment” on the biggest banks to help replenish the DIF.
The government corporation keeps the banking system running smoothly and profitably at all costs. In concert with other, more active regulators like the Office of the Comptroller of the Currency (OCC) and the Federal Reserve (the Fed), the FDIC helps ensure that members of the financial guild play by the rules. In normal times the corporation takes a backseat to these agencies. In times of financial crisis, however, it exercises tremendous discretion because of its control of the DIF purse strings and power to take over failed banks. It uses this power to bail out collapsing banks while distributing the cost to the financial system as a whole, essentially extending the logic of its normal insurance mandate to cover its slowly-growing emergency powers as well.
While regulators including the FDIC oversee a stable and profitable financial system, this state of affairs benefits financial elites at the expense of long-term economic growth and technological progress. In a nominally capitalist country like the U.S., growth is posited to come from competition and “creative destruction,” in which new, better companies arise and displace the old. By ensuring large banks and corporations all follow the same well-accepted practices and propping them up when they would fail, the government and its agencies have created a system of state capitalism which functions very differently from the laissez-faire capitalism described by economic theory. While preventing economic crashes, job losses, and drops in financial asset prices, it might actually slow down the engine of economic growth.
Cleaning Up Failed Banks
The Federal Deposit Insurance Corporation’s most basic purpose is, naturally, to insure deposits. The 2008 Temporary Liquidity Guarantee Program raised the previous insured limit from $100,000 to $250,000, in an emergency measure which was made permanent by the 2010 Dodd-Frank Act.3 During the 2023 collapses of Silicon Valley Bank and Signature Bank, the FDIC used the DIF to bail out depositors even beyond the normal $250,000 limit, largely in response to pleas from software businesses that would have been unable to meet payroll if their deposits were lost.
It may well become the norm for the FDIC to authorize similar emergency bailouts beyond the de jure insurance amount in most or all future bank collapses, effectively making the insurance coverage unlimited. Exceeding the $250,000 limit requires the approval of the Secretary of the Treasury, and of two-thirds of the boards of the FDIC and the Federal Reserve, to invoke a “systemic risk exception,” so the corporation technically needs wider buy-in to make similar decisions in the future. However, the U.S. financial regulators are closely coordinated with each other and rarely disagree in public, so for the foreseeable future it is likely that any further requests for “systemic risk exceptions” would be approved. If so, this would continue the ongoing trend of Congress’s de jure powers being claimed de facto by federal agencies.
As of June 2023, the DIF’s $117 billion insures about $10.6 trillion of deposits held at 4645 financial institutions, for a reserve ratio of 1.10%—that is, the DIF amounts to 1.10% of all the deposits which it insures.4 Congress sets the desired reserve ratio, currently 1.35%. The DIF has fallen below this level since the 2020 COVID-19 pandemic and the accompanying government stimulus led to “extraordinary growth in insured deposits.”5 The FDIC asserts that “the reserve ratio remains on track to reach 1.35 percent by the statutory deadline” of September 2028.6
In any case, should the DIF prove insufficient, the FDIC has emergency powers to demand arbitrary assessment payments from surviving banks and to borrow effectively unlimited money from the U.S. Treasury. The upshot is that bank deposits up to the limit—and possibly beyond, at the regulators’ discretion—are backed by the U.S. government as a whole. In the wake of the 2008 financial crash, the DIF’s balance sheet went $20 billion into debt by the end of 2009, but it nevertheless maintained liquid reserves and continued performing its functions until it was once again solvent by 2011.7
The DIF’s coffers are filled directly from banks. The FDIC, which audits each bank, sets the payment rates. These range from 2.5 basis points to 42 basis points—that is, from 0.025% to 0.42%—of a bank’s “assessment base,” which is roughly its total deposits.8 Each bank’s assessment is calculated according to complex formulas designed to assess a bank’s risk of collapse. After that, for large banks “the FDIC can make both upward and downward discretionary adjustments to the total score up to 15 points” based on “information not directly captured in the scorecard.”9
These rates function both as a direct financial incentive to comply with the corporation’s recommendations and a legible signal to third parties of whether a given bank is “risky” or “safe” in the corporation’s judgment. While in principle it could manipulate these adjustments as a mechanism to pursue unrelated agendas, as has been done with ESG metrics in the private sector, this does not appear to be happening. The regulators’ judgment is generally being used in a good-faith effort to maintain stability and levy costs fairly, and while fairness is always somewhat subjective, the corporation’s decisions are “consistent with the fund being used as an accounting mechanism designed to have the banking industry pay, over time, for the costs of insuring deposits and resolving failed banks.”10
More dramatically, when the DIF needs to be topped off, the FDIC also has the power to directly requisition funds from banks, more or less however it chooses. This occurred most recently after the 2023 bank collapses, which cost the DIF $15.8 billion.11 As might be expected, this provoked the bankers to a great deal of lobbying, private conferences, and other competition for favorable relationships with the corporation, since any possible decision must advantage some banks at the expense of others.12 Ultimately the FDIC chose to impose a payment schedule which “bases each institution’s fee on its estimated uninsured deposits as of December, excluding the first $5 billion.”13 Earlier, during the 2008 financial crash, in addition to special assessments the FDIC also demanded banks prepay three years of their normal assessments, in effect providing zero-interest loans, to make sure the government corporation had enough liquid funds to make it through the crisis while doing less damage to banks’ balance sheets.14
The FDIC’s other main function is administering the management and dissolution of failed banks. When this happens, the corporation takes receivership of the failed bank’s assets and liabilities, and arranges for their sale to other banks. This is often done in a matter of days, in order to resolve potential crises before they have a chance to cause cascading bankruptcies. The FDIC is not obligated to sell to the highest bidder. Instead they can, and often do, use their discretion to reject bids which they believe would lead to unstable, risky, or otherwise undesirable ownership structures that could cause future bankruptcies which the corporation would also have to clean up.
This tends to favor big incumbent banks, which have the assets to absorb potential losses, the experienced staff to manage complicated bundles of assets, and of course personal relationships and trust with the regulators. The FDIC recently approved the sale of the failed First Republic Bank’s assets to JPMorgan Chase, the largest bank in the U.S. The corporation believes “The trend toward fewer but larger FDIC-insured and supervised institutions is expected to persist into the future.”15 This is a trend it could reverse if it wished, so its expectation is a tacit endorsement.
Critically, the FDIC does not retain the staff to manage the details of these receiverships. Instead, it brings in consultants from the private sector to handle most of the work. The corporation describes this as “transferring day-to-day management responsibility to expert private sector professionals who also have a financial interest in the assets and share in the costs and risks associated with ownership.”16 To deal with the fallout of the 2023 banking crisis, the FDIC hired BlackRock, the U.S. government’s favored asset manager,17 and Piper Sandler, an investment bank.18 As of May 2022, the FDIC listed these two firms plus four others as potential contractors for “Receivership Financial Advisory and Consulting Services.”19 These decisions are high-stakes and politically fraught, and provoke commentary and public hearings from the members of Congress who are nominally tasked with overseeing the corporation.20 This armchair quarterbacking appears to exert little influence on its decisions.
Prior to its formation in 1933, when a bank went bankrupt, its depositors would simply lose the money they were owed like any other creditor. At its foundation, the FDIC insured the first $2500 of bank deposits (equivalent to $60,000 in 2023), preventing bank collapses from wiping out the savings of ordinary households, who were previously at risk of losing their entire savings due to faraway events they could not understand or predict. The DIF functions much the same today, although Congress has sporadically increased the amount that is insured in order to keep up with inflation and the rising real savings of the American middle class.21 It was the keystone of President Franklin Delano Roosevelt’s reforms of the banking sector in response to the Great Depression of 1929 to 1939. While the Great Depression was not much greater than the other depressions which regularly struck the Western world in the late 19th and early 20th centuries, it is uniquely remembered because of its role in legitimizing Roosevelt’s new bureaucracies which form the foundation of the U.S. administrative state to this day, including the Social Security Administration, the National Labor Relations Board, and the FDIC itself.
The FDIC Oversees Culture and Practices, Not Just Finances
The FDIC does not only influence the U.S. financial system by administering the receivership of failed banks and using the DIF to insure their depositors. Every bank in the U.S. is supervised by a single regulator, which at the national level may be the Treasury’s Office of the Comptroller of the Currency (OCC), the Fed, or the FDIC. While the OCC is the largest, “as of October 31, 2022, the FDIC was the primary Federal regulator for 3055 [insured depository institutions] with approximately $4.48 trillion in assets, including 62 with more than $10 billion in assets.”22 The industry is slowly consolidating, as “the number of FDIC-supervised institutions has declined each year for more than three decades, industry assets have grown, and the industry has become more complex with the addition of new products, services and technologies.”23 As of September 2022, of the corporation’s 5661 employees, 2413 worked in the Division of Risk Management Supervision responsible for overseeing these banks.24
Every U.S. bank is examined by its regulator to determine whether it is “operating in a safe and sound manner.” If the regulating agency has concerns with the bank’s financial position, business practices, or other issues, they will issue a formal or informal demand that the bank change its practices, which is usually sufficient for compliance. The regulators use this to enforce adherence to standard financial practices—with which many regulators have first-hand experience, due to the revolving door—in an effort to prevent bank collapses which could cause contagious losses to the financial sector and wider chaos in the U.S. economy. The agencies have the authority to fine the banks they regulate, although this is normally used only to punish outright fraud. Banks require regulatory approval for most major moves such as expansions or mergers.
It was in this capacity that the FDIC played a role in the Operation Choke Point scandal, largely by the hand of veteran managers.25 Operation Choke Point was the name given by Department of Justice (DOJ) officials to their campaign to hinder legal but unpopular businesses by pressuring banks not to do business with them. In 2013 the DOJ began by targeting payday lending operations.26 For this purpose they collaborated with FDIC staff, who would threaten banks with extra “scrutiny” unless they closed the accounts of companies engaging in activities deemed to have “reputational risk.”27
After initial success, the agencies expanded the operation to target other businesses such as pornography. Most of these actions were aimed at business categories unpopular with both political parties, but when the agencies targeted gun sellers, this particularly angered Republican Congressmen, who view the firearms industry as part of their political coalition.28 Pressure from Republicans in the House of Representatives eventually shut down the operation.29 There appear to have been no career consequences for the FDIC officials involved.30
In 2023, cryptocurrency advocates coined the term “Operation Choke Point 2.0” to describe efforts by banking regulators, including the FDIC, to deny cryptocurrency companies access to the banking system in the wake of the collapse of FTX, a fraudulent cryptocurrency exchange.31 Despite the name applied by its critics, this anti-cryptocurrency campaign is unlike Operation Choke Point in that cryptocurrency companies are to some degree forming a parallel financial system and so fall closer to the regulators’ mission; and in that the campaign is conducted openly rather than secretly.32
While the Operation Choke Point episode demonstrates that the discretion to issue such semi-formal directives to banks necessarily comes with the potential for abuse and unauthorized use that does not serve the organization’s mission, the FDIC mostly uses this power in service of their primary objective of “maintain[ing] stability and public confidence in the nation’s financial system.”33 This involves oversight of the financial system’s norms and culture, not just adherence to recommendations about balance sheets and financial structure.
Much of the reason that Operation Choke Point worked so smoothly is that banks are already accustomed to following semi-formal instructions from the FDIC and other regulators with ambiguous consequences for noncompliance. For example, the FDIC works with other regulatory agencies to publish rules on executive pay, laying out guidelines on which payment structures are permissible and which are prohibited, with the justification that banks which do not follow these best practices would be prone to taking greater risks.34 The line between oversight of this sort and illegal activism like Operation Choke Point cannot be drawn precisely, even if some cases are clearly well over the line.
The FDIC is also responsible for identifying and punishing fraud and regulatory noncompliance in the banks it supervises. The Division of Depositor and Consumer Protection is the agency’s second-largest. In 2022 its 791 employees “conducted approximately 1000 consumer compliance examinations,” checking for violations ranging from false advertising, to charging prohibited types of overdraft fees, to making loans without adequate flood insurance.35 These are punished lightly; that year the FDIC levied $1.3 million in fines and oversaw $13.6 million in “voluntary restitution payments” to 61,000 bank customers, or slightly more than $200 per customer. The Division of Depositor and Consumer Protection also runs programs to make sure banks are making enough loans in areas populated by poor residents or racial minorities, as required by laws like the Community Reinvestment Act.
Taken as a whole, the financial sector is essentially a well-functioning guild which regulates itself, with codes of conduct and ethical standards set and enforced largely by practitioners, who circulate freely between the private sector and the various regulatory bureaucracies. The FDIC is one of the crucial mechanisms by which informal rules of “fair play” become codified or modified as needed. Like the guilds of the late middle ages, the financial guild’s self-imposed rules prevent the worst frauds and abuses, but also suppress competition.
Financial Lawyers in Control
The FDIC is headed by a board of five directors. Three directors, including the chairman, are directly appointed by the President and confirmed by the Senate; these are generally financial lawyers with a history working for government regulators. The other two are ex officio seats held by other members of the financial regulatory bureaucracy, to promote greater coordination among the different agencies. One is held by the Comptroller of the Currency, a major post in the Department of the Treasury. The other is held by the director of the Consumer Financial Protection Bureau (CFPB). No more than three of the five directors can be from the same political party, just as with the five Commissioners of the Securities and Exchange Commission (SEC).
The current chair of the corporation is 70-year-old Martin Gruenberg. After receiving his law degree in 1979, Gruenberg began his career working on finance and banking regulation in Washington. By 1987 at the latest, he was working for the Senate Committee on Banking, Housing, and Urban Affairs, better known as the Senate Banking Committee, the most important Congressional body on financial regulation. Relationships with members of this committee are very useful for securing Congressional appointment to top financial regulatory posts; the other appointed directors, Travis Hill and Jonathan McKernan, also have past experience working for the Banking Committee or its members, and the same is true of most of the Commissioners who lead the SEC.
In 1993, Gruenberg joined the staff of Senator Paul Sarbanes as Senior Counsel.36 Sarbanes, a member of the Banking Committee, was the Committee’s chair from 2001-2003, and in 2002 co-authored the influential Sarbanes-Oxley Act which established new financial regulations in response to the Enron fraud scandal. Per his official bio, “major legislation in which Mr. Gruenberg played an active role during his service on the Committee includes the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), the Gramm-Leach-Bliley Act, and the Sarbanes-Oxley Act of 2002.”37
In 2005 Gruenberg was appointed to the board as vice chairman, where he has remained since, becoming the longest-serving director in the corporation’s history. In that period he has been the board’s chairman or acting chairman three times, from 2005-2006, 2011-2018, and now from 2022 to the present.38 Gruenberg keeps a low public profile. During his unprecedentedly long tenure, Gruenberg has overseen regular operations and made relatively few large changes. For the most part, financial regulators like the FDIC have grown and evolved because of Congress’s responses to major financial crises, not because of proactive empire-building on the part of regulators during normal times.
From 2018-2022, the corporation’s chairman was Jelena McWilliams, who also had previously worked for the Senate Banking Committee. In December 2021, McWilliams, a Republican appointed by President Donald Trump, published an op-ed titled “A Hostile Takeover of the FDIC” in the Wall Street Journal, alleging that the other directors were in mutiny and illegitimately ignoring her directives on a procedural matter.39 The other directors, all Democratic appointees, maintained that their voting majority was legitimate.40 For McWilliams to take such a dispute to the press is extraordinarily unusual within the normally-insular world of financial regulators.
McWilliams published her op-ed a mere two months after Rohit Chopra was appointed director of the CFPB and therefore also a FDIC director ex officio.41 Importantly, Chopra is part of a clique of populist progressive Democrats centered around Senator Elizabeth Warren and known for their aggressive factionalism and empire-building in the financial regulatory bureaucracies. It seems likely that Chopra may have instigated the plan to circumvent McWilliams’ authority. In any case, McWilliams soon resigned in February 2022, despite having over a year left in her term as chairman. This left Gruenberg, a Democrat, as the acting chairman.42 The following year, he was confirmed as chairman for his second official five-year term.
One of McWilliams’s top aides, Travis Hill, was later appointed to the FDIC board as vice chairman, and since his appointment Hill has generally voted in line with traditional Republican viewpoints on economic regulation.43 This suggests McWilliams’s ouster was not part of a larger purge, but may have been a limited play to put the chairmanship’s powers in the hands of Democrats. McWilliams has since joined the law firm Cravath, Swaine & Moore LLP to lead their new Washington, D.C. office, joined by two former senior SEC officials.44 This type of influence peddling is extremely common among former financial regulators from all agencies.
Vicious power struggles along partisan lines like this are rare within the financial regulatory bureaucracies, and airing the dirty laundry in public is rarer still. Coupled with the memories of Operation Choke Point, this could potentially lead to more infighting within the corporation, perhaps someday compromising the agency’s functionality, or even spilling out into other regulatory institutions. So far, however, there are few signs of ongoing problems. It seems more likely that the incident will blow over as the FDIC staff pursue their common goals.
Prioritizing Financial Stability Contributes to U.S. Industrial Stagnation
The FDIC, like much of the rest of the U.S. financial regulatory system, is a bureaucracy for maintaining the “stability and public confidence” of the U.S. financial system. They do this not just by setting up regulations and prosecuting violations, but are also involved with the regular operations of the banks, monitoring closely and issuing semi-formal guidance and demands for change should the banks veer too close to the largely-subjective guardrails on accepted operational practices. The FDIC’s competence and good relations with both other regulators and with financiers themselves makes it very successful at fulfilling its mandate.
Maintaining stability, in practice, means maintaining prices and substantial—but not excessive—returns on financial assets. This policy serves the interests of financial elites, the wealthy, and to a much lesser extent the interests of homeowners, since U.S. house values are to some degree pushed up by financial engineering. It also serves the short-term interest of the nation, and the world, since crashes cause a great deal of economic chaos and short-term value destruction.
The FDIC’s combination of informal regulation of practices up to and including executive pay, as well as the inherently self-serving nature of its regulatory goal, are a striking example of the way in which the U.S. financial sector functions more like a medieval guild than a competitive industry. The people who staff the FDIC, U.S. Treasury, or the Fed are often the same people who work privately in the financial sector, just at different stages of their careers. Where they aren’t, they maintain good social relations and are happy to outsource regulatory work to the private financial institutions like BlackRock. Such a close relationship should not be taken for granted, as many nuclear industries in the developed world know, including in the U.S. The FDIC does not serve the interests of any individual financial institution, but the common interest of the financial sector as a whole.
However, this mandate does not necessarily serve the long-term economic interests of the country or government as a whole, since compounding real economic growth builds more resources of all kinds for both enabling general prosperity as well as projecting international power. The basis of legitimacy of financial engineering and financiers as a class is that they help allocate capital more efficiently to the best investments, so that scarce resources will flow to companies and projects which do a better job of producing material goods and services which people want. In theory, this increases real wealth by more than the salaries and profits taken by the financial sector.
However, this is not a stable and quiet process, but a chaotic one where old companies are destroyed and replaced by new ones. Such a system will provoke opposition from incumbent business elites when they face the prospect of watching their own companies be creatively destroyed and would necessarily lead to some degree of “instability,” really market volatility, in both financial and other markets. It is not inevitable that the failure of any individual company or bank must necessarily cascade throughout the entire economy and cause a devastating financial panic. But this belief, that any volatility is inherently bad, serves the financial sector because it provides the legitimacy for non-market means to ease losses and buttress their gains.
The FDIC was founded to administer the DIF, primarily to protect household savings from the worst of the business cycle, but secondarily to help prevent financial contagion by lowering the incentives for bank runs. Along with the other New Deal financial reforms, this has achieved its purpose remarkably well—in almost a century since then, U.S. bank customers have not lost their money in bank collapses, and the U.S. has experienced two world-historical depressions, in 1973 and 2008, rather than the four or five that might have occurred had depressions continued at the pre-1929 rate.
However, over time the FDIC has expanded its role, from protecting households by insuring bank deposits, to protecting financiers and corporations by managing the entire banking system. This slow process has accelerated in recent decades as the political influence of financial elites has grown. The resulting de facto policy, often disparaged as “privatized gains and socialized losses,” has been widely criticized on social and fairness grounds. It also retards long-term economic growth, because the bailouts and subsidies that keep major employers from collapsing during a depression, and thereby keep the financial sector from losing their investments, work exactly by interrupting the process of creative destruction, where less efficient businesses are starved out and driven to collapse by new upstarts. This does not halt creative destruction entirely—the auto bailouts did not destroy Tesla, after all—but it does slow it considerably.
Ruthless competition and creative destruction is not the only way that a society can achieve economic growth. Even within industries, solving the succession problem and making reforms can obviate the need to replace dysfunctional old companies with functional new ones.45 In many East Asian countries, capitalism centered on chosen national champions has seen a tremendous buildout of industry and wealth, as well as technological progress and incremental refinement that has pushed forward the cutting edge in many industries. But in the U.S., the creative destruction of the free market is taken for granted and used as a reason not to pursue alternate growth and development strategies. If in fact the U.S. does not practice creative destruction properly, then there is simply no growth or development strategy at all.
Instead of going bankrupt and collapsing, inefficient U.S. businesses that are economically load-bearing or politically favored are instead deemed “too big to fail” and propped up by preferential government contracts or by the emergency intervention of federal officials and financial regulators. This occurred most famously with the bailout of U.S. automakers after the 2008 financial crash, when the government loaned a total of $80 billion to General Motors and Chrysler to keep them from liquidation. Of this, $25 billion was distributed by the outgoing administration of President George W. Bush, and $55 billion by the incoming administration of President Barack Obama at the recommendation of a task force co-chaired by Treasury Secretary Timothy Geithner and former Treasury Secretary Larry Summers.46
As crises like these are papered over without dismantling the ailing institutions, the amount of dead wood in the U.S. economy builds up ever higher. By interrupting creative destruction that would otherwise burn away the dead wood, the FDIC and other financial regulators risk choking off long-term economic vitality and growth in order to stave off a short-term collapse. Creative destruction is the theory of economic growth that is the most legitimate, widely-believed, and viewed as an empirical reality in the United States. The FDIC shows that rather than Darwinian free market competition, the banking sector is actually a customary economy where legitimate custom is in large part officially determined by institutions like the FDIC, the OCC, and the Fed. Insofar as the banking system is important to the rest of the U.S. economy, the U.S. economy is then also operating on custom as much as capitalism.
“Proposed 2023 FDIC Operating Budget by Major Expense Category and Budget Component,” FDIC, https://www.fdic.gov/news/board-matters/2022/2022-12-13-notice-dis-a-fr.pdf.
“Federal Deposit Insurance Corporation Quarterly,” FDIC, Vol. 17, No. 3, 2023, https://www.fdic.gov/analysis/quarterly-banking-profile/fdic-quarterly/2023-vol17-3/fdic-v17n3-2q2023.pdf.
Andrew Chan, “FDIC Insurance Limit of $250,000 is Now Permanent,” Boston.com, September 9, 2010,
“Statics at a Glance,” FDIC, June 30, 2023, https://www.fdic.gov/analysis/quarterly-banking-profile/statistics-at-a-glance/2023jun/fdic.pdf.
Patrick Mitchell, “Memo: Restoration Plan Semiannual Update and Amended Restoration Plan,” FDIC, June 21, 2022, https://www.fdic.gov/news/board-matters/2022/2022-06-21-notice-sum-b-mem.pdf.
“Statistics at a Glance,” FDIC, June 30, 2023, https://www.fdic.gov/analysis/quarterly-banking-profile/statistics-at-a-glance/2023jun/fdic.pdf.
“Crisis and Response: An FDIC History, 2008–2013,” FDIC, https://www.fdic.gov/bank/historical/crisis/chap5.pdf.
“Deposit Insurance: Fund Management and Risk-Based Deposit Insurance Assessments,” FDIC, https://www.fdic.gov/resources/deposit-insurance/deposit-insurance-fund/dif-assessments.html.
“Deposit Insurance Assessments: Risk-Based Assessments,” FDIC, January 19, 2023, https://www.fdic.gov/deposit/insurance/assessments/risk.html.
Larry Wall, “The Change in the FDIC Assessment Base,” Federal Reserve Bank of Atlanta, March 2015, https://www.atlantafed.org/cenfis/publications/notesfromthevault/1503.
Tanaz Meghjani,”Wall Street Giants Expect $8.9 Billion Hit From Bank Failures,” Bloomberg, August 4, 2023, https://www.bloomberg.com/news/articles/2023-08-04/wall-street-giants-expect-8-9-billion-hit-from-bank-failures.
Lydia Beyoud, Steven T. Dennis, and Katanga Johnson, “SVB Collapse Turns Banker Island Retreat Into Lobbying Blitz,” Bloomberg, March 16, 2023, https://www.bloomberg.com/news/articles/2023-03-16/svb-collapse-turns-bankers-island-retreat-into-lobbying-blitz.
Tanaz Meghjani,”Wall Street Giants Expect $8.9 Billion Hit From Bank Failures,” Bloomberg, August 4, 2023, https://www.bloomberg.com/news/articles/2023-08-04/wall-street-giants-expect-8-9-billion-hit-from-bank-failures.
“Deposit Insurance Assessments: Risk-Based Assessments,” FDIC, January 19, 2023, https://www.fdic.gov/deposit/insurance/assessments/risk.html.
Bret Edwards, “ Memo: Proposed 2023 FDIC Operating Budget,” FDIC, December 12, 2022, https://www.fdic.gov/news/board-matters/2022/2022-12-13-notice-dis-a-mem.pdf.
“Financial Asset Sales (Joint Venture Transactions),” FDIC, https://www.fdic.gov/buying/financial/index.html.
“Blackrock Securities Sales FAQ,” FDIC, https://www.fdic.gov/buying/financial/documents/blackrock-securities-sales-faq.pdf.
Sam Sutton, “FDIC taps investment bank to lead Silicon Valley Bank sale,” Politico, March 15, 2023, https://www.politico.com/news/2023/03/15/fdic-investment-bank-silicon-valley-bank-sale-00087286.
“List of Awards and Contractor Contact Information,” FDIC, May 2022, https://www.fdic.gov/about/doing-business/awards-contractor-contact-info-financial-services.pdf.
For example, Republican Senator Pat Toomey criticized soon-to-be FDIC Chairman Martin Gruenbeg, saying he “will continue to politicize the agency”. In response to the FDIC’s sale of the failed First Republic Bank to JPMorgan Chase, Democrat Senator Elizabeth Warren criticized the move as a sweetheart deal for a giant bank.
“Toomey Praises Republican Nominees to FDIC,” United States Senate Committee on Banking, Housing and Urban Affairs, November 30, 2022,
https://www.banking.senate.gov/newsroom/minority/toomey-praises-republican-nominees-to-fdic; Elizabeth Warren, “Letter to Chair Gruenberg and Acting Chair Hsu,” United States Senate, May 1, 2023,
“The History of FDIC Insurance Limits,” Bankrate, March 24, 2023, https://www.bankrate.com/banking/fdic-limits-history.
Bret Edwards, “ Memo: Proposed 2023 FDIC Operating Budget,” FDIC, December 12, 2022, https://www.fdic.gov/news/board-matters/2022/2022-12-13-notice-dis-a-mem.pdf.
Ibid.
“Proposed 2023 FDIC Operating Budget by Major Expense Category and Budget Component,” FDIC, December 13, 2022, https://www.fdic.gov/news/board-matters/2022/2022-12-13-notice-dis-a-fr.pdf.
“Federal Deposit Insurance Corporation’s Involvement in “Operation Choke Point,” U.S. House of Representatives Committee on Oversight and Government Reform, December 8, 2014, https://oversight.house.gov/wp-content/uploads/2014/12/Staff-Report-FDIC-and-Operation-Choke-Point-12-8-2014.pdf.
Alan Zibel and Brent Kendall, “Probe Turns Up Heat on Banks,” Wall Street Journal, August 7, 2013, https://www.wsj.com/articles/SB10001424127887323838204578654411043000772.
“Federal Deposit Insurance Corporation’s Involvement in “Operation Choke Point,” U.S. House of Representatives Committee on Oversight and Government Reform, December 8, 2014, https://oversight.house.gov/wp-content/uploads/2014/12/Staff-Report-FDIC-and-Operation-Choke-Point-12-8-2014.pdf.
Chuck Raasch, “Luetkemeyer says feds to investigate 'Operation Choke Point,'” St. Louis Post-Dispatch, November 14, 2014, https://www.stltoday.com/news/local/govt-and-politics/luetkemeyer-says-feds-to-investigate-operation-choke-point/article_92390dd9-3d35-5818-8ec1-71ea9f85b5c4.html.
Victoria Guida, “Justice Department to end Obama-era 'Operation Choke Point,'” Politico, August 17, 2017, https://www.politico.com/story/2017/08/17/trump-reverses-obama-operation-chokepoint-241767.
Several of the key FDIC staff involved in Operation Choke Point are named at https://oversight.house.gov/wp-content/uploads/2014/12/Staff-Report-FDIC-and-Operation-Choke-Point-12-8-2014.pdf. As of 2023, these staff are mostly still in their positions or have seen normal career advancement at the FDIC.
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“ Luetkemeyer says feds to investigate 'Operation Choke Point',” FDIC, January 3, 2023, https://www.fdic.gov/news/press-releases/2023/pr23002a.pdf.
“Failing Bank Resolutions,” FDIC, https://www.fdic.gov/resources/resolutions .
“FIL-34-2016: Incentive-Based Compensation Arrangements: Interagency Notice of Proposed Rulemaking,” FDIC, May 16, 2016, https://www.fdic.gov/news/financial-institution-letters/2016/fil16034.html.
“Consumer Compliance Supervisory Highlights,” FDIC, March 2023, https://www.fdic.gov/regulations/examinations/consumer-compliance-supervisory-highlights/documents/ccs-highlights-march2023.pdf “Proposed 2023 FDIC Operating Budget,” FDIC, December 13, 2022, https://www.fdic.gov/news/board-matters/2022/2022-12-13-notice-dis-a-fr.pdf.
“Martin J. Gruenberg Sworn in as Vice Chairman of FDIC Board; Sandra L. Thompson Named Deputy to Vice Chairman,” FDIC Archive, August 22, 2005, https://archive.fdic.gov/view/fdic/2674.
“List of Chairmen.” FDIC, January 5, 2023, https://www.fdic.gov/about/history/chairmen/index.html.
Jelena McWilliams, “A Hostile Takeover of the FDIC,” The Wall Street Journal, December 15, 2021, https://www.wsj.com/articles/hostile-takeover-fdic-board-rohit-chopra-michael-hsu-jelena-mcwilliams-abuse-power-11639432939.
Victoria Guida, “FDIC's GOP Chair to Resign After Partisan Brawl,” Politico, December 31, 2021, https://www.politico.com/news/2021/12/31/fdic-chair-jelena-mcwilliams-to-resign-526295.
At the time, the FDIC’s directors were McWilliams, Gruenberg, Chopra, and Michael Hsu. The fifth directorship was vacant. Chopra had replaced Dave Uejio, an interim Democrat appointee.
Jelena McWilliams. “Press Release: FDIC Chairman Jelena McWilliasms Announces Her Resignation.” FDIC, December 2021 31, https://www.fdic.gov/news/press-releases/2021/pr21107.html.
Hill resigned his FDIC post in February 2022, just three days after McWilliams left:
Jelena McWilliams“Press Release: Statement from FDIC Chairman Jelena McWilliams,” FDIC, February 1, 2022, https://www.fdic.gov/news/press-releases/2022/pr22010.html.
He was nominated to the directorship in September 2022: Kate Davidson and Sam Sutton, “A White House Nomination Surprise,” Politico, September 21, 2022, https://www.politico.com/newsletters/morning-money/2022/09/21/a-white-house-nomination-surprise-00057922.
“Cravath to Open in Washington, D.C., Former Leadership of FDIC and SEC to Join as Partners.” Business Wire, June 6, 2022, https://www.businesswire.com/news/home/20220605005107/en .
Samo Burja, “How Roman Emperors Handled the Succession Problem,” Samo Burja, August 16, 2018, https://samoburja.com/how-roman-emperors-handled-the-succession-problem .
Thomas H. Klier and James Rubenstein, “Detroit Back From The Brink? Auto Industry Crisis And Restructuring 2008–11,” Federal Reserve Bank of Chicago, 2012, https://www.chicagofed.org/~/media/publications/economic-perspectives/2012/2q2012-part1-klier-rubenstein-pdf.pdf.