OIG highlights challenges facing FDIC
Deposit protection body faces risks emanating from both traditional and digital financial markets
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- Written by Banking Exchange staff
The Office of the Inspector General has identified the nine greatest challenges facing the Federal Deposit Insurance Corporation — which insures almost $10trn in deposits at more than 4,700 banks — it its annual assessment. The top three challenges were preparing for a banking sector crisis, cyber security threats and risks posed by digital assets.
The OIG highlighted important updates in certain areas in Top Management and Performance Challenges Facing the Federal Deposit Insurance Corporation. It stated: “The need for supervisory attention and crises planning to include executing its resolution processes, examining banks’ compliance with U.S.-imposed sanctions, and assessing digital asset risk.”
The FDIC occupies a key role in creating confidence and stability in the US financial system. The OIG notes that banks face a rising interest rate environment and the real economy faces continued inflationary pressure. Such pressures could contribute to crises in the banking sector.
The OIG stated: “The FDIC faces crises-readiness challenges to fully develop its plans to respond to an unfolding crisis, including exercising the orderly liquidation of systemically important entities. Further, FDIC readiness and supervisory activities should take into account climate-related risks.”
“FDIC supervisory processes should also be agile to respond to evolving risks such as fraud in crises-related government-guaranteed loan programs and the evasion of US-imposed economic and trade sanctions.”
The OIG identified the FDIC’s top challenges as:
1. Preparing for crises in the banking sector
2. Mitigating cybersecurity risks at banks and third parties
3. Supervising risks posed by digital assets
4. Fostering financial inclusion for underserved communities
5. Fortifying IT security at the FDIC
6. Managing changes in the FDIC workforce
7. Improving the FDIC’s collection, analysis, and use of data
8. Strengthening FDIC contracting and supply chain management
9. Implementing effective governance at the FDIC
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