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FDIC Faces Criticism in Inspector General’s Report

1 Mins read

The Federal Deposit Insurance Corp. (FDIC) has come under scrutiny in a recent review conducted by the Inspector General. The report, released on Tuesday, concluded that the FDIC missed several opportunities to address concerns surrounding Signature Bank, ultimately leading to a fatal run on deposits on March 10.

Delays in Supervisory Actions

According to the Inspector General’s report, the FDIC did not always take timely supervisory actions. Staffing challenges were cited as a major contributing factor to the delays in issuing supervisory findings.

Downgrade in Liquidity Rating

While the FDIC appropriately downgraded Signature Bank’s liquidity rating, the report suggests that a broader review is necessary. The IG report highlights the need for examination and potential revision of guidance on liquidity.

FDIC’s Response

In response to the report, the FDIC acknowledged the findings and agreed with the Inspector General’s conclusions. The FDIC stated that the report aligns with their own internal assessment issued in April. The organization has taken steps to address its policies and is actively working on implementing the six recommendations outlined in the IG’s report.

Signature Bank’s Closure

Following the events in question, Signature Bank was closed by the FDIC on March 12. The majority of its remaining assets were then sold to New York Community Bancorp on March 20. This bank failure is notable because it marked the third-largest in U.S. history at that time.

The Inspector General’s report serves as a reminder of the importance of proactive supervisory actions and highlights areas where improvements can be made within the FDIC.

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