Insurance Corporation Office of Inspector General (FDIC-OIG) - PowerPoint PPT Presentation

Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) Special Agent Donrich L. Young

Office of Inspector General ▪ Outline: ⬧ History/Overview of FDIC ⬧ IG ACT ⬧ OIG Structure ⬧ Types of Cases Office of Inspector General 2 Federal Deposit Insurance Corporation

History of FDIC Emergency Banking Act of 1933 • Signed into Law by President Franklin D. Roosevelt on March 9,1933 • Legalized a national banking holiday to quell the cash run on the banks The Banking Act of 1933 (Permanent) • Signed into law on June 16, 1933 • Creates the Federal Deposit Insurance Corporation • Gives federal oversight to all commercial banks (a 1 st ) • Separates commercial & investment banking (Glass-Steagall Act) • Prohibits banks from paying interest on checking accts • Allows national banks to branch statewide, if states permit Office of Inspector General 3 Federal Deposit Insurance Corporation

History of FDIC Mission: Created by Congress to Maintain stability & public confidence in the nation’s financial system by : • Insure Deposits • Examine & supervise financial institutions for safety and soundness • Make large & complex financial institutions resolvable • Manage Receiverships Authority • To provide deposit insurance to banks • To regulate and supervise state nonmember banks Administration • U.S. Treasury and Federal Reserve Board fund the FDIC with initial loans of $289 million • FDIC office is established in each state Office of Inspector General 4 Federal Deposit Insurance Corporation

Historic Insurance Limits ▪ January 1, 1934: Deposit Insurance Coverage = $2,500 ▪ July 1,1934: Deposit Insurance Coverage ▪ = $5,000 ▪ 1950: Deposit Insurance Coverage = $10,000 ▪ 1966: Deposit Insurance Coverage = $15,000 ▪ 1969: Deposit Insurance Coverage = $20,000 ▪ 1974: Deposit Insurance Coverage = $40,000 ▪ 1980: Deposit Insurance Coverage = $100,000 ▪ 2008: Deposit Insurance Coverage = $250,000 Office of Inspector General 5 Federal Deposit Insurance Corporation

Timeline of Notable Events ▪ 1933 : U.S. Treasury & Federal Reserve Board provide initial funding to FDIC in the form of a $289 million loan ▪ 1934 : Deposit Insurance Fund = $292 million ▪ 1948 : FDIC repays $289 million loan to U.S. Treasury & Federal Reserve Board ▪ 1950 : FDIC Act revises and consolidates legislation from Banking Act ⬧ FDIC authority expanded to national & state member banks to assess insurance risk ⬧ Deposit Insurance increases = $10,000 ⬧ Deposit Insurance Fund = $1.2 billion Office of Inspector General 6 Federal Deposit Insurance Corporation

Timeline of Notable Events ▪ 1960 : Deposit Insurance Fund = $2 Billion ▪ 1980 : Deposit Insurance Fund = $11 Billion ▪ 1987 : Deposit Insurance Fund = $18.3 Billion ▪ 1990 : FDIC Insurance Premium Increases from 8.3 cents to 12 cents per $100 of deposits for the first time since 1933 ▪ January 1,1991 : FDIC Insurance Premiums increase to 19.5 cents per $100 of deposits ▪ July 1, 1991 : FDIC Insurance Premiums increase to 23 cents per $100 of deposits Office of Inspector General 7 Federal Deposit Insurance Corporation

Timeline of Notable Events ▪ 1993 : Banks begin paying risked-based premiums vs flat rate ▪ 1994 : Deposit Insurance Fund = $21.8 Billion ▪ 2005 : FDIC consolidates into 6 regional offices. ▪ 2010 : Deposit Insurance Coverage increases to $250,000 ⬧ Congress approved a temporary increase from $100K to $250K effective Oct 2008 – Dec 2010. ⬧ Passage of the Dodd-Frank/Consumer Protection Act on July 21, 2010 made the increase permanent ▪ 2018 : Deposit Insurance Fund = $95.1 Billion Office of Inspector General 8 Federal Deposit Insurance Corporation

Bank Failures by RMS Region (2007 through December 31, 2015) AK WA ME 19 MT ND MN VT 23 NH OR WI ID SD MA 1 6 MI NY 4 CT 1 8 RI 2 WY 1 13 1 IA PA 8 NJ 5 CA NE OH 6 NV 2 IL IN DE 40 * 3 12 * MD 10 WV 1 UT 63 * 3 CO VA 5 6 * KS MO 10 * KY 2 9 * 16 NC 7 * TN 5 OK AZ SC NM AR 7 * 15 * GA 10 AL 3 2 MS 91 * 7 2 HI TX LA 11 * 2 FL * States where Failures Regions (518 Failures) were supervised by 72 * Atlanta – 188 another region AZ – 5 CHI, 1 KC Chicago - 111 CA – 3 CHI * States where Failures CO – 1 KC Dallas - 37 were supervised by another region FL – 3 CHI, 1 KC Kansas City - 58 NV – 1 CHI GA – 1 CHI PR 4 OK – 1 KC New York - 34 IL – 1 ATL, 1 KC TX – 3 CHI KS – 1 CHI San Francisco - 90 Office of Inspector General UT – 1 NY NC – 1 CHI Federal Deposit Insurance Corporation

Bank Failures ▪ 2007 – 3 Failures 2013 – 34 Failures ▪ 2008 – 25 Failures 2014 – 18 Failures ▪ 2009 – 140 Failures 2015 – 8 Failures ▪ 2010 – 157 Failures 2016 – 5 Failures ▪ 2011 – 92 Failures 2017 - 8 Failures ▪ 2012 – 51 Failures 2018 – 0 Failures YTD $ince the Establishment of the FDIC, no depositor has loss any funds due to a commercial bank failure Office of Inspector General 10 Federal Deposit Insurance Corporation

Federal Government Guarantee If a Bank fails – the FDIC pays Office of Inspector General 11 Federal Deposit Insurance Corporation

Inspector General Act 1978 ▪ Signed into Law by President Jimmy Carter effective October 12, 1978 Purpose : To create independent & objective units within each agency whose duty is to combat waste fraud and abuse. Each OIG is headed by a presidentially-appointed Inspector General. There were 12 original Inspectors General. Today there are 72 statutory IGs across the Federal government. Act authorizes OIG to conduct & supervise audits and investigations into the programs & operations of its agency Office of Inspector General 12 Federal Deposit Insurance Corporation

Office of Inspector General FDIC Established – April 17, 1989 per the Inspector General Act Amendments of 1988. OIG MISSION : To Prevent, deter, and detect waste, fraud, abuse, and misconduct in FDIC programs and operations, and to promote economy, efficiency, and effectiveness to the agency. Office of Inspector General 13 Federal Deposit Insurance Corporation

Homeland Security Act 2002 December 8, 2003: Pursuant to the Homeland Security Act, Congress granted statutory law enforcement authority to certain OIGs, including the FDIC OIG. Authority : Criminal Investigators employed within the certain OIGs Office of Investigations were authorized to conduct investigations, carry firearms, seek and execute search and arrest warrants, serve subpoenas and to administer oaths affirmations, or affidavits Office of Inspector General 14 Federal Deposit Insurance Corporation

Office of Inspector General Organizational Structure Office of Inspector General 15 Federal Deposit Insurance Corporation

OIG Regional Presence ▪ Atlanta: SAC Jason Moran ▪ Chicago: SAC Joseph Moriarty ▪ Dallas: SAC Laurie Younger ▪ Electronic Crimes Unit: SAC Tyler Smith ▪ Kansas City: SAC David Anderson ▪ New York: SAC Patti Tarasca ▪ San Francisco: SAC Wade Walters, IV Office of Inspector General 16 Federal Deposit Insurance Corporation

Special Agents ▪ Approximately 53 agents with over 1000 years of experience in the white-collar criminal investigations ⬧ Agents with experience from: • Federal Bureau of Investigation • Internal Revenue Service • United States Secret Service • Offices of Inspectors General with experience working various criminal and program frauds • Office of Audits • Private Sector Experience w/ various professional certifications: CPAs, CFEs, MBAs Office of Inspector General 17 Federal Deposit Insurance Corporation

Investigative Support ▪ Electronic Crimes Unit (ECU): ⬧ Five agents with specialized skill in data mining and forensic analysis on vast volumes of electronic data/evidence ⬧ Assist FDIC with investigation of intrusion and phishing scams ▪ 2 Forensic Accountants (HQ): ⬧ Assist in the tracing of assets and development of investigative leads (HQ) ▪ 3 Financial Analyst (NY, Chicago, Dallas): ⬧ Provide in-depth analysis of financial data and interpret into useful information for investigative & case development Office of Inspector General 18 Federal Deposit Insurance Corporation

Types of Cases ▪ Employee Misconduct ▪ Banking Insiders – Tellers to CEOs ▪ Significant Customers Causing Losses ▪ Elder Abuse-Embezzlement ▪ Loan Fraud Scheme Conspiracy ▪ Risky Bank Operations with the potential for losses Office of Inspector General 19 Federal Deposit Insurance Corporation

Bank Insiders PRIORITY for OIG and FDIC – get bad bankers out of the banking Industry Ban: NON-PARTICIPATION IN BANKING INDUSTRY. Defendant agrees to consent to any regulatory action taken by a Federal financial institution regulatory agency to permanently remove him from office and/or prohibit him from participating, whether as an institution-affiliated party or otherwise, in the conduct of the affairs of any insured depository institution or depository institution holding company, or any other organizations or entities related to the financial industry, as provided in section 8(e) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(e), or in any other statute, rule, or regulation. Office of Inspector General 20 Federal Deposit Insurance Corporation