Nick Fleming: A Note, FDIC Statutory Powers 8-4-21


Nicks Intel Update

Updates concerning the RV/GCR

08/04/2021 Note From Nick

The FDIC Statutory Powers extends past just FDIC Insurance

The FDIC is responsible for a number of authorities and initiatives under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act, provides a framework for the proper management of all licensed banks, and/or in the event of failure of a large, complex, systemically important financial institution.

The FDIC is the primary federal supervisor for all Federally chartered banks, all state non-member banks and state-chartered savings institutions.  For those institutions, the FDIC performs risk management (safety and soundness), trust, Bank Secrecy Act/Anti-Money Laundering, and information technology (IT) examinations in cooperation with state banking regulators.

Risk management examinations are conducted according to statutorily-established rules & guidelines.  These examinations assess an institution’s overall financial condition, management practices and policies, compliance with applicable laws and regulations, and the adequacy of management and internal control systems to identify, measure, and control risks.  Examination procedures may also detect the presence of fraud or insider abuse including any RICO activities such as money laundering, bank fraud, wire fraud, counterfeit currencies, counterfeit bonds, fake bonds, tax fraud, tax evasion, and securities fraud.

The FDIC’s statutory authority also gives it a degree of supervisory responsibility in its role as insurer for insured depository institutions regardless if it is not the primary federal supervisor. 

The FDIC focuses its examinations and other supervisory activities on those industry products, services, and practices that have the highest potential risk for violations of law that may result in potential harm to consumers and depositors of the bank which may affect the banks daily liquidity and/or capital position.Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the new law gives the FDIC broad authority to use its “receivership” powers. These “powers” are similar to those the FDIC has long used to resolve failed insured depository institutions since the creation of the Federal Reserve Systems and the FDCIC insurance fund.

Mainly the Law authorizes the FDIC to bring back-up enforcement actions in the front line activities of financial institutions against said depsitory institution if the conduct or threatened conduct of the depository institution poses a foreseeable and material risk of loss to the Deposit Insurance Fund.

The bottom line is the FDIC was granted Statutory authority over any and all activities that it deems is a risk to the FDIC insurance fund, a risk to the depositors money, and/or involve any activities that might involve counterfeit currencies, counterfeit bonds, money laundering, and/or tax evasion activities. At which point the FDIC has the authority to shut down the bank, and/or the transaction(s) of the bank; and work in tandem with the DOJ and FBI to bring any resulting criminal indictments. Although the FDIC is viewed as providing insurance to depositors, this duty is secondary to its job to preventing any and all activities that will harm either the bank, its assets, its depositors, the bank’s liquidity, the bank’s capital position, and the FDIC Insurance Fund.


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