Best Practices of Managing a Closed Bank Mitchell L' Glassman Director, Division of Resolutions and

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Best Practices ofManaging a Closed
BankMitchell L. GlassmanDirector, Division of
Resolutions and ReceivershipsMarch 29, 2007
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Overview

• How FDIC Manages a Closed Bank Receivership
• Historic Perspective
• FDIC Legal Framework
• Human Resources
• Best Business Practices

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History of Resolutions

• Historical Failure Activity
• National and State Bank Failures Varied
• Customer Concerns
• Political Appointments
• Liquidation Timeframes
• Hardship on Communities

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Appointment of Receiver

• Creation of the FDIC
• Stability to the Economy
• Maximize Return
• Minimize Loss
• Government, not Private Function
• Receiver Largest Creditor
• Independent Decision-Making Authority

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Appointment of Receiver

• Benefits of Single Receiver
• Efficient - Common Overhead
• Consistent Application of Rules and Regulations
• Experienced Personnel
• Flexible and Pro-active

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The Legal Framework

• Separate from Insurer and Supervisor
• Bankruptcy vs. Receiver
• Receivership Powers
• Claims Determination Process
• Cancel Burdensome Contracts
• Hold Litigation
• Avoid Fraudulent Transfers
• Special Defenses

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The Legal Framework

• Special Defenses
• Rely on Failed Bank Records
• Agreements Must Be Written Authorized
• Sovereign Immunity
• Independent of Other Agencies or Courts

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Receivership Best Practices

• Business Approach to Receiverships
• Decisions based on Business Principals
• Continuous Process Improvement
• Transparency
• Exercise Corporate Governance
• Risk Management
• Internal Controls
• Ethical Standards
• Least Costly Resolution

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Receivership Best Practices

• Effective Systems of Record
• Reliable Accounting Records
• Access to Information
• Leveraging of Technology
• World Class Customer Service
• Professional Knowledgeable - Timely
• Aggressive Marketing of Assets
• Established Investigative Process

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Lessons Learned Summary

• Public Trust
• Transparency
• Reputation
• Business Approach
• Continuously Improve Standards
• Training
• Customer Service
• Strategic Vision and Planning

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QUESTIONS