Acting Comptroller of the Currency Keith A. Noreika has called the Federal Deposit Insurance Corp. (FDIC) to task for failing to provide deposit insurance to 14 de novo banks.
According to a Bloomberg report
, the Office of the Comptroller of the Currency is tasked with approving bank charters, but the new banks are unable to begin business until the FDIC approves their applications for deposit insurance. In a podcast from last week, Noreika complained that the FDIC’s failure to act on applications for deposit insurance has prevented new banks from opening.
“We, ourselves, since 2001 have chartered 14 institutions, and the FDIC hasn’t acted on a single—any of those 14 applications,” Noreika said. “They just let it hang out there forever, so that the organizers wasted all their money trying to get insurance, and then they gave up. And to me, that’s unconscionable for a regulatory agency.”
The FDIC has approved nine new deposit insurance applications since 2009, and five applications are now pending approval. FDIC spokesperson Barbara Hagenbaugh credited her agency with maintaining fiscal responsibility in its deposit insurance application process.
“The statutory provision mandating that the FDIC approve applications for deposit insurance was established in 1991 in the aftermath of the banking and thrift crisis,” said Hagenbaugh. “A key lesson learned from that experience was that the incentives of chartering agencies often were not the same as those of the FDIC in the protection of the deposit insurance fund.”