Safety and Soundness Banks are well-positioned to handle economic downturns
Most banks are well capitalized and prepared for economic
Banks are well-positioned to handle economic downturns, and
if necessary, absorb losses.
Customers’ deposits are protected by FDIC insurance. Not one
penny of insured savings has ever been lost by a customer of a
federally insured bank. The FDIC insurance fund has more than $13
billion in assets available to protect depositors.
The FDIC has temporarily raised its coverage amount from
$100,000 to $250,000 per depositor per insured bank through Dec.
31, 2013. Congress is currently considering legislation,
supported by the CBA that would make the increase permanent.
Many banking institutions in California are also paying an
additional deposit premium in order to provide the FDIC’s
unlimited insurance coverage for non-interest bearing checking
Banking’s capital and loan loss reserves serve as a “rainy
day fund” to cover credit losses – is near historic highs. In
fact, capital levels at California banks are at or near all-time
highs, with double the amount of capital today as compared to the
last significant economic downturn in the early 1990’s.
Regulation and supervision of bank risk is improving
Bank performance data is collected quarterly and continually
monitored by a primary regulator, which for a nationally
chartered bank is the Office of the Comptroller of the Currency
and state chartered bank, the California Department of Financial
Institutions and the FDIC.
Onsite examinations are conducted every 12 to 18 months or
more frequently if warranted.
The regulators have also fortified examination practices and
encourage bankers to focus on the quality of enterprise-wide risk
Bank management has responded with deepened integrated risk
Banks have increasingly put enterprise-wide risk management
processes in place, increased the use of sophisticated
risk-management procedures, and implemented strong systems of
checks and balances.
Advances in collecting data and benchmarking performance,
identifying key risk indicators and controlling operational risks
all contribute to the sound, active management of a bank’s