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FDIC Needs Director with State Bank Supervisory Experience – It’s the Law

By CSBS President and CEO John Ryan

In my view, laws set by Congress are meant to be followed.

That is one reason that I am so delighted that Miki Bowman, a former community banker and state banking commissioner, is now a member of the Board of Governors of the Federal Reserve System. In addition to having excellent credentials, Gov. Bowman’s confirmation fulfills a federal law made by Congress in 2015 requiring that the Fed board have at least one member who has previous experience in community banking or community banking supervision.

I hope that soon I can say the same about an FDIC director.

In 1996, Congress amended the Federal Deposit Insurance Act to require that at least one of the FDIC’s three independent directors have state bank supervisory experience, which clearly means someone who has served in state government as a supervisor of state-chartered banks. Given that the Comptroller of the Currency’s seat on the Board represents the national banking system, Congress wanted to ensure a state bank commissioner would also serve on the FDIC Board to provide the state banking system’s perspective, allowing for representation from both sides of the dual banking system.

However, no one has met the state bank regulatory expertise requirement on the FDIC board since former Massachusetts State Bank Commissioner Thomas Curry finished his term in 2012. Although Curry still served on the FDIC board in his role at the OCC, he no longer met the requirement as it’s described under the law.

That means the FDIC Board has not had anyone with state regulatory experience for six years.

That could change soon. There is a current vacancy on the board. It is a wonderful opportunity for the Administration to nominate and confirm someone with state bank supervisory experience. 

Here’s why. In addition to being federal law, a director with state bank supervisory experience expands the FDIC board’s knowledge base to include a practitioner with direct experience of the approximately 4,400 state-chartered banks that make up 79 percent of the nation’s banking system. That is important, as the FDIC coordinates with the states to examine most of these banks.

State-chartered banks play a vital role in their communities. They provide 68 percent of all agriculture lending and 56 percent of all small-business lending in the nation. State bank supervisors have a unique perspective on these banking services. They are mandated to ensure the safety and soundness of these banks, protect consumers and support economic development of their communities. A state bank supervisor can give a practical, real-life view to examining these banks at a federal level.

Congress agreed. And I have every expectation that the Administration and the Senate will do their due diligence to nominate a person with state regulatory experience.

We expect them to follow the law.

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