International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 Best Practices of Managing a Closed Bank Mitchell L. Glassman Director, Division of Resolutions and Receiverships March 29, 2007

International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 Overview How FDIC Manages a Closed Bank Receivership Historic Perspective FDIC Legal Framework Human Resources Best Business Practices

3 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 History of Resolutions Historical Failure Activity National and State Bank Failures Varied Customer Concerns –Political Appointments –Liquidation Timeframes –Hardship on Communities

4 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 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

5 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 Appointment of Receiver Benefits of Single Receiver –Efficient - Common Overhead –Consistent Application of Rules and Regulations –Experienced Personnel –Flexible and Pro-active

6 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 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

7 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 The Legal Framework Special Defenses –Rely on Failed Bank Records –Agreements Must Be Written & Authorized Sovereign Immunity Independent of Other Agencies or Courts

8 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 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

9 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 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

10 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 Lessons Learned Summary Public Trust Transparency Reputation Business Approach Continuously Improve Standards Training Customer Service Strategic Vision and Planning

11 International Conference on Enhancing the Effectiveness of Deposit Insurance Operation, Hanoi March, 2007 QUESTIONS