WASHINGTON, Nov. 17 — Concerned about the government's increasing exposure to losses on deposit insurance, Rep. John Dingell on Thursday questioned the decision to give the Federal Deposit Insurance Corp. responsibility for both banks and thrifts.
"Although we are assured that the FDIC is in relatively better shape [than the Federal Savings and Loan Insurance Corp.] and will not require a tax bailout in the near future, I am not overwhelmed with these assurances," said the powerful chairman of the House Energy and Commerce Committee, at a hearing on government guarantees.
The Michigan Democrat expressed concern that the amount of deposits insured by the government had soared to $2.7 trillion, according to figures released Thursday by the General Accounting Office. Insured deposits account for 54% of the $5 trillion in government guarantees. Other guarantees include direct loans and guarantees on third-party loans and securities. The $5 trillion total is more than 11 times the 1965 total of $438 billion.
Rep. Dingell questioned the FDIC's ability to adequately protect the government given the scope of its expanded duties. The FSLIC was shut down in August with the $157 billion thrift-bailout law. It was replaced by the Savings Association Insurance Fund, which was handed to the FDIC to manage.
Mr. Dingell said Congress' willingness to give broader power to the FDIC seemed to be "based on the questionable assumption that the FDIC is better-managed than the FSLIC."
"We never said that," FDIC Chairman L. William Seidman said in an interview Thursday. "I think the banking industry is in better shape than the S&L industry was."
"As the FDIC examiners pick up a major part of the savings and loan responsibilities, the result will be less examination, enforcement, and oversight of the banking system," Mr. Dingell said.
FDIC spokesman Alan Whitney denied that the FDIC was cutting back its supervision of the banking industry.
"We'd be happy to share with Chairman Dingell specific information on our plans to maintain and actually increase our supervisory resources," he said. "Even with the added workload, the number of examinations has not been reduced."
Comptroller General Charles A. Bowsher, who heads the General Accounting Office, told Energy and Commerce's oversight and investigations subcommittee that deposit insurance for the bank and thrift industries, managed by the FDIC, totaled $2.57 trillion as of Sept. 30, 1988, the most recent fiscal-year data available. Insured deposits at credit unions, managed by the National Credit Union Administration, totaled $157 billion. The GAO is an investigative arm of Congress.
Mr. Dingell also targeted the accounting industry.
"As with FSLIC, we are depending on the same accounting firms which failed miserably in finding fraud in the savings and loan industry and on regulators whose resources are stretched well beyond any reasonable limit," he said.
