SAN FRANCISCO - Ricki Helfer, celebrating her first anniversary as Federal Deposit Insurance Corp. chairman this week, told bankers Tuesday to get ready for lower premiums.
Savings from cuts in the agency's staff and expenses should allow the FDIC to lower bank insurance costs, Ms. Helfer said in a speech at the American Bankers Association's annual convention here.
"We are reviewing everything we do - as supervisor, insurer, liquidator, and employer - to increase efficiency of the FDIC as an organization and to reduce costs," she said. "For an industry that continues to make record profits, that analytical approach portends well for your premium costs in the future."
For the fourth quarter, the FDIC dropped premium rates to 4.36 cents per $100 of domestic deposits from 23 cents. The agency's board will meet next month to consider how much to charge banks in the first quarter of 1996.
Ms. Helfer said the FDIC had reduced its staff more than a third from a high of 15,600 employees. She said additional cuts were likely but declined to say how much. The FDIC also has slashed expenses by a fifth, combining regulatory relief efforts with reduced employment costs.
"There is more we need to do to reduce staff and expense as the remaining assets of failed banks and thrift institutions are disposed of, and we will do it," she said.
In responding to questions from bankers after her speech, Ms. Helfer contradicted her hints of lower premiums by saying she must build the Bank Insurance Fund above its required 1.25% reserve level. She said it was the only way to guard against unreasonably high premiums during economic downturns.
The bank fund's reserve ratio was 1.288% on June 30, the most recent figures released by FDIC.
As part of the FDIC's cost-cutting efforts, Ms. Helfer said examiners would spend less time in the banks, lowering travel expenses and improving the morale of employees who spend much time on the road.
The agency has already reduced 1995 exam times by an average of 10%, Ms. Helfer said. "That is a solid start, but only a start," she commented.
The FDIC is field-testing an automated loan review program that could allow examiners to conduct most of their loan-file investigations without ever having to enter the bank, she said. The program will capture data straight from a bank's data processor, she said.
"This method of evaluating the loan function will reduce the number of specialized loan reports requested from you by the examiner and will reduce on-site examination time because the electronic record will be analyzed away from the bank," she said.
The agency also has knocked off 10 hours of the average Community Reinvestment Act examination, she said. "Not enough yet, but a start in the right direction," she said.
Further cuts in CRA exam times could come from a software package that combines demographic data from the Census Bureau with a bank's loan portfolio. This allows examiners to review a bank's compliance from the field office, she said.
