The Federal Deposit Insurance Corp. said Tuesday that it plans to hire 150 examiners next year - the first time it has added examiner jobs since 1992.
The FDIC wants to boost its supervision staff to more than 2,750 employees in 1998 because downsizing and hiring freezes have left the division understaffed, officials said. The agency reached a peak of nearly 4,000 supervision employees in 1992.
The staff shortage caused 180 scheduled exams to be delayed until next year, the FDIC said. The year-2000 computer problem is expected to add to examiner work loads.
Comptroller of the Currency Eugene A. Ludwig, a member of the FDIC board, questioned whether the hiring is needed, given the industry's record profits and the failure of only one bank in more than a year. "These numbers on the face of it seem odd," Mr. Ludwig said.
Overall, the FDIC will continue its downsizing trend of recent years. On Tuesday its board approved a 16% cut in the budget, to $1.36 billion for 1998. Overall employment will be slashed by 9%, to 7,661 employees. The agency expects assets in liquidation to drop next year to $2.8 billion, from $4.4 billion.
In a separate action, the FDIC approved an interim rule that it said will ease the burden of risk-based capital requirements on banks with large trading portfolios. The Federal Reserve Board and the Office of the Comptroller of the Currency plan to issue the same interim rule soon.
The agencies have decided to eliminate a requirement that banks with large trading portfolios hold half the market risk capital demanded under international standards. As a result, the dozen U.S. banks that qualify will be able to rely solely on internal models for computing market risks. The interim rule takes effect as soon as it is published, and comments are due 60 days later.
Also this week, the FDIC said it will give bank directors pocket guides to overseeing their institutions. These remind them to make independent decisions, thoroughly scrutinize management, and avoid preferential deals for insiders.