The Federal Deposit Insurance Corp. board took steps Monday to respond to criticism that the FDIC was hindered from using its backup examination powers aggressively enough during the financial crisis to protect the deposit insurance fund.
The FDIC's board unanimously approved a memorandum of understanding that would enhance the ability of the agency to gather information from primary regulators and conduct special examinations of large and risky insured depository institutions.
The agreement was designed to address concerns raised by the inspectors general of the FDIC and the Treasury Department in a joint report in April on the failure of Washington Mutual Inc.
The report chiefly faulted the thrift's primary regulator, the Office of Thrift Supervision, yet criticized the FDIC for not using its backup examination authority more effectively to prevent the thrift's demise. Comptroller of the Currency John Dugan said it was important not to undercut the primary regulator's function.
"I am very leery of creating a de facto system of 'supervision by committee,' " he said.
FDIC Chairman Sheila Bair said the agreement in theory would provide the FDIC with the tools it needs to do its job.
"I want to note that while significant effort has gone into developing this revised agreement, the real work lies ahead in implementing its terms," she said.