WASHINGTON - After quadrupling its staff during the last decade, the Federal Deposit Insurance Corp. is preparing to slim down.

The agency is working on an early retirement package for as many as 1,100 employees. Another group - 1,000 temporary staffers - will be let go by yearend.

Rumors that a massive reduction in force is coming are being dismissed by senior officials, but they admit that trimming the agency's 15,000-person work force is a top priority.

"This is going to be a huge undertaking," said FDIC research director Roger Watson. "It's easy to grow. It is much harder to shrink. It's not as much fun either."

Record Failures in '80s

The FDIC has been riding a rocket since the mid-1980s, when bank failures started setting records. The agency bulked up its staff and its budget to handle the unprecedented workload.

In May 1992, the FDIC slapped on a hiring freeze. Still, at midyear the agency employed 15,575 people, which is more than four times the 3,504 people employed in 1982.

The agency's Washington staff nearly doubled - to 2,242 - between 1988 and 1992. Two government office buildings once accommodated these Washington staffers, but in mid - 1991 the FDIC added the seven-story, 350,000-square-foot Seidman Center at a cost of $129 million.

No Firm Numbers

FDIC officials said in interviews that they do not know exactly how much the agency needs to be trimmed.

"FDIC today does not have specific targets," said Carmen J. Sullivan, who as the FDIC's director of information resources management is involved in managing the downsizing. "Projecting what your total organizational staffing is going to be cannot be done with much certainty between a year and 18 months out."

The FDIC is working up staff-size estimates on a division-by-division basis. The liquidation division, which will be hardest hit, is due to deliver its reduction estimates this month.

As the FDIC took over more assets from failed banks, the liquidation division mushroomed from 778 people in 1982 to about 6,600 people, or 44% of all FDIC employees.

Largely Contract Workers

Of that total, about 5,250 are contract employees, and 1,000 of these temporary staffers will be let go by yearend, said liquidation director John Bovenzi. Three of liquidation's 22 field offices already have been closed this year.

"The serious downsizing is just starting now for the division," he said. "The decline is clearly going to continue through '94; there will be more office closings and a decline in number of employees, but we haven't worked out the specifics."

Not only does the FDIC have too many people, but nearly 1,700 employees at the Resolution Trust Corp. will be transferring to the FDIC, many of them liquidators. The two agencies agreed in February 1992 that the 2,400 people working at the RTC at that time had the right to a job at FDIC when the thrift-bailout agency closes in 1996. So far, 667 RTC staffers have made the jump to the FDIC.

The resolutions division, the agency's newest, will also feel the ax. The division has ballooned from 105 in 1991 to 350 today, and there just is not enough work for everyone. By the end of 1994, the resolutions division aims to employ 320 people, but more than 30 people will have to go because room must be made for returning RTC staffers.

The agency has too many lawyers as well. Today, lawyers and their support staff total 2,077; that's up from 105 in 1982. But general counsel Alfred Byrne said he does not expect any cutbacks because his division is doing more work in-house, relying less on private law firms.

At the end of 1990, the FDIC did just 39% of its legal work in-house. By this May, that figure was up to 58%, Mr. Byrne said.

As major divisions downsize, support areas within the agency will have to cut back as well. For example, Ms. Sullivan's division has 370 workers to provide computer and other support services to a staff of 15,000.

"If that work force were reduced by a third, then do I need 370 employees?" she said. in the interview, when asked if she thought the FDIC might indeed be reduced by a third, Ms. Sullivan said, "I just pulled that out of the air."

But a third may not be that far off.

If the early retirement program covers 1,100 people and the liquidation division sheds most of its temporary employees, that's more than a third of the staff.

The division of supervision, home to 3,996 employees, is not expected to shrink much, because the FDIC still needs to examine its banks once a year.

Examination Overkill?

But some people think the FDIC has too many examiners as well.

Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, said the FDIC is needlessly tying up small banks by sending in eight examiners for three weeks.

"They are parking excess employees in banks via the examination function," he said.

Paul G. Fritts, the FDIC's executive director, denied the parking charge but agreed that banks often get extra examiners because some of them are being trained.

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