FDIC will offer 1,200 voluntary buyouts to prepare for retirement surge

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WASHINGTON — The Federal Deposit Insurance Corp. will offer 1,200 of its permanent employees — representing 20% of the agency's permanent workforce — voluntary early retirement and separation buyout packages, the agency said Thursday.

The initiative is intended to thwart the FDIC’s coming retirement wave and ensure better continuity in its workforce as it prepares to confront future challenges to the banking industry.

"Today's announcement is part of a deliberate strategy to further reduce layers of management, acquire new skillsets, and allow the agency to proactively address succession planning prior to any crisis or emergency situation," said Chairman Jelena McWilliams. "This program will enhance our agility, preparedness, and technological transformation."

The announcement followed the release of a February report by the agency's inspector general predicting that over 42% of the agency’s staff will be eligible to retire within five years, compared with 31% of the broader federal workforce. The watchdog warned that a surge of retirements could leave the FDIC short-staffed in the event of a banking crisis.

"Today's announcement is part of a deliberate strategy to further reduce layers of management, acquire new skillsets, and allow the agency to proactively address succession planning prior to any crisis or emergency situation," said FDIC Chair Jelena McWilliams.
"Today's announcement is part of a deliberate strategy to further reduce layers of management, acquire new skillsets, and allow the agency to proactively address succession planning prior to any crisis or emergency situation," said FDIC Chair Jelena McWilliams.

On Thursday, the FDIC stressed that the move was not a round of layoffs or cost-cutting, and that the agency "remains focused on retaining and growing its examination and risk-related workforce."

Still, the FDIC plan includes the closing of five field offices, while others will be consolidated and one will relocate.

The FDIC will close field offices — when their leases expire this year or next year — in Tulsa, Okla.; Gainesville, Fla.; Hopkinsville, Ky.; Memphis, Tenn.; and Cincinnati, Ohio. Banks will be reassigned to new field offices. Additionally, a field office in Elizabethtown, Ky., will be relocated to Louisville.

The FDIC estimates that 20% of the employees offered a buyout will accept, given historical trends. Eligible employees will be able to apply for a buyout package as soon as next week, and the departures could begin as early May. There will be a limited number of buyouts put in place for certain divisions the agency considers operationally sensitive.

The agency noted that the number of senior managers and executives has grown more than twice as fast as the total workforce, which creates "an imbalance that challenges the agency's agility and its long-term goal of supporting employee empowerment and succession management."

The move followed reviews of the agency's workforce launched shortly after McWilliams took the helm of the agency in 2018.

But the recent inspector general report also suggested a need for the FDIC to develop a strategy for its future workforce. Reiterating concerns that the watchdog raised in 2018, the inspector general said a wave of retirements could cripple the agency tasked with safeguarding consumer deposits in the midst of a financial crises.

Workforce management is a perennial issue at the FDIC that traditionally must expand its hiring as bank closings tick upward and then downsize as the financial system stabilizes.

While the banking industry and broader economy are healthy, many analysts note the possibility of economic shocks due to a variety of factors, such as slowing growth and the impact of the coronavirus.

Among the FDIC’s regional offices, the inspector general said, Dallas could be hit particularly hard by a retirement wave.

“Retirements and attrition can create opportunities for employees and allow organizations to restructure to meet program goals and fiscal realities,” the report said. “However, if turnover is not strategically monitored and managed, gaps can develop in an organization’s institutional knowledge and leadership.”

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