I thank Senator Johnson, Chairman of the Financial Institutions Subcommittee, for holding this morning's hearing on the important subject of possible Federal deposit insurance system reform. Any reform effort will demand a thorough analysis of the issues and today's hearing contributes to that effort.
On April 5, 2001, the FDIC published a report on reforming the deposit insurance system. The FDIC recommended:
Last week, the Treasury Department, Federal Reserve Board, Comptroller of the Currency and Office of Thrift Supervision, announced their views on the FDIC's recommendations. They all supported merging the funds. They also supported the concept of giving the FDIC greater flexibility to allow a range of reserve ratios. The Treasury Department, Fed and Comptroller did not support raising the amount of Federal deposit insurance coverage.
Today's hearing is particularly timely in light of last Friday's failure of a major thrift, Superior Bank, FSB, of Illinois. The failed institution is projected to be the 11th most costly loss to the insurance fund in U.S. history. Reports suggest that the failure may cost the SAIF $500 million. In addition, customers with uninsured deposits may lose over $40 million.
I am very concerned about this failure and have taken steps to inquire into its causes. I have sent letters to the Comptroller General of the United States, Inspector General of the Treasury Department, which has authority over the Office of Thrift Supervision, and the Inspector General of the FDIC and asked them to report on the reasons for the failure with recommendations for preventing future losses. I look forward to their responses.
I look forward to hearing the testimony from representatives of the banking and thrift industries on their views of the deposit insurance system and the FDIC's recommendations.