Chairman D'Amato, Ranking Member Sarbanes and Members of the Committee, it is a privilege to appear before you today. I am honored that President Clinton has nominated me to chair the Federal Deposit Insurance Corporation. If I am confirmed by the U.S. Senate, I pledge to work closely with all Members of this Committee. I am particularly grateful to Senator Inouye and to Senator Akaka for their confidence in me and for being here today.
I appreciate this opportunity to share briefly with you my views on some of the issues which would command my attention at the FDIC.
The FDIC has been insuring deposits and promoting safe and sound banking practices since 1934. Although Congress has given the agency additional duties and power over the years, the heart of the agency's mission continues to be to insure deposits and to maintain stability and public confidence in the nation's banking and thrift systems.
Today, when our financial institutions are enjoying record profitability, it is easy to take the deposit insurance program for granted. It was not very long ago, however, that nearly 3,000 banks and savings and loan institutions failed over a 15-year period. As Commissioner of Financial Institutions for the State of Hawaii, I then worked with the FDIC and the former FSLIC to deal with financial institution failures and their aftermath. The Asian economic crisis serves as a further reminder of the need for a strong bank supervisory system. It underscores the importance of deposit insurance in protecting the individual depositor and in anchoring the financial system when the system is under stress. It would be a mistake not to take advantage of these good economic times to prepare the FDIC to address the emerging challenges of the changing banking industry.
Under recent leadership, the FDIC has been transformed from an agency focused on crisis management and damage control into one that is devoted to identifying risks to the insurance funds and to anticipating future problems. I believe the FDIC should press ahead with its work in the area of risk management, which benefits consumers and the industry alike.
As can be seen in the daily headlines, our commercial banks and thrifts are operating in a marketplace that is changing very rapidly. Federal and state geographic restrictions have been repealed, allowing institutions to assume greater scale. Regulatory prohibitions on affiliations with non-bank financial service firms, and even with non- financial firms, are eroding. Against this background, the FDIC, together with the other regulatory agencies and the Congress, must continue to consider the proper role of deposit insurance and appropriate supervisory and regulatory safeguards for the insurance funds.
While the bank mergers raise significant issues, my immediate concern is the Year 2000 problem. Adequate preparation for the Year 2000 is more than a regulatory requirement -- it is a system-wide imperative. I share the conviction of this Committee that regulators must pursue an aggressive agenda -- to make certain that insured institutions understand the problem, respond effectively, and have contingency plans to deal with any failures of compliance. As Chairman, I would work diligently to prepare both the FDIC and the depository institutions it supervises for the Year 2000.
I would at the same time work to make certain that the FDIC retains its independence. To keep the public's trust, the FDIC must continue to make unbiased judgments and to act upon them without fear or favor. There are few certainties in life, but one of them is that no one has ever lost a penny of an FDIC-insured deposit. And, under my stewardship, that will not change. If honored with confirmation as Chainnan of the FDIC, I will work to maintain the public's trust in the FDIC, and to justify your confidence in me.
Mr. Chairman, Ranking Member Sarbanes and Members of the Committee, thank
you for allowing me to appear before you today. I would be pleased to respond to your
questions and concerns.
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