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Values

The FDIC and its employees have a long and continuing tradition of distinguished public service. Six core values guide FDIC employees as they strive to fulfill the Corporation’s mission and vision:

Integrity

FDIC employees adhere to the highest ethical standards in the performance of their duties and responsibilities.

Competence

The FDIC maintains a highly skilled, dedicated, and diverse workforce.

Teamwork

FDIC employees work cooperatively with one another and with employees in other regulatory agencies to accomplish the Corporation’s mission.

Effectiveness

The FDIC responds quickly and successfully to identified risks in insured financial institutions and in the broader financial system.

Financial Stewardship

The FDIC acts as a responsible fiduciary, consistently operating in an efficient and cost-effective manner on behalf of insured financial institutions and other stakeholders.

Fairness

The FDIC treats all employees, insured financial institutions, and other stakeholders with impartiality and mutual respect.

Mission

The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress that maintains the stability and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions, and managing receiverships.

Vision

The FDIC is a leader in developing and implementing sound public policies, identifying and addressing risks in the nation’s financial system, and effectively and efficiently carrying out its insurance, supervisory, and receivership management responsibilities.

MessagefromtheChairman 4

MessagefromtheChiefFinancialOfficer 10

I. Management’s Discussion and Analysis 12

TheYearinReview 12

Insurance 12

SupervisionandConsumerProtection 15

ReceivershipManagement 27

EffectiveManagementofStrategicResources 30

II. Financial Highlights 32

DepositInsuranceFundPerformance 32

AContinuingRecordofPrudentStewardship 34

2008CorporateOperatingBudget 34

InvestmentSpending 35

III. Financial Statements 36

DepositInsuranceFund(DIF) 36

FSLICResolutionFund(FRF) 39

GovernmentAccountabilityOffice’sCondensedAuditOpinion 42

Management’sResponse 43

IV. Other Information 44

FDICOrganizationChart /Officials 44

SourcesofInformation 45

RegionalandAreaOffices 46

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IampleasedtopresenttheFederalDepositInsuranceCorporation’s(FDIC)2007 Annual Report(alsoreferredtoasthePerformance and Accountability Report).Theyearposedmajorchallengestofinancialinstitutionsandtotheeconomyasawhole.Slumpinghousingmarketsandescalatingproblems,particularlyrelatedtosubprimemortgagelending,wereamongthechiefcontributorstoincreaseduncertaintyinthefinancialmarketsandwidespreadreductionsinassetvalues.Inspiteofthesechallenges,theFDICcontinuedtoensurepublicconfidenceandstabilityinthenation’sfinancialsystem.FDIC-insuredinstitutionsentered2007withstrongearningsandcapital,andconsequently,wereinagoodpositiontoabsorbtheinitialstressesassociatedwithlastsummer’smarketevents.

Theproblemsthathaveemergedinthesubprimemortgagemarketunderscoremylongstandingviewthatconsumerprotectionandsafeandsoundlendinggohandinhand.Mostinsuredinstitutionshaveagoodperformancerecordinbothareas.However,failurebysomelenderstoupholdadequatestandardsintheincreasinglycomplexmortgageindustryhascausedseriousproblemsforconsumers,lenders,investors,andtheeconomy.Manyofthemoretroublinglendingpracticeswerefoundininstitutionsthatarenotsubjecttofederalsupervision,ratherthanininsuredbanksandthrifts.Nationally,thehomeforeclosureratehasnearlydoubledinthepasttwoyears.Anestimated1.7millionowner-occupied,subprimehybridadjustableratemortgages(ARMs)willresetin2008and2009,andthecombinationofdeclininghomepricesandscarcerefinancingoptionscouldresultinhundredsofthousandsofadditionalforeclosures.TheFDICiscommittedtoworkingwithmarketparticipantstodevelopsolutionsthatwouldhelppreventunnecessaryforeclosuresandkeephomeownersintheirhomes.

Throughout2007,Iurgedservicersandlenderstovoluntarilyrestructuresomeoftheirperformingloans.Specifically,Iendorsedastreamlinedprocesstokeephomeownerswithresettingsubprimemortgagesattheirstarterrateforfiveormoreyearsiftheywerecurrentontheirpayments,butcouldnotmakethehigherpaymentsaftertheloanreset.Usingastreamlinedprocesstokeepsubprimeborrowerspayingaffordablemortgagesfreesupresourcesforlendersandservicerstorespondtoproblemsinothercategoriesofloans.OnDecember6,2007,TreasurySecretaryPaulsoncalledforacceleratedandsystematicloanmodifications–aplanendorsedbyPresidentBushalongwiththeotherfederalbankingregulators,andagreedtobymanyrepresentativesofthemortgagelendingindustry.Iviewthisasaverypositiveinitialsteptowardsavoidinghundredsofthousandsofforeclosuresandtheensuingeconomicconsequences.

ThreeFDIC-insuredbanksfailedin2007.AllthreefailuresposeduniquechallengesfortheFDIC–one,inparticular,becauseitwasanInternetbankwithnophysicalbranches.ItwasalsotheFDIC’slargestbankclosingin14years.Whiletheindustryhadexperiencednofailuresfortwo-and-a-half-years,theFDICremainedreadyandabletorespondandincorporatedinnovationstoaddressnewandchallengingissues.Inallthreebankfailures,theFDICeffectivelyrespondedtotheneedsofthefailedbanks’depositors–asithassince1934–ensuringtimelypaymentsofinsureddeposits.

Message from the Chairman • Sheila C. Bair

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Inspiteofitsrecordofsuccess,theFDIChasremainedfocusedonimprovingitsabilitytoresolvefinancialinstitutionfailures.Asfinancialinstitutionshavegrowninbothsizeandcomplexity,thechallengesfacingtheFDIC,ifoneormoreshouldfail,havelikewisegrown.Inresponse,theFDIChasstrivedtobalancetheneedforreadinesswiththegoalofmaximizingoperationalefficiencies.Theseobjectivesarebeingmetthroughacombinationofcontingencyplanning,cross-trainingofstaff,developmentofenhancedsystemsformanagingboththeassetsandliabilitiesoffuturefailures,andproposedimprovementsinfinancialinstitutionrecordkeeping.Throughthiscombinationofstrategies,theFDICwillcontinueitsstrongrecordofservice,reliability,efficiency,andprovidingoutstandingvaluetoitsstakeholders.

TheU.S.financialsystembenefitsfromabalancebetweenlargeandcomplexbanks,regionallyfocusedbanks,andcommunitybanks.Communitybanksareintegraltotheirlocaleconomiesandtothecustomerstheyserve–individualsandbusinessesalike.Overallitisimpressivethatcommunitybanks,whilefacingintensifiedcompetition,havebeenabletoachievebothrespectableearningsandgrowthinrecentyears.Communitybankspossesscertainadvantagesaslenderstolocalhouseholds,smallbusinesses,andfarmers.Thewillingnessofprivateinvestorstorisktheirownmoneytocreatenewbanksisapowerfulmarketindicatoroftheviabilityofsmallbanks,especiallyinareasofhighpopulationdensity.Communitybankswillcontinuetooccupyanimportantpositioninthebankingindustryfortheforeseeablefuture.

Wewerebusyinotherareasaswell,amongthem:implementingsignificantpoliciestoimplementdepositinsurancereform,workingtowardsanagreementonBaselIIcapitalstandards,modernizingtheclaimsbusinessprocess,maintainingastrongsupervisoryprogram,andpromotingeconomicinclusion.Belowareafewhighlightsofouractivitiesin2007,aswellassomechallengeswewillfacein2008.

Policy OnJanuary1,2007,newrisk-baseddepositinsuranceassessmentratesbecameeffectiveaspartofimplementationoftheFederalDepositInsuranceReformActof2005.Wedistributedcreditstotaling$4.7billiontothoseinstitutionsthatcontributedtothebuildupoftheinsurancefundsthrough1996,andissuedanAdvanceNoticeofProposedRulemaking(ANPR)seekingcommentsonalternativemethodsforallocatingfuturedividends.

Oureffortsoncapitalreformcontinuedin2007,withouractiveparticipation–alongwithourfellowU.S.bankingregulators–insharedimplementationoftheBaselIICapitalAccord.OnNovember5th,theFDICBoardofDirectorsjointlyapproved,alongwiththeotherfederalbankingregulators,thefinalruletoimplementtheadvancedapproachesoftheBaselIICapitalAccordintheU.S.(BaselIIAIRBfinalrule).Thefinalruleisconsistentinmostrespectswiththerulesthatarebeingimplementedinotherjurisdictions.AttherequestoftheFDIC,theagenciesalsoincludedsafeguardsintheeventthatthenewrulesdonotworkasintended.Forinstance,thefinalregulationimplementstheagencies’agreementnottoallowanybanktoexitits

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transitionalrisk-basedcapitalfloorsunlessanduntiltheagenciespublishastudyfindingthattherearenomaterialdeficienciesintheframeworkaftertwoyearsexperienceinimplementationorunlessidentifieddefectsareremedied.Ifanyagencyallowsitsbankstoexitthefloorsinawaythatdepartsfromthisconsensusapproach,therulerequiresthatagencytopublishareportexplainingitsreasoning.ThefinalrulewillbecomeeffectiveonApril1,2008.

Theagencieshaveagreedtoissueaproposedrulethatwouldprovideallnon-corebankswiththeoptiontoadoptastandardizedapproachundertheBaselIICapitalAccord.Thiswouldreplacetheearlierproposedruletoadoptthe“BaselIA”option.BaselIAwasanewcapitalframeworktobeusedbybanksthatchosenottousetheBaselIIframework.Asweenterthenewyear,theFDICwillcontinuetoprovideleadershipforthiseffortandworktowardthegoalofpublishingaNoticeofProposedRulemaking(NPR)toimplementthestandardizedapproachesofBaselIIintheU.S.(BaselIIStandardizedNPR).BoththeBaselIIAIRBfinalruleandtheBaselIIStandardizedNPRarepartofourefforttoenhancetherisksensitivityoftheexistingrisk-basedcapitalframework,whilemaintainingsafetyandsoundnesswithinthebankingandthriftindustries.

Wealsomovedforwardwithourdepositinsuranceclaimsandmodernizationinitiativethathasbeenongoingforthepastseveralyears.WepublishedanNPRbrokenintotwoparts.ThefirstpartappliestoallFDIC-insuredinstitutionsandgovernsthespecifictimeandcircumstancesunderwhichaccountbalanceswillbedetermined,fordepositinsurancepurposes,intheeventofafailure.ThesecondpartappliesonlytothelargestFDIC-insuredinstitutions–approximately160institutionswithatleast$2billionindomesticdepositsandmorethan250,000depositaccounts,ortotalassetsofmorethan$20billion,regardlessofthedollaramountofdepositsornumberofaccounts.Undertheproposal,theseinstitutionswouldberequiredtoadoptmechanismsthatwould,intheeventoftheinstitution’sfailure:placeprovisionalholdsonlargedepositaccountsinapercentagespecifiedbytheFDIC;providetheFDICwithdepositaccountdatainastandardformat;andallowautomaticremovalofprovisionalholdsoncetheFDICmakesaninsurancedetermination.TheFDICplacesahighpriorityonprovidingaccesstoinsureddepositspromptlyand,inthepast,hasusuallybeenabletoallowmostdepositorsaccesstotheirdepositsonthenextbusinessday.Ifadopted,theproposedrulewouldbetterenabletheFDICtocontinuethispractice,especiallyforthelarger,morecomplexinstitutionsitinsures.

Supervisory Program Alongwithsuccessfullymanaginganunusuallylargepolicyagendain2007,wecontinuedtoadministerstrongandeffectivesupervisoryprogramsinboththerisk-managementandcomplianceareas.Weperformed2,258safetyandsoundnessexaminations;1,773complianceandCommunityReinvestmentActexams;and2,941specialtyexams.TheFDICistheprimaryfederalregulatorforstatenonmemberbanks,thevastmajorityofwhicharecommunitybanks.Thecoreworkofourexaminationstaffcontinuestobetheon-siteevaluationsandassessmentofthesebanks’riskmanagement,compliance

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andconsumerprograms.Ourfieldexaminersareonthefrontlineandtheirworkinidentifyingemergingrisksandpromotingstabilityinournation’seconomicsystemhasbeenthehallmarkoftheFDICfor75years.

Duringtheyear,astheFDICandfellowbankingregulatorsbecameincreasinglyconcernedwiththeexpansionofsubprimehybridARMsandthepotentialriskposedbytheseproducts,wetookaleadingrolewiththeotherregulatorsinissuingtheStatement on Subprime Mortgage Lending.Thestatementdescribestheprudentsafetyandsoundnessandconsumerprotectionstan-dardsthatinstitutionsshouldfollowtoensureborrowersobtainloanstheycanaffordtorepay.WealsotookaleadingroleindevelopingtheinteragencyStatement on Working with Mortgage Borrowers,encouragingfinancialinstitutionstopursuestrategiestomitigatelosseswhilepreservinghome-ownershipforborrowersthataredelinquentorindefault,orareatimminentriskofdefault.Toprovideguidancetoentitiesthatserviceresidentialmortgageloansforothers,theFDIC,alongwiththeotherfederalfinancialregulatoryagencies,issuedtheStatement on Loss Mitigation Strategies for Servicers of Residential Mortgages.

Toimprovethequalityofourexaminationprograms,welaunchedoursuccessfulJointExaminationTeams(JETs)initiative,inwhichexaminersfromboththecomplianceandtherisk-managementsidesexamineFDIC-supervisedinstitutionsidentifiedasofferingcertainconsumercreditproducts,suchassubprimeloans,nontraditionalmortgageloans,andthird-partyloanoriginationarrangements.Throughthisteameffort,wecanmorefullyassessinstitutions’variousrisksaswellastheirabilitytocontrolthoserisks.Ourcomplianceexaminershaveexpertiseinsuchareasasunfairanddeceptiveactsorpractices,theTruth-in-LendingAct,theRealEstateSettlementProceduresAct,andtheEqualCreditOpportunityAct,whileourrisk-managementexaminers’expertisecoverssuchareasascreditcardandmortgagebankingactivities,securitizationandasset-liabilitymodeling.

Aspartofourcontinuedefforttodevelopandmaintainahighlyskilledandflexibleworkforce,wehaveexpandedourinternalcertificateprogramtoincludetheBankSecrecyAct,ReceivershipClaims,FranchiseandAssetMarketing,andBasicComplianceExaminationfunctions.Thisprogramallowsemployeestoearnindustry-recognizedprofessionalcertifications.

Alsoin2007,weimplementedanumberofregulatoryreliefprovisionsincludedintheFinancialServicesRegulatoryReliefActof2006.TheseincludedrevisingRegulationR,whichsetsforthcircumstancesandconditionsunderwhichbankscancontinuetoeffectsecuritiestransactionsforcustomerswithoutbeingsubjecttoregistrationasabrokerundertheSecuritiesExchangeActof1934;expandingtheexaminationcyclefor“1”and“2”- ratedbanksto18monthsbyraisingtheprogram’sassetthresholdfrom$250millionto$500million;anddevelopingmodelprivacynotices–alongwithotherfederalfinancialinstitutionregulatoryagencies,theSecuritiesandExchangeCommissionandtheFederalTradeCommission–whichfinancialinstitutionshavetheoptiontouse.Wearemindfulofunnecessaryregulatoryburdenandwillcontinuetoeliminateitwherepossible.

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Finally,duringayearinwhichwewitnessedarangeofnaturaldisastersaroundthecountry,weissued12financialinstitutionlettersannouncingstepstoprovideregulatoryrelieftoinstitutionsandtofacilitaterecoveryinareasdamagedbyfire,floodandothernaturaldisasters.RecognizingthelastingdamagecausedbyHurricaneKatrina,wealsoissuedguidancetoremindexaminationpersonnelandtheindustrythatcommunitiesandfamiliesimpactedbyHurricaneKatrinamayneedadditionaltimetorecover.

Economic Inclusion TheFDICisstronglycommittedtoadvancingeconomicinclusionforallsegmentsofsociety.In2007,welaunchedourAllianceforEconomicInclusioninitiativeinninemarketsacrossthecountry,promotingtheexpandeduseofinsuredfinancialinstitutionsbysegmentsoftheU.S.populationthatarecurrentlyunderservedbythebankingindustry.Broad-basedcoalitionsoffinancialinstitutions,community-basedorganizationsandotherpartnerswereformedtofocusonexpandingbasicretailfinancialservicesforunder-servedpopulations.Servicesincludesavingsaccounts,affordableremittanceproducts,small-dollarloanprograms,targetedfinancialeducationprograms,alternativedeliverychannelsandotherasset-buildingprograms.Also,foreclosure-preventioneffortshavebeenintegrated.

Aspartofoureconomicinclusioneffortthisyear,wefocusedonassistingfinanciallystressedresidentialborrowers.WorkingthroughourAllianceforEconomicInclusionandwithNeighborWorks®America,wearepromotingabroadforeclosure-preventioninitiativeforconsumersatriskofforeclosurefromsubprimeandnontraditionalmortgagelending.

Inaddition,wehostedthreemeetingsoftheFDICAdvisoryCommitteeonEconomicInclusion(ComE-IN),whichwasapprovedbytheFDICBoardofDirectorspursuanttotheFederalAdvisoryCommitteeActinNovember2006.TheCommitteeprovidestheFDICwithadviceandrecommendationsonimportantinitiativesfocusedonexpandingaccesstobankingservicesbyunderservedpopulations.Thetopicsaddressedduringthe2007meetingswereaccesstosmalldollarloans,thesubprimemortgagesituationandmoneyservicesbusinessesandtheiraccesstothebankingsystem.

BasedonarecommendationfromtheAdvisoryCommitteeonEconomicInclusion,theFDICBoardapprovedatwo-yearpilotprojecttoreviewaffordableandresponsiblesmall-dollarloanprogramsinthirtydiversefinancialinstitutionsacrossthecountry.Thisprogramwillassistbankersbyidentifyinganddisseminatinginformationonreplicablebusinessmodelsforsmall-dollarloansbyevaluatingdatasubmittedtotheFDICaboutthebank’ssmalldollarloans,theoverallvalueandprofitabilityoftheirprogram,andthebenefittoconsumers.

During2007,theFDICalsocommencedworkontwosurveysintendedtoprovideextensivenewdataregardingeconomicinclusion.Bothofthesesurveyeffortsarerelatedtoamandateinsection7oftheFederalDepositInsuranceReformConformingAmendmentsActof2005requiringtheFDICtoconductasurveyofFDIC-insuredinstitutionseverytwoyearsregarding

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theireffortstoservetheunbanked.Thefirstofthesesurveys,theSurveyofBanks’EffortstoServetheUnbankedandUnderbanked,willbeconductedduring2008andisexpectedtoyieldsignificantinsightaboutbankeffortstoserveunbankedandunderbankedpopulations.TheFDICisalsoexploringthefeasibilityofconductingasurveyofU.S.householdstoestimatethepercentageoftheU.S.populationthatisunbankedandunderbanked.ThesurveyisscheduledtobeconductedinJanuary2009asasupplementtotheBureauoftheCensus’sCurrentPopulationSurvey.Itisexpectedtoyieldsignificantnewdataontheextentofthepopulationthatisunbankedand/orunderbankedandthereasonswhysomehouseholdsdonotmakegreateruseoftraditionalbankingservices.

Wealsocontinuedpromotingfinancialeducationtotheunbankedandunder-bankedpopulationsaroundthecountry,expandingoureffortstointegrateourMoney Smartfinancialeducationprogramintopublicschools.ToreachanevenwideraudiencewithMoney Smart,wedistributedarevisedversionofourinstructor-ledcurriculumandanonlinecomputer-basedinstruction.In2007,theFDICsurpasseditsgoalestablishedattheinceptionoftheMoney Smartprogramtoprovidefinancialeducationto1millionconsumers.Todate,over1.4millionconsumershavetakentheMoney Smartcurriculum.

Conclusion Aswebegin2008,theFDICaspirestoberecognizedbyitsemployeesandstakeholdersasanoutstandingemployerwithahighlymotivatedandengagedworkforcethatunderstandsandiscommittedtotheCorporation’smission,goalsandobjectives.Tothatend,during2007weconductedacomprehensiveemployeesurveyandhaveplansunderwaytofurtherimprovetheCorporationintheareasofcommunication,empowerment,employeeperformance,andcompensationsystems.OuremployeeshavebeenandalwayswillbetheFDIC’smostimportantresourceincompletingitsmission.IlookforwardtocontinuedworkwithourdedicatedstaffandexceptionalBoardofDirectorsin2008.

TheFDICremainscommittedtoworkingwithbankers,consumers,fellowregulators,Congressandotherstokeepthebankingindustryhealthyandtheeconomystrong–acommitmentthatwewillcontinuetokeepinto2008andwellbeyond.

Sincerely,

Sheila C. Bair

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IampleasedtojoinChairmanBairinpresentingour2007 Annual Report.Thereportprovidesourstakeholderswithmeaningfulfinancialandprogramperformanceinformationandsummarizesouraccomplishments.Ourpriorityistoprovidetimely,reliableandusefulinformation.

TheU.S.GovernmentAccountabilityOffice(GAO)issuedunqualifiedauditopinionsforthetwofundsadministeredbytheCorporation:theDepositInsuranceFund(DIF)andtheFederalSavingsandLoanInsuranceCorporation(FSLIC)ResolutionFund(FRF).Thismarksthesixteenthconsecutiveyearthatwehavereceivedunqualifiedauditopinions,anddemonstratesourcontinueddedicationtosoundfinancialmanagement.Itisalsoindicativeofthefinancialstatementsbeingfairlypresented.AchievingthismajormilestoneatteststothehardworkoftheFDIC’semployees,andIapplaudtheirefforts.

TheFDIC’sfinancialhighlightsduring2007include:

ForthetwelvemonthsendingDecember,31,2007,DIF’scomprehensiveincometotaled$2.2billioncomparedto$1.6billionforthepreviousyear,anincreaseof38percent.Excludingtherecognitionofexitfeesearnedof$345million(aone-timeadjustment)fromthe2006results,comprehensiveincomeroseby$1.02billion,or84percent,fromayearago.Thisyear-over-yearincreasewasprimarilyduetoa$611millionincreaseinassessmentrevenue,a$299millionincreaseininterestrevenue,a$298milliondecreaseintheunrealizedlossonavailable-for-sale(AFS)securities,offsetbya$42millionincreaseinoperatingexpensesanda$147millionincreaseintheprovisionforinsurancelosses.

The$611millionincreaseinassessmentrevenueresultedfromsignificantchangestotherisk-basedassessmentsystembeginningin2007.For2007,DIFrecognized$643millioninassessmentrevenue,representing$3.7billioningrosspremiumsduefrominsureddepositoryinstitutions,netof$3.1billioninassessmentcreditsused.Assessmentrevenueincreasedfrom$94millioninthefirstquarterto$245millioninthefourthquarter.Theincreasedrevenueeachquarterprimarilyresultedfromareductionintheassessmentcreditsusedbyfinancialinstitutionstooffsetgrossassessments.Thistrendtowardshigherassessmentincomeisexpectedtocontinueasinstitutionsdepletetheiravailablecredits.Ofthe$4.7billioninone-timeassessmentcreditsgranted,$1.6billion(34percent)remainedasofDecember31,2007.

In2007,wecontinuedoureffortstoreduceoperatingcostsandprudentlymanagethefundsthattheFDICadministers.Annualbudgetedoperatingexpendituresfor2007totaledapproximately$1.00billion,whichrepresentsanincreaseof$29million(3percent)from2006.OnDecember19,2007,theFDICBoardofDirectorsapproveda2008CorporateOperatingBudgettotaling$1.14billion,aslightincreaseoverthe2007budget,largelyduetothecostofemployeepayincreasesnegotiatedfor2008.

Message from the Chief Financial Officer • Steven O. App

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Capitalinvestmentspendingdecreasedsignificantlyin2007toapproximately$12million,roughly48percentof2006levels.Thisdecreaseislargelyattributabletothecompletionoftwomajorinvestmentprojectsin2006.TheFDICnowhasfouractiveinvestmentprojectsremaining.Investmentspendingisprojectedtobe$17millionin2008.

InaccordancewiththerequirementsoftheFederalManagers’FinancialIntegrityActof1982,theFDIC’smanagementconducteditsannualassessmentandconcludedthatthesystemofinternalcontrols,takenasawhole,complieswithinternalcontrolstandardsprescribedbytheGovernmentAccountabilityOffice(GAO)andprovidesreasonableassurancethattherelatedobjectivesarebeingmet.

Ourperformancein2007givesusconfidencethatwecanmeetthechallengesofanever-changingbankingindustry.In2008,wewillcontinuetofocusoncosteffectivemanagementofboththeDIFandtheFRF,whilemaintainingastrongenterprise-wideriskmanagementandinternalcontrolprogram.

Sincerely,

Steven O. App

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The Year in Review

In2007,theFDICcontinueditsworkonhigh-profilepolicyissues,rangingfromimplementationofdepositinsurancereformtofinalizingcapitalreform.Inaddressingtheseandotherissues,theCorporationpublishednumerousNoticesofProposedRulemaking(NPRs)throughouttheyear,seekingcommentfromthepublic.TheCorporationalsocontinuedtofocusonastrongsupervisoryprogramandreorganizedexaminationteamsthatinspectedfinancialinstitutionsthatoriginatesignificantvolumesofsubprimeloansandnontraditionalloanproducts.TheFDICcontinuedexpansionoffinancialeducationprograms,providingMoney Smarttrainingtohundredsofpublicschoolteachers.Italsosponsoredandco-sponsoredmajorconferencesandparticipatedinlocalandglobaloutreachinitiatives.

HighlightedinthissectionaretheCorporation’s2007accomplishmentsineachofitsthreemajorbusinesslines–Insurance,SupervisionandConsumerProtection,andReceivershipManagement–aswellasitsprogramsupportareas.

Insurance

TheFDICinsuresbankandsavingsassociationdeposits.Asinsurer,theFDICmustcontinuallyevaluateandeffectivelymanagehowchangesintheeconomy,thefinancialmarketsandthebankingsystemaffecttheadequacyandtheviabilityoftheDepositInsuranceFund.

Implementation of Deposit Insurance Reform OnNovember2,2006,theFDICBoardofDirectorsadoptedafinalruleonassessmentsaspartoftheimplementationoftheFederalDepositInsuranceReformActof2005(ReformAct).ThenewruleenablestheFDICtomorecloselytieeachbank’sassessmentstotheriskthatitposestotheDepositInsuranceFund.

EffectiveJanuary1,2007,assessmentratesrangedfrom5to7basispointsforRiskCategoryIinstitutions,10basispointsforRiskCategoryIIinstitutions,28basispointsforRiskCategoryIIIinstitutionsand43basispointsforRiskCategoryIVinstitutions.Theseratesareuniformly3basispointsgreaterthanthebaseassessmentratesalsoadoptedbytheBoardinNovember2006.TheBoardretainstheflexibilitytoadjustrateswithoutfurthernotice-and-commentrulemaking,providedthatnosuchadjustmentcanbegreaterthan3basispointsinanyquarter;thattheseadjustmentscannotresultinratesmorethan3basispointsaboveorbelowthebaserates;andthatratescannotbenegative.ThetableonthefollowingpageshowsthedistributionofinstitutionsamongtheriskcategoriesaswellaswithinRiskCategoryI.

I. Management’s Discussion and Analysis

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Institutionsthatcontributedtothebuild-upoftheinsurancefundsthrough1996receivedanaggregate$4.7billioninone-timecreditsundertheReformActtooffsetfuturedepositinsuranceassessments.Thesecreditswereallocatedtoinstitutionsbasedontheir1996assessmentbaseshares.

Theaverageannualizedassessmentrate(weightedbyeachinstitution’sassessmentbase),beforeaccountingfortheuseofcredits,wasapproximately5.4basispointsforthefirstthreequartersof2007.Approximately68percentofallinstitutions(71percentofinstitutionsinRiskCategoryI)wereabletooffsettheirfirst,second,andthirdquarter2007assessmentsentirelyusingcredits.

InSeptember2007,theFDICissuedanAdvanceNoticeofProposedRulemaking(ANPR),seekingcommentsonalternativemethodsforallocatingdividendsaspartofapermanentfinalruletoimplementthedividendrequirementsoftheReformAct.InOctober2006,theBoardadoptedatemporaryrulegoverningdividends,whichexpiresattheendof2008.ThecommentperiodfortheDividendANPRclosedonNovember19,2007.

International Capital Standards Ensuringtheadequacyofinsuredinstitutions’capitalunderBaselIIremainedakeyobjectivefortheFDIC.In2007,theFDICdevotedsubstantialresourcestodomesticandinternationaleffortstoensurethesenewrulesaredesignedandimplementedappropriately.Theseefforts,inconjunctionwithotherfederalfinancialregulators,includedpublishingafinalrulefortheimplementationoftheadvancedapproachesofBaselIIaswellasproposedexaminationguidance.Thisguidanceisintendedtoprovidetheindustrywithregulatoryperspectivesforimplementation.InconcertwithregulatorsfromotherU.S.bankingagenciesandotherBaselCommitteemembercountries,theFDICalsoparticipatedinareviewofsupervisoryandregulatorysupplementalcapitalmeasurescurrentlybeingusedtoensurebankcapitaladequacy.

TheBaselIIFinalRulewaspublishedintheFederal RegisteronDecember7,2007,withaneffectivedateofApril1,2008.Thefindingsofthefourthquantitativeimpactstudy(QIS-4),whichwerecompletedin2005,suggestedthat,withoutmodification,theBaselIIframeworkcouldresultinanunacceptabledeclineinminimumrisk-basedcapitalrequirements.Asaresult,theagencieshaveincludedsafeguardsagainstthepossibility

D o l l a r s i n b i l l i o n s Annual Percent Rate in Percent of Total Risk Basis Number of of Total Assessment Assessment Category Points Institutions Institutions Base Base

I - Minimum 5 2,709 32% $3,872 56% I - Middle 5.01– 6.00 3,088 36% 2,078 30% I - Middle 6.01–6.99 1,422 17% 456 7% I - Maximum 7 859 10% 296 4% II 10 422 5% 163 2% III 28 64 1% 14 0% IV 43 7 0% 1 0% Total 8,571 100% $ 6,880 100%

Distribution of Institutions and Assessment Base Among Risk CategoriesQuarterEndingSeptember30,2007

Note: Institutions are categorized based on supervisory ratings, debt ratings and financial data as of September 30, 2007. Rates do not reflect the application of assessment credits. Percentages may not add to 100 percent due to rounding.

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thatthenewrulesdonotworkasintended.Throughitssupervisoryprogram,theFDICcontinuestoworkwithcertaininsuredstatenon-memberbanksubsidiariesofbankingorganizationsthatplantooperateunderthenewcapitalaccord,toreviewandassessimplementationplansandprogresstowardsmeetingqualificationrequirements.

Domestic Capital Standards TheFDICisinvolvedineffortstorevisetheexistingrisk-basedcapitalstandardsforbanksthatwillnotbesubjecttotheadvancedapproachesofBaselII.Assuch,theFDIChastakenaleadroleindevelopingaproposedrulethatwouldimplementthestandardizedapproachofBaselII(BaselIIStandardizedNPR).Theproposedruleisintendedtomodernizetherisk-basedcapitalrulesforbanksthatdonotusetheadvancedapproachesofBaselII,andminimizepotentialcompetitiveinequitiesthatmayarisebetweenbanksthatadoptBaselIIandbanksthatremainundertheexistingrules.TheagencieshaveindicatedthattheyexpecttoissuetheBaselIIStandardizedNPRduringthefirstquarterof2008.

Center for Financial Research During2007,theFDIC’sCenterforFinancialResearch(CFR)co-sponsoredtwomajorresearchconferences:the17thAnnualDerivativesSecuritiesandRiskManagementConferenceandtheseventhAnnualBankResearchConference.

The17thAnnualDerivativesSecuritiesandRiskManagementConference,whichtheFDICco-sponsoredwithCornellUniversity’sJohnsonGraduateSchoolofManagementandtheUniversityofHouston’sBauerCollegeofBusiness,washeldinApril2007atFDIC’sVirginiaSquarefacilityandattractedover100researchersfromaroundtheworld.

TheCFRandThe Journal of Financial Services Research(JFSR)hostedtheseventhAnnualBankResearchConferenceinSeptemberwithover100attendees.Theconferenceincludedthepresentationof12papers,anationallyrecognizedguestspeaker,FrancisA.Longstaff–AllstateProfessorofInsuranceandFinance,AndersonSchoolofManagement,UCLA,anexpertpanel,anddiscussionsontimelyissuesaffectingthefinancialsystem.

TheCFRalsohostedtheBaselResearchTaskForceAnnualWorkshopinMay.Approximately85researchersandpolicymakersattendedtheworkshop.Additionally,theFDICalongwiththeFederalReserveBankofChicago,theUniversityofKansasSchoolofBusiness,andThe JFSR, co-sponsoredtheMergersandAcquisitionsofFinancialInstitutionsConferenceinNovember.TenCFRworkingpaperswerepublishedin2007ontopicsincludingriskmeasurement,exchangerateexposure,andfinancialinstitutioncreditandretailbankingrelationships.

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Supervision and Consumer Protection

SupervisionandconsumerprotectionarecornerstonesoftheFDIC’seffortstoensurethestabilityofandpublicconfidenceinthenation’sfinancialsystem.TheFDIC’ssupervisionprogrampromotesthesafetyandsoundnessofFDIC-supervisedinsureddepositoryinstitutions,protectsconsumers’rights,andpromotescommunityinvestmentinitiatives.

Examination Program TheFDIC’sstrongbankexaminationprogramisthecoreofitssupervisoryprogram.Atyear-end2007,theCorporationwastheprimaryfederalregulatorfor5,257FDIC-insuredstate-charteredinstitutionsthatarenotmembersoftheFederalReserveSystem(generallyreferredtoas“statenonmember”institutions).Throughsafetyandsoundness,consumercomplianceandCommunityReinvestmentAct(CRA),andotherspecialtyexaminations,theFDICassessestheiroperatingcondition,managementpracticesandpolicies,andtheircompliancewithapplicablelawsandregulations.TheFDICalsoeducatesbankersandconsumersonmattersofinterestandaddressesconsumers’questionsandconcerns.

In2007,theCorporationconducted2,258statutorily-requiredsafetyandsoundnessexaminations,includingareviewofBankSecrecyActcompliance,andallrequiredfollow-upexaminationsforFDIC-supervisedprobleminstitutionswithinprescribedtimeframes.TheFDICalsoconducted1,773CRA/Complianceexaminations(1,241jointCRA/complianceexaminations,528compliance-onlyexaminations,1andfourCRA-onlyexaminations)and2,941specialtyexaminations.AllCRA/complianceexaminationswerealsoconductedwithinthetimeframesestablishedbyFDICpolicy,includingrequiredfollow-upexaminationsofprobleminstitutions.Thetableonthefollowingpagecomparesthenumberofexaminations,bytype,conductedin2005,2006and2007.

1Compliance-onlyexaminationsareconductedformostinstitutionsatornearthe mid-pointbetweenjointcompliance-CRAexaminationsundertheCommunity ReinvestmentActof1977,asamendedbytheGramm-Leach-BlileyActof1999. CRAexaminationsoffinancialinstitutionswithaggregateassetsof$250million orlessaresubjecttoaCRAexaminationnomorethanonceeveryfiveyearsifthey receiveaCRAratingof“Outstanding”andnomorethanonceeveryfouryearsif theyreceiveaCRAratingof“Satisfactory”ontheirmostrecentexamination.

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AsofDecember31,2007,therewere77insuredinstitutionswithtotalassetsof$22.2billiondesignatedasprobleminstitutionsforsafetyandsoundnesspurposes(definedasthoseinstitutionshavingacompositeCAMELS2ratingof“4”or“5”),comparedtothe51probleminstitutionswithtotalassetsof$8.5billiononDecember31,2006.Thisconstituteda51percentyear-over-yearincreaseinthenumberofprobleminstitutionsanda161percentincreaseinprobleminstitutionassets.During2007,38institutionswithaggregateassetsof$6.4billionwereremovedfromthelistofproblemfinancialinstitutions,while64institutionswithaggregateassetsof$26.5billionwereaddedtothelistofproblemfinancialinstitutions.TheFDICistheprimaryfederalregulatorfor47ofthe77probleminstitutions.

During2007,theCorporationissuedthefollowingformalandinformalcorrectiveactionstoaddresssafetyandsoundnessconcerns:48CeaseandDesistOrders,threeTemporaryCeaseandDesistOrders,onemodifiedCeaseandDesistOrder,and158MemorandaofUnderstanding.Oftheseactionsissued,25CeaseandDesistOrdersand31MemorandaofUnderstandingwereissuedbased,inpart,onapparentviolationsoftheBankSecrecyAct.

2 TheCAMELScompositeratingrepresentstheadequacyofCapital,thequalityof Assets,thecapabilityofManagement,thequalityandlevelofEarnings,theadequacy ofLiquidity,andtheSensitivitytomarketrisk,andrangesfrom“1”(strongest) to“5”(weakest).

200� 200� 200�Safety and Soundness: State Nonmember Banks 2,03� 2,184 2,198 Savings Banks 2�3 201 199 Savings Associations 3 2 1 National Banks 0 0 0 State Member Banks 3 1 1Subtotal - Safety and Soundness Examinations 2,2�� 2,388 2,399CRA/Compliance Examinations: Community Reinvestment Act - Compliance �,2�� 777 815 Compliance-only �2� 1,177 1,198 CRA-only � 5 7Subtotal CRA/Compliance Examinations �,��3 1,959 2,020Specialty Examinations: Trust Departments ��� 468 450 Data Processing Facilities 2,�23 2,584 2,708Subtotal-Specialty Examinations 2,��� 3,052 3,158Total �,��2 7,399 7,577

FDIC Examinations 2005-2007

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AsofDecember31,2007,43FDIC-supervisedinstitutionswereassigneda“4”ratingforsafetyandsoundnessandfourinstitutionswereassigneda“5”rating.Forty-twoofthe“4”-ratedinstitutionswereexaminedin2007,andformalorinformalenforcementactionshavebeenfinalizedtoaddresstheFDIC’sexaminationfindings.All“5”-ratedinstitutionswereexaminedin2007.

AsofDecember31,2007,eightFDIC-supervisedinstitutionswereassigneda“4”ratingforcompliance;noinstitutionswereassigneda“5”rating.Intotal,threeofthe“4”-ratedinstitutionswereexaminedin2007;threewereexaminedpriorto2007butarecurrentlyinvariousstagesofappealingtheratings,andtheremainingtwowereexaminedin2006.Withregardtothetwoforwhichexaminationswerelastconductedin2006,aninformalenforcementactionforonewasissuedinSeptember2007;therefore,anexaminationisnotdueuntil2008.TheotherinstitutionisoperatingunderaCeaseandDesistOrderandtheexaminationremainsopen.

TheCorporationhasissuedenforcementactionstoaddresstheexaminationfindingsforallfiveoftheinstitutionsthatwerenotintheprocessofanappeal.TheseactionsincludeoneCeaseandDesistOrderasnotedaboveandfourMemorandaofUnderstanding.

Joint Examination Teams TheFDICusedjointcompliance/riskmanagementexaminationteams(JETs)toassessrisksassociatedwithnew,nontraditionaland/orhigh-riskproductsbeingofferedbyFDIC-supervisedinstitutions.TheJETapproachrecognizesthattofullyunderstandthepotentialrisksinherentincertainproductsandservices,theexpertiseofbothcomplianceandriskmanagementexaminersisrequired.TheJETapproachhasthreeprimaryobjectives:

• ToenhancetheeffectivenessoftheFDIC’ssupervisoryexaminations inuniquesituations;

• Toleveragetheskillsofexaminerswhohaveexperiencewithemerging andalternativeloananddepositproducts;and

• Toensurethatsimilarsupervisoryissuesidentifiedindifferentareas ofthecountryareaddressedconsistently.

TheJETconceptevolvedfromtheFDIC’sexaminationofstatenonmemberbanksthatwereconductingpaydaylendingactivitiesthroughthird-partyvendors.Paydaylendinginvolveduniqueandcomplexproductswithsignificantsafetyandsoundnessandconsumerprotectionrisksfortheinstitutionsinvolvedinthisactivity.

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Subprime Hybrid Adjustable Rate Mortgages In2007,theFDICcontinuedtocloselymonitortheexpansionofsubprimehybridadjustableratemortgages(ARMs),typicallyofferedtosubprimeborrowers.HybridARMsstartwithalowfixedinterestrateforaninitialperiod,whichoftenlastsfortwotothreeyears,andthenresetstoavariablerate.Mortgagelenderstypicallyqualifiedborrowersbasedonthelowintroductorypaymentamountratherthanatthefullyindexedinterestrate,assumingafullyamortizingrepaymentschedule.Suchunderwritingstandardsandloantermscancausepaymentshock,theconsequencesofwhichmaynothavebeenfullyexplainedtoborrowers.Inaddition,manylenderscombinedtheseloanswithotherpotentiallyriskyfeatures,suchasrequiringlittleornodocumentationofincome,highloan-to-valueratios,andsimultaneoussecond-lienmortgages,whichcouldcompoundtherisktobothborrowersandlenders.

Toaddresstheseconcerns,theFDICjoinedtheotherfederalfinancialinstitutionregulatoryagenciesinissuingtheStatement on Subprime Mortgage Lending(SubprimeGuidance)onJuly10,2007.Theguidancecoversthreeprimaryareas:riskmanagementpractices,consumerprotectionprinciples,andcontrolsystems.Theriskmanagementsectionfocusesonavoidingpredatorylending,followingprudentunderwritingstandardsforqualifyingborrowers,andencouraginginstitutionstoworkconstructivelywithresidentialborrowerswhoareindefaultorwhosedefaultisreasonablyforeseeable.

Working through Mortgage Resets TheFDICbecameincreasinglyconcernedaboutborrowers’abilitytoservicethehigherdebtloadresultingfrompaymentshockwhentheirhybridARMspaymentsreset.Manyborrowers,especiallythosewhowerequalifiedatalowintroductorypaymentamountratherthanthefullyindexedinterestrateandonafullyamortizingrepaymentschedule,maynothavesufficientfinancialcapacitytomakethehighercontractualpaymentsowedontheirhomeloans.

Toaddressthisconcern,theFDICledtheagenciesinissuingtheStatement on Working with Mortgage BorrowersinApril2007.Thisguidanceprimarilyaddressesthoseinstanceswhenafinancialinstitutionhasretainedaresidentialmortgageloanonitsbooks.TheagenciesissuedtheStatement on Loss Mitigation Strategies for Servicers of Residential MortgagesinSeptember2007toprovideguidancetoentitiesthatserviceresidentialmortgageloansforothers.Inaddition,theFDICjoinedtheConferenceofStateBankSupervisorsandtheAmericanAssociationofResidentialMortgageRegulatorsinissuingtheSupplemental Information for Loss Mitigation Strategies.Thisguidanceencouragesservicerstoconsidertheborrower’sabilitytorepaymodifiedobligations,takingintoaccounttheborrower’stotalmonthlyhousing-relatedpaymentsasapercentageoftheborrower’sgrossmonthlyincome.

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TheFDICisencouragingservicerstoadoptastreamlinedapproachtomakingthedecisiontograntloanmodificationswherenecessary.Wherethehomeownergenerallyhasbeencurrentatthestarterrate,butcannotrefinanceintoday’smarketormakethehigherpaymentsaftertheinterestrateresets,thentheloanshouldbemodifiedtokeepitatthestarterrateforalong-termsustainableperiod.Suchmodificationarrangementswouldalsobenefitlendersandinvestorswhowouldnotonlyhaveahigherlevelofperformingloans,butwouldalsoavoidadministrativeexpensesassociatedwithservicingdelinquentdebtsorforeclosingontheproperty.Inaddition,financialinstitutionsmayreceivefavorableCRAconsiderationforprogramsthattransitionlow-tomoderate-incomeborrowersfromhighercostcredittolowercostcredit,providedthattheloanmodificationsaremadeinaprudentmanner.

Protection of Federal Benefit Payments TheFDIC,alongwiththeotherfederalfinancialinstitutionregulators,proposedguidancethatencouragesfederallyregulatedfinancialinstitutionstofollowbestpracticestoprotectfederalbenefitpaymentsfromgarnishmentorders.Federallawprotectsfederalbenefitpayments–suchasSocialSecuritybenefitsandVeterans’benefits–fromgarnishmentordersandtheclaimsofjudgmentcreditors,subjecttocertainexceptions.Creditorsanddebtcollectorsareoftenabletoobtainordersfromstatecourtsgarnishingfundsinaconsumer’saccountthatdonotmeettherequirementsofexemptfunds.Tocomplywithstatecourtgarnishmentorders,financialinstitutionsoftenplaceatemporaryfreezeorholdonanaccountuponreceiptofagarnishmentorder,whichcancausesignificanthardshipfortheaccountholder.Theagenciesdevelopedproposedguidance,whichincludesbestpractices,toencouragefinancialinstitutionstominimizethehardshipsencounteredbyfederalbenefitfundsrecipientsandtodosowhileremainingincompliancewithapplicablelaws.ThecommentperiodclosedinNovember2007andtheagencieshavereviewedthecommentsandwilldeterminethebestcourseofactionduring2008.

Large Complex Financial Institution Program In2007,theFDICledacomprehensiveinitiativetostandardizedatacaptureandreportingthroughtheLargeInsuredDepositoryInstitution(LIDI)Program.UnderthisProgram,supervisorystaffthroughoutthenationperformscomprehensivequantitativeandqualitativeriskanalysisoninstitutionswithassetsover$10billion,orunderthisthresholdatregionaldiscretion.Thisinformationisusedbyvariousbusinesslinestoperformcriticalfunctionsrelatedtoinsurance,resolutionsandsupervision.

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In2007,theFDICsupportedtheinsurancefunctioninanalyzingandsettingappropriateinsurancepremiumsforlargeinsuredfinancialinstitutions.TheCorporationalsoledandsupportedvariousinitiativesdesignedtobetterunderstandpotentialresolutionchallengesposedbycomplexinsuredfinancialinstitutions.

TheFDICcontinuedtoassessinternalandindustrypreparednessrelativetoBaselIIcapitalrulesandwasactivelyinvolvedindomesticandinternationaldiscussionsintendedtoensureeffectiveimplementationoftheNewCapitalAccord.ThisincludedparticipationinnumeroussupervisoryworkinggroupmeetingswithforeignregulatoryauthoritiestoaddressBaselIIhome-hostissues.

Bank Secrecy Act/Anti-Money Laundering TheFDICpursuedanumberofBankSecrecyAct(BSA),Counter-FinancingofTerrorism(CFT)andAnti-MoneyLaundering(AML)initiativesin2007.

International AML/CFT Initiatives TheFDICconductedthreetrainingsessionsin2007for57centralbankrepresentativesfromAlgeria,Bosnia,Egypt,Indonesia,Jordan,Kuwait,Morocco,Pakistan,Paraguay,Philippines,Tanzania,andTurkey.ThetrainingfocusedonAML/CFTcontrols,theAMLexaminationprocess,customerduediligence,suspiciousactivitymonitoring,andforeigncorrespondentbanking.ThesessionsalsoincludedpresentationsfromtheFederalBureauofInvestigationoncombatingterroristfinancing,andtheFinancialCrimesEnforcementNetwork(FinCEN)ontheroleoffinancialintelligenceunitsindetectingandinvestigatingillegalactivities.

InadditiontohostingonsiteAML/CFTinstruction,theFDICprovidedguidanceandresourcesforinternationalAML/CFTfinancialsystemassessmentsandtraining.In2007,theFDICprovidedtechnicalassistanceinYemenandSenegaltoevaluateAMLcontrolsandeachcountry’sAMLstatutoryandlegislativeframework.Also,theFDICdeliveredanAMLpresentationattheU.S.-MiddleEast/NorthAfricaPrivateSectorDialogueconferenceinDubai,UnitedArabEmirates.Finally,theFDICmetwithrepresentativesfromtheDepositInsuranceCorporationofJapan,theKoreanFinancialIntelligenceUnit,theBancoCentraldelUruguayandtheBankofAl-Maghrib,Morocco,todiscusstheAMLexaminationprocess,enforcementauthorityandtheFDIC’ssupervisoryroleincombatingmoneylaunderingandotherillicitfinancialactivities.

Enforcement Actions TheFDIC,alongwiththeotherfederalbankingagencies,releasedtheInteragency Statement on Enforcement of BSA/AML RequirementsonJuly19,2007.ThestatementprovidesforgreaterconsistencyinBSAenforcementdecisionsandoffersinsightintohowthosedecisionswere

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made.Thestatementdescribesthecircumstancesandprovidesexamplesunderwhichthefederalbankingagencieswillissueaceaseanddesistorder.ApplicablestatutesmandatethattheappropriateagencyshallissueaceaseanddesistorderifaregulatedinstitutionfailstoestablishandmaintainaBSAcomplianceprogramorcorrectapreviouslyidentifiedproblemwithitsBSAcomplianceprogram.

Promoting Economic Inclusion TheFDICpursuedanumberofinitiativesin2007topromoteinclusionoftraditionallyunderservedpopulationsinbankingservicesandtoensureprotectionofconsumersintheprovisionoftheseservices.

The Advisory Committee for Economic Inclusion TheFDICAdvisoryCommitteeonEconomicInclusion(ComE-IN)wasestablishedbyChairmanSheilaC.BairandtheFDICBoardofDirectorspursuanttotheFederalAdvisoryCommitteeAct.TheComE-INwascharteredinNovember2006,andprovidestheFDICwithadviceandrecommendationsonimportantinitiativesfocusedonexpandingaccesstobankingservicesbyunderservedpopulations.

ThreeComE-INmeetingswereheldduring2007.Theinauguralmeetingaddressedaccesstoaffordablesmalldollarloans.Onerecommendationthatresultedwastolaunchasmalldollarloanpilotprogram.TheBoardofDirectorsoftheFDICsubsequentlyapprovedatwo-yearpilotprojecttoreviewaffordableandresponsiblesmall-dollarloanprogramsinfinancialinstitutions.Thepurposeofthestudyistoidentifyeffectiveandreplicablebusinesspracticestohelpbanksincorporateaffordablesmall-dollarloansintotheirothermainstreambankingserviceofferings.Bestpracticesresultingfromthepilotwillbeidentifiedandbecomearesourceforotherinstitutions.

Thesecondmeetingaddressedthesubprimemortgagesituation,howitdevelopedandpossiblesolutions.Thethirdmeetingcoveredwaystoensuresafe,availableservicesforthemoneyservicesbusinessesandexaminedtheiraccesstothebankingsystem.

Alliance for Economic Inclusion In2007,theFDICformallylaunchedtheAllianceforEconomicInclusion(AEI),abroad-basedcoalitionofbanks,communityorganizations,foundations,educators,andlocal,stateandfederalagenciesinnineunderservedmarketsacrossthenation–theGreaterBostonarea;Wilmington,DE;Baltimore,MD;SouthTexas(Houston/Austin);Chicago;theLouisianaandMississippiGulfCoast;Alabama’sBlackBelt;KansasCity;andLosAngeles.Thesediversemarketsincludelow-andmoderate-incomeneighborhoods,urbanneighbor-hoods,minoritycommunitiesandruralareas.ThegoaloftheAEIinitiativeistoworkwithfinancialinstitutionsandotherpartnersinselectmarketstobringthosewhoareunbankedandunderservedintothefinancialmainstream.

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Morethan700banksandotherorganizationshavejoinedtheAEI.UndertheauspicesoftheAEI,approximately28,000bankaccountshavebeenopened;29,000consumershavereceivedfinancialeducation;41banksaredevelopingsmall-dollarloanprograms;and21banksnowofferremittanceproductsallowingcustomerstosendmoneytofriendsorfamilymembersoutsidetheU.S.TheFDIChasalsoincludedacomponentofitsforeclosurepreventioneffortswithintheAEI.

Affordable Small-Dollar Loan Guidelines and Pilot Program Manyconsumerswithbankaccountsturntohigh-costpaydayorothernon-banklendersbecausetheyareaccessibleandcanquicklyprovidesmallloanstocoverunforeseencircumstances.Tohelpenableinsuredinstitutionstobetterserveanunderservedandpotentiallyprofitablemarketwhilehelpingconsumersavoid,ortransitionawayfrom,relianceonhigh-costdebt,theFDICissueditsAffordable Small-Dollar Loan GuidelinesonJune19,2007.Theguidelinesexploreseveralaspectsofproductdevelopment,includingaffordabilityandstreamlinedunderwriting.Theyalsodiscusstools,suchasfinancialeducationandlinkedsavingsaccountsthatmayaddresslong-termfinancialissuesthatconcernborrowers.TheguidelinesalsonotethatFDIC-supervisedinstitutionsofferingproductsthatcomplywithconsumerprotectionlaws,andarestructuredinaresponsible,safeandsoundmanner,mayreceivefavorableconsiderationundertheCommunityReinvestmentAct(CRA).Additionally,onJune19,2007,theFDICBoardapprovedatwo-yearpilotprojecttoreviewaffordableandresponsiblesmall-dollarloanprogramsinfinancialinstitutionsandassistbankersbyidentifyinganddisseminatinginformationonreplicablebusinessmodelsforsmall-dollarloans.

Minority Depository Institutions TheFDIC’sMinorityBankers’Roundtableseriesisaforumdesignedto,amongotherthings,explorepossiblepartnershipsbetweentheMDIcommunityandtheFDIC,aswellastoseekinputonhowtheFDICcanbetterpromotetheavailabilityoftechnicalassistancetotheMDIsegmentoftheindustry.Fromthe2006Roundtablesessionsevolvedideasfortwopartnershipsthatwerepilotedduring2007.Thefirstinitiative,a“UniversityPartnerships”pilot,isdesignedtodothefollowing:

• PromotefinancialliteracyatHistoricallyBlackCollegesandUniversities (HBCUs)orotherschoolswithasignificantminoritypopulation;

• ProvidethepartneringMDIandtheFDICanopportunitytokeepthe businessschooldeansawareofcurrentindustryissuesandtobuild goodwilloncampus;and

• OfferboththeMDIandtheFDICanopportunitytoshowcasetheir respectivecareeropportunities.

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Thesecond2007RoundtableinitiativeinvolvedpartneringwiththePuertoRicoBankersAssociationtodeliverahigh-levelspecializedComplianceSchool.ThiseventtookplacefromNovember6-9,2007,inSanJuan,PuertoRico,andwasattendedby150bankers.ThistypeofpartnershipwasthefirstfortheFDICandwasconsistentwiththegoalofincreasingusageofFDICtechnicalassistance.

InJuly2007,theFDIChostedthesecondannualNationalMinorityDepositoryInstitutionConferenceinMiami,Florida.Thiseventwascoordinatedonaninteragencybasisanddrewapproximately170attendees.Inadditiontopresentationsbyseniorofficialsfromallofthefederalbankingregulatoryauthorities,theprogramcoveredthesetopics:BroadeningAccesstotheFinancialMainstream,OpportunitiesforNeighborWorks®AmericaandMinorityCommunityBankers,andCapitalEnhancementandInvestmentOpportunities,includingapresentationontheCommunityDevelopmentFinancialInstitutionFund.TheprogramalsoincludedworkshopsonInformationTechnology,BSAEmergingIssues,ComplianceandCRAHotTopics,andtheRevisedInteragencyPolicyStatementontheAllowanceforLoanandLeaseLosses.Feedbackfromtheattendeeswasoverwhelminglypositive.Athirdannualinteragencyconferenceisplannedfor2008.

Information Technology, Cyber Fraud and Financial Crimes TheFDICandotherFFIECregulatoryagenciesjointlyissuedguidancerequiringfinancialinstitutionstostrengthenaccountaccesscredentialsinanefforttocurbonlinefraudandprotectbothconsumerandcommercialInternetbankingcustomers.TheguidancerequiredtheimplementationofstrongerauthenticationformostinstitutionsonorbeforeJanuary1,2007.FDICexaminerstrackedandreportedoncompliancewiththeguidanceduringvariousexaminationactivitiesin2007.Detailscollectedsuggestthatanoverwhelmingmajority(94percent)oftheinstitutionshavecompliedwiththeprovisionsoftheguidance.Mostoftheremaininginstitutionshaveplanstocomply.IndustryfeedbacksuggeststhatstrongerauthenticationhasreducedonlineInternetbanking-relatedfraudthroughmoresecureaccesscredentialmanagementpractices.

Othermajoraccomplishmentsduring2007incombatingidentitytheftincludedthefollowing:

• Assistedfinancialinstitutionsinidentifyingandshuttingdownapproximately 1,400“phishing”Websites.Theterm“phishing”–asinfishingfor confidentialinformation–referstoascamthatencompassesfraudulently obtainingandusinganindividual’spersonalorfinancialinformation.

• Issued323SpecialAlertstoFDIC-supervisedinstitutionsofreported casesofcounterfeitorfraudulentbankchecks.

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• ParticipatedonthePresident’sIdentityTheftTaskForceandfiveofits primarysubgroups.TheFDICwasoneofseventeenfederalagencies thatparticipated.TheTaskForcesubmitteditsreporttothePresident onApril11,2007.Thereportcontainsacomprehensivedescriptionof theproblemaswellasnumerousrecommendationsconcerningwhat thefederalgovernmentandprivateindustrycandotomitigatethis seriousproblem.SincethereportwassubmittedtothePresident,the FDICcontinuestoparticipateinseveralTaskForcesubgroupsthatare performingadditionalresearchonspecificaspectsofidentitytheftand plantosubmitadditionalrecommendationstothePresidentinthe springof2008.

• TheFDIC,inadditiontotheotherfederalbankingagenciesandtheFederal TradeCommission,publishedafinalidentitytheftredflagregulationand guidelinesonNovember9,2007.Theregulationandguidelinesimplement sections114and315oftheFairandAccurateCreditTransactionsActof 2003.ComplianceisexpectedbyNovember1,2008.

Consumer Complaints and Inquiries TheFDICinvestigatesconsumercomplaintsaboutFDIC-supervisedinstitutionsandanswersinquiriesfromthepublicaboutconsumerprotectionlawsandbankingpractices.In2007,theFDICreceived11,624writtencomplaints,ofwhich4,457wereagainststatenonmemberinstitutions.TheCorporationrespondedtoover93percentofthesecomplaintswithintimelinessstandardsestablishedbycorporatepolicy.TheFDICalsorespondedto3,656writtenand3,321telephoneinquiriesfromconsumersregardingstatenonmemberinstitutions.Overallin2007,theFDIChandled5,856consumertelephonecallsfromthepublicandmembersofthebankingcommunityaboutconsumerprotectionissuesnotincludingdepositinsuranceinquiries.

Deposit Insurance Education TheFDIChasanextensivedepositinsuranceeducationprogramconsistingofseminarsforbankers,electronictoolsforestimatingdepositinsurancecoverage,andwrittenandelectronicinformationtargetedforbothbankersandconsumers.TheFDICalsorespondstothousandsoftelephoneandwritteninquirieseachyearfromconsumersandbankersregardingFDICdepositinsurancecoverage.TheFDICcompletedamulti-prongedeffortin2007toupdatenumerouspublicationsandeducationaltoolsforconsumersandbankersonFDICinsurancecoverage,includingconsumerbrochures,bankerresourceguides,videosandtheElectronicDepositInsuranceEstimator.

TheFDIChostedtwoidenticalseriesoftelephoneseminarsforbankersontheFDIC’srulesfordepositinsurancecoverage.EachseriesconsistedoftopicsonBasicConceptsofDepositInsuranceCoverage,CoverageforRetirementandEmployeeBenefitPlanAccounts,TrustAccountCoverage,andCoverageforBusinessandGovernmentAccounts.Thesefreeseminars

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wereopentoemployeesofallFDIC-insuredbanksandsavingsassociations.Thetelephoneconferenceswereattendedbybankersinapproximately11,000locations.Manyoftheselocationsrepresentbankbranchofficeswheremultipleemployeestookpartinthetraining.

TheFDICcoordinatedwithbanktradeassociationstoconductsevencomprehensiveseminarsforfinancialinstitutionemployeesontherulesfordepositinsurancecoverage.Theseseminars,whichwereconductedinclassroomsettingsthroughouttheUnitedStates,providedacomprehensivereviewofhowFDICinsuranceworks,includingthe2006changestotheFDIC’sfinalrulesforinsurancecoverage.

TheFDICalsocompletedacomprehensiveandauthoritativeresourceguideforbankers,attorneys,financialadvisorsandsimilarprofessionalsontheFDIC’srulesandrequirementsfordepositinsurancecoverageofrevocableandirrevocabletrustaccounts.ThenewtrustguidebookwillbepublishedontheFDIC’sWebsiteinthefirstquarterof2008.

In2007,theFDICreceivedover119,000telephoneandwritteninquiriesfromconsumersandbankersregardingfederalinsurancecoverageofbankdeposits.Oftheseinquiries,4,125requiredformalwrittenresponses,98percentofwhichwerecompletedwithintimelinessstandardsestablishedbycorporatepolicy.

Financial Education and Community Development In2001,theFDIC–recognizingtheneedforenhancedfinancialeducationacrossthecountry–inaugurateditsaward-winningMoney Smart curriculum,whichisnowavailableinsixlanguages,largeprintandBrailleversionsforindividualswithvisualimpairmentsandacomputer-basedinstructionversion.Sinceitsinception,over1.4millionindividuals(includingapproximately200,000in2007)haveparticipatedinMoney Smartclassesandself-pacedcomputer-basedinstruction.Approximately163,000oftheseparticipantshavesubsequentlyestablishednewbankingrelationships.During2007,theFDICupdatedandenhancedtheMoney Smartcurriculumandtrainingtools.Thesechangesincludedguidanceonconsumer-relatedconcernssuchasidentitytheft,remittancesandhowtoassessmortgageproductoptions.

Inrecognitionthatpublicschoolsareoneofthebestvenuesforreachingthenextgenerationofconsumersofallincomelevels,theFDICembarkedonapilotprojecttoexpanditsoutreachandenhancetheavailabilityoftheMoney Smartfinancialcurriculuminhighschools.Over339schools,schoolsystemsandrelatedentitieshavebeencontactedregardingtheavailabilityofMoney Smart.SeveralhundredsecondaryschoolteachersandvolunteershavebeentrainedtodeliverMoney Smart.TheFDICalsobeganworkondevelopingaMoney Smartcurriculumforyoungadults.

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TheFDICcompletedamajormulti-yearstudyin2007toevaluatetheeffectivenessoftheMoney Smartcurriculum.Thestudy,A Longitudinal Evaluation of the Intermediate-term Impact of the Money Smart Financial Education Curriculum upon Consumers’ Behavior and Confidence, showsthatthetrainingcanpositivelyinfluencehowpeoplemanagetheirfinances.Thesurveyexaminestheimpactoffinancialeducationonthebehaviorofabroadaudienceuptooneyearaftercompletingthetraining.Thegoalwastomeasure,overtime,notonlywhethertrainees’knowledgeoffinancialmattersimproved,andwhethertheyintendedtochangetheirfinancialbehaviors,butalsowhether,monthsafterthetraining,theyhadactuallyactedontheirintentions.SurveyresultsindicatethatthosewhotooktheMoney Smart courseweremorelikelytoopendepositaccounts,savemoney,useandadheretoabudget,andhaveincreasedconfidenceintheirfinancialabilitieswhencontacted6to12monthsaftercompletingthecourse.Amajorityofthosesurveyedreportedanincreaseinpersonalsavings,adecreaseindebt,abetterunderstandingoffinancialprinciples,andanincreasedwillingnesstocomparisonshopforfinancialservices.

International Outreach During2007,theFDICfocuseditsinternationalprogramsandactivitiestowardthegoalofhelpingtobuildstrongandeffectivesystemsforprotectingdepositors,supervisingfinancialinstitutionsandresolvingfailures.Effortsincludedarrangingandconductingtrainingsessions,technicalassistancemissionsandforeignvisits,leadershiprolesininternationalorganizations,bilateralconsultationswithforeignregulators,andmanyotheractivitiesandconsultingservices.

TheFDIC’sstrengthenedinternationalleadershiprolepavedthewayfortheelectionoftheFDIC’sViceChairmantothepositionofPresidentoftheInternationalAssociationofDepositInsurers(IADI)andChairoftheIADIExecutiveCouncil.Inaddition,theViceChairman,asChairoftheIADITrainingandConferenceStandingCommittee,developedandledthefirst-everExecutiveTrainingProgram,providingtrainingto35IADImembersfrom27countries.TheFDICwaselectedforthefirsttimetoserveontheBoardofDirectorsfortheAssociationofSupervisorsofBanksintheAmericas(ASBA)andtorepresenttheNorthAmericanRegion.TheFDIC’sleadershipwithinASBAincludedprovidingtechnicaltrainingtoASBAmembersonoperationalriskmanagementandleadingtwoworkinggroupsindevelopingASBAguidanceonkeysupervisoryissues.TheFDICalsoestablishedstrongworkingrelationshipsandpresentedatseveralEuropeanForumofDepositInsurers(EFDI)meetings,includingtheEFDI/IADIJointSymposiumonCrossBorderIssues.

TheFDICcontinuedtoenhancetheeffectivenessandbroadenthescopeandimpactofitsthreeprimaryinternationalprograms–technicalassistance,foreignvisitorsandtraining.TheFDICprovidedtechnicalassistanceto12centralbanks,banksupervisorsanddepositinsurersfrom11countries.AhighlightofthisassistancewasanexpandedpartnershipwiththeFinancial

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ServicesVolunteerCorp(FSVC)insupportingtheCentralBankofEgyptindevelopinganexaminercommissioningprogram.TheFDICalsoprovidedcriticaltechnicalassistancetoAlbaniaonresolutionpracticesandthelegalframeworkforestablishingthebackupfinancialsupportfromthegovernmenttostrengthenthedepositinsurancesafetynet.Inaddition,theFDIChosted66foreigncountryvisits,including417foreignvisitorsfrom28countries.NoteworthyamongthesevisitswasthesecondU.S.-ChinaSeminaronBankSupervision,delegationsrepresentingparliamentofficialsfromSouthAfrica,UnitedKingdom,SwedenandItaly,andanextendedvisitbyboardmembersandstaffoftheNigerianDepositInsuranceCorporation.Lastly,168foreignstudentsfrom17countriesreceivedtraininginexaminations,financialinstitutionanalysis,loananalysis,examinationmanagement,informationtechnologyexamination,andanti-moneylaunderingandcounter-terrorismfinancing.

TheFDICexpandedrelationshipswithkeyinternationalbankinganddepositinsuranceorganizationsbyexpandingthesecondmentprogram(detailingstafffromonecountrytoanother),technicalassistanceagreementsandinitiatingnewsupervisoryinformationsharingagreements.SecondmentMemorandaofUnderstanding(MOU)wereenteredintowithJapan,Albania,Poland,Nicaragua,andKoreatoallowforselectedemployeesfromthesecountriestocometotheFDICtoreceivetrainingandgainexpertiseinareasofsupervision,resolutionmanagementanddepositinsurance.TechnicalassistanceagreementswereexecutedwiththePeople’sBankofChinaandtheU.K.FinancialServicesAuthority,providingFDICsubjectmatterexpertiseinpromotingdepositinsurancebestpractices.

Receivership Management

TheFDIChastheuniquemissionofprotectingdepositorsofinsuredbanksandsavingsassociations.NodepositorhaseverexperiencedalossontheinsuredamountofhisorherdepositinanFDIC-insuredinstitutionduetoafailure.Onceaninstitutionisclosedbyitscharteringauthority–thestateforstate-charteredinstitutions,theOfficeoftheComptrolleroftheCurrency(OCC)fornationalbanksandtheOfficeofThriftSupervision(OTS)forfederalsavingsassociations–andtheFDICisappointedreceiver,itisresponsibleforresolvingthefailedbankorsavingsassociation.TheFDICgathersdataaboutthetroubledinstitution,estimatesthepotentiallosstotheinsurancefundfromvariousresolutionalternatives,solicitsandevaluatesbidsfrompotentialacquirers(ifany),andrecommendstheleast-costlyresolutionmethodtotheFDIC’sBoardofDirectorsforapproval.

Resolving Financial Institutions Failures During2007,threeFDIC-insuredinstitutionsfailed.Theaccompanyingchartonthefollowingpageprovidesliquidationhighlightsandtrendsforthepastthreeyears.Nofederally-insuredfinancialinstitutionfailuresoccurredineither2005or2006.

2�

• MetropolitanSavingsBankinPittsburgh,Pennsylvania,wasthefirst FDIC-insuredinstitutionclosedsinceJune2004.Thisinstitutionwas closedbythePennsylvaniaDepartmentofBankingonFebruary2,2007.

• NetBankofAlpharetta,Georgia,wasclosedbytheOfficeofThrift SupervisiononSeptember28,2007.NetBankwasanInternetbank andhadnophysicalbranches.

• MiamiValleyBankofLakeview,Ohio,wasclosedbytheOhioSuperintendent ofFinancialInstitutionsonOctober4,2007.

Receivership Management Activities TheFDIC,asreceiver,managesthefailedbanksandtheirsubsidiarieswiththegoalofexpeditiouslywindinguptheiraffairs.Theoversightandpromptterminationofreceivershipshelptopreservevaluefortheuninsureddepositorsandothercreditorsbyreducingoverheadandotherholdingcosts.Oncetheassetsofafailedinstitutionhavebeensoldandthefinaldistributionofanyproceedsismade,theFDICterminatesthereceivershipestate.In2007,thenumberofreceivershipsundermanagementwasreducedby22percent(from55to43),whilethebookvalueofassetsundermanagementincreasedby158percent(from$352millionto$907million).

Receivership-Related Securities Disposition and Cash Collections Atotalof56securities,includingmortgage-backedsecurities,swapagreements,corporatebondsandcommonstock,weremanagedthroughouttheyearorweresold,withcashcollectionsfromsalesandmanagementtotalingapproximately$29million.

Claims Administration System and Related Notice of Proposed Rulemaking During2007,theFDICidentifiedrequirementsandcompletedthehigh-leveldesignofanewinsurancedeterminationsystemcalledtheClaimsAdministrationSystem,targetedtobeimplementedin2009.TheFDICalsoissuedaNoticeofProposedRulemakingthat,intheeventofafinancialinstitutionfailure,wouldrequireallinsuredinstitutions,regardlessofsize

200� 200� 200�Total Institutions Resolved 3 0 0Assets of Resolved Institutions $ 2.3� $ 0.00 $ 0.00Net Collections from Assets in Liquidation

●

$ �.2� $ 0.17 $ 0.37Total Assets in Liquidation

●

$ 0.�� $ 0.35 $ 0.44Total Dividends Paid

●

$ �.�� $ 0.17 $ 0.44Savings Over Cost of Liquidation

■ $ .3� $ 0 $ 0

Includes activity from thrifts resolved by the former Federal Savings and Loan Insurance Corporation and the Resolution Trust Corporation. Least Cost Test Savings. The least cost test is performed prior to resolution to rank order the various resolution

alternatives by estimated cost to the Deposit Insurance Fund.

D o l l a r s i n b i l l i o n s

Liquidation Highlights 2005-2007

●

■

2�

toassistintheinsurancedeterminationprocessandtoprovidetheFDICwithdepositordatainastandardformat.Inboth2005and2006,theFDIChadissuedAdvanceNoticesofProposedRulemakingonthistopic.

Asset Servicing Technology Enhancement Project In2007,theAssetServicingTechnologyEnhancementProject(ASTEP)implementedanewassetmanagementsystemcalled4C.Thisefforttakesadvantageofnewtechnologyandreplacesseveraloutdatedsystems.The4Csystemcurrentlysupportsthemanagementofreceivershiploans,realestate,securities,andotherassets.Italsoprovidesadatawarehouse.OnMay8,2007,theFDICBoardofDirectorsapprovedfundingfortheinclusionoftheinstitutionfranchiseandtheassetmarketingfunctionsinthe4Csystem.4Cwillbecompletedinlate2008allowingtheFDICtomoreefficientlymarketfinancialinstitutionsfranchises,manageandselltheassetsoffailedbanks,andtoeasilyreportontheseactivities.

Protecting Insured Depositors AlthoughtheFDIC’sfocusinrecentyearshasshiftedfromresolvinglargenumbersoffailedinstitutionstoaddressingexistingandemergingrisksininsureddepositoryinstitutions,theFDICcontinuestoprotectdepositsininstitutionsthatfail.TheFDIC’sabilitytoattracthealthyinstitutionstoassumedepositsandpurchaseassetsoffailedbanksandsavingsassociationsatthetimeoffailureminimizesthedisruptiontocustomersandallowssomeassetstobereturnedtotheprivatesectorimmediately.AssetsremainingafterresolutionareliquidatedbytheFDICinanorderlymannerandtheproceedsareusedtopaycreditors,includingdepositorswhoseaccountsexceededthe$100,000(or$250,000)insurancelimit.During2007,theFDICpaiddividendsof$64.3milliontodepositorswhoseaccountsexceededtheinsuredlimit(s).

Professional Liability Recoveries TheFDICstaffworkstoidentifypotentialclaimsagainstdirectorsandofficers,accountants,appraisers,attorneysandotherprofessionalswhomayhavecontributedtothefailureofaninsuredfinancialinstitution.Onceaclaimisdeemedmeritoriousandcosteffectivetopursue,theFDICinitiateslegalactionagainsttheappropriateparties.Duringtheyear,theFDICrecoveredapproximately$47.1millionfromtheseprofessionalliabilityclaims.Inaddition,aspartofthesentencingprocessforthoseconvictedofcriminalwrongdoingagainstinstitutionsthatlaterfailed,acourtmayorderadefendanttopayrestitutionortoforfeitfundsorpropertytothereceivership.TheFDIC,workinginconjunctionwiththeU.S.DepartmentofJustice,collectedmorethan$5.3millionincriminalrestitutionduringtheyear.Attheendof2007,theFDIC’scaseloadwascomprisedofnineprofessionalliabilitylawsuits(upfrom8atyear-end2006),34openinvestigations(upfrom2),and93activesettlementcollections(downfrom97).Atyearend,therewere687activerestitutionandforfeitureorders(downfrom814).Thisincludes357ResolutionTrustCorporationordersthattheFDICinheritedonJanuary1,1996.

30

Effective Management of Strategic Resources

TheFDICrecognizesthatitmusteffectivelymanageitshuman,financial,andtechnologicalresourcesinordertosuccessfullycarryoutitsmissionandmeettheperformancegoalsandtargetssetforthinitsannualperformanceplan.TheCorporationmustalignthesestrategicresourceswithitsmissionandgoalsanddeploythemwheretheyaremostneededinordertoenhanceitsoperationaleffectivenessandminimizepotentialfinancialriskstotheDepositInsuranceFund.MajoraccomplishmentsinimprovingtheCorporation’soperationalefficiencyandeffectivenessduring2007follow.

Human Capital Management TheFDIC’shumancapitalmanagementprogramisdesignedtoattract,develop,rewardandretainahighlyskilled,cross-trained,diverseandresults-orientedworkforce.In2007,theFDICcontinuedtoimplementworkforceplanninganddevelopmentinitiatives,aswellasstrategiestomorefullyengageemployeesinadvancingtheCorporation’smission.

Succession Management Strategies During2007,theFDICbeganimplementinganumberofinitiativesaimedatstrengtheningourhumancapitalcapabilities.First,seniorleadershipdistributedasummaryreportofthefindingsofthe2006ExecutiveManager(EM)talentreviewtoallEMs.Asaresultofthereview,severalrecommendedsuccessionplanninginitiativesarebeingpursued,andthetalentreviewprocesswillbecascadeddowntocaptureCorporateManager(CM)IIleadersinthefirstquarterof2008.Second,theOfficeofPersonnelManagement’smanagementcompetencyassessmenttoolwasadministeredtoallEMsandCMstoestablishabaselineforidentifyingandclosingleadershipcompetencygaps.Finally,theCorporateExecutiveDevelopmentProgramwaslaunchedwiththeselectedhighpotentialemployeesbeginningan18-monthprogramofrotationalassignments,mentoringandtrainingthatwillpreparethemtoassumeleadershiprolesintheCorporationaspartofthesuccessionplan.TheFDICwillcontinuetopursuetheseandothersuccessionmanagementinitiativesin2008andtheyearstocome.

Corporate Employee Program During2007,theFDICcontinueditsfocusonnewemployeedevelopmentthroughtheCorporateEmployeeProgram,whichisthepipelinefornewemployeesintotheCorporation’sbusinesslinedivisions.TheprogramprovidesafoundationacrossthefullspectrumoftheCorporation’sbusinesslines,allowingforgreaterflexibilitytorespondtochangesinthefinancialservicesindustryandinmeetingtheCorporation’sstaffingneeds.Attheendof2007,364employeeshadenteredthemulti-year,multi-disciplinedprogram.

3�

Employee Learning and Growth TheFDICimplementeditsProfessionalLearningAccountProgram,whichemphasizescontinuousemployeelearningandgrowth.Itprovidesemployeesagreaterroleinplanningtheircareerdevelopment.Also,tofurtherenhancetheFDIC’sreadinessandflexibility,theinternalcertificateprogramwasexpandedduring2007toincludetheareasofBankSecrecyAct,ReceivershipClaims,FranchiseandAssetMarketing,andBasicComplianceExaminationfunctions.Inaddition,theFDICcontinueditssponsorshipofindustry-recognizedprofessionalcertificationssuchasCertifiedAnti-MoneyLaunderingSpecialist(CAMS);CertifiedFraudExaminer(CFE);CertifiedInformationSystemsAuditor®(CISA®);CertifiedRegulatoryComplianceManager(CRCM);CharteredFinancialAnalyst®(CFA®);andFinancialRiskManager®(FRM®).

Information Technology Management Informationtechnology(IT)resourcesareoneofthemostvaluableassetsavailabletotheFDICinfulfillingitscorporatemission.TheFDICcontinuedtoimproveitsITadministrationandmanagementpracticesin2007.

Enterprise Architecture TheCorporationiscommittedtousingITtoimprovetheoperationalefficiencyofitsbusinessprocesses.In2007,theITprogramfocusedonestablishinganeconomicalenterprisearchitecturethatsupportseffectiveITsystemsportfoliomanagementaswellassecurityandprivacyprograms.Thisarchitecture,whichisbeingimplementedoverathree-tofive-yeartimeframe,willprovideforbetteraccountabilityandtransparencywhileofferingservicedeliveryefficiencies.

Internet Program TheFDIC’spublicWebsite,www.fdic.gov,isakeycommunicationdeliverymethodfortheFDIC.Eachofthethreemajorbusinesslines–Insurance,Supervision,andReceivershipManagement–utilizestheWebsiteextensively.ABrownUniversityresearchstudyreleasedinJuly2007,rankedtheFDIC’sWebsiteeighthinfederalgovernmentWebsites,upfrom27thlastyear.TheFDIC’sWebsitewasthehighestrankedamongallfederalbankregulators.Duringatypicalweekday,www.fdic.govhostsapproximately30,000usersessions.OnOctober5,2007,adayaftertheMiamiValleyBankclosing,theFDIClogged157,986usersessions.ThiswasthelargestsingledayusagefortheWebsite,representinga500percentincreaseintrafficandresultinginover2.6millionhitstowww.fdic.govina24-hourperiod.Toensurethecontinuedavailabilityofthisfacility,therobustnessandsecurityoftheWebsitewereimprovedduring2007.

Securing the FDIC During2007,manyITinitiativeswereundertakentoprovideamoresecureenvironmentwithintheFDIC,includingimplementationoftoolstocombattheincreasinglevelsofInternetande-mailscams,conductingdisasterrecoverytestsandupdatingtheCorporation’sdisasterrecoveryplan,andconductingprivacyandsensitivedatawalk-aboutinspections.

32

Deposit Insurance Fund Performance

TheFDICadministerstheDepositInsuranceFund(DIF)andtheFSLICResolutionFund(FRF),whichfulfillstheobligationsoftheformerFederalSavingsandLoanInsuranceCorporation(FSLIC)andtheformerResolutionTrustCorporation(RTC).ThefollowingsummarizestheconditionoftheDIF.(SeetheaccompanyingtablesonFDIC-InsuredDepositsandInsuranceFundReserveRatiosbelowandonthefollowingpage.)

ForthetwelvemonthsendingDecember,31,2007,DIF’scomprehensiveincometotaled$2.2billioncomparedto$1.6billionforthepreviousyear,anincreaseof38percent.Excludingtherecognitionofexitfeesearnedof$345million(aone-timeadjustment)fromthe2006results,comprehensiveincomeroseby$1.02billion,or84percent,fromayearago.Thisyear-over-yearincreasewasprimarilyduetoa$611millionincreaseinassessmentrevenue,a$299millionincreaseininterestrevenue,a$298milliondecreaseintheunrealizedlossonAFSsecurities,offsetbya$42millionincreaseinoperatingexpensesanda$147millionincreaseintheprovisionforinsurancelosses.

II. Financial Highlights

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

1960 1970 1980 1990 2000

FDIC-DIF Insured Deposits (estimated 1960 -2007)●

D o l l a r s i n b i l l i o n s

2007

•All amounts are year-end except 2007 is at 9/30/07. From 1989 through 2005, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts. Source: Commercial Bank Call Reports and Thrift Financial Reports.

$

33

The$611millionincreaseinassessmentrevenueresultedfromsignificantchangestotherisk-basedassessmentsystembeginningin2007.For2007,DIFrecognized$643millioninassessmentrevenuerepresenting$3.7billioningrosspremiumsduefrominsureddepositoryinstitutionsnetof$3.1bil-lioninassessmentcreditsused.Assessmentrevenueincreasedfrom$94millioninthefirstquarterto$245millioninthefourthquarter.Theincreasedrevenueeachquarterprimarilyresultedfromareductionintheassessmentcreditsusedbyfinancialinstitutionstooffsetgrossassessments.Thistrendtowardhigherassessmentincomeisexpectedtocontinueasinstitutionsdepletetheiravailablecredits.Ofthe$4.7billioninone-timeassessmentcreditsgranted,$1.6billion(34percent)remainedasofDecember31,2007.

1.45

1.40

1.35

1.30

1.25

1.20

1.15

1.00

0

3/0� �/0� �/0� �2/0� 3/0� �/0� �/0� �2/0� 3/0� �/0� �/0� �2/0� 3/0� �/0� �/0�

Deposit Insurance Fund Reserve Ratios (Fund Balances as a Percent of Estimated Insured Deposits)

Prior to 2007, amounts represent the sum of separate Bank Insurance Fund and Savings Association Insurance Fund amounts.

3�

A Continuing Record of Prudent Stewardship

TheFDICreliesprimarilyuponinterestearnedontheinvestmentoftheDepositInsuranceFundforitsoperations.ItisnotablethattheCorporationhasreduceditsoperationalspendingevenastheinterestearnedontheDIF(anditspredecessorfunds)hasincreasedsignificantly.Asaresult,theFDIC’sannualspendinghasdramaticallydeclinedasapercentageofinterestrevenueontheDIF.ThecombinedinterestearnedbytheDIFandFRFgrewto$2,696millionin2007($2,540millionforDIFand$156millionforFRF),whilecombinedoperatingandinvestmentbudgetspendingfellto37.6percentofinterestrevenue,downfrom49.4percentin2003.

2008 Corporate Operating Budget

Althoughitsstaffingrealignmentwasessentiallycompletedin2006,theFDICwillcontinuetoemphasizecontrolofspendingin2008andfutureyears.InDecember2007,theBoardofDirectorsapproveda2008CorporateOperatingBudgetofapproximately$1.142billion,including$1.067billionforongoingoperations.Theapproved2008budgetis3.1percenthigherthanthe2007CorporateOperatingBudget.Thislimitedbudgetincreasewasrequiredfornegotiatedemployeepayincreasesandincludedfundingforanumberofmajornewinitiatives,includingadditionalstaffforriskmanagementandcomplianceexaminations,aswellasincreasedfundingforresolutionpreparedness.TheCorporationrealigneditsspendingpriorities

$ Millions

3,000

2,000

1,000

0 2003 200� 200� 200� 200�

$ 2,095 2,148 2,440 2,392 2,696 $ 1,035 1,112 1,052 998 1,013

Total Interest Revenue vs. Operating and Investment Budget Spending

Total Interest Revenue (DIF + FRF)

Total Budget Spending

3�

andreducedcostsinotherareastoaddressthesepriorityinitiativeswhilelimitingthesizeoftheoverall2008budgetincrease.In2008andfutureyears,theFDICwillcontinuetorigorouslyreviewitsworkloadandstaffingandseekoperationalefficienciesthroughcontinuousimprovementofitsbusinessprocesses.

Investment Spending

TheFDICinstitutedaseparateInvestmentBudgetin2003.Ithasadisciplinedprocessforreviewingproposednewinvestmentprojectsandmanagingtheconstructionandimplementationofapprovedprojects.AlloftheprojectsinthecurrentinvestmentportfolioaremajorITsysteminitiatives.ProposedITprojectsarecarefullyreviewedtoensurethattheyareconsistentwiththeCorporation’senterprisearchitecture.TheprojectapprovalandmonitoringprocessesalsoenabletheFDICtobeawareofriskstothemajorcapitalinvestmentprojectsandfacilitateappropriate,timelyinterventiontoaddresstheserisksthroughoutthedevelopmentprocess.AninvestmentportfolioperformancereviewisprovidedtotheFDIC’sBoardofDirectorsquarterly.

TheCorporationundertooksignificantcapitalinvestmentsduringthe2003-2007period,includingconstructionofamajorexpansionofitsVirginiaSquarefacilityandtheimplementationof11majornewITsystems.Investmentspendingtotaled$234millionduringthisperiod,peakingat$108millionin2004.Spendingforinvestmentprojectsin2007totaledapproximately$12million.In2008,investmentspendingisestimatedtototal$17million.

$ Millions

120

80

40

0 2003 200� 200� 200� 200�

$ 27 108 62 25 12

Investment Spending 2003-2007

Investment Spending

3�

III. Financial Statements

F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n

Deposit Insurance Fund Balance Sheet at December 31, condensed

D o l l a r s i n T h o u s a n d s

200� 200�

Assets Cash and cash equivalents $ 4,244,547 $ 2,953,995 Investment in U.S. Treasury obligations, net: Held-to-maturity securities 38,015,174 37,184,214 Available-for-sale securities 8,572,800 8,958,566 Assessments receivable, net 244,581 0 Interest receivable on investments and other assets, net 768,292 747,715 Receivables from resolutions, net 808,072 538,991 Property and equipment, net 351,861 376,790 Total Assets $ �3,00�,32� $ �0,��0,2��

Liabilities Accounts payable and other liabilities $ 151,857 $ 154,283 Postretirement benefit liability 116,158 129,906 Contingent liabilities for: Anticipated failure of insured institutions 124,276 110,775 Litigation losses 200,000 200,000 Total Liabilities ��2,2�� ���,���

Fund Balance

Accumulated net income 52,034,503 49,929,226 Unrealized gain on available-for-sale securities, net 358,908 233,822

Unrealized postretirement benefit gain 19,625 2,259

Total Fund Balance �2,��3,03� �0,���,30�

Total Liabilities and Fund Balance $ �3,00�,32� $ �0,��0,2��

3�

F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n

Deposit Insurance Fund Statement of Income and Fund Balance for the Years Ended December 31, condensed

D o l l a r s i n T h o u s a n d s

200� 200�

Revenue Interest on U.S. Treasury obligations $ 2,540,061 $ 2,240,723 Assessments 642,928 31,945 Exit fees earned 0 345,295 Other revenue 13,244 25,565

Total Revenue 3,���,233 2,��3,�2�

Expenses and Losses Operating expenses 992,570 950,618 Provision for insurance losses 95,016 (52,097) Insurance and other expenses 3,370 5,843

Total Expenses and Losses �,0�0,��� �0�,3��

Net Income 2,�0�,2�� �,�3�,���

Unrealized gain/(loss) on available-for-sale securities, net 125,086 (172,718) Unrealized postretirement benefit gain 17,366 2,259

Comprehensive Income 2,2��,�2� �,���,�0�

Fund Balance - Beginning �0,���,30� ��,���,�02

Fund Balance - Ending $ �2,��3,03� $ �0,���,30�

3�

F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n

Deposit Insurance Fund Statement of Cash Flows for the Years Ended December 31, condensed

D o l l a r s i n T h o u s a n d s

200� 200�

Operating Activities Net Income: $ 2,105,277 $ 1,739,164 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of U.S. Treasury obligations 571,267 599,274 Treasury inflation-protected securities (TIPS) inflation adjustment (313,836) (109,394) Depreciation on property and equipment 63,115 52,919 Loss on retirement of property and equipment 153 0 Provision for insurance losses 95,016 (52,097) Terminations/adjustments of work-in-process accounts 0 433 Exit fees earned 0 (345,295) Unrealized gain on postretirement benefits 17,366 0

Change in Operating Assets and Liabilities: Decrease in unamortized premium and discount of U.S. Treasury obligations (restricted) 0 1,359 (Increase) in assessments receivable, net (244,581) 0 (Increase) in interest receivable and other assets (20,442) (14,635) (Increase) /Decrease in receivables from resolutions (350,309) 147,258 (Decrease) in accounts payable and other liabilities (39,580) (166,822) (Decrease)/Increase in postretirement benefit liability (13,748) 129,906 Increase in exit fees and investment proceeds held in escrow 0 3,639

Net Cash Provided by Operating Activities �,���,��� �,���,�0�

Investing Activities Provided by: Maturity of U.S. Treasury obligations, held-to-maturity 6,401,000 5,955,000 Maturity of U.S. Treasury obligations, available-for-sale 1,225,000 845,000 Used by: Purchase of property and equipment (1,607) (11,721)

Purchase of U.S. Treasury obligations, held-to-maturity (7,706,117) (9,050,372)

Purchase of U.S. Treasury obligations, available-for-sale (497,422) 0

Net Cash Used by Investing Activities (���,���) (2,2�2,0�3)

Net Increase/(Decrease) in Cash and Cash Equivalents �,2�0,��2 (2��,3��)

Cash and Cash Equivalents - Beginning 2,��3,��� 3,230,3��

Cash and Cash Equivalents - Ending $ �,2��,��� $ 2,��3,���

3�

F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n

FSLIC Resolution Fund Balance Sheet at December 31, condensed

D o l l a r s i n T h o u s a n d s

200� 200�

Assets Cash and cash equivalents $ 3,617,133 $ 3,616,466 Receivables from thrift resolutions and other assets, net 34,812 36,730 Receivables from U.S. Treasury for goodwill judgments 35,350 251,827 Total Assets $ 3,���,2�� $ 3,�0�,023

Liabilities Accounts payable and other liabilities $ 4,276 $ 5,497 Contingent liabilities for litigation losses and other 35,350 279,327 Total Liabilities 3�,�2� 2��,�2�2��,�2� Resolution Equity Contributed capital 127,417,582 127,453,996 Accumulated deficit (123,769,913) (123,833,797)

Total Resolution Equity 3,���,��� 3,�20,���

Total Liabilities and Resolution Equity $ 3,���,2�� $ 3,�0�,023

�0

F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n

FSLIC Resolution Fund Statement of Income and Accumulated Deficit for the Years Ended December 31, condensed

D o l l a r s i n T h o u s a n d s

200� 200�

Revenue Interest on U.S. Treasury obligations $ 156,034 $ 151,648 Other revenue 31,558 17,650

Total Revenue ���,��2 ���,2��

Expenses and Losses Operating expenses 3,364 12,002 Provision for losses (10,135) (19,257) Goodwill/Guarini litigation expenses 195,939 411,056

Recovery of tax benefits (68,217) (34,783) Other expenses 2,757 2,783

Total Expenses and Losses �23,�0� 3��,�0�

Net Income/(Loss) �3,��� (202,�03)

Accumulated Deficit - Beginning (�23,�33,���) (�23,�3�,2��)

Accumulated Deficit - Ending $ (�23,���,��3) $ (�23,�33,���)

��

F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n

FSLIC Resolution Fund Statement of Cash Flows for the Years Ended December 31, condensed

D o l l a r s i n T h o u s a n d s

200� 200�

Operating Activities Net Income/(Loss) $ 63,884 $ (202,503) Adjustments to reconcile net income/(loss) to net cash (used by) operating activities: Provision for losses (10,135) (19,257)

Change in Operating Assets and Liabilities: Decrease in receivables from thrift resolutions and other assets 12,053 21,273 (Decrease ) in accounts payable and other liabilities (1,221) (2,302)

(Decrease )/Increase in contingent liabilities for litigation losses and other (243,977) 21,824

Net Cash Used by Operating Activities (���,3��) (��0,���)

Financing Activities Provided by:

U.S.Treasury payments for goodwill litigation 405,063 194,728

Used by:

Payments to Resolution Funding Corporation (225,000) 0

Net Cash Provided by Financing Activities ��0,0�3 ���,�2�

Net Increase in Cash and Cash Equivalents ��� �3,��3

Cash and Cash Equivalents - Beginning 3,���,��� 3,�02,�03

Cash and Cash Equivalents - Ending $ 3,���,�33 $ 3,���,���

�2

To the Board of Directors The Federal Deposit Insurance Corporation

We audited the assets, liabilities, and fund balance as of December 31, 2007, and 2006, for the two funds (the Deposit Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF)) administered by the Federal Deposit Insurance Corporation (FDIC), the related statements of income and fund balance (accumulated deficit), and the statements of cash flows for the years then ended. In our report dated February 4, 2008, we expressed an unqualified opinion on those statements.

In that report, we stated that we found

• the financial statements of each fund are presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles;

• FDIC had effective internal control over financial reporting and compliance with laws and regulations for each fund; and

• no reportable noncompliance with the laws and regulations we tested.

In addition, we referred the reader to note 6 in DIF’s financial statements that discussed increased challenges in 2007 faced by FDIC’s insured financial institutions. The downturn in housing markets led to asset-quality problems and volatility in financial markets, which hurt banking industry performance and threatened the viability of some institutions that had significant exposure to higher-risk residential mortgages. It is uncertain how long the effects of this downturn will last. In addition to a recorded estimated liability of $124 million as of December 31, 2007, for the anticipated failure of some DIF-insured institutions, FDIC has identified additional risk that could result in a further estimated loss to the DIF of $1.7 billion should potentially vulnerable insured institutions ultimately fail. FDIC continues to evaluate the risks to affected institutions in light of evolving economic conditions, but the impact of such risks on the DIF cannot be reasonably estimated at this time. Actual losses, if any, will largely depend on future economic and market conditions and could differ materially from FDIC’s estimates.

In our opinion, the information set forth in the accompanying condensed financial statements is presented fairly, in all material respects, in relation to the financial statements from which it has been derived.

We performed our work in accordance with U.S. generally accepted government auditing standards.

David M. Walker Comptroller General of the United States

February 4, 2008

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Federal Deposit Insurance Corporation55017thStreet,NWWashington,DC204299990DeputytotheChairmanandChiefFinancialOfficer

February 4, 2008

Mr. David M. Walker Comptroller General of the United States U.S. Government Accountability Office 441 G Street, NW Washington, DC 20548

Re: FDIC Management Response on the GAO 2007 Financial Statements Audit Report

Dear Mr. Walker:

Thank you for the opportunity to comment on the U.S. Government Accountability Office’s (GAO) draft audit report titled, Financial Audit: Federal Deposit Insurance Corporation Funds’ 2007 and 2006 Financial Statements, GAO-08-416. The report presents GAO’s opinions on the calendar year 2007 and 2006 financial statements of the Deposit Insurance Fund (DIF) and the Federal Savings and Loan Insurance Corporation Resolution Fund (FRF). The report also presents GAO’s opinion on the effectiveness of the Federal Deposit Insurance Corporation’s (FDIC’s) internal control over financial reporting and compliance with laws and regulations for each of the funds as of December 31, 2007, and GAO’s evaluation of FDIC’s compliance with selected laws and regulations.

We are pleased that FDIC received unqualified opinions on its financial statements for the sixteenth consecutive year and that there were no material weaknesses or significant deficiencies identified during the 2007 audits. The GAO reported that the funds’ financial statements were presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles; FDIC had effective internal control over financial reporting and compliance with laws and regulations for each fund; and there was no reportable noncompliance with laws and regulations that were tested.

We appreciate GAO’s recognition of our accomplishments during the 2007 audit year. As always, our management team is dedicated to promoting the highest standard of financial management, and we will work diligently to sustain that focus. Continued improvements in operations remain a priority for FDIC.

In addition, I want to recognize the GAO’s support throughout the audit and to acknowledge you and the GAO staff for your efforts and dedication in working with FDIC again this year to meet the accelerated reporting deadline for our audited financial statements. We look forward to continuing this productive and successful relationship in the coming year.

If you have any questions or concerns, please do not hesitate to contact me.

Sincerely,

Steven O. App Deputy to the Chairman and Chief Financial Officer

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FDIC Organization Chart/Officials asofDecember31,2007

Deputy to the Chairman and Chief Financial Officer

Steven O. App

Deputy to the Chairman

Alice C. Goodman

General Counsel

Sara A. Kelsey

Deputy to the Chairman and Chief Operating Officer

John F. Bovenzi

Division of Finance

Bret D. Edwards Director

Division of Supervision and Consumer Protection

Sandra L. Thompson Director

Division of Insurance and Research

Arthur J. Murton Director

Office of Legislative Affairs

Eric J. Spitler Director

Legal Division

Sara A. Kelsey General Counsel

Office of the Ombudsman

Cottrell L. Webster Ombudsman

Office of Diversity and Economic Opportunity

D. Michael Collins Director

Corporate University

Thom H. Terwilliger Chief Learning Officer

Division of Information Technology

Michael E. Bartell Director

Division of Administration

Arleas Upton Kea Director

Division of Resolutions and Receiverships

Mitchell L. Glassman Director

Office of International Affairs

Fred S. Carns Director

Office of Enterprise Risk Management

James H. Angel, Jr. Director

Chief of Staff

Jesse O. Villarreal, Jr.

Office of Public Affairs

Andrew Gray Director

Chief Information Officer and Chief Privacy Officer

Michael E. Bartell

Office of Inspector General

Jon T. Rymer Inspector General

Vice Chairman

Martin J. Gruenberg

Board of Directors

Sheila C. Bair Martin J. Gruenberg Thomas J. Curry John C. Dugan John M. Reich

Office of the Chairman

Sheila C. Bair Chairman

IV. Other Information

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FDICpublications,pressreleases,speechesandcongres-sionaltestimony,directivestofinancialinstitutions,policymanualsandotherdocumentsareavailableonrequestorbysubscriptionthroughthePublicInformationCenter.ThesedocumentsincludetheQuarterly Banking Profile, FDIC Consumer News andavarietyofdepositinsuranceandconsumerpamphlets.

TheOfficeoftheOmbudsman(OO)isanindependent,neutralandconfidentialresourceandliaisonforthebankingindustryandthegeneralpublic.TheOOrespondstoinquiriesabouttheFDICinafair,impartialandtimelymanner.Itresearchesquestionsandcomplaintsprimarilyfrombankers.TheOOalsorecommendswaystoimproveFDICoperations,regulationsandcustomerservice.

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