Banks and regulations may have yet another boost coming their way in 2017, on top of higher interest rates and lower regulations proposed by the Trump administration. The Federal Deposit Insurance Corporation (FDIC) has approved a $2.18 billion operating budget for 2017. This is actually down 2.4% from the FDIC’s 2016 budget, but it marks something far more important as well: this was the seventh consecutive budget cut for the FDIC, and it is a sharp 46% lower than during the peak of the financial crisis in 2010.
The FDIC also approved an authorized staffing level of 6,363 positions for 2017. This is 2.6% lower than in 2016 and is 32% lower than when the FDIC headcount peaked in 2011. Salaries and compensation is still set to be higher in 2017 despite the lower headcount. That figure was budgeted at $1.247 billion for the proposed 2017 budget, about 2% higher than last year’s budget and about 3.1% higher than what is actually estimated now.
As far as the lower budget, several issues were cited. A continuing steady improvement in the health of the U.S. banking industry was the main issue. Managing costs and remaining focused on fulfilling its mission were also cited.
Some major expenses were actually lower in the 2017 budget than the 2016 budget, if you exclude the Office of the Inspector general. These lower expenses were in travel, buildings and leased space, equipment and outside services. That being said, outside services personnel was budgeted higher at $271.76 million for 2017, versus $240.59 million budgeted for 2016.
As of September 30, 2016, the FDIC insured deposits at 5,980 banks and savings associations. At the end of 2010, the FDIC insured deposits at some 7,760 banks and savings associations.
Another issue to consider about the peak of the headcount at the FDIC was back in the 2011 budget. That report said that on a net basis, all the new positions were temporary, as are 40% of the total 9,252 authorized positions for 2011.
Also worth noting is that the FDIC is not paid for by taxpayers. The FDIC’s operating expenses are paid from the Deposit Insurance Fund, which is funded entirely by the banking industry itself via paying deposit insurance premiums.