I want us to start to talk in meaningful ways about these risks and hope that we can weather them.”
Transcript of FDIC Chairman Gruenberg’s Keynote Address
Good afternoon. I would like to thank Mike Hanson for that kind introduction.
I am grateful for the opportunity to speak with you today at the 22nd Annual Conference of the International Association of Deposit Insurers (IADI). I am delighted to be back in person with my IADI friends and colleagues. I would like to thank IADI and IADI’s outstanding President, my friend Alejandro López, for inviting me to share some thoughts this afternoon, and the Massachusetts Credit Union Share Insurance Corporation (MSIC) for being such gracious hosts. I would also note that this is our first annual meeting with our new Secretary General, Eva Hüpkes, with whom I have had the pleasure of working closely through my involvement in the Financial Stability Board (FSB), and for whom I have the highest regard. From 25 founding members in 2002, IADI now has 124 affiliated organizations, including 95 member deposit insurers, 12 associates, and 17 partners. This growth speaks to the increasing recognition of the importance of effective systems of deposit insurance for financial stability and depositor protection, and the importance of IADI as the international standard setter for deposit insurance and the repository of global experience and expertise in this crucial area of banking regulation. In my remarks today, I will discuss the FDIC’s experience earlier this year with three large bank failures in the United States, considerations for changes to deposit insurance in light of that experience, and some thoughts on IADI’s role in global financial leadership. I am honored to join a number of distinguished speakers and panelists at today’s conference, and I commend IADI for organizing such an outstanding program. Recent Events As many of you probably know, on March 10, 2023, Silicon Valley Bank (SVB), with $209 billion in assets at year-end 2022, was closed by the state banking authority, which appointed the FDIC as receiver. The events that led to its failure began on March 8, when SVB announced a $1.8 billion loss on sale of securities, and a concurrent plan to
to deal with the next runaway train derailment? Because I’m certain of only one thing: that there will be another crisis at some point. How do we get better at our jobs? Do our institutions have sufficient liquidity? Do they have sufficient management talent? Do they understand the risks of the changing business model that they work under? Do we have the necessary liquidity? Do we have that capacity? Do we understand those risks in a way that can be meaningful? Because our job is not to clean up the derailment; our job is to avoid it and have consumers never know that it might have happened. We want to be so far under the radar that consumers don’t even know there was a crisis as we finish sweeping it up in private without public knowledge of that crisis. Consumer fear is our biggest volatile risk as we go forward. I’ll leave you with this thought: Benjamin Franklin - some historians have called him the first American - was born in Boston and is buried here, not far from where a group of Bostonians threw $10 million of tea into the harbor, pretty close to this spot. That’s why, by the way, we have coffee shops instead of tea rooms in America. While Franklin made his mark in Philadelphia, we still claim him in Boston and after the signing of the Declaration of Independence, he came out of the hall in Philadelphia and said, “We’d better hang together now or we shall surely hang separately later.”
So, I say to you, my friends, in the face of this revolutionary change in our business: We better hang together now. . . .
Today, I want us to start to talk in meaningful ways about these risks and hope that we can all weather them successfully.
Thank you.
2023 ANNUAL REPORT 19
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