FDIC staffing shortages put banking system at risk

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FDIC staffing shortages put banking system at risk

Sen. Elizabeth Warren, D-Mass.

Tom Williams | Cq-roll Call, Inc. | Getty Images

Sen. Elizabeth Warren is urging the Federal Deposit Insurance Corporation to reevaluate the decision to rescind more than 200 job offers to bank examiners in the wake of President Donald Trump’s federal hiring freeze.

The FDIC is already severely understaffed, which “threatens the stability of the banking system,” Warren, D-Mass., explained in a letter sent Monday to Inspector General Jennifer Fain and shared exclusively with CNBC.

In the letter, also signed by Sen. Raphael Warnock, D-Ga., Sen. Chris Van Hollen, D-Md., and Sen. Lisa Blunt Rochester, D-Del, the senators said staffing shortages directly contributed to Signature Bank’s failure in March 2023.

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The lack of examiners “led to a series of supervisory delays, canceled or postponed exams, and quality control issues in the supervision of Signature,” the letter said.

“The lesson learned in this case was that a shortage of cops on the beat can threaten the safety and soundness of the banking system and pose risks to the Deposit Insurance Fund,” the letter stated.

The incident marked the largest U.S. banking failures since the 2008 financial crisis, and one of the biggest bank failures in U.S. history. The unexpected shutdown also caused widespread concern among consumers about their deposits, their bank and the banking system.

In a Jan. 27

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,  Warren also said: “the FDIC should explain why it’s now axing even more examiners whose job it is to make sure big banks don’t ****** our economy.”

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