On Wednesday next week, March 20th, the Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a hearing on two studies recently completed by the Federal Deposit Insurance Corporation (FDIC), the Federal Deposit Insurance Corporation Inspector General (FDIC IG), and the Government Accountability Office (GAO). The FDIC IG and GAO studies were done in compliance with legislation I drafted that was signed into law in December 2011 (Pub. L. No. 112-88).
The law required the GAO and the FDIC IG to look into fair value accounting and the use of shared loss agreements and whether they contributed to bank failures, and what impact bank failures had on local communities. The states in the study included Georgia, Arizona, California, Florida, Illinois, Michigan, Minnesota, Missouri, Nevada, and Washington. All states have had at least 10 bank failures since 2008. Georgia leads the nation in bank failures, with more than 84 failures since 2008. Many community banks feel the FDIC's practices have actually led to more bank failures, meaning they harmed more than they helped.
Georgia has been very hard hit by the large number of bank failures we have had in our state. Community banks are the economic engine of many of our towns and cities. When they fail, we often see economic investment dry up -- an unmistakable reality proven by the fact that states with the highest number of failures also have some of the highest foreclosure rates and highest unemployment rates in the country. This is not a problem that one study will be able to solve and I will continue to look into the issues behind the vast number of bank failures in Georgia and around the country, but I look forward to questioning the GAO, FDIC, and FDIC IG on their studies to learn more about their findings.
I encourage everyone to TUNE IN and watch the hearing live. You can do that by visiting the Financial Services website and click on the "LIVE WEBCASTS" link on the left side of the page under CONNECT. I will also be LIVE TWEETING the hearing. Find me on Twitter at @RepWestmoreland.