RALs had been, and stay, appropriate tasks, but eventually were seen by the FDIC as dangerous to your banking institutions and possibly bad for customers.
3 As talked about inside our report, the FDIC’s articulated rationale for needing banking institutions to leave RALs morphed in the long run. The choice to cause FDIC-supervised banks to leave RALs was implemented by certain Division Directors, the Chicago Regional Director, and their subordinates, and supported by each one of the FDIC’s Inside Directors. The cornerstone with this choice had not been completely clear since the FDIC opted for to not ever issue formal help with RALs, using more generic guidance relevant to wider regions of supervisory concern. Yet the decision set in place a few interrelated activities impacting three organizations that involved aggressive and unprecedented efforts to utilize the FDIC’s supervisory and enforcement capabilities, circumvention of particular settings surrounding the exercise of enforcement power, injury to the morale of particular industry assessment staff, and high expenses into the three institutions that are impacted.