Speeches and Testimony

November 12, 2020

Statement of Jelena McWilliams Chairman Federal Deposit Insurance Corporation on Oversight of Prudential Regulators

Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions During the Pandemic before the U.S. House Committee on Financial Services; U.S. House of Representatives

Chairwoman Waters, Ranking Member McHenry, and members of the Committee, thank you for the opportunity to testify today before the House Financial Services Committee.

When I appeared before this Committee six months ago, we were confronting great uncertainty and volatility due to the COVID-19 pandemic. Many industries and segments of the economy were experiencing unprecedented declines in activity, and this shock was reverberating throughout the financial system.

Although there remains considerable uncertainty about the path of the economy, we know from two quarters of industry-wide reporting that the banking system has served as a source of strength throughout this period. Notwithstanding declines in aggregate earnings, during the first half of the year banks of all sizes supported their customers and communities, including by originating the vast majority of over $500 billion in Small Business Administration-guaranteed Paycheck Protection Program (PPP) loans.¹

The banking system's ability to support the economy reflects the industry's strong capital and liquidity positions. In the second quarter of 2020, aggregate equity capital increased to more than $2.1 trillion, which translated to an average common equity tier 1 capital ratio of 13.4 percent.² On both an aggregate and percentage basis, these capital levels were slightly higher than the quarter immediately preceding the pandemic.

In addition, the banking system has accommodated two consecutive quarters of over $1 trillion in new deposits, customer demand that far exceeds any deposit growth the FDIC has seen in the past.³ These inflows demonstrate public confidence in the banking system, as individuals and businesses sought safety during the uncertain economic environment.⁴

To support the ability of banks to work constructively with their customers, the Federal Deposit Insurance Corporation (FDIC) has taken meaningful actions to provide banks necessary flexibility while maintaining safety and soundness.

Today, I will provide an update on five areas in which we have made significant progress:

• Responding to economic risks related to COVID-19;
• Enhancing resolution readiness;
• Supporting communities in need;
• Fostering technology solutions and encouraging innovation; and
• Finalizing outstanding rulemakings.

I appreciate the opportunity to update the Committee on each of these key issues.

Read the Chairman's Full Statement

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