FDIC plans to decrease its workforce by a substantial 1,250 employees.
The Federal Deposit Insurance Corporation (FDIC) has announced plans to reduce its workforce by 1,250 employees, representing a 20% decrease in the agency's staff. This move is part of the FDIC's Workforce Optimization Initiative, which aligns with broader federal government-wide job cuts and hiring freezes implemented under President Donald Trump's administration in 2025.
The reduction in staff may challenge the FDIC's ability to conduct the statutorily required examinations of banks and financial institutions effectively. With fewer staff, there is concern about maintaining the frequency, depth, and quality of these critical oversight activities, which are essential for ensuring financial system stability and protecting depositors.
The FDIC's regulatory responsibilities, such as supervising bank safety and soundness, are mandated by law and require adequate personnel resources to fulfill. The reduction in staff may potentially impact financial oversight and consumer protection in the banking sector.
Notably, the FDIC Office of the Inspector General has warned that with fewer examiners but the same responsibility to conduct statutorily required exams in 2025, it may be difficult for the FDIC to complete these examinations by the end of the year. This concern is further highlighted by a recent report suggesting that attrition at the agency could jeopardize its ability to examine lenders and resolve bank failures.
The FDIC's workforce reduction plan includes approximately 500 employees who agreed to the Deferred Resignation Program (DRP) and some non-permanent positions. Employees can apply for the Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Program (VSIP) between April 28 and May 5, and will be notified of the status of their application on May 13.
However, "mission critical" positions, including those responsible for resolving failed banks, risk management examinations, and information security, will not be eligible for the VERA and VSIP incentives. Moreover, applications for the DRP from "mission critical" employees are unlikely to be accepted.
The FDIC's workforce reduction is not funded by taxpayers, unlike some federal spending cuts. The agency is primarily funded by premiums paid by member banks and savings associations, and additionally by the interest earned on investments in Treasury notes.
In a related development, the Consumer Financial Protection Bureau's staff cuts were halted by a judge, unlike the FDIC's ongoing workforce reduction. The Department of Government Efficiency, created by President Donald Trump to bring transparency to federal spending, has been involved in the FDIC's workforce reduction plans since April 10.
As the FDIC moves forward with its workforce reduction, it may need to adjust its current examination processes based on the outflow of skills. The agency may also need to address the concerns raised in the FDIC Office of the Inspector General report about the potential impact on the agency's ability to examine lenders and resolve bank failures.
FDIC employees will receive an email this week offering reduction options for positions they qualify for. Leadership will decide whether further reductions are needed after May 13.
The FDIC's reduction in staff may impact its business of conducting crucial finance industry examinations, potentially affecting the quality of business oversight and consumer protection. Among significant concerns, the FDIC Office of the Inspector General warned that reduced personnel resources could make it difficult to complete essential fintech-related examinations on time.
