Federal Deposit Insurance Corporation
Office of Inspector General
Federal Deposit Insurance Corporation - Office of Inspector General

Minority Depository Institution Program at the FDIC

Tuesday, September 24, 2019

The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General issued a report on the FDIC’s Minority Depository Institution (MDI) Program.  Minority Depository Institutions play a vital role in assisting minority and under‑served communities and are resources to foster the economic viability of these communities

The FDIC considers an institution to be an MDI if it is a Federally-insured depository institution where a majority of a bank’s voting stock is owned by minority individuals; or a majority of the institution’s Board of Directors is minority and the institution serves a predominantly minority community.

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) required the Secretary of the Treasury to consult with the FDIC on methods for best achieving the five statutory goals aimed at preserving and promoting MDIs.  In keeping with the requirements of FIRREA, the FDIC adopted an MDI Policy Statement describing its interpretation of ways to preserve and promote MDIs and implement the goals. 

We concluded that the FDIC achieved its program goals as outlined in the MDI Policy Statement.  That is, the FDIC took actions to preserve and promote MDIs, and preserve the minority character of MDIs; provided technical assistance to MDIs; encouraged the creation of new MDIs; and provided MDI training sessions, education, and outreach efforts.

Notwithstanding these efforts, we found that the FDIC did not evaluate the effectiveness of key MDI Program activities.  Specifically, the FDIC did not assess the effectiveness of its supervisory strategies and MDI technical assistance.  We also determined that the FDIC should further assess the effectiveness of its MDI training sessions, education, and outreach, including the benefit and value that they provide.

The FDIC also did not define the types of activities that it considered to be MDI technical assistance, as distinct from training, education, and outreach events.  Additionally, while the FDIC provided training, education, and outreach events, the MDI banks, FDIC Regional Coordinators for MDIs, and representatives from MDI trade associations requested that the FDIC provide more such events.

Our report contained five recommendations to improve the FDIC’s MDI Program.  FDIC management concurred with the recommendations.

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