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Not too big for oversight

By Marcie Geffner · Bankrate.com
Wednesday, January 5, 2011
Posted: 9 am ET

Jim Wigand has a too-big-to-fail job.

As of Dec. 31, 2010, the former deputy director for franchise and asset marketing at the Federal Deposit Insurance Corp., or FDIC, became the new director of the Office of Complex Financial Institutions, or CFI, also at the FDIC.

The CFI was created in August 2010 to help the FDIC conduct its reviews and oversight of bank holding companies that have more than $100 billion in assets and nonbank financial firms designated by the Financial Stability Oversight Council as "systemically important." Along with the Federal Reserve, the CFI also will review and approve resolution plans for large bank and nonbank institutions, and it will carry out the FDIC's new authority to liquidate big bank holding and nonbank financial companies that fail.

In plain English, that means Wigand will be the government's top go-to guy for analysis, comment and cleanup of super-sized financial companies deemed "too big to fail."

The FDIC was given these new authorities as part of the massive Dodd-Frank Wall Street Reform and Consumer Protection Act.

The meltdown of such gigantic companies as AIG, Lehman Brothers and Bear Stearns was exacerbated the recent financial crisis in the absence of such authority, the FDIC said in a statement announcing the creation of the new office.

"The FDIC plans to vigorously implement its new authorities under the Dodd-Frank Act, which ends the presumption of 'too big to fail' for the largest and most complex financial institutions," FDIC Chairman Sheila C. Bair said in the statement. "The creation of our new Office of Complex Financial Institutions is a critical first step in this process."

At the FDIC, Wigand has directed the sale of more than 300 deposit institutions and more than $600 billion in failed bank and thrift assets. Previously, he held various executive positions at the FDIC and Resolution Trust Corp.

Whether the new office, director and authority can better forestall and mop up similar meltdowns of huge companies that pose a systemic risk to the financial sector in the future remains to be seen.

It would be nice if we never had to find out.

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