Statement by Acting Chairman Travis Hill on Problem Bank Assets

February 25, 2025

The FDIC began disclosing the aggregate assets of banks on the “Problem Bank List” at year-end 1990, an addition to the preexisting practice of reporting only the number of problem banks.¹ Since then, changes in the industry over the past 35 years have made it comparatively easier to identify a large bank that is added to the list, resulting in a number of potentially negative consequences, including, as examples:

1. A large bank experiencing severe financial distress is added to the Problem Bank List, which the public correctly identifies, prompting a disorderly run;
2. Supervisors fail to downgrade a large bank in poor condition for fear the disclosure could spark a bank run and/or financial instability;
3. The public incorrectly identifies a bank added to the Problem Bank List (e.g., if a large regional bank and a smaller midsize bank are both added to the list in the same quarter, and the public incorrectly assumes the addition was a large bank whose assets approximately equal the combined total), prompting customers to withdraw funds from the incorrectly identified bank; and
4. A large bank is downgraded for reasons other than deteriorating financial condition (which, as a general matter, occurs regularly), prompting customers to withdraw funds out of misplaced fear of insolvency.

At the same time, the total assets chart provides limited useful information to the public – particularly given (1) the subjective nature of ratings and (2) the time lag of disclosure. For the reasons stated above, the FDIC is not disclosing total assets on the Problem Bank List as part of the QBP materials and will not do so going forward, returning to the original practice of only disclosing the total number of banks on the list.

Upon becoming Acting Chairman, I issued a statement that noted the FDIC would “expand transparency in areas that do not impact safety and soundness or financial stability.”² We will continue to seek to enhance transparency in areas that do not negatively impact safety and soundness or financial stability.³

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