A couple of weeks ago there was some debate over whether it was legal for the FDIC to start doing things beyond guaranteeing deposits -- like, say, guaranteeing billions of dollars in non-recourse loans used to purchase toxic assets. But I think William Seidman makes a good point about the FDIC, which is that giving it all these new tasks will, not surprisingly, require hiring thousands of new FDIC employees:
The Resolution Trust Corporation had to handle the assets from failed institutions when I ran it in the aftermath of the savings and loan crisis of 1985-92. The RTC experience provides a useful guide for what the FDIC has do to now.
The RTC had to hire several thousand new employees to handle a little over half the value of the legacy assets the FDIC is now handling. It also had to obtain exemption from normal government-hiring requirements to be able to put together a team on a timely basis. Since several hundreds of bank and S&L failures left so many unemployed, we had a large pool of qualified financial people from which to hire. Still, it took almost a year for the RTC to be staffed up.
[...] In January 2008 (around the time this financial crisis began), the FDIC had 4,810 employees, of which 223 were in property dispositions (the department which resolves distressed properties). It now has 5,381 employees, of which 636 work in resolutions. It is currently authorized to increase that to 800. So far, it has achieved this increase without getting a special exemption to the government-hiring rule. But the RTC needed several thousand people to dispose of assets with less property than the current financial crisis presents. Even if it is much more efficient than the RTC, it seems the FDIC is going to be substantially understaffed for a while.
The craziest part of this must be that it required "an exemption from normal government-hiring requirements" to staff-up the Resolution Trust Corporation in the aftermath of the savings and loans crisis. (And, indeed, government hiring practices are fairly ridiculous.) But more generally I think it must be true that (1) The FDIC is understaffed; and (2) There is a large pool of qualified and, er, newly available people from which the FDIC can hire.
And while I wasn't quite expecting this post to turn into an advertisement for the FDIC when I started writing it, it does seem that there are many hundreds of fine jobs in public service available.
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