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Washington, D.C.-- As the health of the U.S. economy remains uncertain, the Federal Deposit Insurance Corporation (FDIC) has indicated its intent to move forward with a workforce reduction plan that will eliminate the jobs of some 95 employees in its legal division. The proposed reduction-in-force (RIF) at the nation’s key banking regulatory agency is “risky, unwise and unnecessary,” said the leader of the union representing FDIC.

National Treasury Employees Union (NTEU) National President Colleen M. Kelley said FDIC’s own historical data shows an upswing in troubled banks during economic downturns, making a reduction in staffing a risky and unwise proposition for American bank customers given the uncertainty of the economy.

FDIC reported during the 1991 recession 127 incidents of bank failures and assistance provided banks. In 1992, that number fell to 102, underscoring the lag time in which banks remain at risk in economic downturns.

“Americans need to be assured that the FDIC is doing its job to ensure the fiscal health of the nation’s banks during these uncertain economic times, and that it is prepared to act when and if banks get into trouble,” said Kelley.

The union leader said the proposed workforce reduction is unnecessary because the FDIC projects a loss of 25 percent of its legal staff over the next few years. Moreover, said Kelley, the FDIC is increasingly relying

on private sector contractors to do work that could be done by FDIC legal staff. She noted that the agency spent $24 million for outside legal counsel in 2000 and that figure is expected to have increased last year.

“Shifting the work to the private sector is a workforce shell game that has been shown in far too many instances to increase the cost and lessen the accountability for American taxpayers. To contract out such a vital service, that of safeguarding the bank accounts and savings of the American people, is a risk that should not be taken,” said Kelley.

NTEU has been encouraging FDIC to expand and extend the use of its buyout authority to complement projected attrition to reduce staffing, said Kelley. FDIC has said it wants to reduce its Washington, DC legal staff by as many as 70 attorneys and to cut another 25 attorneys in Dallas by this spring.

“Extending the time period over which these reductions will occur would make more sense, particularly given the uncertainty of the current economy and the potential for troubled banks to emerge. The FDIC should not be so quick to send institutional knowledge out the door at a time when they might need it the most,” said Kelley.

NTEU represents some 150,00 federal employees in 25 different federal departments and agencies, including more than 4,600 FDIC employees in 11 chapters around the nation. This includes more than 1,400 at the agency’s Washington headquarters and some 800 workers in two facilities in Dallas.