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The Drawbacks of Mass Layoffs
A spate of mass layoffs at federal agencies could help trim the federal budget deficit and reduce spending. Staff departures at the Federal Deposit Insurance Corp. also could help the agency “reshape its business processes and provide opportunities for employee growth,” according to a report last month from the Office of Inspector General at the FDIC.
But layoffs at banking regulators such as the FDIC also could impact its ability to ensure the safety and soundness of the banking system. The FDIC’s OIG previously identified challenges recruiting and retaining staff in New York City as a factor in the troubled supervision of New York-based Signature Bank, which failed in 2023. Another 2023 OIG report noted increased resignations among examiners-in-training. A large percentage of the workforce that is supposed to train the next generation of examiners also is heading out the door. The report found that by 2027, 38% of the agency would be eligible to retire.
Since January, the FDIC has already been moving some of those people towards their post-work years. It has reduced staffing by 9% — 7% of all FDIC employees had accepted an offer to retire. “With fewer examiners but the same responsibility to conduct statutorily required exams in 2025, it may be difficult for the FDIC to complete these examinations by the end of the year,” the March report said.
Job applicants from the federal agencies are flooding the offices of the law firm Troutman Pepper Locke with resumes, according to partner Alexandra Steinberg Barrage, in the second quarter issue of Bank Director magazine. “It will have a direct impact on how banks are supervised and regulators’ ability to ensure our banks and financial system remain safe,” she says.
• Naomi Snyder, editor-in-chief for Bank Director
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