Bank Examiner Shortage Looms Amid Changing Risk Landscape

Bank examiners offer an initial line of defense in spotting weaknesses that can ripple across the U.S. financial system. They scrutinize credit portfolios, cyber controls and the third-party vendors linking traditional banks to FinTech partners. Yet, as risk grows more digital and diffuse, the examiner corps charged with keeping it in check is shrinking.

The Government Accountability Office’s March 2025 audit of the FDIC’s 2024 and 2023 financial statements confirmed that while the Deposit Insurance Fund and related accounts remain well managed, the agency faces capacity strains. The FDIC’s 2024 operating expenditures fell 11.3% year over year to $2.5 billion, driven in part by “vacancies in budgeted positions and delays in modernization projects.”

Fewer examiners are performing more complex oversight. The number of examinations completed fell from 5,297 in 2022 to 4,699 in 2024 — an 11% drop — even as the number of “problem institutions” as of the end of the surveyed period climbed 55% to 68, with assets up 63% to $87.3 billion. At the same time, the agency reports a heavier load of cybersecurity and specialty exams: 1,205 IT reviews and 1,214 anti-money-laundering/counter-terrorism exams were conducted in 2024.

That imbalance alarmed members of Congress, as expressed in their Sept. 18 letter to FDIC Inspector General Jennifer Fain. They cited Acting Chairman Travis Hill’s decision to rescind more than 200 job offers to bank examiners after the January 2025 government-wide hiring freeze and noted that the FDIC subsequently “reduced its workforce by 20% (approximately 1,250 positions).” The lawmakers warned that such cuts “jeopardize stability and public trust in the nation’s banking system,” urging the OIG to resume its suspended review of the FDIC’s succession-management and retention efforts.

Those workforce stresses come as risk itself is changing. PYMNTS reported that regulatory agencies have sought comments on “clarity and certainty” on risk, and signaled recognition that legacy vendor-risk models may no longer fit FinTech partnerships.

The FDIC Office of Inspector General (OIG) has acknowledged that “the full effect and impact … due to the hiring freeze, deferred resignations, and any reshaping and restructuring remain to be seen,” pledging to adjust oversight work to analyze those changes. But with the agency’s succession-management review on hold, it is unclear when examiner-pipeline rebuilding will resume.

For banks, timing matters. Examiners increasingly serve as the interpretive bridge between FinTech APIs and prudential standards. A diminished workforce could slow risk-model validation, third-party vendor approvals, and emerging-technology reviews — precisely where supervisory clarity is most needed.

The nation’s safety-and-soundness framework ultimately depends not on software or policy documents but on people capable of asking hard questions inside banks. GAO’s numbers show those people are fewer, even as the questions are multiplying. The mismatch between changing risk and examiner capacity may evolve into a significant risk.

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