Federal Deposit Insurance Corporation
Office of the Chairman
550 17th Street, NW, Washington, D.C. 20429-9990

On October 24, 2005, the Audit Committee met to review the findings and recommendations contained in the above named audit and to deliberate with respect to the two recommendations contained in the audit that are unresolved and remain open. After discussing the issues at length with representatives of the Office of Inspector General (“OIG”) and the Deputy to the Chairman and Chief Financial Officer, the Committee formulated recommendations and forwarded them to me for consideration as the FDIC’s designated “Audit Follow-Up Official” for disputed OIG report findings and recommendations. After considering all available information provided, I have determined to accept the Audit Committee’s recommendations as follows:

• With respect to the disputed portion of OIG recommendation number one -- establishing a dollar limit on overnight investment holdings in the Bank Insurance Fund and Savings Association Insurance Fund — we are not persuaded that such additional controls are needed. The FDIC therefore declines to adopt the OIG’s recommendation to establish a dollar cap.

• With respect to OIG recommendation number five -- retention of outside experts to conduct periodic reviews — both the OIG and management agree that periodic, independent audits of the Corporate investment program are necessary and useful for sound corporate governance. After carefully deliberating on this issue, the FDIC has determined that an independent review of the Corporate investment program should be undertaken every three years by the OIG. The FDIC has further determined that the review include the investment policies applicable to the National Liquidation Fund.

Accordingly, the FDIC does not concur with OIG recommendation number one (dollar caps) and does concur with OIG recommendation number five (as modified).