Why the U.S. Government Really Wants Some People To Take Vacations

In the United States, generally, the law doesn’t require that employers provide paid time off — sick leave, vacation time, etc. — to their employees. That makes the U.S. rare among other Western countries; as NPR notes, “the U.S. stands virtually alone in not mandating paid leave of any type for its workers.” Putting aside the pros and cons here, suffice it to say that “let your employees take a vacation” isn’t U.S. policy.

But there is one exception: the government really wants bankers to take a break.

During the Great Depression, as many as a third of U.S. banks failed, taking bankers’ deposits with them. As a result, many consumers refused to trust those banks which survived; if the bank can’t keep your money safe, there’s no reason to use the bank. In response, the Franklin Delano Roosevelt administration created the Federal Deposit Insurance Corporation or FDIC. Primarily, the FDIC’s role was to ensure bankers’ deposits — if the bank went belly-up, the FDIC would make the banker whole. But over the years, the FDIC has taken an expanded role in protecting depositors and, as a result, in protecting banks.

Which brings us to the vacation policy. In 1995, the FDIC issued a letter to the chief executive officers of relevant banking institutions, encouraging that the CEOs make their employees take some time off every year. That letter, available here, states that “the FDIC endorses the concept of a vacation policy that allows active officers and employees to be absent from their duties for an uninterrupted period of no less than two weeks. During this time, their duties and responsibilities should be assumed by other employees.” Why? Because, per that same letter, the FDIC concluded that vacations are a “basic control [which] has proven to be an effective internal safeguard in preventing fraud.”

Certainly, the FDIC isn’t suggesting that a few days on the beach would prevent an otherwise rotten employee from going rogue. Nor is it likely that the FDIC is suggesting that a good employee, overworked, may turn into a criminal. So, this requires more explanation. Thankfully, we have the perfect person to explain: Frank Abagnale, best known as the protagonist portrayed by Leonardo DiCaprio in the 2002 movie “Catch Me if You Can.” Abagnale, a real person, was a fraudster for years, but has since reformed and started his own security consultancy — and has written a few books. In 2001, for example, he wrote “The Art of the Steal: How to Protect Yourself and Your Business from Fraud, America’s #1 Crime.” And in its pages, you’ll find the reason for the FDIC policy:

[M]ake people take vacations, especially the ones who handle your money and transactions records. Every employee has to be out of the office and without control over transactions for at least one week a year. Large embezzlement schemes, as I have already pointed out, often must be maintained daily, and key figures in the scheme will resist being away. [If key employees never take a vacation,] find out why.

The policy isn’t law — it’s more akin to a suggestion than anything else. But it’s probably good advice. It’s no coincidence that the FDIC issued its above-cited letter in August of 1995. As the New York Times subsequently reported, that letter came on the heels of bank scandal in which the bank in question “secretly lost $1.1 billion from bond trading.” The banker behind the losses, a man named Toshihide Iguchi, hadn’t taken an extended vacation in eleven years.

Bonus fact: What’s a $10 million vacation look like? Well, in a sense, it looks like the difference between an “r” and an “x.” In 1988, Banner Travel, a California travel agency, took out an ad in the local yellow pages for $230. The ad was supposed to be for “exotic vacations” — safaris, island hopping, etc. — but the Pacific Bell Yellow Pages titled it “erotic vacations” instead. The owners of the travel agency sued for $10 million, according to the Associate Press, and, according to language site Grammarly, the travel agency won.

From the Archives: Somebody Set Us Up the Bomb: The story of a bank heist.

Related: “The Art of the Steal: How to Protect Yourself and Your Business from Fraud, America’s #1 Crime” and “Catch Me If You Can,” both by Frank Abagnale.