WASHINGTON (12/6/13)--A team of international regulators on Thursday told the Office of the Comptroller of the Currency that it should implement significant supervisory reforms.
The suggestions, which resulted from a report commissioned by Comptroller Tom Curry, called on the OCC to relocate examiners-in-residence that are stationed at the biggest banks and to revise the way it rates the stability of institutions.Curry said that he was pleased with the report--researched and written by regulators from Australia, Canada and Singapore--and would plan to adhere to some of its recommendations in the next few months.Jonathan Fietcher, a former OCC and International Monetary Fund official who collaborated on the report, said that in-house examiners should be relocated to lessen the chances of them becoming too close to bank management. He also said that a centralized regime would promote consistency and collaboration among OCC officials.The examiner-in-residence program--started in the 1990s to theoretically allow the office to keep tabs on the big banks--has been seen as ineffective, and a reason why the OCC is perceived as being too cozy with bigger banks like Citigroup, Bank of America and JPMorgan Chase. (American Banker Dec. 6).Fietcher conceded that scrapping the in-house program would be tough, with the cost of continually transporting regulators around the country being significant.The report also said that the OCC should sharpen its focus on the stability of financial institutions, with examiners in the field currently being told to watch for a number of different issues. It recommended that the agency develop a "risk appetite statement" to clarify what officials should be mindful of, and suggested the implementation of the CAMEL rating system—a regime adopted by many regulators--including the National Credit Union Administration-- around the world, Fiechter said, to be more preventative and less reactive. In a response to the report, Comptroller Curry said that he hoped implementation plans would be ready in 120 days, but said that mutli-agency changes and an analysis of the recommendations about the in-house program would take a longer time. He said that he would share the report with the Federal Reserve, the Federal Deposit Insurance Corp. and the Conference of State Bank Supervisors.The team that compiled the report were allowed to interview OCC senior staff from Oct. 28 to Nov. 5. They also spoke to a sister agency, and board members and managers at two large banks.