Regulators Know We Are Watching

You should have seen the look on the regulator’s faces when we presented them with data that revealed the disparate enforcement of Fair Lending standards in two of the FDIC regional offices. At the time, about 25 percent of the banks across the country were being criticized for Fair Lending violations, but in these two FDIC regions, almost 80 percent of the banks were being criticized. Regulators had just heard a barrage of criticism from bankers in those regions angry about fair lending, and now they knew why.

When we showed them the results from the Regulatory Feedback Initiative survey, it’s unclear what impacted them more, the fact that two of the regional offices were clearly on a warpath on fair lending, or the fact that we had the data to prove it. Regardless, within six months we watched the survey results as criticism reported in these two regions came back to the national average.

Thanks to more than 2,500 bankers who have taken the time to complete the Coalition of Bankers Associations’ “Post Exam Survey,” bankers association advocates across the country are now armed with the information we need to fight for the fair treatment of our members.

Recently, several executives from state bankers associations were asked to meet with FDIC field examiner supervisors in San Francisco, Calif. to provide input on what banks are saying about their examinations. We prepared a report from the “Post Exam Survey” database and presented them with the “Overall Satisfaction” of bankers on their safety and soundness and compliance exams. We also identified and shared with them the five most significant issues driving “Overall Satisfaction.”

In each category, we presented a comparison of how satisfaction with the FDIC compared with satisfaction with the OCC and the Federal Reserve, and then went on to show them how satisfaction with the San Francisco office compared with the other FDIC regions across the country.

The news was positive in some areas, but fairly negative in others. In the most negative areas, we presented the results according to the years of experience of the examiner in charge.   And to no surprise, the most significant challenges were found in those exams conducted by EOC’s with under three years’ experience.

We left them with six bullet point recommendations on things they could do to improve banker satisfaction with the examination process, substantiated by the data.

Based on the question and answer segment of the presentation, it was clear the examiners were very interested in the results, but we could sense that they were even more startled by the fact that we had access to this amount of detailed information about the examinations. We are convinced that just knowing we are watching and recording what is happening in these examinations will improve the way some examiners approach their job.

This is the primary objective of the Regulatory Feedback Initiative, to use transparency to demand accountability and improve the examination process for all banks. This information makes every state bankers association more effective. Not only can we share the aggregated information strategically with the regulatory agencies, we can share it with our members to help them prepare for upcoming examinations.

But we can only accomplish these goals if every bank will adopt a policy to take a few minutes after every exam (or visitation) to anonymously tell us what happened. Every year, more and more banks are participating when they realize it is a very small price to pay for such an enormous dividend.

This article was provided by the Coalition of Bankers Associations.