OCC to Rotate On-Site Examiners at Biggest U.S. Banks
By Jesse Hamilton
To sharpen oversight of the largest financial firms, the U.S. regulator of national banks said it will regularly rotate examiners working inside the companies and shift others to a program that identifies industry risks. The Office of the Comptroller of the Currency, criticized for missing some high-profile problems such as JPM’s London Whale losses, will institute a five-year rotation schedule for in-bank examiners, the agency said today in response to a review of its practices by non-U.S. regulators. The agency also said transfers to the risk-analysis group would reduce the number of on-site examiners. “Facilitating the sharing of information and knowledge among examiners across institutions and rotating examiner assignments will allow us to provide a fresh and broader perspective to the examination of each large institution,” said Comptroller of the Currency Thomas Curry, in a statement. Curry, whose agency has drawn accusations that it missed JPMorgan’s massive trading losses, money-laundering violations at HSBC Holdings Plc (HSBA) and other big-bank missteps, took the unusual step of inviting regulators from other countries – Canada, Australia and Singapore — to review its approach to supervision. The OCC announced the changes today in response to a series of recommendations from the review. “This is the most significant structural change any of the agencies has made in the wake of the crisis,” said Karen Shaw Petrou, managing partner of Washington-based research firm Federal Financial Analytics Inc. She said Curry is turning the OCC — which she said was “remarkably sleepy before the crisis” — into a more aggressive supervisor. She said rotating examiners will mean fresh eyes on each institution, even if the banks that were comfortable with the officials they knew may find it disruptive.