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Vol. 1, No. 1
October 2004
Ombudsman Report to the Industry
Message from the
FDIC Ombudsman
This publication is the
first in a series of periodic reports to financial industry representatives
designed to keep you informed about the activities of the FDIC Office of the
Ombudsman (OO). These reports will summarize those matters that you
identify as being of particular concern to you.
To receive e-mail
notification of new issues posted to the FDIC Web site, follow instructions
posted on the FDIC's
Online Subscription page.
Outreach and Problem Resolution
The OO is now in the
third year of its outreach program to the financial industry. Over the last
2-1/2 years, OO staff have spoken with many of you personally to explain our
role as an industry liaison and resource. During these conversations, you
have shared your suggestions and concerns about the FDIC as a regulator and
about the banking industry in general. Since the establishment of the OO in
1995, a number of you have requested assistance on a variety matters.
Feedback to FDIC Management
Your concerns,
comments, and requests for assistance are a valuable source of information
to the FDIC and are periodically reported to senior management. The
information is presented in a manner that preserves confidentiality, yet
provides senior management with enough information to clearly articulate
matters requiring their attention.
Feedback to the Industry
Over the past few
years, we have provided occasional feedback to you in personal conversations
and presentations. However, this periodic report will give us the
opportunity to keep you informed about the most significant industry issues
being brought to our attention.
If you have any
questions or suggestions about this report, please contact me at
202-942-3715, or by e-mail at
cwebster@fdic.gov.
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Cottrell Webster
Director
Office of the Ombudsman |
This report covers industry contacts received between January 1, 2004 , and June 30, 2004.
What You Told Us:
During the first six months of 2004, OO staff spoke with 436 financial industry representatives through personal visits and telephone calls, at industry sponsored conferences, and FDIC training events. Approximately 87% of those who commented during these contacts reported overall satisfaction with the FDIC regulatory process. Comments were offered about the following topics:
- Burdensome Regulations: Concern about regulatory burden imposed on financial institutions is the most frequently raised issue. “Burdensome” characterized 39% of the dissatisfaction expressed. In particular, eighteen of you indicated concern about the Bank Secrecy Act and USA PATRIOT Act, believing that these regulations place banks in the role of law enforcer and threaten profitability. (NOTE: FDIC, as a member of the Interagency EGRPRA Task Force has been conducting an assessment of various regulations viewed as burdensome by the financial industry. More information about this project, which is headed by FDIC Vice Chairman John Reich, can be found at www.egrpra.gov).
- Misapplication of Sarbanes-Oxley: Concerns were raised that examiners might incorrectly apply the provisions of Sarbanes-Oxley to community banks that are exempt from most of the law's requirements.
- Sharing of Bank Information: Bankers suggested that exam teams (e.g., risk management, compliance, IT) share more information among the teams rather than burden the bank by asking for the same information multiple times.
On a positive note, a number of you mentioned or praised the improved communication with regional and field offices.
Your Requests for Assistance:
During this same time period, 264 financial industry representatives contacted us for assistance on matters, including the examination and regulatory processes. Only 9% of your requests for assistance involved complaints. Frequently raised issues included the following:
- Regulation O – Loans to Executive Officers, Directors, and Principal Shareholders: Bankers commented that lending limits are too low, particularly at small banks or banks located in small communities, and that enforcement of this regulation appears inconsistent among the regulators. Additionally, bankers sought Reg O clarification relating to loans with non-correspondent banks, the offering of preferential loan terms, and the effect of lending limits on affiliate relationships between institutions.
- FDIC Examination Process: Concern with CRA examinations, especially conflicting directions, inconsistent enforcement between examination teams, and difficulty in obtaining high CRA ratings is prevalent among bankers distressed about the FDIC examination process. You frequently described compliance examinations as being burdensome and time-consuming. You also sought clarification relating to FDIC's examination of RESPA forms, guidance on Board of Director's obligations and procedures to review executive compensation.
To find out more about the services provided by the OO or to contact us with questions or for assistance please Contact the Ombudsman.
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