Foreign regulators say U.S. OCC should improve bank oversight

Thu Dec 5, 2013 12:03pm EST
 
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WASHINGTON Dec 5 (Reuters) - U.S. officials should improve the way they judge banks' risk levels and move supervisors out of the biggest banks and into central offices, bank regulators from Australia, Singapore and Canada recommended in a report released on Thursday.

The international group also said the U.S. Office of the Comptroller of the Currency (OCC) should clarify that ensuring the safety and soundness of banks takes precedence over other goals, such as maintaining U.S. firms' competitiveness abroad.

"The idea is really to have a culture of safety and soundness being uppermost in the examiners' minds," said Jonathan Fiechter, a former OCC senior official who led the international peer group in reviewing the agency.

Comptroller of the Currency Thomas Curry asked the group to conduct a peer review of the agency's supervision of large- and mid-sized U.S. banks as a way to assess the OCC's progress since the 2007-09 financial crisis.

The recommendations came on the same day that the United States urged Europe and Asia to match its efforts to make the financial industry safer, saying that other countries had been moving "far more slowly" in some areas of reform.

U.S. regulators were criticized by lawmakers and others for missing warning signs as they developed in the subprime mortgage market and other areas. Critics said regulators grew too close to the industry they supervised and let banks get away with dangerous practices.

The OCC is also in the midst of implementing a slew of new rules for the biggest U.S. banks that were required by the 2010 Dodd-Frank Wall Street oversight law. And a high proportion of its examiners are near retirement age, which poses challenges for the agency's future, the report said.

The group's recommendations, which Fiechter said were finalized over the weekend and submitted to the OCC on Wednesday, included suggestions to cope with staffing shortfalls and improve risk-spotting at banks.

"We have not had time to conduct a thorough analysis of the report, but I can tell you from my initial review that it is a thoughtful document with a number of important recommendations that we can use to position the OCC to meet the challenges of the future," Curry said in a statement.   Continued...