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#44201 - 11/20/02 01:13 PM FDIC Compliance Examinations
Skittles Offline
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TN
A co-worker attended a seminar yesterday. He found out that compliance exams will now be 'risk-based process oriented'. Could someone put that in layman's terms for me, please?
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#44202 - 11/20/02 01:25 PM Re: FDIC Compliance Examinations
Richard Insley Offline
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Risk-based: Certain regs will never be examined again--spend all your money on big ticket items like CRA and fair lending.

Process oriented: Policies, procedures and management structure will be examiners' focus--results are optional.
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#44203 - 11/20/02 01:27 PM Re: FDIC Compliance Examinations
Skittles Offline
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HMDA and flood are on the top of my list also. My co-worker was told that they will interview board members and various employees along with reading the policies and procedures. I figure that's to see if the employees are actually doing what the policies state.
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#44204 - 11/20/02 01:36 PM Re: FDIC Compliance Examinations
waldensouth Offline
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FINALLY ABOVE the gnat line
Risk-based - they will look at your last compliance exam and internal audit, see where the problems were, and look at those areas only along with the hot topic of the moment.
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#44205 - 11/20/02 01:37 PM Re: FDIC Compliance Examinations
Don_Narup Offline

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At a recent conference I was told by several FDIC examiners that the agency will encourage more outside audits and self assessments and use those in the examination process, in order to cut down on the time and expense of their visit.
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#44206 - 11/20/02 01:58 PM Re: FDIC Compliance Examinations
Nanwa Offline
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What happened? Did FDIC downsize again?
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#44207 - 11/20/02 03:45 PM Re: FDIC Compliance Examinations
Don_Narup Offline

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The last number (rumor) I heard was that they downsized by 800 folks. Some of the BOL ers are probably more aware of what the cuts were than I am. If thats close to fact, then it has to have an impact on the number of exams and how often they perform them. Using audits and self assessments provided by the bank would only require some validity checks and will save a lot of time for them and bank employees.

My biased opinion - Having independent audits and self assessments completed on a more scheduled basis eliminates any examination surprises due to an agency only perform them every few years.
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#44208 - 11/20/02 03:48 PM Re: FDIC Compliance Examinations
Kara S Offline
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I agree with Don on this one. I feel that the more internal and external audits that are done, the better off
we will be. Now only if everyone felt that way!
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#44209 - 11/20/02 04:18 PM Re: FDIC Compliance Examinations
MackenzieS Offline
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I talked to my FDIC Safety & Soundness examiner just yesterday and he told me that they have restructured and eliminated quite a few positions. As expected, my usual contacts in Dallas are now gone...I have left messages and haven't heard back from them yet, they are probably on work overload! I did ask him though (because I heard in the rumor mill) if it was true that safety and soundness and compliance exams were eventually going to be combined, he said "no, not that he has heard of".

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#44210 - 11/20/02 04:50 PM Re: FDIC Compliance Examinations
E.E.G.B Offline
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Don has the numbers almost right - it was a 699 person drop, as of the last count. (I was one of those.) That report came straight out of Chairman Powell's office. I have heard rumors that there may be further reorganizing/downsizing in 2003, which has a lot of my former co-workers agitated.

Mackenzie, from what I hear, the DOS folks are running themselves ragged, those few that are still there. A lot of the cuts came from the 19th floor (DOS Case Managers) - I think they lost 11 people? Or almost half that group.

From what I'm hearing, it is still being considered whether the exam teams will be combined - a lot of people seem to think it will happen, maybe not right away, but soon. It is being tested in some regions (KC) but not yet in Dallas.

Another hot rumor is that the compliance review examiners will be moved out to the field offices - that means your normal regional office contact will suddenly only be working in one field office's jurisdiction, rather than region-wide. Most of the review examiners hate this idea and have been fighting it for over 2 years - if it comes to pass, you may see a lot of them leaving as well.

Just in case you were wondering!
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#44211 - 11/20/02 05:38 PM Re: FDIC Compliance Examinations
Nanwa Offline
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Hey ExGovtBabe! Which downsize did you take? What year? I took the one in March 1996, and was employed by a bank by May 1996. My "retirement" lasted roughly 6 weeks!

(I'm too young to completely retire.)
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#44212 - 11/20/02 07:04 PM Re: FDIC Compliance Examinations
MackenzieS Offline
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Isn't the 19th floor the Division of Compliance? That is who I have been trying to reach. I think they should have informed the banks they supervise of the change in contacts so that we don't have to go fishing around looking for someone to help us.

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#44213 - 11/20/02 08:18 PM Re: FDIC Compliance Examinations
Pale Rider Offline
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We have just completed compliance and S & S exams by the FDIC regional office in Austin. They had to borrow examiners from Oklahoma and Colorado to complete the exams. We were told that compliance is now part of Supervision but would remain as a separate exam at least for now. I believe it is the OTS that has combined the exams and examiners.
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#44214 - 11/20/02 08:43 PM Re: FDIC Compliance Examinations
Nanwa Offline
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And to think of all that wasted time and effort a few years back to separate compliance from S & S. It sure would be nice if it would disappear altogether!
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#44215 - 11/20/02 09:21 PM Re: FDIC Compliance Examinations
Don_Narup Offline

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Not for me
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#44216 - 11/20/02 10:39 PM Re: FDIC Compliance Examinations
Anonymous
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Yes, the OTS is beginning to combine S&S and Compliance into one exam. We just had one of their first in this area (OTS Midwest Region). Compliance exam was brief, covered only BSA, Fair Lending, Privacy, and Safeguarding Customer Info. They spent most of their time on fair lending and some on BSA but very little else. Exam just ended, so I haven't seen the report yet, but I understand that compliance will get a page or less and will be considered under the "M" part of the CAMEL rating. Coincidentally, they did a CRA Exam at the same time and it was done totally off-site. All-in-all, a very different examination experience.

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#44217 - 11/21/02 04:17 AM Re: FDIC Compliance Examinations
AnonRegulator Offline
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Getting back to the original question, a risk based process is one in which the regulators look to see what the bank does first concerning compliance and answer several questions, like:

o What audits are done?
o Who does them?
o Are they competent?
o Are the audits effective?
o Are the people doing them independent of the transactions they are auditing?
o Is the scope adequate?
o Are employees trained?
o What is the bank's history of compliance?
o What is the bank's demonstrated ability to assimilate new or changed laws/regulations?
o What are the bank's main products?
o Is the bank involved with any third party vendors?
o Is the bank involved in payday or subprime lending?
o Does it exhibit unfair and deceptive practices with those loan products?

The answers to questions such as these allow us to assess which area of your bank poses the most compliance risk and if that risk is being properly monitored by bank management. If it isn't, then the examiners will either do some exam procedures to cover the area, or ask bank management to develop their own procedures.

Risk based systems are a misnomer from the standpoint that we, or you, don't really take a risk in using such systems. Instead, we are assessing risk and the adequacy of the management of that risk. And it definitely does NOT mean that there are certain regs that we won't examine for as was said in an earlier post. I always hesitate even using the risk based term with bankers because so many have thought that if the examiners aren't covering an area, then neither do they, the bankers. The fallacy of that is that the examiners do at least check to make sure the bank is covering applicable areas appropriately. AR.

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#44218 - 11/21/02 12:03 PM Re: FDIC Compliance Examinations
Anonymous
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We just completed an FDIC S & S exam and I have to say it was quite an experience! They looked at things they have never looked at before and were tougher than ever!!!!!

I think the layoffs and the corporate scandals are to blame (they want to keep thier noses clean). Mostly, I think the examiners are trying to prove they are worthy of keeping when the next layoff comes around. Bankers beware!

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#44219 - 11/21/02 01:18 PM Re: FDIC Compliance Examinations
E.E.G.B Offline
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I took the most recent one (ended 09/30 and you should have seen the hordes of people streaming out of the building that day.) I left early - a Friday in mid-July - and started my new job that next Monday (had the job before I filed the papers to take the buyout.) Wish I could afford to have totally retire, but I'm glad I found a "safe haven".
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#44220 - 11/21/02 01:19 PM Re: FDIC Compliance Examinations
E.E.G.B Offline
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19 has been home to Safety and Soundness for over 5 years. Compliance is on 20. If you are trying to reach a compliance person, call Review Examiner Kevin Leas at 972-761-8005, he should be helpful.
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#44221 - 11/21/02 01:20 PM Re: FDIC Compliance Examinations
E.E.G.B Offline
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That would be the FIELD office in Austin - which is now the Austin/Houston office. The regional office is in Dallas. Trust me, combined exams are being tested and from what I hear will be the wave of the future.
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#44222 - 11/21/02 01:38 PM Re: FDIC Compliance Examinations
Richard Insley Offline
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Do you think there's a chance that compliance duties will be viewed as career-enhancing, or will loan review eclipse every other assignment (as it always has)? The reason the agencies split these functions was to assure dedication to compliance examining as a career. Combined, it may very well be viewed and an obstacle to a career in S&R.
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#44223 - 11/21/02 01:46 PM Re: FDIC Compliance Examinations
E.E.G.B Offline
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I think a lot of people are afraid that is exactly what will happen. There are still a lot of dedicated, career compliance examiners out there, but who knows if they will stay (esp. if their jobs are given short shrift and they are treated as 2nd class citizens, which is what used to happen.) I think we will have to wait and see what happens over the next couple of years. Chairman Powell's term is about half over, and I believe he has said he won't stay a 2nd term; if someone is appointed who is consumer-oriented, it may shift back again.
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#44224 - 11/21/02 02:48 PM Re: FDIC Compliance Examinations
MackenzieS Offline
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Funny you mentioned that, there was a message on my voice mail from Kevin when I got here this morning! Nice to see that we are all on track so early in the morning.

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#44225 - 11/21/02 06:24 PM Re: FDIC Compliance Examinations
E.E.G.B Offline
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Kevin's always in about 6.30. He's a doll, you'll like working with him. Smart, too.
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