Alert May 14, 2013

Comptroller Curry Stresses the Importance of Bank Supervision and Examination, Interagency Collaboration, and Stronger Internal Oversight

In a May 9, 2013 speech to the 49th Annual Conference on Bank Structure and Competition, Comptroller of the Currency Thomas J. Curry defended and touted the enduring relevance of “the federal banking agencies’ traditional on-site examination programs,” in light of the Dodd-Frank Act and supervisory stress tests.  Comptroller Curry asserted that the “financial crisis underscored the importance of bank supervision and the role of examiner judgment,” and that supervision and examination, along with “strong regulation and robust analytics,” are the “cornerstones of a healthy financial system.”  The Comptroller also emphasized a need to “understand how risk is transmitted across different types of institutions,” and stressed that the OCC has increased its efforts to coordinate and collaborate with other federal agencies to “develop integrated strategies for joint supervision of complex institutions and new tools to aid oversight.”  Comptroller Curry also discussed the OCC’s efforts to foster more effective supervision, particularly of large banks.  As part of such efforts, the OCC is reorganizing its “program of lead experts,” “deploying lead experts across companies, to measure risk horizontally and validate the results of [the OCC’s] supervision.”

The Comptroller also stressed the importance of data and information, including the OCC’s nascent Semiannual Risk Perspective report (the “Report”).  Regarding the Report, the Comptroller said that its message is that the OCC “expect[s] greater diligence from our banks in managing their risks,” and that the OCC has raised its “expectations for corporate governance for the largest and most complex institutions.”  Comptroller Curry mentioned that the OCC has a corresponding “heightened expectations” program that it has communicated to senior management and independent directors at large national banks and thrifts.  As part of that program, the OCC has increased its expectations for independent directors and has placed a premium on the “highest fiduciary duty of management and independent directors.”  The Comptroller added “[the OCC is] no longer willing to accept audit and risk management systems that are simply satisfactory…we are looking for excellence.”

In his remarks, Comptroller Curry also addressed the importance of capital.  Specifically, he said, that it is important that regulators revisit “the issue of the leverage ratio in the context of the Basel rulemaking.”