The regulator of U.S. national banks is inviting overseas counterparts to find flaws in its practices that may have caused the agency to miss early signs of the coming financial crisis more than five years ago.
Comptroller of the Currency Thomas Curry said today that he has asked regulators from Australia, Singapore and Canada to review his agency’s bank supervision methods even as the OCC conducts its own performance evaluation.
“There is plenty of blame to go around for the problems we’ve seen in recent years, both in the run-up to the financial crisis and in its aftermath, and some of it falls squarely on the shoulders of the regulatory agencies,” Curry said in remarks prepared for delivery at an American Banker regulatory conference in Arlington, Virginia.
The OCC was among regulators criticized by lawmakers for missing early evidence that the financial system was under threat before the crisis, as well as for overlooking initial signs of money-laundering violations at HSBC Holdings Plc and trades at JPMorgan Chase & Co. that would lead last year to a $6.2 billion loss.
“We’ll be looking at everything from agency culture to our approach to risk identification,” Curry said in his remarks, “and we’ll be looking for gaps in the system that might have led us to miss problems in the past.”
Australia, Singapore and Canada were selected as countries that weathered the 2008 global credit crisis well, Curry said. They will conduct “an independent peer review of the process we use for the supervision of large banks and thrifts” -- an evaluation he said could be “frankly painful” for those at the OCC, Curry said.
The comptroller has also instructed his enterprise-governance deputy to run independent reviews of each division at the agency, “structured very much like a bank exam.”
“If his unit finds deficiencies, he will issue MRAs -- the same kind of Matters Requiring Attention that we issue when we find problems in a bank or thrift exam that require board attention,” Curry said.
OCC’s expectations will also rise for the banks it oversees. Curry said the OCC also will soon formalize guidance it has shared with big banks that they must meet higher standards in internal controls and audits, Curry said. The expectations will become “specific requirements,” he said.
He said the agency is “making it clear that satisfactory ratings are not acceptable,” and bank boards will be expected to offer credible challenges to management.