On April 30, BPI President & CEO Greg Baer appeared before the Senate Banking Committee to provide testimony on examination and enforcement actions taken by the banking agencies as part of their supervisory role. He stated that regulators have effectively turned examination reports into enforcement action and made four key recommendations:
- The banking agencies should grant petition for rulemaking regarding supervisory practices consistent with the September 2018 interagency statement issue clarifying that guidance is nonbinding and only violations of law will form the basis of an MRA.
- Agencies should seek public comment on whether an MRA is an unenforceable suggestion, or a de facto order issued only when there is a violation of the law, and the outcome of such determination should be consistent with the Administrative Procedure Act-prescribed process.
- The agencies should adopt a zero-based review application process that emphasizes transparency and accountability including regular reporting to the Governors of the Federal Reserve, Comptroller of the Currency, and Directors of the FDIC.
- The CAMELS rating system should be replaced with standards that are objective, transparent, and consistent as opposed to subjective, opaque, and ad hoc and assessment of management should focus on financial management.
Following the hearing, Mr. Baer sat down with Jeremy Newell, BPI’s Executive VP, General Counsel and COO to discuss the testimony and the importance of this issue.
A link to Mr. Baer’s submitted written and oral testimony can be found below.
- Greg Baer Oral Testimony Before Senate Banking Committee on Guidance and Supervision – April 30, 2019
- Greg Baer Written Testimony Before Senate Banking Committee on Guidance and Supervision – April 30, 2019