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FDIC: Banks can consult with FDIC staff instead of hiring consultants

The Summer 2014 edition of the FDICs Supervisory Insights Journal is now out. This edition includes two articles: (1) an article advising banks on how to meet regulatory expectations without outside consultants; and (2) an article summarizing common risks to banks as identified through FDIC examinations. The Journal concludes with a Regulatory and Supervisory Roundup listing recent Dodd-Frank rulemakings, FAQs, seminar listings, and operational guidance.

The first article discusses regulatory expectations and how banks can meet them without using outside consultants. It provides ideas and solutions for banks to use internal resources to conduct certain reviews of key bank functions, and notes that communication with the FDIC can be a useful tool for banks to independently ensure regulatory compliance. By taking these measures, banks may be able to significantly reduce expenditures on outside compliance consultants, which they often hire due to a desire for specific expertise and a perceived cost savings (i.e., avoiding the need to hire and train internal staff). The article states that the FDIC staff can be consulted to clarify regulatory expectations, and highlights certain technical assistance videos (introduced in the spring of 2013) that banks may use as a resource. Meanwhile, the article clarifies that certain FDIC and interagency policies and guidance do require independent reviews (such as control processes for AML, IRR and ALLL).

The second article describes recent trends in the most cited Matters Requiring Board Attention (MRBA) page of the FDIC’s Risk Management Report of Examination. The article provides significant data regarding the most cited MRBAs since 2010, and states that MRBAs have generally tended to address deficiencies in one of two categories: loans and board/management. According to the article, a large majority of loan-related MRBAs pertain to credit administration. Board/management-related MRBAs include revision and compliance with board-approved policies, audit issues, strategic and succession planning, risk management practices, and oversight. Current trends—due in large part to a shift in the risks facing banks in recent years—include a decrease in the proportion of loan-related MRBAs. This is due to recent increases in loan quality. On a related note, the noncurrent loan rate and quarterly net charge-off rate have decreased, as have MRBAs related to liquidity issues. By contrast, IRR-related MRBAs are on the rise.

The Summer edition was announced through a Financial Institution Letter dated July 29, 2014.

Topics: Agency Notices and Advisories
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