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In recent months at least 650 thrift institutions have experienced a change in supervisory agency from the Office of Thrift Supervision to the Office of the Comptroller of the Currency as mandated by Dodd-Frank. Also, thrift holding companies now come under the supervision of the Federal Reserve Board.
February 27 -
Bankers have reacted well to acting FDIC chief Gruenberg's first speech since taking helm of the agency, but say actions will speak louder than words.
September 27
Thrifts that switched over to the Office of Comptroller of the Currency last year shouldn't find any surprises during the examination process, the agency's acting director told attendees at the Independent Community Bankers of America conference.
John Walsh seemed determined to use his appearance at the Nashville, Tenn., conference to
"I can't promise every bank and thrift that they'll agree with every finding in their exam, but you should not find any surprises in our approach to the examination," Walsh said. Because of a network of offices in about 60 cities, the OCC has institutional knowledge of local markets, he said.
"In some places we have more examiners than the state banking department," Walsh said. "We know these towns and markets as well as anyone." Still, he added that "examiner judgment does not replace that of bank or thrift management."
Martin Gruenberg, the acting chairman of the Federal Deposit Insurance Corp., used his time at the conference to stress to attendees that large banking companies should face the same market forces as smaller banks, including the threat of failure. "It's essential to subject these companies to meaningful market discipline," he said, drawing applause from the crowd largely consisting of executives from smaller banks.
Gruenberg ticked off numerous plans the FDIC is putting in place to create oversight of big banks, adding that the FDIC's new powers are essential to replacing a regime that favored mega-banks. He said the environment before Dodd-Frank distorted the financial marketplace in a way that created "an unlevel playing field for other financial institutions that are not perceived as benefitting from potential public support."
Having settled into his role at FDIC amid a tense atmosphere between community bankers and regulators, Gruenberg has tried to portray himself as sympathetic to the needs of smaller institutions. Last fall,
Gruenberg used Tuesday's appearance at the ICBA convention to reinforce that message. He said community banks are underappreciated, noting that even though such banks hold 10% of U.S. assets, they provide about 40% of total small-business lending. "Community banking is … labor-intense [and] highly customized," he said. "It's not clear that large institutions would fill that need if community bankers were not there."
Cam Fine, a former banker who is the ICBA's president and CEO, echoed Gruenberg's theme of fairness for community banks, though more forcefully. He reiterated two of the ICBA's longstanding goals of fairness in the administration of the deposit insurance fund, and creating a two-tiered regulatory scheme for big banks and for community banks.
"It's not community banks that hold nearly than $100 billion in sovereign debt from nations like Greece, Italy and Spain," Fine said. "So why on earth are we treated as if we do?"