Can you count on the emperor’s handpicked ministers to tell him when he’s naked? Banking regulators seem to think so.
The
Allowing the banks to choose their own judge, jury, and jailer presents almost
PricewaterhouseCoopers, for example, is the auditor for Bank of America and JP Morgan Chase, two of the fourteen servicers under scrutiny. PwC’s retired Chairman, Sam DiPiazza, is an executive of, and on the board of, Citigroup, another bank with a servicer to be reviewed.
Complicating matters, as a result of so many mergers and acquisitions, global banks are run by layers upon layers of automated systems – like SAP and Oracle – and legacy applications created from Cobol and other, older programming languages. All this software and hardware is held together by band aids, string, duct tape, manual processes, lots of unsecure spreadsheets, and crossed fingers.
The consulting firms hired under the consent order were also expected to address the bigger and more complicated management information systems issues. But it’s
The Office of the Comptroller of the Currency says it has been sensitive from the beginning to potential conflicts of interest between the consultants and law firms and the banks hiring them to do the reviews.
“We did reject some consultants and law firms submitted by the banks because of conflicts,” OCC spokesman Bryan Hubbard told me. “We were very aware of the impact of actual and perceived conflicts of interest.”
The banks have contracted with and will pay the vendors directly. Without bank-by-bank disclosure of the reports and the vendors that wrote them, we’ll never know if the process to right these wrongs was truly independent and objective.
Hubbard told me that there has been no final decision by the OCC regarding public disclosure of the action plans, the results of each bank’s reviews, or the vendor names. Of course, the banks could always decide to make public the reports, and the names of the law firms and consultants they employed.
Julie Williams, First Senior Deputy Comptroller and Chief Counsel of the OCC told
I’m crossing my fingers.
Francine McKenna writes the blog re: The Auditors, about the Big Four accounting firms. She worked in consulting, professional services, accounting and financial management for more than 25 years.