Pub. 2 2014 Issue 2

www.uba.org 8 I nconsistency is among the top concerns bankers have regarding examinations and visitations by their regulators. Rather than coping with these inconsistencies and the uncertainty re- garding what issues will be covered in an examination or how a regulation will be enforced, as well as wondering whether the bank down the street has a similar exam experience, bankers can take action with the Regulatory Feedback Initiative. The Regulatory Feedback Initiative is a powerful tool in the form of a confi- dential electronic survey which allows bankers to anonymously provide de- tails on their most recent examination or visitation, creating a new level of transparency in the examination pro- cess. Survey results are aggregated and analyzed to identify discrepancies in how banking regulations are enforced, and to help avoid misguided regulatory treat- ment. Bankers need not be concerned with the anonymity of the survey. Data cannot be traced back to the reporting bank, as it is reported only in aggregate form. Partic- ipation in the survey will not violate the confidentiality requirements associated with any exam. The federal banking regulatory agencies have reviewed the questions within the survey and have raised no concerns regarding confidenti- ality; rather, the agencies have expressed strong interest in viewing the aggregated survey results. The Regulatory Feedback Initiative has already achieved success in helping to improve the quality of banks’ examina- tions. Based on two years of survey data, the Initiative found that the proportion of survey respondents who were “very satisfied” with their safety and soundness and compliance exams by the OCC rose from 17% in 2012 to 22% in 2013. Even more noteworthy is a victory achieved in early 2012, when significant discrepancies in the way fair lending regulations were being enforced na- tionwide were uncovered due to the Regulatory Feedback Initiative. Based on data received from over 1,000 surveys completed in 2011, national fair lending criticism rates varied among the four federal regulatory agencies by up to 40%. It was discovered that a regional office of one regulator had a fair lending criticism rate above 70%, while another regulator’s nationwide criticism rate was 20%. After this information was shared with the reg- ulator’s director, the criticism rate in the regional office decreased dramatically, to under 30%. Identifying inconsistencies in how banking regulations are being enforced has never been more important, given the avalanche of new requirements resulting from the Dodd-Frank Act. As many of the rules recently became effective, both regulators and the industry are working to understand and implement the new requirements. Bankers have the power to help ensure that the new regulations are consistently enforced across the country. The continued success of the Regulatory Feedback Initiative depends on banks integrating the survey into their ongoing regulatory compliance processes, by com- pleting a survey immediately following each regulatory exam or visitation. One of the primary benefits of the Initiative is the ability to identify discrepancies in “real time”. Bankers have a unique opportunity to improve the industry’s reg- ulatory climate and truly hold examiners accountable, by making their voices heard after each exam. When sufficient data has been gathered from the survey, participating banks may also request a report from their state bankers association that summarizes the feedback of similarly situated banks (based on asset size, primary federal regulator, region, etc.),which can serve as a powerful resource in exam preparation efforts. n More information about the Regulatory Feedback Initiative can be found at: http://www.allbank- ers.org/initiative.html. Regulatory Feedback Initiative Allows Bankers to Make their Voices Heard By Howard Headlee