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5000 - Statements of Policy
{{4-30-97 p.5077}}
INTERAGENCY POLICY STATEMENT ON EXAMINATION COORDINATION
AND
IMPLEMENTATION GUIDELINES
This statement outlines a program for coordinating examinations of
insured depository institutions and inspections of their holding
companies by the federal financial regulatory agencies. This program
expands on existing interagency agreements, and responds to the
industry's concern over the increased burden on organizations
supervised by multiple regulatory agencies.
The objective of the program is to minimize disruption and avoid
duplicative examination efforts and information requests, whenever
possible. The significant elements of the program include:
• Coordinating the planning, timing and scope of
examinations and inspections of federally insured depository
institutions and their holding companies;
• Conducting joint interagency examinations or
inspections, when necessary;
• Coordinating and conducting joint meetings between bank
or bank holding company management and the regulators;
• Coordinating information requests; and
• Coordinating enforcement actions, when appropriate.
The program emphasizes full cooperation and coordination by the
agencies in supervising large banking organizations and organizations
that are in a less than satisfactory condition. Additional effort will
also be made to reduce the regulatory burden on the remaining
population of depository institutions.
Guidelines for implementation of the program are attached.
IMPLEMENTATION GUIDELINES
1. PURPOSE
These guidelines were developed to strengthen coordination and
cooperation among the federal banking agencies in examining and
supervising banking organizations and to carry out the provisions of
the March 10 Interagency Policy Statement intended to minimize the
disruptions and burdens associated with the examination process. The
provisions are:
• Eliminate duplication in examinations by multiple
agencies, unless clearly required by law;
• Increase coordination of examinations among agencies
when duplication is required; and
• Establish procedures to centralize and streamline
examinations in multibank organizations.
These guildelines address the coordination of the examinations by
federal agencies of depository institutions and the inspections of
their holding companies. To achieve the desired strengthening in the
coordination of the federal agencies' examination/inspection
activities, the guidelines focus on the planning, staffing, timing and
conduct of examinations and inspections; the conduct of joint
management meetings to discuss inspection and examination findings; and
other areas of mutual concern.
2. PRIMARY SUPERVISORY AND COORDINATION RESPONSIBILITY
Examinations/inspections of a particular legal entity will be
conducted by the federal regulatory agency that has primary supervisory
authority for that entity. In carrying out its supervisory
responsibilities for a particular entity within a banking organization,
each regulatory agency will rely on examinations/inspections conducted
by the primary regulator of the affiliate to the extent possible,
thereby avoiding unnecessary duplication and disruption to the banking
organization. In certain situations, however, it may be necessary for a
regulatory agency other than the entity's primary supervisory authority
to participate in the examination or inspection of the entity in order
to fulfil its regulatory responsibilities. These guidelines provide
procedures for handling such situations.
{{4-30-97 p.5078}}
Primary supervisory authority and coordination responsibilities are
organized as follows:
| OCC
|
national banks; |
|---|
| FDIC |
state nonmember banks; |
| OTS
|
thrift holding companies and savings associations; and |
| FRB
|
parent bank holding companies, nonbank subsidiaries of bank holding
companies, the consolidated bank holding company and state member
banks.
|
The primary federal regulator is responsible for scheduling,
staffing and setting the scope of supervisory activities, including
coordinating formal and informal administrative actions, as necessary.
In fulfilling these responsibilities, the primary regulatory agency
should consult closely with the other appropriate agencies when there
is need for coordination.
3. OVERVIEW
The agencies will make every effort to coordinate the examinations
and the inspections of banking organizations. Coordinated examinations
and inspections may not be practical in all cases because of resource
constraints, serious scheduling conflicts, or geographic
considerations; however, particular emphasis for implementing this
program will be placed on banking organizations with over $10 billion
in consolidated assets and those banking organizations (generally, with
assets in excess of $1 billion) that exhibit financial weaknesses.
4. PRE-EXAMINATION COORDINATION
Where multiple regulators have authority over a legal entity,
representatives from the appropriate supervisory offices should meet
quarterly as necessary to discuss supervisory strategies for specific
banking organizations, and at least annually to review and establish
examination and inspection schedules, to plan for the next year, and to
consider the need for coordination in the following areas:
• Sharing the strategy and scope of each
examination/inspection;
• Determining if agencies other than the primary
regulator of a particular entity should participate in the
examination/inspection of that entity;
• Determining whether a consolidated request letter
should be prepared to avoid duplicative information requests;
• Sharing examination/inspection work papers and
resulting findings and conclusions from prior examination/inspection
efforts; or
• Other areas as necessary.
5. INTERAGENCY REVIEW OF BANK, NONBANK AND PARENT COMPANY
ACTIVITIES
Certain areas or functions transcend legal entity distinctions, such
as internal audit, credit review and the methodology for determining
the allowance for loan and lease losses. Such functions may be located
at the bank or holding company level. The primary regulator of the
depository institution and the holding company may both have
supervisory responsibility to assess such functions. In these cases,
examinations or inspections of such areas should be conducted on a
coordinated and concurrent basis to avoid duplicative reviews and
unnecessary disruption.
The primary regulator of the entity being examined/inspected should
take the lead on such a coordinated examination or inspection, unless
there is mutual agreement that another agency will serve as the lead
agency. The responsibilities of the lead agency, in consultation with
other appropriate agencies, include developing the scope of the
examination or inspection and determining the staff requirements. The
lead agency will also coordinate examination/inspection scheduling and
the presentation of examination/inspection findings to the appropriate
management.
{{4-30-97 p.5078.01}}
6. COORDINATION OF MANAGEMENT MEETINGS
At the conclusion of examinations and inspections conducted under
these guidelines, the agencies should coordinate and plan joint
meetings with the board of directors to discuss the findings and
conclusions. Agencies will be guided by the coordination responsibility
definitions outlined in Provision 2 of this program, unless otherwise
agreed upon.
7. PROCESS FOR HANDLING SIGNIFICANT DIFFERENCES BETWEEN THE
AGENCIES IN FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
Prior to forwarding examination and inspection results to management
or boards of directors, every effort should be made to resolve any
significant differences concerning major findings, conclusions and
recommendations.
Such differences should be resolved by examiners, or officials at
the regional level, within 10 business days of identification. If
resolution cannot be achieved following full review and communcation
between the regional offices, the matter should be referred to the
national level, where it will be resolved within a reasonable time
frame.
8. INSPECTION AND EXAMINATION REPORTS
The primary regulator will prepare the formal report of examination
or inspection covering the entity for which it is the primary federal
regulator and in those cases for which it serves as the lead agency.
The report should be addressed and transmitted to the directors of the
entity for which the regulator is the primary federal supervisory
authority and, as necessary, it may be sent to the directors of other
entities that have a need for the information. The agencies may
mutually agree, if necessary and appropriate, to prepare a joint
report.
9. INFORMATION REQUESTS
Any request for information to be obtained from an entity for
supervisory purposes should normally be made through the entity's
primary regulator. The primary regulator should also share relevant
supervisory information with the other appropriate regulatory agencies.
10. COORDINATING ENFORCEMENT ACTIONS
When enforcement action is contemplated by one or more regulatory
agencies, consideration should be given to initiating a joint
enforcement action to address and correct deficiencies within a banking
organization. At a minimum, each agency considering enforcement action
should inform other regulatory agencies. This provision reaffirms the
existing interagency enforcement agreement.
11. OTHER MATTERS
The agencies will establish arrangements to monitor coordination
efforts and to resolve any differences that arise under this program.
The agencies will also endeavor to coordinate with state banking
departments, where appropriate and feasible.
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