Federal Reserve to Examine Banks More Frequently
Wolfe, Lou Anne, THE JOURNAL RECORD
The new policies will apply to three Oklahoma bank holding companies and 22 Oklahoma state-chartered banks that are regulated by the Federal Reserve.
In contrast to the new Federal Reserve policy to examine state-chartered member banks once a year, some Oklahoma banks will still be scrutinized by regulators at a rate of once every 2 1/2 years, Oklahoma Bank Commissioner Robert Y. Empie said Tuesday.
If they haven't been deemed "problem banks" by the Oklahoma State Banking Department, 290 of Oklahoma's 312 state-chartered banks are examined once every two and a half years, he said. "We need more money to do the job Oklahoma thinks we should be doing," he said, adding that the department needs "at least 20 more than the 48 total staff currently funded for" by the Oklahoma Legislature. That staff includes 37 examiners and 11 administrative staff members.
Of 312 state-chartered Oklahoma banks, 290 are not members of the Federal Reserve. Those institutions are examined by the state banking department and the Federal Deposit Insurance Corp.
Oklahoma also has 237 national banks, which are examined by the office of the Comptroller of the Currency.
Under the new Federal Reserve policy, the state-chartered banks will be examined every year instead of every 18 months. The 32 largest U.S. bank holding companies, those with more than $10 billion in assets, will be examined twice a year. Bank holding companies with more than $1 billion in assets will be examined at least every 12 months, depending on complexity and financial condition of theorganization, according to James M. Harvey, supervisor of the monitoring section of the division of bank supervision and structure for the Federal Reserve Bank in Kansas City.
The Federal Reserve makes an effort to coordinate holding company inspections with examinations of the lead bank by the Office of the Comptroller of the Currency, Harvey said. Mid-year 1985 figures show three Oklahoma bank holding companies have assets in excess of $1 billion: Banks of MidAmerica Inc. of Oklahoma City - $3.5 billion; BancOklahoma Corp. of Tulsa - $2.9 billion; and First Oklahoma Bancorporation of Oklahoma City - $2.6 billion.
The Federal Reserve said steps were being taken to aid in the early identification of problems in banking organizations through more frequent and in-depth, on-site examinations.
A new summary letter to a bank's board of directors, highlighting the exceptions found by examiners, will accompany Federal Reserve examination reports beginning in January 1986, said Tom Hoenig, vice president of the Federal Reserve Bank in Kansas City.
The letter will itemize "clearly and concisely" specific problems found by examiners that are incorporated in the larger examination report, Hoenig said. Rather than simply reviewing and acknowledging the examination report as they have in the past, directors will now be required by the Federal Reserve to respond in detail with corrective actions they intend to take.
"We will not be sidestepping bank management," Hoenig said, "but we will be working with management and directors to insure that the directors are holding the management accountable and becoming involved."
Banks have complained in the past, he said, that examination reports are not specific enough and fail to require specific corrective action by management and directors. …