When you've been the resident examiner-ill-charge at one of the biggest banks in the world--Citibank, N.A.--what do you do for an encore? In the case of G. Scott Calhoun, a 19-year veteran of the Comptroller's Office, you break entirely new ground by becoming the agency's "risk czar"--deputy comptroller for risk evaluation.
The announcement of the appointment of Calhoun to this post in early June (he arranged to take the reins a bit later in order to wrap things up at Citi) is one of the latest developments in the adoption of the "supervision by risk" program at the Comptroller's Office. Whoever sits in the new post is intended to be the Comptroller's principal advisor on risks facing the national banking system. The deputy comptroller is also the chairman of the OCC National Risk Committee, a body formed to identifY potential serious risks to the banking system earlier than in the past.
One of the purposes of the supervision by risk program is to prioritize use of agency resources, m part by putting more stress on large bank issues, as large bank problems can wreak broader havoc on more of the national banking system. In Calhoun the agency has a large-bank exam veteran. He served as a large bank examiner in various posts from 1983 to 1986 and began working as a large bank examiner-in-charge in 1987, most recently at Citi.
ABA Banking Journal interviewed Calhoun recently to learn more about his views of the industry and about risk in general. The following are edited highlights from the interview.
Q. How did working with an institution like Citibank develop you as a regulator? Has it had an effect on your outlook on banking or the work of being a bank supervisor?
A. Of course, before I was assigned to Citibank I was stationed at Chase Manhattan a couple of years and before that, Continental Illinois.
Yet it's valid to ask about Citibank because it is a different and unique experience. It provided me with an unparalleled exposure to the international financial services community. There are other U.S. banks that have overseas operations and cross-border activities, but that tends to be more along the global finance line. Citi, on the other hand, transacts virtually all lines of business overseas. It is involved with consumers, trading and capital markets activities, and traditional lending and structured finance.
One thing became very clear to me. In order for U.S. banks to remain relevant in the global financial services community, they're going to have to be able to grow.
I don't mean that in the traditional sense of size, but in the sense of the ability to follow their customers and provide service to them. That really gets into issues of what banks can and can't do in terms of product offerings and geographic limitations as well as embracing technological advances--all unencumbered by arbitrary constraints.
Q. An examiner in charge has a fair amount of authority, on the scene. Would you have the same big stick to wield in your new position or would you have to make things happen in a somewhat different way?
A. At the bank I was responsible for supervising an individual large institution, focusing on potential issues, communicating with management, and which exposures could be modified. There was a very healthy dialogue between our agency and the bank.
In my new role I'm looking at current and emerging issues across the population of large banks.
So on the one hand I was much more of an actual day-to-day implementer. In this new job I will be spending more time working with the senior people in the organization in supervision as well as with [Comptroller of thc Currency] [Eu]Gene Ludwig and other members of the agency's executive committee to make sure that we are getting the supervision right.
We should be working as a team to make sure we're delivering seamless supervision. By "seamless" I mean supervision that doesn't have gaping holes. …