Magazine article American Banker

Ludwig Plans to Restructure OCC and Alter Way It Examines Banks

Magazine article American Banker

Ludwig Plans to Restructure OCC and Alter Way It Examines Banks

Article excerpt

WASHINGTON -- Comptroller of the Currency Eugene A. Ludwig said Monday that he plans to revamp the structure of his agency and the way national banks are examined.

Mr. Ludwig said he has concluded after nearly a year on the job, the agency must change to respond to the phenomenal consolidation in the industry and the proliferation of new products and services.

"Quite frankly, the district structure we have today may reflect what banking has been, but it does not reflect what banking is already becoming," Mr. Ludwig said.

Furthermore, the agency's focus on lending threatens to make its examination obsolete,

"We run the risk that - as banks move increasingly into nontraditional activities - we as supervisors will simply understand less and less about the business we supervise," Mr. Ludwig said.

Elaboration at Convention

The comptroller made his remarks in Weehawken, N.J., to a gathering of the agency's examiners who supervise banks in northeastern states. Mr. Ludwig is expected to elaborate on his idea to overhaul bank exams at the Independent Bankers Associaton of America's annual conventioin in Orlando Friday.

Because of widespread mergers, a company may operate banks in several of the agency's six geographical regions.

"Before pur eyes, the banking industry is transforming itself from an industry comprised largely of locally based, independent banks, to an industry in which the vast majority of assets is held by bank holding companies with operations spanning large regions of the country," Mr. Ludwig told the examiners.

In the past, the six regional offices have operated with "a great deal of autonomy," Mr. Ludwig said.

Divergences Seen in New Way

While diversity sparks new ideas, Mr. Ludwig said: "The industry is going to view district divergences less and less as a helpful source of creativity and more and more as a cause of inconsistency, inequity, and regulatory burden. …

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