Magazine article American Banker

New Examiner Guidelines Move beyond Derivatives, a Top OCC Official Says

Magazine article American Banker

New Examiner Guidelines Move beyond Derivatives, a Top OCC Official Says

Article excerpt

New guidelines for bank examiners do not single out derivatives for special treatment, a top regulator told bankers at a Bank Administration Institute conference in New York.

Douglas E. Harris, senior deputy comptroller for capital markets at the Office of the Comptroller of the Currency, said Monday that the OCC's newly released guidelines urge bank examiners to evaluate all risk-management procedures at banks.

"Our 93 pages of guidelines are intended to go beyond derivatives and to risk management in general," Mr. Harris said, noting that the job of making sure that banks conduct their risk management in a safe and sound manner now falls squarely on the shoulders of the OCC's bank examiners.

In a speech before bankers at BAI's Asset, Liability, and Treasury Management Conference, Mr. Harris said the new guidelines are intended to ensure that banks have adequate controls in place.

"Our goal is to neither increase nor decrease the capital requirements, but to ensure banks have adequate capital," he said.

Derivatives are often-volatile financial instruments whose value is tied to currencies, interest rates, and other benchmarks. The instruments have received unfavorable publicity recently due to losses by such users as Procter & Gamble Co.

Responding to a question, Mr. Harris seemed to signal that bank regulators believe banks are acting responsibly as dealers, saying Procter & Gamble is a sophisticated corporation that knew the risks of the investment.

Another corporation that lost money on derivatives, Gibson Greetings, has charged in court that Bankers Trust New York Corp. …

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