Magazine article American Banker

FDIC Testing Software to Detect Lending Bias during Compliance Exams

Magazine article American Banker

FDIC Testing Software to Detect Lending Bias during Compliance Exams

Article excerpt

WASHINGTON -- Paul L. Sachtleben is going high-tech with compliance exams.

As director of the new division of compliance and consumer affairs at the Federal Deposit Insurance Corp., he has made it his mission to bring computer technology to the art of ferreting out lending bias at banks.

A software package, developed by an outside vendor, will be tested in 10 banks next month. By May, Mr. Sachtleben said, the program will be part of every FDIC compliance exam.

The new software fits in nicely with Mr. Sachtleben's goal of shaking things up at the agency every once in a while.

"We have to constantly look at what we do so it doesn't get stale," said the 47-year-old Mr. Sachtleben.

Creation of the division four months ago was part of the agency's effort to reinforce its commitment to consumer compliance.

"In the '80s and '90s, supervision's main job was to deal with bank failures," Mr. Sachtleben said. "Now, we're devoting our time to compliance."

The new division is the only growth area left at the FDIC. It has 500 employees, with 18 more to be hired soon. Mr. Sachtleben left his post as deputy director of the FDIC's resolutions division to take this job. Janice M. Smith, former head of the consumer affairs office, was named associate director.

Mr. Sachtleben plans to change compliance exams in other ways, too. He said he wants examiners to spend less time in banks. The software will help, he said, because analysis can be done in a field office instead of the institution. …

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