Report: FDIC Gave Repeat Violators High Grades

By Adler, Joe | American Banker, November 16, 2006 | Go to article overview

Report: FDIC Gave Repeat Violators High Grades


Adler, Joe, American Banker


WASHINGTON -- Federal Deposit Insurance Corp. examiners awarded high performance ratings to state banks that repeatedly violated consumer protection rules, according to the agency's inspector general.

What's more, examiners were slow to demand improvements once flaws were identified, according to a report released Tuesday.

Of the 1,945 state, nonmember banks examined in 2005, 83% had "significant" consumer compliance violations, and 837 were repeat offenders. Of those, 85% still got the best Camels ratings of 1 or 2.

"As a result of repeat, significant violations, consumers and businesses of the affected institutions may not obtain the benefits and protections afforded them by consumer protection laws and regulations," the inspector general said.

FDIC officials and industry representatives downplayed the report, saying the inspector general overstated the seriousness of violations and ignored the subjectivity of examinations.

But Allen Fishbein, the director of housing and credit policy at the Consumer Federation of America, called prompt action by regulators "the cornerstone of compliance and consumer confidence."

"The finding that repeated and significant violations for some institutions were allowed to continue over several exam cycles undermines that public confidence," he said.

The report noted that the FDIC's division of supervision and consumer protection focuses its efforts on violations by banks with lower Camels ratings. But the inspector general found that flexibility toward higher-rated institutions means significant violations go unresolved for too long.

Among its recommendations, the inspector general advised the agency to follow up on repeat, significant violations at all institutions -- regardless of their Camels rating.

Camels ratings factor into how much the FDIC charges a bank for deposit insurance, and with premiums on the verge of an increase, a bank's rating will have a bottom-line impact.

FDIC Chief Operating Officer John Bovenzi said the audit wrongly identified violations as "repeat," when in reality different violations of the same law occurred in consecutive exam periods.

"The way they set this up, I think, it overstates their case," Mr. Bovenzi said.

"The report mischaracterizes their own findings, which are on a fairly small sample to begin with. It uses the word 'repeat' to imply that the same violation has occurred between exams and that we're not being timely," Mr. Bovenzi said. "The FDIC is committed to protecting the consumer and ensuring that the consumer protection laws are being followed. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Report: FDIC Gave Repeat Violators High Grades
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.