The Bank Policy Institute (BPI) has announced the launch of an advertising and media campaign called “Better Bank Supervision.” The initiative aims to encourage federal policymakers to reform the current bank examination framework. The campaign will be visible in Washington, D.C., and national markets, and features an educational website with downloadable resources that provide solutions for improving bank oversight.
Greg Baer, BPI President and CEO, stated: “Bank supervision is the hidden hand determining where banks can expand, which businesses they can finance and how they can do business. After decades of bureaucracy and redundancy, supervision has dampened examiners’ ability to identify actual risks. Now is the time to return supervision to its intended purpose: evaluating banks on fundamental, objective standards. Regulators have already started to make much-needed changes and we encourage continued progress. Focusing on what truly matters will enable examiners to better protect the banking system and for banks to better support and grow the economy.”
According to BPI, there are several concerns with the current supervisory regime. The organization argues that bank supervision operates without external checks or balances, focuses on process over material financial risks, uses examinations as a way to discourage legitimate business activities that support economic growth, and includes duplicative reviews that complicate operations for banks.
To address these issues, BPI recommends refocusing exams on material risks based on objective standards; modernizing anti-money laundering rules; defining “unsafe and unsound” practices through rulemaking; repealing illegal guidance; and restoring fairness, efficiency, and coordination in the process.
BPI also noted recent steps by regulators toward reforming bank supervision. These include a Federal Reserve proposal aimed at changing how large financial institutions are rated; efforts by all banking agencies to remove reputational risk from examinations; and actions by the FDIC regarding supervisory appeals.
BPI describes itself as a nonpartisan group focused on public policy, research, and advocacy for leading U.S. banks as well as major foreign banks operating in the country. Its members collectively employ nearly 2 million people across the United States.
For more information about the campaign or access to its resources, visit BetterBankSupervision.com.