BPI Launches ‘Better Bank Supervision’ Campaign

Washington, D.C. - The Bank Policy Institute today launched a new advertising and media campaign, "Better Bank Supervision," that urges federal policymakers to reform the bank examination framework while also noting recent progress on some key issues. The campaign, targeting D.C. and national markets, features an educational website with downloadable resources for visitors to find solutions to enhance bank oversight.

"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." - Greg Baer, BPI President and CEO

Background: Banks are subject to regulation - the rules that govern their practices - and supervision - on-site examination for compliance with rules and laws. Increasingly, supervision has become subjective, duplicative, tangential to material risks and extralegal. Bank examiners are trying to do too much in too many places, often without objective standards or oversight, and this redundancy is leading to a system rife with complications that is ultimately less safe.

• Opaque Framework. The bank supervisory regime operates in secret, with no external checks and balances.
• Focus on the Wrong Risks. Examination focuses on process and immaterial issues, and not on the real financial risks that the law directs regulators to consider.
• Pushing Banks Out of Business Lines. The examination process is used to push banks out of legitimate activity that benefits economic growth.
• Redundant Reviews. Duplicative and conflicting examination activities make it harder for banks to support the economy.

The Solutions: To fix bank supervision, policymakers should:

• Refocus bank exams on what matters: material risks that reflect a bank's financial condition and objective standards.
• Modernize anti-money laundering rules to address bank account access concerns driven by regulatory and supervisory overreach.
• Define "unsafe and unsound" practices by rulemaking.
• Repeal illegal guidance.
• Restore fairness, efficiency and coordination.

Progress:The banking agencies have taken several constructive steps toward reform in key areas of supervision, including:

• A Federal Reserve proposal to reform the Large Financial Institutions Rating System.
• All banking agencies are moving to eliminate reputational risk from examination.
• FDIC actions toward reform of supervisory appeals.

To learn more, visit BetterBankSupervision.com.

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About Bank Policy Institute

The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation's leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation's small business loans, and are an engine for financial innovation and economic growth.

Media Contact

Tara PayneBank Policy [email protected]