Tag: OCC

Should We Blame Bank Examiners For Slow Job Growth?

By Simon Johnson. My written testimony to House Financial Services, Subcommittee on Financial Institutions and Consumer Credit is here.

With unemployment back up to 9.2 percent, in the numbers that came out last week, the hunt is on for an explanation of why job creation has been so slow since the financial crisis of 2008. Some House Republicans think they have found a specific culprit: bank examiners.

In the view of Representative Bill Posey (R.) and a number of his colleagues on the House Financial Services Committee, bank examiners are clamping down on otherwise perfectly healthy banks – and forcing them to inappropriately classify some loans as “nonaccrual” (meaning less likely to be paid back). Mr. Posey has therefore introduced a bill that would direct examiners to regard all loans as accrual, as long as payments are still being made – and a hearing was held last Friday to discuss the merits of the matter.

I testified at the hearing and was not supportive of Mr. Posey’s legislation. On the subsequent panel of witnesses, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) testified – as the relevant regulators – and they were even more forcefully against the proposal. Continue reading “Should We Blame Bank Examiners For Slow Job Growth?” →

O.C.C. Spells Trouble, Again

By Simon Johnson

The Office of the Comptroller of the Currency (OCC) is one the most important bank regulators in the United States – an independent agency within the Treasury Department that is responsible for “national banks” (for more on who regulates whom in the US, see this primer). Over the past decade the OCC repeatedly demonstrated that it was very much on the side of banks, for example with regard to fending off attempts to impose more consumer protection – James Kwak and I covered the history in our book, 13 Bankers; these details have not been disputed by the agency or anyone taking its side.

After suffering some serious and well-deserved loss of prestige during the financial crisis of 2008-09, the OCC survived the Dodd-Frank reform legislation and is now back to pushing the same agenda as before. In the view of this organization and its senior staff – including key people who remain from before the crisis – the “safety and soundness” of banks requires, above all, not a lot of protection for consumers. This is a mistaken, anachronistic, and dangerous belief. Continue reading “O.C.C. Spells Trouble, Again” →

John Dugan: Consumer Advocate Or Bank Defender?

In a quote potentially for the ages, John C. Dugan, Comptroller of the Currency since 2005, told the Senate Banking Committee yesterday, enforcement of consumer protection laws “should stay with the bank regulators, where it works well.”

This is a bold statement. Does Mr. Dugan have any evidence to support the idea that consumer protection vis-à-vis financial products currently works well? A close reading of his written testimony to the Senate Banking committee reveals none.

In fact, his whole testimony sounds like it comes from a parallel universe – one that did not just experience the biggest banking crisis in world history. Continue reading “John Dugan: Consumer Advocate Or Bank Defender?” →