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Should Bank Examiners Have to Make a Lifetime Commitment?

When former Federal Deposit Insurance Corp. chairman Sheila Bair visited American Banker's office this month, she reiterated her call to ban the revolving door between the industry and its regulators. That is, she wants regulators to be prohibited from turning around and taking a high-paying job as an industry or private sector lobbyist at the end of their tenure.  

Moreover, Bair felt bank examiners, specifically, should be required to commit to the profession.

"I think that should be a lifetime calling,"she said. "Pay them more and train them more and give them more status, but in return, expect them to make a lifelong commitment."

Not everyone was on board with this assertion. In response to an American Banker article highlighting Bair's remarks, one commenter made a strong case for why such a commitment might not be practical … or fair. 

"Constantly being on the road and away from home is not an attractive lifelong profession," the commenter wrote, adding that, while the pay raise Bair advocated was certainly in order, "it should be expected that [examiners] will move on after contributing to the public interest and learning a great deal."

The commenter also pointed out that, at times, there were benefits to having a person move from regulating the industry to working in it.

"Some of the best examiners may serve the interests of prudential regulation by being bank managers … having been exposed to the other side of risk management," they wrote.

Also, if an examiner makes a lifetime commitment to the job, will the job return the favor? Richard I. Isacoff, a lawyer in Pittsfield, Mass., who used to work out failed institutions for the FDIC and, earlier, the old Federal Savings and Loan Insurance Corp., tweeted that he "loved [the] work. Job left-I didn't."

Do you believe bank examiners should be required to make a lifelong commitment? Why or why not? Let us know in the comments section below.

Jeanine Skowronski is the deputy editor of BankThink. You can contact her at or follow her at Twitter @JeanineSko


(17) Comments



Comments (17)
Bair's comments are so outrageous and out of touch that they do not deserve response. Typical commentary from someone who has never practiced what they have preached. Until we get some bankers at the head of these regulatory agencies, we will continue to read baseless comments such as this.
Posted by jharmonn | Tuesday, October 16 2012 at 9:31AM ET
No. Examiners have to travel a lot, and being gone from the family a lot can be hard. Travel gets old and some just have to say no more. There are changes in life and decisions have to be made to best fit personal and family purposes. I would think the regulators would want experienced examiners working in banks.
Posted by Donack36 | Monday, October 15 2012 at 8:44PM ET
I was in public accounting twice and left twice just because I got burnt out. I know former examiners both FDIC and FHLB then OTS who experienced the same burn out. Some times its good to have fresh faces in the industry.
Posted by EMCG | Monday, October 15 2012 at 4:37PM ET
It is a crazy proposal. I'd say north of crazy. The regulatory experience on all sides benefits the other side when real thinking needs to create real solutions to real opportunities, challenges and problems. Go figure a future with no banks with regulatory experience and no regulators with banking experience. But to her Credit, she has come up with a new way to destroy the industry.
Posted by Crawford Cragun | Monday, October 15 2012 at 3:46PM ET
Pay the examiners more and better benefits and they will stay. You can't "make" them commit to the job for life, but you could make the financial incentive attractive enough to keep them from wanting to leave.
Posted by someoneelse | Monday, October 15 2012 at 3:36PM ET
The big shots, such as Jerry Hawke, Bill Isaac and particularly Gene Ludwig, have access to the revolving door. Why not their more humble brethren?
Posted by andrewkahr | Monday, October 15 2012 at 3:32PM ET
The core issue here is the excessive coziness that exists between the regulator and the regulated, as well as the lack of real-world experience by some regulators (which a lifetime commitment would exacerbate, not help). How to fix? Not sure, but it's a real issue in the regulatory culture. Definitely need to do better recruiting into fed gov't from nonprofit or AG/US Atty offices -- sometimes those folks can't even get looked at for a senior federal regulator job bc their previous salary is too LOW.
Posted by JRGordonDC | Monday, October 15 2012 at 3:28PM ET
Examiners who have worked in the private sector, and vice-versa, can have a valuable insight and experience that they can then bring to their current job. We need examiners with actual banking experience.

Pay examiners better? Examiners are already paid much better than any comparable job in the private sector. Experienced examiners can make well in excess of $100,000. This is for non-managerial positions. Plus benefits that are often better than the private sector. Their pay should be cut, or at least frozen.
Posted by bartharness | Monday, October 15 2012 at 3:03PM ET
Sure: and let's include the revolving door between congressional staff and lobbyists/lawyers in the same bill. That'll be a winner in Washington.

She's not a dumb woman; let's hope she was just "ruminating" in a stream of consciousness sort of way.
Posted by kappa1973 | Monday, October 15 2012 at 2:57PM ET
Absolutely not. The examiner tract is an excellent training ground for future bankers. They are in dozens of banks and they see what good bankers do and what bad bankers shouldn't do.
Posted by donsaint | Monday, October 15 2012 at 2:10PM ET
This is certainly an interesting concept! Having been on the other side of the desk for almost 40 years, I have seen a significant increase in the number of "new hire" and "trainee" examiners visit our bank in recent years, so I certainly share Ms. Bair's concern. However, a "lifelong commitment" sounds a little bit like slavery and would be somewhat difficult to enforce. While lifelong commitment sounds like a good idea on the surface, shouldn't EVERYONE be entitled to at least ONE career mistake?
Posted by BankerGal1 | Monday, October 15 2012 at 2:03PM ET
You would not ask an intern at a hospital to make a commitment never to go into private practice. I feel the examiners should be free to go work in private practice or lobbying if they so choose. I would impose that they cannot be hired by one of their recent auditees to avoid saying that he had findings or gave them a bad rating so that he would be offered a job.
Posted by MartaC | Monday, October 15 2012 at 1:56PM ET
Isn't this still America - Land of the Free and Home of the Brave? One can address the revolving door by setting the ethics policy to bar any contact for a longer period of time. As for the lifetime commitment idea - I would check with the Vatican on that and see how that is going. In all seriousness, this is America - think freedom, liberty, etc. I would love to hear what Thomas Jefferson would have to say about that idea.
Posted by jpodvin | Monday, October 15 2012 at 1:50PM ET
I don't believe examiners should be asked to make a lifelong commitment, any more than I would ask anyone to make such a commitment to any job. If there is concern that a former examiner could exert undue influence as a lobbyist, then certainly a provision for 'number of years' prior to taking such jobs could be implemenented (not that it seems to have worked in any other application!!!!!).

I would certainly welcome a former examiner into areas of banking where they can use their expertise and experience to improve internal controls.
Posted by hendricksondoug | Monday, October 15 2012 at 1:48PM ET
To expect people to volunteer their freedom to choose their profession or employer is naive at best and st
Posted by Gore the Ox | Monday, October 15 2012 at 1:45PM ET
Sounds like Ms. Bair wants to run the Teacher's Union. How's that worked out for everyone?
Posted by Watchdog1 | Monday, October 15 2012 at 1:44PM ET
No, and they should be permitted to marry and have children too.
Posted by rrbarnet | Monday, October 15 2012 at 1:40PM ET
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