One small national bank that has tested a new compliance exam praised it as simpler and faster.
"It was the easiest exam we've ever experienced and the least disruptive to our business," said Marilyn Buhyoff, senior vice president of National Bank of Blacksburg, Va.
The bank was one of 17 chosen for a pilot test of streamlined compliance exams from the Office of the Comptroller of the Currency. Come October, all national banks with less than $250 million in assets will undergo the new exams.
There are 2,495 national banks with less than $250 million in assets, representing 81% of all national banks.
The exams, announced by Comptroller Eugene A. Ludwig last week, are an attempt to lessen regulatory burden while bringing more consistency to the process.
Ms. Buhyoff said the change was evident from the beginning. The request list her bank received to prepare for the exam was only a page and a half, compared with a 15-page letter for the last exam.
Rather than asking for specific documents, the letter only asked for broad descriptions of the bank's compliance programs and what types of loans the bank offers.
Ms. Buhyoff said that scaled-down request scared her a bit, because she thought examiners might ask for more information when they got to the bank. But they didn't.
"They were looking more at systems rather than going through specific documents," she said.
For example, examiners used to look at individual Internal Revenue Service forms to check for Bank Secrecy Act compliance. This time, Ms. Buhyoff said, they looked at the bank's BSA program to see how it works rather than sifting through the actual documents.
In other cases, such as checking for compliance with the Real Estate Settlement Procedures Act, the examiners did a smaller sampling of loan files than they had done in other exams.
But the new exams did add some requirements.
One thing examiners asked for this year that they never had before, she said, was demographic information on the bank's community. The bank, which uses mapping software, showed the examiners where their delineated area is in their community. Those data were used to check the bank's fair-lending record, Ms. Buhyoff said.
Finally, the exam lasted only two weeks, whereas previous exams have gone three to four weeks, she said. Besides cutting down on time, the new exams are expected to be more consistent.
"The big change in the procedures is that the exams are more standardized," said Bert Otto, assistant deputy comptroller for compliance at the OCC.
Examiners are not supposed to go beyond the new procedures unless a violation is found, Mr. Otto said. Even then, examiners must get a supervisor's approval, he said. For example, an examiner who found violations with the Expedited Funds Availability Act would have to check with his supervisor before asking the bank for extra documents and policies on Regulation CC.
Last year, after the agency introduced new safety and soundness exams for small banks, it started looking at ways to make compliance exams better, too. The agency recognized that small banks often have tiny staffs and cannot be expected to do the same amount of work during an exam as large banks.
"One size doesn't fit all in examinations," Mr. Otto said.
