Strong ombudsman programs at the federal financial agencies will be very much needed in the post-Dodd-Frank-Act world of banking. With greater regulatory and supervisory involvement in financial services companies' day-to-day operations, the chances for error grow.

Ombudsman programs — created in the 1990s and made mandatory by Congress at all the federal banking agencies — hold the promise to minimize problems that arise from unintended mistakes. It does so by offering regulated entities an avenue for appealing supervisory decisions and other issues.

Our financial services agencies are all made up of exceptionally talented and diligent professionals who work hard to follow the law and do the right thing. However, no human enterprise is perfect; people make mistakes. Existing ombudsman programs have been an important fairness safety valve. In a post-Dodd-Frank world, such programs become even more important.

Now is the time to ensure that a serious expansion of financial agency ombudsman programs both takes place and works. Under Dodd-Frank, the Securities and Exchange Commission has been directed to establish such a program, and the Federal Housing Finance Agency is setting up an ombudsman program mandated by the Housing and Economic Recovery Act of 2008. Similar programs should be started at the Commodity Futures Trading Commission, Financial Stability Oversight Council, Office of Financial Research and Consumer Financial Protection Bureau. Perhaps even the Treasury, which has ombudsmen for several of its agencies and divisions, could benefit from having an overall departmental ombudsman.

To be sure, the Treasury already has an office of inspector general, and legal means of appeal exist at most government organizations. But IGs are more oriented toward matters of waste, fraud and abuse than to the finer points of supervision and oversight. And actions that, from an agency perspective, may be minor mistakes can be onerous from the private-sector perspective.

Formal appeals processes also serve a function and involve a degree of formality and an adversarial context that, again, is not right for relatively minor and less contentious disputes. Most people, and particularly regulated entities, do not want and are well advised to avoid adversarial tussles with their regulator or other agencies unless matters become extreme.

Indeed, this justifiable reluctance to have an adversarial relationship is precisely why ombudsmen are so needed and appealing. The very nature of these programs is to resolve matters before they become needlessly contentious.

The ombudsman office established by the Office of the Comptroller of the Currency in 1993, during my tenure, has worked well. In many ways it is a model for programs at the Treasury and other agencies that lack ombudsmen. Indeed, Congress thought so well of the OCC program that it required ombudsmen at the other banking agencies in the 1990s.

However, even the banking agency ombudsman programs should be enhanced in the wake of Dodd-Frank. These agencies have had their powers enhanced by the reform law, and the likelihood of unintended but seriously hurtful mistakes has grown. Even at the OCC, cutbacks in the ombudsman's authority in matters involving enforcement actions, a step taken in the last decade, should be reversed.

Today, ever more matters are going to enforcement. If the ombudsman cannot delve into enforcement matters, he or she is precluded from getting into a whole variety of issues that could involve mistakes. Furthermore, matters involving enforcement actions typically are of great importance to the regulated financial institution. A second pair of eyes in such important cases not only avoids unnecessary harm but also enhances the agency's stature as a place of probity and fairness.

Ombudsman programs have had a positive impact on bank supervision and banks' relations with their supervisors. All the regulators should consider whether more of what they do should be eligible for ombudsman review. And now, before the new Dodd-Frank rules take effect, is the right time to consider and create new and enhanced ombudsman programs.

Government and the private sector have a shared interest in addressing this issue now. Fairness is at the heart of the American experience and its values, and as government expands its reach, every effort should be made to make sure this core value is protected.

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