Comptroller of the Currency Thomas Curry is trying to create a tougher, more ethical agency, he testified Tuesday on Capitol Hill.
The Senate Permanent Subcommittee on Investigations held an hours-long hearing that examined years of lax anti-money-laundering controls at HSBC's U.S. unit. Sen. Carl Levin, D-Mich., the chairman of the panel, criticized the quality of supervision at the Office of the Comptroller of the Currency.
Levin referred to its record in dealing with HSBC as "pretty feeble enforcement" and asked the comptroller: "Mr. Curry, what do you think about this record that you inherited?"
Curry, who was confirmed to the job this year, answered: "I would like to see going forward a much more aggressive posture by the OCC. If there is evidence of material weaknesses in a [Bank Secrecy Act]/AML program, I would like to see at the very least a progressive remedial program being instituted and to use all of the tools that are available to us, including cease-and-desist orders."
Curry acknowledged his agency acted too slowly in addressing the bank's problems.
Though the agency issued a broad cease-and-desist order against HSBC in 2010, Curry said, "with the benefit of hindsight, the OCC could have, and should have taken this action sooner."
"The issuance of this order does not conclude our activities with respect to the matters covered by the cease and desist order," he said. "We are now actively evaluating the bank's compliance with the order and considering the assessment of monetary penalties."
Curry added that the agency is implementing recommendations made by the subcommittee, including that AML deficiencies be included in a bank's safety and soundness rating.
Sen. Tom Coburn of Oklahoma, the subcommittee's ranking Republican, asked Curry about investigations by the Treasury Department's inspector general into alleged improprieties by employees of the OCC as well as the Office of Thrift Supervision, which was absorbed into the OCC. An examiner is said to have accepted a bank's offer to go on golf outings, and in a separate instance the agency's information technology resources were allegedly used to solicit a prostitute.
The IG found only three of the six cases cited over a three-year period had merit, Curry said. Still, "this particular conduct that I have just recently become aware of is totally unacceptable and reprehensible conduct by a bank examiner."
"What I find particularly troubling is the potential for disrepute that it places on the many fine people — the 3,600 people — who work for the OCC. That is not our standard of ethical conduct," he said. "We take great pains to advise and to educate our staff about what conduct is expected from a bank examiner, particularly given the significance of their duties as examiners."
He added: "I want to create a culture at the OCC — or to reinforce a culture — that we're here to be bank supervisors and that we're to be fair and reasonable in how we approach that. At the end of the day, we're to do what we're being paid to do."