WASHINGTON - As if Delora Jee doesn't have enough to worry about, a cattle virus is spreading in Colorado.
The new deputy comptroller of the currency for the western United States is keeping a close eye on the bovine disease, vesicular stomatitis, because it could have a serious impact on livestock lending.
But in recession-weary California, there are plenty of other problems to occupy Ms. Jee, who oversees institutions with 17% of the national bank system's assets. Too many national banks are invested in real estate for her taste, and lending standards are starting to slide.
And then there's the question of her agency's image. The OCC had shed its "regulator from hell" persona everywhere in the country, it seemed, but in California, where the real estate crunch continued to strain its relations with banks.
Her boss, Comptroller Eugene A. Ludwig, had heard the "horror stories" bankers told, and in his marching orders last February, he directed her to spruce up the agency's image.
"I came out here knowing that we needed to do more to reach out to our bankers," Ms. Jee said.
By all accounts, she's begun to enjoy some success.
"Her presence has been terribly significant in improving relations between regulators and bankers," said Craig Hudson, western regional director for the Independent Bankers Association of America. "She's maintained a truly open-door policy to us, and aggressively responded to our concerns."
Yet Ms. Jee has had to strike a balance between smoothing out the banker-regulator relationship and taking a hard look at the risks facing national banks in her district.
A number of small national banks, especially in Southern California, still hold portfolios that are highly concentrated in real estate. As recently as a year ago, two-thirds of the average small-bank portfolio consisted of real estate loans, according to the Federal Reserve Bank of San Francisco.
Ms. Jee said that her examiners are keeping a close eye on the new risks these banks take on as they try to dilute the real estate concentrations that have caused them so much trouble over the last five years.
For example, some small national banks in Southern California may lend to film studios in Hollywood without having any expertise in entertainment loans.
"It's a completely different business cycle and a different set of risks" Ms. Jee said. "As they diversify out of their traditional lines of business, we want to ensure that they know what they're doing and that they have the proper risk controls in place."
Ms. Jee is also directing her examiners to keep a close watch on loan underwriting standards. A recent OCC survey of examiners at the 40 largest national banks found that consumer lending standards were slipping, especially in the home equity area.
Ms. Jee said that while she didn't see any "wholesale deterioration" in lending standards, she has noticed an increase in the exceptions banks make to their underwriting criteria.
"We're encouraging our banks to monitor those exceptions, to track what volume of exceptions are being approved so they know what aggregate risk this poses," Ms. Jee said.
While the majority of her present constituency is made up of community banks, most of Ms. Jee's 17 years at the OCC have been spent working with large multinational institutions.
From 1983 to 1986, she was a field examiner in the agency's London office, which supervised about 40 branches of U.S. national banks there.
Ms. Jee said her work in London showed her how restricted American banks are in their ability to compete with other countries.
"I gained a different perspective, since London was a testing ground for a lot of different trading and lending activities," Ms. Jee said. Because there are certain activities that U.S. banks aren't allowed to participate in here, they simply can't gain a competitive edge, she added.
"When I look at the U.S. banking industry, there is a very small number of what I would call global competitors."
After her first stint in London - she returned to run the agency's office there from 1991 to 1993 - Ms. Jee came to Washington to work in the multinational bank supervision division. In 1993, she became Chase's top resident examiner, a post that made her arrival at her current post all the more challenging.
"When I arrived in this job, there was real concern among community bankers, who were saying, How will you deal with us, because we are much smaller institutions than Chase," Ms. Jee said. "It was another reason why it was important for me to participate in all of the up-front outreach."
This initial distrust was also ameliorated by the fact that Ms. Jee started her OCC career in 1978 as a field examiner in Dallas.
"This definitely helped her out, because Texas has a huge population of small banks," said OCC ombudsman Samuel P. Golden. Mr. Golden recruited Ms. Jee at a job fair in 1978 when she was a senior at Rice University. He recalled that she was a sure hire because she had done some homework before her interview.
"The industry was very healthy then, so the agency wasn't exactly well known," he said. "But she actually knew what the OCC was."
