Since former Federal Deposit Insurance Corp. Chairman Sheila Bair made her comments regarding the revolving door between the banking industry and its regulators – specifically, that bank examiners ought to make a lifetime commitment – none of the BankThink comments to date have laid out the present post-employment restrictions that apply to bank examiners. They are pretty tough.

Presently in Title 18, the Federal criminal code, there is a permanent representational bar that prohibits a former examiner from communicating with their agency on behalf of a bank if they "personally and substantially participated in a particular matter."

There is an additional two-year representational bar, which prohibits a former agency employee from communicating with the agency regarding matters that were pending under his/her responsibility during the last year of agency employment.

On top of those prohibitions, for senior, higher-paid examiners, there is a strict one year cooling off period, where the employee may not communicate with their agency on behalf of anyone, regarding any matter, regardless of whether they had been involved in that matter as an agency employee.

Lastly, in the wake of the conflict of interest issues identified between the lead examiner and bank management in the supervision of the Riggs Bank, N.A. around 2005, new legal restrictions were passed by Congress.  

For OCC examiners, any large or midsize bank examiner-in-charge is prohibited, for a period of one year after leaving federal employment, from accepting compensation as an employee, officer, director or consultant from the bank they had broad responsibility for during two of the preceding twelve months. That applies as well to its parent company and national bank affiliates.

Generations of retired bank examiners have already made the lifelong commitment Sheila Bair advocated on their own accord and their public service is applauded and appreciated. Others, based on personal and career-driven factors, choose to have their professional life move in a different direction.

Sometimes they go into the banking industry, and most of those join the staffs of community banks. The community bank benefits from the training paid for by the examiner's former regulatory agency and the experience and perspectives their new employee has gained as a field examiner.  In an indirect way, that makes our community banking system stronger.

The Dodd-Frank Act has mandated board-level risk committees for publicly-traded banks over $10 billion, with at least one committee member having risk management expertise.  In addition, those same institutions must employ a Chief Risk Officer who will implement enterprise risk management practices and report to the board-level risk committee. Bank examiners, who are trained to evaluate the panoply of risks affecting the banking enterprise, will likely be in higher demand than ever before.

However, given the strict post-employment restrictions and prohibitions listed above, the fears of potential conflicts of interest should be more hypothetical than real.

Ron Lindhart is a retired national bank examiner. He can be reached at