Tag: FFIEC

Further to the previous post, the memorandum requires the FDIC opinion to prevail in the event that an institutions’ PFR (primary federal regulator) CAMELS rating differs from the FDIC:

If the FDIC’s CAMELS ratings for an institution differ from a PFR’s assigned ratings, the FDIC is required to provide the PFR with an explanation of the basis for the FDIC’s position. In the event of a disagreement, the matter must be referred to the FDIC Director of the Division of Supervision and Consumer Protection (Director), or other designee, and the appropriate supervision official of the PFR. Any decision by the FDIC to use an assigned rating different than the PFR’s rating must be made by the Director (or other designee), after consultation with the Chairman of the FDIC.

Again, best advice is to adopt the FDIC interpretation of FFIEC regulations, regardless of your PFR.

According to a memorandum of understanding just signed by all the primary federal regulators (FDIC, OTS, OCC and Fed), the FDIC now has the authority to step in whenever they feel the DIF (deposit insurance fund) is in jeopardy. Although this is primarily targeted at larger (>$10b) institutions, it also applies to smaller (<$10b) institutions as well, and applies to ANY threat to the DIF, not just under-capitalization (i.e. any safety and soundness concerns).

There are several potential implications for this, but I think the primary one is that since the opinion of the FDIC examiner will prevail, all other primary regulators will follow their lead when it comes to interpretation of FFIEC guidance. We all know that certain regulators (FDIC) are more stringent than others (OTS, OCC) when it comes to both the interpretation of federal guidance, and the way that is reflected in examination procedures.

Compliance officers would be well advised to be proactive by following FDIC examination procedures regardless of your primary regulator.