Testimonies from the Federal Reserve and OCC before the Senate Banking Committee Regarding the Role of Independent Consultants in Enforcement

The Senate Committee on Banking, Housing, and Urban Affairs held a hearing discussing the role of independent consultants in the enforcement process of various regulators. The Committee heard testimony from, among others, Daniel P. Stipano, Deputy Chief Counsel at the OCC, and Richard Ashton, Deputy General Counsel at the Federal Reserve.

• Stipano reviewed the OCC's authority to require the use of independent consultants, the circumstances in which the OCC has ordered banks to engage independent consultants, the OCC's oversight of such independent consultants, significant results of the use of independent consultants, and the future use of independent consultants in the OCC's enforcement actions. Stipano concluded that the OCC's longstanding practice of requiring banks to retain independent consultants to help them meet enforcement requirements has generally worked well, but that the OCC continues to monitor and evaluate their use.
• Ashton, in contrast, testified that the mandatory use of a consultant has not been a frequent requirement in the Federal Reserve's enforcement actions. Nevertheless, he reviewed certain scenarios in which the Federal Reserve might require their use, such as (i) enforcement actions that require an expert third party to review and submit a report on a specific area of the organization's operations, (ii) situations where examiners found serious deficiencies in an organization's systems for monitoring compliance with Bank Secrecy Act and anti-money laundering requirements, and (iii) enforcement actions that required organizations to identify and then compensate or otherwise remediate injured consumers.

Click hereto view a webcast of the hearing.See also: Daniel P. Stipano's testimonyand Richard Ashton testimony.