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Novice Examiners
Banks, it seems, are training their examiners. One respondent to Bank Director’s 2025 Risk Survey said: “Our bank seems to get green regulators, and we are their training ground.” At conferences, we continue to hear community bankers complain of novices in the federal agencies asking weird questions or needing basic banking concepts explained.
The Office of the Inspector General for the Federal Deposit Insurance Corp. has been warning for more than a year of a coming wave of retirements and turnover at the agency, and that was before President Donald Trump took office. Shortly after his inauguration, the agency lost 9% of its staff through retirements and layoffs, the inspector general said in a March report. An additional 17% of staffers were eligible to retire this year. (An FDIC official said this week very few safety and soundness examiners were laid off this year, and the agency is working to improve retention of examiners.)
A “substantial number” of seasoned examiners took advantage of buyout options earlier this year, says Kevin Toomey, a partner and head of the financial services practice at Arnold & Porter. Junior examiners may have lost the benefit of more experienced staffers. Toomey recommends that bankers work to educate their examiners and make sure they understand the history and context of what they’re evaluating.
He adds that bankers should not go over their examiners’ head with complaints unless absolutely necessary. “If you disrupt or shake the confidence and trust of your day-to-day person, that's sometimes hard to repair,” Toomey says.
As the federal agencies have announced changes to focus examinations on material financial risks, such as issues that could affect liquidity, earnings and capital, and less on other types of risks, relief may be in store for banks. (See the article below, “Community Bank Exams Are About To Change.”) But it could take time for Washington pronouncements to make their way down to exam staff, says Peter Weinstock, a partner and coleader of the financial services group at Hunton Andrews Kurth. “I’ll believe it when I see it,” he says.
• Naomi Snyder, editor-in-chief for Bank Director
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