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Tools: Rapid Response Keeps Examiners up to Date

Thursday, October 1, 2009

When examiners come to your bank, you expect them to have the latest understanding of regulations, guidelines and issues affecting the banking system.  When the financial crisis erupted last year, and changes started coming rapidly, the Federal Reserve immediately saw the need to provide examiners detailed and pertinent information on emerging issues.  And the St. Louis Fed took on the responsibility for getting it done by designing and implementing a program called Rapid Response. 

"We knew that discussions were going on informally about supervisory issues.  So, we elevated those discussions to a learning experience for anyone who saw the topic as relevant," says the Fed's Erik Soell, who manages the program on a daily basis.
"Examiners already understood the regulations.  What they needed was the wider context on the practical implications in the current environment," he says.  "Until now, there hadn't been an outlet on this scale that could provide such information."  
Rapid Response examiner conference calls are held once or twice a week.  Examiners receive an e-mail invitation to register for the session. 

One recent session was held on the registered warrants issued by the state of California.  Regulatory guidance was issued on July 8, and a System-wide training conference was held the following day.  As with most sessions, state bank examiners were also invited to participate.  Because of the call, Fed and state examiners nationwide understood the risk and issues facing the banks that were asked to accept the warrants.

Phil Herwig, a senior examiner for safety and soundness at the St. Louis Fed, reports that Rapid Response helps fulfill his duties.  "A Rapid Response session can provide a good overview of a particular topic, which helps me develop a better action plan when examining for that topic," Herwig says.  "It's also helpful to have current information about a particular issue, and a more global perspective on the issue's implications, when having discussions with bank management during an examination."

Post-session surveys confirm that the program is helping Fed examiners do their job more effectively with bank holding companies and state member banks, explains Julie Stackhouse, senior vice president of Banking Supervision, Credit and the Center for Online Learning.  "In addition to our post-session surveys, we receive feedback through anecdotal e-mails and phone calls.  The feedback tells us that the sessions are bringing to light the experts in the Fed System, making it easier to know whom to call when questions arise during an examination," Stackhouse says.  "A participant from one Fed even told us that he had seen better alignment in views with state banking regulators because of the shared training."

While established because of the financial crisis, Rapid Response will likely outlast the current financial and economic difficulties.  "I don't think there will be a time that we won't need Rapid Response, because it's a concept that goes beyond the current crisis," Soell says.  "In the future, we could scale it back to once a week, then once a month after the recession and crisis are over, because Rapid Response fills a need regardless of the current economic landscape."

Banking Supervision and Regulation's Erik Soell explains how Rapid Response helps examiners and bankers.