US Comptroller Discusses Plans to “Refocus” Supervision

In a recent speech, US Comptroller of the Currency Jonathan Gould discussed an interagency effort to “refocus” supervision on material financial risk, moving away from “check-the-box” exercises that distract from high-stakes issues, as reported by the American Banker.

Gould argued that, since the Global Financial Crisis, supervisory practices have gradually expanded the examiner’s remit to the point where they cannot effectively assess the full spectrum of risk. This leads to a surplus of supervisory notes, he said, as examiners “always want to cite every possible thing on the planet, including the kitchen sink.” The result is that attention has been drawn away from serious financial risks, Gould contended.

He used the 2023 failure of Silicon Valley Bank (SVB) as an example of the framework’s shortcomings, noting that while supervisors identified the hazards, they failed to compel action. “From my perspective, we need to make sure that we are focusing those people on the things that matter most, which I would broadly define as the material financial risk,” he said. “That is the area that we can absolutely not fail to see and defend against, and I think that did not happen at Silicon Valley Bank.”

Gould concluded that while the revisions constrain the scope, they do not, and could not, get rid of supervisory judgment. “There’s no substitute for examiner judgement,” he acknowledged. “What I’m attempting to do is to constrain the parameters of how they exercise that judgement in the scope of the examination itself.”

For more from Jonathan Gould on supervision, governance, and culture, read our just-released Deeper Dive report, “Supervisors on Supervision.”