The Banking Supervision and Regulation (BS&R) Division of the Federal Reserve Bank of San Francisco is responsible for executing the Federal Reserve System’s supervisory policies within the Twelfth Federal Reserve District. We do this through a combination of on-site examinations and off-site supervision activities.
Safety and Soundness Examinations
Our Safety and Soundness examination areas conduct on-site examinations of domestic and international organizations, including specialized examinations in trust operations, information systems, capital markets, and operations risk. Examination staff take a risk-focused approach to supervision that tailors each examination to the institution’s risk profile.
On-site examinations determine the safety and soundness of the institution’s operations and financial condition. Examiners evaluate the quality of the institution’s assets; the effectiveness of internal controls, policies, and risk management systems; and compliance with banking laws and regulations. For our larger institutions with greater than $10 billion in total assets, we execute a continuous supervision model, which combines full-scope and target on-site examinations with a variety of off-site monitoring activities.
Our supervision of companies that own insured depository institutions, i.e., bank holding companies (BHCs) and savings and loan holding companies (SLHCs), is also risk-focused. In general, we focus on whether the parent company can act as a source of strength to its subsidiary depository institution(s) and on the potential risks presented by nonbank units to their banking affiliates.
Safety and soundness examination staff coordinate regularly with other federal and state bank regulators. They also rely on existing work of functional regulators (such as the Securities and Exchange Commission and various state insurance agencies), where appropriate.
Consumer Compliance Examinations
Our Consumer Compliance examination area conducts on-site examinations of supervised institutions to ensure compliance with federal consumer protection laws and regulations. Through enforcement of these rules—which include laws such as the Truth in Lending Act, the Equal Credit Opportunity Act, and Electronic Funds Availability Act—consumer compliance examiners help promote market efficiency and fairness in consumer financial services. In addition, our compliance function also evaluates institutions’ performance under the Community Reinvestment Act (CRA), which encourages institutions’ lending, investment, and services in communities in which they operate and promotes access to banking services in historically underserved markets. Staff also provide ongoing monitoring and technical assistance to individual banks, conduct outreach to educate both consumers and bankers, and work with industry trade and interagency groups to conduct group training forums. In addition, the unit investigates consumer complaints lodged against supervised institutions.
Foreign Banking Organizations
In addition to U.S. banks and holding companies, we are responsible for supervising a group of primarily Asian foreign banking organizations operating in the District. The U.S. operations of foreign banking organizations encompass a wide variety of banking and nonbanking activities, conducted through subsidiaries, branches, agencies, and representative offices. Examiners conduct routine on-site safety and soundness examinations of these entities, using a risk-focused approach, and our Foreign Institutions Group prepares an annual assessment of the combined U.S. operations of the foreign banking organizations for which the 12th District has responsibility. Our Country Analysis Unit also monitors and analyzes financial sector developments in key Asian economies and prepares country-specific studies and analyses, including the periodic publication Asia Focus.
Off-Site Supervision Activities
We conduct additional supervisory responsibilities in our offices and not on-site at financial institutions.
Banking Applications processes all filings from financial holding companies (FHCs), BHCs, SLHCs, state member banks (SMBs), and international banking entities in the District. Examples of reviewed submissions include bank memberships in the Federal Reserve System, changes in control, mergers and acquisitions, BHC formations, and proposals to engage in non-banking activities. In evaluating domestic applications, staff consider financial and managerial factors, meeting the convenience and needs of the community, and effects on competition. In addition, the Federal Reserve must approve all new branches, agencies, and representative offices of foreign banking organizations doing business in the U.S. While upholding statutory standards and requirements, staff also provide guidance to applicants and/or their legal representatives and strive to provide prompt responses and actions on application matters.
Enforcement institutes and monitors supervisory enforcement actions imposed on financial institutions and their institution affiliated parties supervised by the Reserve Bank. Typically, banking supervisors initiate enforcement actions to remedy unsafe or unsound practices and violations of laws and regulations identified during on-site examinations or off-site surveillance. Once such deficiencies have been identified, enforcement actions are used to compel the board of directors and management to address the weaknesses before they become pronounced; comply with applicable banking laws, regulations, and standards; and restore the institution to a safe and sound condition. Formal enforcement actions are made public through a press release and the posting of the order or agreement on the public website of the Board of Governors.
Risk Monitoring and Analysis identifies, explores, and provides guidance on a wide range of banking and policy issues, trends, and risks. The team focuses on broad industry conditions as well as specific sectors, capital markets, risk modeling and development, and implementation of regulatory policies, including those related to capital adequacy and accounting practices. In addition to participating on examinations and other supervisory activities at District institutions, unit staff prepare many of our publications.
Surveillance and Analysis conducts quarterly domestic bank, BHC, and SLHC financial surveillance and monitoring and provides pre-examination analysis and other ad hoc analytical support to examination staff and Division management. This area also provides regular financial analysis of some of the largest and most complex supervised institutions, identifying performance outliers and highlighting potential supervisory concerns that may require further investigation through the examination process. Additionally, the group is responsible for off-site supervision of BHCs and SLHCs with assets under $1 billion. More broadly, the group provides periodic analysis of banking industry performance and conditions through metric and analytical reports.