Banking and Finance Law Daily Fed moves to tighten post-employment restrictions on senior examiners
Monday, November 21, 2016

Fed moves to tighten post-employment restrictions on senior examiners

By Richard A. Roth, J.D.

A change in Federal Reserve Board policy will more than double the number of Federal Reserve Bank employees who are subject to post-employment restrictions, according to the Fed. About 250 employees will be covered, up from the current number of approximately 100. Also, a new policy will ban former FRBank officers from representing private parties before Fed employees and ban FRBank employees from discussing official business with former officers for one year (SR 16-16/CA 16-7).

According to the Fed, the policies apply to two groups of former employees:

  1. individuals who acted as senior examiners for a depository institution or holding company for two months or longer during their last 12 months as a federal reserve bank employee; and
  2. any Fed examiner or supervision staff member who accepts a job with a depository institution or holding company he examined in that final 12-month term.

The revised senior examiner policy will take effect Jan. 2, 2017, and the restriction on former officers will take effect Dec. 5, 2016, the Fed said.

Senior examiner. The broader coverage comes about due to a change in who is considered to be a senior examiner. Currently, the post-employment restrictions apply generally to individuals thought of as "central points of contact." The restrictions are being expanded to deputy CPCs, senior supervisory officers, deputy SSOs, enterprise risk officers, and supervisory team leaders. Functionally, these would be individuals who:

  • were authorized to conduct examinations or inspections for the Fed;
  • had "continuing, broad, and lead responsibility" for examining or inspecting a single institution, affiliated group of institutions, or holding company;
  • performed examinations, inspections, or supervision as a substantial part of their assigned duties; and
  • routinely interacted with the company’s employees or officers.

Violations. If a former employee violates the one-year ban, the Fed is required to seek an order prohibiting the individual from participating in the industry for up to five years, a civil penalty of up to $250,000, or both. However, the Fed chairman has the authority to waive the restriction.

The FRBanks are to review examiners’ duties regularly and notify an examiner if a change in her job duties would make her a senior examiner who is covered by the rule or remove her from that status.

Conflicts of interest. The Fed also has a policy designed to uncover possible conflicts of interest. If any examiner—even an individual not considered to be a senior examiner—takes a job with a company he examined in the 12 months before leaving the Fed, the FRBank is to review all of his work papers for any indication that the upcoming change in employment might have compromised any examination findings or supervisory proceedings.

MainStory: TopStory FederalReserveSystem

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