OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
SUPERVISION AND REGULATION
September 22, 1998
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OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 |
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| DIVISION OF BANKING SUPERVISION AND REGULATION |
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| SR 98-26 (TRN) September 22, 1998 |
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TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK
As set forth in SR letter 98-2, the System has adopted a new examiner training program leading to commissioned examiner status.1 The new training program requires assistant examiners, regardless of specialty, to progress through three levels of training and successfully complete two proficiency examinations before being eligible for commissioning. It is recognized that some new employees already possess advanced skills relevant to the SR letter 98-2 commissioning process through previous work experience or education. With the implementation of the new training program, a fundamental review was warranted of SR letter 93-15, which addresses the waiver of certain SR letter 91-1 training or testing requirements.
This SR letter provides guidance for Reserve Bank management in exercising its discretion to waive certain training and testing requirements for staff members hired after February 28, 1998.2 These guidelines include situations when staff members (1) were previously commissioned by another regulatory agency; (2) received equivalent training at another regulatory agency but were not commissioned; (3) have previous, directly relevant work experience; (4) have education beyond an undergraduate degree; or (5) have an identifiable combination of these factors. In addition, this SR letter describes the process for recommending and confirming such waivers.
At the discretion of Reserve Bank management, waivers may be considered
in the following situations.
Commission Issued by Another Agency. The training and testing requirements may be waived for any System staff member previously commissioned by another Federal financial regulatory or state banking agency that has a clearly equivalent certification process. The certification process must include training in the staff member's specialty area comparable to that required by the System's training program.
Because of changes in the banking industry and the evolving supervisory environment, Reserve Bank management should identify any additional training needs for such staff hired from other agencies. Management at each Reserve Bank has the discretion to enroll the staff member in any pre-commissioning courses that would address the identified learning gaps.3 For example, if the other regulatory agency does not offer certification in the specialty area for which the staff has been hired (e.g., consumer affairs, information technology, trust) or the newly hired staff member has not completed comparable specialty training while employed by the other agency, the applicable pre-commissioning specialty courses offered by the System should be completed. In addition, on-the-job training may supplement the courses as necessary.
At a minimum, Reserve Bank management should ensure that examiners hired from other agencies have, or promptly acquire, competencies in the following areas:
Equivalent Training from Another Agency. If a staff member was previously employed with another Federal financial regulatory agency or state banking agency but has not received a commission, Reserve Bank management may, after appropriate documentation and evaluation, accept the courses the staff member completed in substitution for those SR letter 98-2 courses with substantially similar content. Such courses may replace equivalent pre-commissioning courses provided comparable competencies have been mastered and the waiver process described later in this letter has been followed. The staff member will still need to pass both proficiency examinations associated with SR letter 98-2 to be eligible for commissioning. For example, the new training program requires completion of the Orientation Program (week one), Banking and Supervision Elements, and four BEST modules prior to taking the First Proficiency Examination. If Reserve Bank management determines that the assistant examiner has the skills and knowledge needed for the First Proficiency Examination and obtains a waiver of these requirements, the staff member may then take the examination without completing the required courses.4
Previous Work Experience. Reserve Bank management may obtain a waiver for a System staff member from any pre-commissioning course if the staff member possesses practical industry experience that is clearly equivalent to the skills and knowledge presented in the System course.5 However, regardless of experience, any staff member wishing to be eligible for commissioning must pass both proficiency examinations associated with SR letter 98-2.
Staff hired to specialize in certain business lines or sub-discipline specialties at the commissioned level, but without an examiner's commission, will not be eligible to receive a standard credential as a commissioned Federal Reserve examiner until the pre-commissioning courses have been attended and the First and Second Proficiency Examinations have been successfully completed.6
Education. For those staff members who have relevant education beyond an undergraduate degree, Reserve Bank management may waive a pre-commissioning course if the education provided skills and knowledge clearly equivalent to the System course.7 Regardless of educational background, any staff member must pass both proficiency examinations associated with SR letter 98-2 to be eligible for commissioning.
Combination of Situations. Under certain circumstances, Reserve Bank management may determine that an identifiable combination of other agency training, work experience, and/or education could replace a pre-commissioning course. For example, Reserve Bank management may waive the staff member from all or parts of the Orientation Program based on a combination of work experience and educational background.
When assessing if a staff member will be waived from a pre-commissioning course or if additional training should be provided to an examiner already commissioned at another agency, Reserve Bank management is strongly encouraged to consider the following items:
If Reserve Bank management accepts other agency training, previous work experience, and/or education in lieu of the staff member completing pre-commissioning courses and the staff member subsequently fails a proficiency examination, Reserve Bank management should ensure that the necessary pre-commissioning courses or other equivalent training are completed before the staff member retakes the proficiency examination.
The following waiver process ensures that all SR letter 98-2 training and testing requirements are approved and recorded properly and that the waiver guidelines are applied consistently across the System. It will also help avoid any future uncertainties in completing SR letter 98-2 training or testing requirements. If a staff member is to be waived from any SR letter 98-2 training and testing requirements, the guidelines detailed below must be followed.
Existing Commission. If Reserve Bank management accepts a new staff member's existing commission from another Federal financial regulatory or state banking agency, a memorandum must be sent to the Manager of Supervisory Education (MSE) in the Board's Division of Banking Supervision and Regulation, indicating Reserve Bank management's intention to accept the commission. The memorandum should describe any pre-commissioning courses or other training that the new staff member must complete to ensure that he or she possesses the knowledge and skills required of System examiners. This memorandum must be submitted at the same time the examiner credential is requested from the Supervisory Reviews and Evaluations section in the Board's Division of Banking Supervision and Regulation.
Waiving System Courses. For other individuals for whom the Reserve Bank believes a waiver is appropriate, the Officer in Charge of Training at the Reserve Bank must send a memorandum to the MSE within three months of the new staff member's employment with the System and before the Reserve Bank makes a final determination regarding the granting of a waiver. The memorandum must indicate the collaborative decision of appropriate Reserve Bank management regarding the waiver, including a comparison of the candidate's qualifications with the objectives and content of the System course being waived. This decision should be supported by documentation such as a resume, course description, syllabus, and/or academic transcript. Also, the memorandum should include a summary of requirements that the candidate will successfully complete before being eligible for commissioning. This information will provide a consistent, Systemwide application of the waiver process.
Each Reserve Bank's Officer in Charge of Training in a collaborative effort with other appropriate Reserve Bank management will be ultimately accountable for ensuring that all assistant examiners have the required competencies to pass the First and Second Proficiency Examinations and adequately perform as commissioned examiners.
Board's Actions. Upon receiving either of the aforementioned memoranda, the MSE will immediately acknowledge receipt of the request, ensure that the memorandum provides sufficient support, and seek concurrence from an appropriate officer in either the Division of Banking Supervision and Regulation or the Division of Consumer and Community Affairs. Unless the Reserve Bank is informed to the contrary (e.g., there is a need for additional information), the waiver process should be completed within two weeks of the MSE receiving the memorandum and appropriate documentation.
Maintaining System Standards. In exercising its discretion to waive training requirements, Reserve Bank management should be careful not to compromise the high training and experience standards required to qualify for commissioning. To ensure that consistently high standards are applied throughout the System, each recommendation to issue a standard commissioned examiner credential should be supported by sufficient evidence of training, experience, and performance.8
If you have any questions regarding this letter, please contact Sid Sussan, Deputy Associate Director, at (202) 452-2638, or Bob Leibowitz, Manager of Supervisory Education, at (202) 973-5078. With regard to consumer compliance matters, contact Shawn McNulty, Assistant Director, at (202) 452-3946.
Deputy Director
Footnotes 1. The new training program replaced the training program set forth in SR letter 91-1. Generally, any staff hired after February 28, 1998, must complete the new training program to be eligible for commissioning. Return to text 2. Reserve Bank management may continue to apply SR letter 93-15 to staff members hired under the guidelines set forth in SR letter 91-1. Alternatively, Reserve Banks may also, in an equitable manner and at their discretion, adopt this letter for those staff. Return to text 3. Pre-commissioning courses that would address potential learning gaps include the Orientation Program, Banking and Supervision Elements, all applicable Level Two specialty-specific courses, Conducting Meetings with Management, Report Writing, Management Skills, Bank Management, Examination Management, and required BEST and computer-based training modules, as outlined in SR letter 98-2. In addition, Reserve Bank management may, as appropriate, avail itself of other System courses in individual instances. Return to text 4. Reserve Bank management may not replace the requirement to attend System pre-commissioning courses with an examination review course or coaching, nor may these activities upgrade an otherwise marginal application for a waiver. Return to text 5. Caution is warranted, however, because of the specialized nature of the regulatory environment and the specialized examination procedures that are taught in many of the pre-commissioning courses. Therefore, it may be difficult to determine that the staff member’s previous work experience has provided knowledge and skills that are clearly equivalent to the System’s training requirements. In particular, all assistant consumer affairs examiners with previous industry experience will be required to attend the Fair Lending and CRA Examination Techniques schools. Further, because Introduction to Consumer Compliance Examinations and Consumer Compliance Examinations II convey examination and supervisory policies and procedures in addition to the requirements of the various laws administered by that program, it would be highly unlikely that a candidate could meet the standard for being granted a waiver for either of these courses. Return to text 6. A standard credential as a commissioned Federal Reserve Examiner is assigned to a System employee whose primary responsibility is to participate regularly in examinations or inspections of institutions for which the Federal Reserve serves as the primary federal banking supervisor. Until the staff member successfully completes the necessary training and testing requirements and has demonstrated on-the-job proficiency to Reserve Bank management’s satisfaction, an assistant examiner credential is issued. Refer to the Federal Reserve Administrative Manual for the definition in SR letter 95-6. Return to text 7. For some specialty areas, it may be difficult to identify educational requirements that provide knowledge and skills that are clearly equivalent to the pre-commissioning courses. Return to text 8. Reserve Banks should continue to follow the procedures outlined in Section 5-040 of the System’s Federal Reserve Administrative Manual when submitting an application to the Board to approve an employee as a commissioned examiner. Applications should continue to include relevant training and testing information for an applicant, including the date(s) that a candidate successfully completed proficiency testing required for commissioning. As indicated in SR letter 98-2, the successful completion or waiver from training or testing requirements does not automatically qualify a staff member for commissioning. The assistant examiner is eligible to be considered for commissioning after completing the three levels of coursework, including passing the two proficiency examinations and demonstrating job-related proficiency to the satisfaction of his or her Reserve Bank management. Return to text
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SR letters | 1998
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