Banking in the Ninth

The Federal Reserve’s Approach to Examination Staff Training

Safety & Soundness Update - December 2018

Peter Schmeling | Business Analyst

Published January 3, 2019  | December 2018 issue

Have you ever wondered what process examiners go through to become commissioned and what kind of ongoing training they complete? The Federal Reserve System maintains a strong examiner education program to produce and maintain highly trained examination staff. This article outlines the broader aspects of the commissioning program and continuing professional development (CPD).

Examiner commissioning

The commissioning program, consisting of unique programming across three supervisory areas, has been significantly updated and restructured to better fulfill the System’s responsibility to supervise institutions under its jurisdiction as well as to deliver more training outside the traditional classroom setting. Outside the commissioning program itself, CPD training has also been enhanced beyond the traditional classroom-based training seminars and district training conferences through the use of technology to deliver timely CPD to all staff. This technology offers live and on-demand training through an internal program similar to the “Ask the Fed/Regulator” webinars that we host for representatives of financial institutions. These changes to the CPD training help examiners receive timely and topically relevant supervisory knowledge and information in a changing environment.

The examiner commissioning program is tailored specifically to the needs of three distinct areas of supervision: Large Financial Institutions, Community Banking Organizations, and Consumer Compliance. These three distinct commission tracks are largely developed and overseen at the national level, with heavy involvement from the supervision business lines in development of the overarching programming. The design relies on local Reserve Banks for implementation through individual examiner trainee oversight and highly structured on-the-job experiences designed to reinforce curriculum concepts.

Formal training materials include stand-alone reading materials, self-paced online learning units, virtual classroom sessions, and in-person coursework. Required on-the-job training, which has defined developmental goals, brings this theoretical learning into practice, as examiners-in-training take on real-world assignments at financial institutions under the guidance of more experienced staff. The importance of this on-the-job training cannot be overemphasized, as it provides an opportunity for staff navigating the commissioning program to see how a variety of financial institutions conduct business. It also provides staff with exposure to institutions of varying complexity and how a range of different practices might be effectively employed to operate a sound organization. This breadth of exposure is key to developing the strong judgment necessary for examiners to make sound supervisory decisions while considering the unique facts or circumstances of each institution.

The commissioned examiner training program culminates with a test for examiners to demonstrate their proficiency across many facets of their area of supervision. Examiners receive their commission only after passing the test and completing all required curricula and on-the-job training. This process is similar to other professional credentialing programs and typically takes three or more years to complete.

Continuing professional development

Examiner CPD provides ongoing training to keep commissioned examiners’ skills current across changing economic, legislative, and regulatory landscapes, and across innovations in financial institution technologies and products/services. CPD remains available through the more traditional in-person classes, but the System’s added webinar program allows it to deliver training to various groups of staff quickly and in place using technology that accommodates live or delayed participation. CPD is also developed and delivered locally at a district level to address specific needs related to the district supervision portfolio. Finally, beyond the broad training designed for all examiners, CPD offers training in such areas as information technology and wealth management for examiners who wish to specialize. In short, an examiner’s training does not end with earning the commission.

Moving forward

The financial industry is in a constant state of evolution. The regulatory framework also changes regularly. By taking a comprehensive approach to examiner education, the System is well poised to continue to produce examiners capable of effectively operating in this dynamic environment. Through blending theoretical knowledge and real-world experiences, delivering learning across an array of programming channels, and having the flexibility to rapidly adapt to a changing landscape, the Federal Reserve System will continue to develop high-quality examination staff both now and into the future.

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