Supervision and Regulation
The Federal Reserve Bank of Chicago is well informed of the banking environment given the broad range of supervised institutions across the Seventh District, which includes portions of Illinois, Indiana, Michigan, Wisconsin, and all of Iowa. As part of its core mission, the Supervision and Regulation Department of the Federal Reserve Bank of Chicago is responsible for supervising:
- State member banks
- Bank holding companies
- Thrift holding companies
- Foreign banking organizations
The Reserve Bank is a relationship driven organization. As such, a single point of contact is assigned for each member bank to maintain the relationship and manage all supervisory matters. Bankers are also encouraged to reach out to our senior management team for more complex issues or provide feedback.
The Reserve Bank partners with the five-district state and other federal banking authorities to ensure a consistent and united supervisory approach for the shared banking organizations. A similar supervisory approach is used as most of the federal regulatory requirements and supervisory framework are handled on an interagency basis—common banking regulations, joint supervisory guidance, shared work programs, comparable application processing standards, and identical examination frequency.
Supervisory activity is primarily accomplished through a blended onsite and offsite examination strategy, as well as ongoing monitoring of these financial institutions. In its continuous monitoring effort, the Reserve Bank uses industry data to:
- Proactively identify surveillance outliers
- Detect broader emerging risks to the banking industry
Additional ways this Reserve Bank fulfills its supervisory responsibilities and outreach efforts include evaluating regulatory applications filed by banking organizations, hosting various training webinars and conferences, meeting with other banking agencies, producing various emerging risk publications, holding periodic meetings with bank leadership teams, and, when warranted, initiating formal and informal enforcement actions to require corrective actions by individual institutions. Fees are not charged for community bank examinations or processing of applications.
Across all of the risk disciplines, the supervision of financial institutions is conducted using a risk-focused approach that is comprised of three basic elements — risk identification, risk analysis, and risk resolution. Using this risk assessment process ensures that appropriate attention is given to the areas that pose the greatest risk to the institution, the industry’s deposit insurance fund, and the nation's payments system. If properly executed, this approach can improve the supervisory team’s ability to identify and address weaknesses in a timely basis, can be more efficient, and reduces the burden to banking organizations.
Partnership with State Agency
Maintaining cooperative work relationships with our state banking counterparts is imperative to effectively oversee our shared institutions. To accomplish this objective, we establish formal working agreements, offer local training from our subject matter experts, conduct joint examinations for our larger and problem institutions, provide exam assistance, and periodically meet to discuss the banking environment.
Industry outreach remains an important aspect to connect with the institutions we supervise and keep the broader public apprised of the policy changes, emerging risks, and current conditions. Therefore, we participate in a variety of traditional outreach efforts—hosting and participating in events, establishing local advisory councils, developing industry publications, and offering speaker engagements. Two of our more popular supervisory conference series are the Community Bankers Symposium and Risk Conference. Ad hoc banker outreach opportunities are also available to discuss various hot topics or assist with a training initiative upon request.
Confidential Supervisory Information
Financial institutions supervised by the Federal Reserve System are reminded of their access to and possession of confidential supervisory information (CSI), which is subject to the Board’s regulations governing availability and disclosure of such information. Examples of CSI include examination and inspection reports, supervisory ratings, and supervisory communications. Except as specifically permitted by the relevant regulations, CSI may be disclosed only upon the prior written approval of the Board’s general counsel. Unauthorized or improper disclosure of CSI exposes an institution and its staff to a number of risks.
Supervisory Appeals Policy
Any institution about which the Federal Reserve makes a written material supervisory determination is eligible to utilize the appeals process as described in the Appeals Process and Board Ombudsman (Ombuds) Policy Statement (See also 85 Fed. Reg. 15,175 (March 17, 2020)). The Ombuds can provide assistance regarding questions related to the appeals process and claims of retaliation as well as assist in facilitating the informal resolution of a supervised institution’s concerns prior to the filing of a formal appeal. For more information about the Ombuds, please visit the Federal Reserve Board’s public website.
Secure Email Exchange
The Federal Reserve requires all supervisory information be provided in a secure manner. Sensitive information can be submitted via email to supervisory staff through the ZixCorp secure website established by the Federal Reserve.