Sen. Sherrod Brown (D-Ohio), the chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, will head a hearing this week that will examine the roles and responsibilities of independent consultants in the financial industry.
“If our financial watchdogs are going to entrust their responsibilities to private companies, then the public must better understand how these companies are selected and directed, how they go about their work, and whether regulators are providing adequate oversight,” Brown said.
The subcommittee will examine the oversight, independence and quality of services provided by private financial consultants, which are often requested by regulators to be hired by banks.
Several witnesses, including OCC Deputy Chief Counsel Daniel Stepano, Fed Board of Governors Deputy General Counsel Richard Ashton, Promontory Financial Managing Director Konrad Alt and Pricewaterhouse Coopers U.S. Financial Services Leader James Flanagan, will be present at the hearing.
Since April 2011, the OCC and Federal Reserve have been overseeing the foreclosure review, which involved a review of mortgage files by third-party consultants to identify any errors in foreclosure and servicing practices.
In a recent report on the foreclosure review process following the housing crisis, the Government Accountability Office found that “broad guidance and limited monitoring reduced the potential usefulness of data from consultants and increased risks of inconsistency,” adding that “without using objective measures to assess sampling or comparing review methods across consultants, regulators’ ability to monitor progress toward achievement of foreclosure review goals was hindered.”