Consulting for big banks pays well — really well.
A prominent Washington consulting firm run by a former top U.S.
banking regulator was paid $927.5 million to conduct a review of
foreclosure files, according to a letter sent by Promontory Financial
Group to the Senate Banking Committee.
The disclosure comes as lawmakers on Capitol Hill and New York’s top
banking regulator push regulators to more closely scrutinize the
relationship between consulting firms and banks, amid concerns that the
consultants are not truly independent.
Earlier this week, Deloitte LLP’s financial advisory services unit
agreed to pay $10 million and accept a one-year ban from consulting for
New York-regulated banks to settle regulators’ allegations the firm
mishandled its anti-money-laundering work for U.K. bank Standard Chartered PLC.
Under the agreement with New York’s banking regulator, Benjamin M.
Lawsky, Deloitte also agreed to overhaul its internal safeguards and
create standards to increase its independence from clients.
Federal bank regulators to adopt similar standards, including the
disclosure of conflicts of interest and boosting regulators’ monitoring
of consultants, says Sen. Sherrod Brown, (D., Ohio), a member of the
Senate Banking Committee. The Office of the Comptroller of the Currency
and Federal Reserve should “act immediately to create a similar set of
written standards for independent consultants,” Mr. Brown wrote in a
letter sent Friday to the two regulators.
“We are actively at work on a set of standards governing the use of
consultants retained by national banks and federal thrifts to satisfy a
regulatory order, and we expect to finalize them in the near future,”
said Bryan Hubbard, a spokesman for the Office of the Comptroller of the
Currency. A Fed spokeswoman said the central bank would respond to the
The foreclosure-relief settlement has come under stiff criticism on
Capitol Hill, with lawmakers questioning whether it adequately
compensates homeowners who may have been subject to foreclosure errors.
The settlement, initially reached in January, has expanded to 13 banks
and is now worth $9.3 billion.
Promontory, which is run by Comptroller of the Currency Eugene
Ludwig, defended its review of more than 250,000 mortgage files.
Regulators shut down the probe, which launched in 2011, amid
dissatisfaction about the review’s escalating costs and the time
Konrad Alt, a Promontory managing dierctor who was a top OCC official
in the 1990s, wrote that the company ”performed several million hours
of labor” and “an amount of information comparable in magnitute to all
the written materials held by the Library of Congres.” Mr. Alt
emphasized that banks, rather tahn taxpayers paid for the review.
Other consulting firms also defended their work in letters to the
Senate panel. Owen Ryan, a Deloitte LLP audit and enterprise risk
partner, said “our independence as a consultant was not influenced in
any way by the financial institution.” Deloitte, which was paid $465
million for its work.
James Flanagan, leader of the U.S. financial services practic at
Pricewaterhouse Coopers LLP, said his company acted as “impoartial and
objective consultants” in the forcelosure reivew. The company was paid
$425 million for its work.
Now lets give a big hand to the OCC, SEC, CFPB, and our goverment for our 300.00 checks! Assholes!