Podcast S6E5 | Regulator Series: Grovetta Gardineer from OCC

TRANSCRIPT

Kimberley Cole 0:01
This is Risky Women Radio, a show that connects, celebrates and champions women in risk regulation and compliance. We’re here to share the insights on the biggest issues in our industry and hear inspiring journeys from our global members. Sign up to our newsletter at riskywomen.org. I’m Kimberley Cole, your Chief Risky Woman.

Maryann Kennedy 0:23
Welcome, everyone. And thank you so much for joining our podcast. My name is Maryann Kennedy, and I’m a Senior Managing Director here at Protiviti. However, before joining Protiviti and in my former life, I was spent 30 years with the Office of the Comptroller of the Currency in various supervisory and managerial roles. And when I retired, I was the Senior Deputy Comptroller for large bank supervision. For our audience, the Office of the Comptroller of the Currency, or the OCC as I’m going to refer to it is an independent bureau of the US Department of the Treasury. The OCC charters, regulates and supervises all national banks, federal savings associations, and federal branches and agencies of foreign banks. Our supervisory responsibilities also includes the largest global systemically important banks. Today’s topic could not be more pertinent given recent events across the financial services industry. We’re going to discuss 2023 Top Risks and Regulatory Priorities in the Current Economic Environment. And we’re going to have this conversation with someone who has been deep in the trenches for many years, facing a variety of risks in the banking industry. It gives me immense pleasure today to introduce to you Grovetta Gardineer, who was the Senior Deputy Comptroller for bank supervision policy at the OCC given Grovetta’s background in compliance risk, as well as policy roles overseeing a variety of risks. She brings a unique perspective to not only risk but to risk management as well. Grovetta and I had the privilege of serving together on the OCC executive committee, and that committee includes all senior executives and decision makers for the agency. She also brought common sense and calm to many difficult situations involving supervision matters, as well as personnel management. And on top of that, Grovetta and I are good friends, and we always shared a common goal, we always wanted to move the agency forward. So with that welcome Grovetta.

Grovetta Gardineer 2:28
Oh, thank you, Maryann. It’s wonderful to see you. And thank you for inviting me to share some time with you today.

Maryann Kennedy 2:35
Right now, Grovetta, I’ve only briefly touched on your background and your vast experiences. We would love to hear from you and your own words about your story and your career journey. Why don’t you start off with…go ahead, I’m sorry!

Grovetta Gardineer 2:50
No, I tell you what it’s been a it’s been a very interesting journey for me, coming from small town and rural North Carolina, where I got my start as the daughter of the Presbyterian minister and the principal of my high school, and then managed to find my way into financial supervision after graduating from law school. So I’ve been doing this for I hate to say it 36 years, I’ve been a federal financial regulator across three different agencies. I joined the FDIC as an honors attorney straight out of law school, and spent 18 years there focusing primarily on enforcement law. And then I left and took a really big leap, something I never thought I would do, which was leave the actual practice of law and come to the business side. And I did that when I joined the Office of Thrift Supervision as the managing director for supervision policy. I stayed there for six years and in advance of the integration with the OCC. I joined the OCC as a deputy comptroller for a compliance risk policy. And basically thought, well, this is great. This is a real challenge post Dodd Frank, significant shifts that we were going to see in the compliance area. And I thought it was an opportunity to be a change agent, and was absolutely happy doing that as I had been with all of my previous jobs. So Maryann, I think you were there and I probably shared with you my surprise when then comptroller Curry decided that the compliance function should have a seat on the executive committee and be elevated given the sensitivities and the importance around those compliance issues which at the OCC are both Consumer and Bank Secrecy Act. So I was overjoyed to be asked to lead the development of what was the line of business known as compliance and community affairs. And really put a focus on compliance and the outreach of the community affairs aspects of our organization. And then there was just another twist and turn when comptroller adding with our colleague, Grace Daly retired, who was, at that time, the chief national bank examiner, and in charge of all policies asked me to combine CCA within CMBE, and become the senior deputy comptroller for what is now known as bank supervision policy. So it’s been quite a journey across these three agencies. I have to say, but exciting nonetheless.

Maryann Kennedy 5:57
Yeah, it has I know, we’ve shared some of that excitement in either your office or my office, given whatever we were talking about. But can you share with the audience a little bit about your role as the Senior Deputy Comptroller, over, you know, policy supervision policy, rather? And what are your key responsibilities, because not everybody might understand what that exactly entails?

Grovetta Gardineer 6:20
Absolutely. So the risks stripes with that, as we talk about them with regard to policy are vast, and they mirror what we go in with direct supervision to examine and supervise our institutions. But I also have a few areas that are outreach as well, that help us develop policies. So I’m responsible for policy development for the OCC in the areas of credit risk, capital and international banking, consumer, which consumer compliance and BSA, market risk policy, I have the Office of the Chief Accountant where we look at accounting policy. In addition to that, I have the community affairs group. I also have I think, I said a capital policy I hope I did. The Office of Innovation, which if you’ve been following some of our recent announcements, we just did the Office of Financial Technology and are looking to expand our role there. So quite a large area that we I look at this as a way for us to provide a number of things when it comes to the agency’s outreach and communication arm if you will, not only to our examiners, because I think that’s where we I think of us as providing good customer service and the level of support in defining and outlining the policies to assist our examiners as they go out and examine and supervise our institutions. But this is also a way for us to communicate through policy, our supervisory expectations, to the institutions that we supervise, and the broad range of stakeholders who also have an interest. So that would be community advocates and stakeholders. Congress, of course, their oversight body, and always engaging with our sister agencies, because we do try to speak to the industry with one voice.

Maryann Kennedy 8:38
Right. Right. So thank you for that Grovetta. Certainly you have a vast and huge responsibility over the policy area in many different ways. Maybe this isn’t a fair question, but I’m going to ask it anyway. What are you most passionate about?

Grovetta Gardineer 8:57
So I have to say I love all these risk areas the same! I think really…

Maryann Kennedy 9:02
Like you children, right?

Grovetta Gardineer 9:04
Absolutely! So when I look and I have to zoom out to answer that one, I think I’m passionate about the mission of the agency, which has to maintain the safety and soundness of the national banks and federal thrifts and to ensure that consumers have fair access to financial services, and there’s fair treatment of those customers. And I often say Maryann, and I think you’ve heard me say this, you really can’t be a safe and sound institution, if you don’t provide fair access to those financial services, and treat your customers fairly.

Maryann Kennedy 9:43
Right. Right, and it’s on the wall as you walk into go into the OCC offices as well.

Grovetta Gardineer 9:48
Every day!

Maryann Kennedy 9:50
Every day, every day. Thanks, Grovetta. So taking a look at your career, what are the big biggest risk you’ve ever taken in your career in how did those risks payoff for you?

Grovetta Gardineer 10:02
So as I describe to you this journey that I’ve been on for these years, I would say each and every one of those had some level of risk that at this point in time, I’d have to say they all paid off. I did grow up in rural North Carolina, I don’t know of anyone I’ve ever talked to who says, you know, I want to be a bank supervisor, when I grow up. What I did know was I really wanted to be an attorney for as long as I can remember, as a, as a young child, it was an opportunity I saw to truly give back, I grew up in a household where my parents were very much devoted to public service. And, and I just think it’s in the DNA. But I saw this opportunity to go into the law to give me an opportunity to give back. I didn’t actually know where I would go or what that path would lead to. But I did find the Honors Program at the FDIC. And I recognized that this is really an opportunity to provide something that benefits such a broad, broad, broad part of the population of the United States. So, you know, joining that was a risk, I didn’t know a lot about it at the time. But I quickly learned the impact that I could have. Next big risk when somebody taps you on the shoulder, and you’re pretty content with what you’re doing. And they say, Hey, take a look at this opportunity. That’s really what happened when I, you know, was informed about the position over at the Office of Thrift Supervision. And the words that were said to me, you know, we have this, this position, like for you to take a look at it. It’s, you know, managing director for supervision policy. Well, what I did know was in my role as enforcement attorney at FDIC, I was often involved in helping the client division to supervision, craft policies, draft those policies, oftentimes in response to things that we had seen, and actions that I had brought in enforcement. That was an indication that there was a lack of communication, or perhaps a gap in understanding what that supervisory expectation was. My immediate response, I don’t think that’s a legal job. And the response I got was, well, it’s bigger than legal. Well, that was a shock to me, I never really thought about it that way. But when I looked at the job, I said, you know, I’ve done a lot of this, I haven’t done everything. But that doesn’t mean I can’t learn, I see opportunities to move positions as opportunities for growth. So I took that, and it was a chance. But again, it gave me insights into a part of the industry that I hadn’t worked with before the thrift industry, and thrift holding companies. So it expanded my knowledge and a great way I was able to leverage the information, and all of the knowledge I’ve had at the FDIC. And a very similar situation occurred when I was asked to take a look at the opportunity at the OCC, what I saw there a real opportunity to be a change agent. Because post Dodd Frank, things were changing. And if you read the Dodd Frank Act, I tend to think of it as the treat your customer fairly act with a lot of changes that were ahead for our agency, and a brand new agency being created. And being at the core of that I saw it as exciting. So, you know, I, I think each one of those moves was a risk. It was a shift away from, you know, the very familiar, where I’d like to think I’d built up a good reputation, and some solid chops for doing the jobs at hand. But I’m really, really happy because at every turn, expands my knowledge. And it goes back to what I really wanted to do when I joined the federal government. I have a vast array of knowledge, I think, at this point, having worked with banks of all sizes, of all charters, and really having that opportunity to give back and contribute to the safety and soundness and fairness that we want in the banking system.

Maryann Kennedy 14:45
You know, and I applaud you for that. Getting out of your comfort zone. It’s never easy, particularly when you’re you’re in a very visible role like like you assumed over the over the years. So I think is a great learning experience for everyone that sometimes a lot can be paid off when you get out of that comfort zone. On that same kind of vein Grovetta, who are some of your role models that have inspired you?

Grovetta Gardineer 15:13
So, this is gonna sound a little hokey, but it’s absolutely true. I mentioned my parents, when we, when I started talking about my journey. As a child, I don’t think you often recognize when you see leadership excellence in your own home, but you take it in, in a very interesting way. So my dad was a pastor of a congregation of about 500, in this very small town. And I watched him lead, both locally, and at the, you know, district, regional, and even national levels of the Presbyterian Church. That leadership capacity, you know, when you’re 12, you kind of see it. But when you reflect on it, when you’re 25, you realize a lot of things you’ve learned about, you know, how you lead people, how you instill trust, so that people will trust you to make good decisions. And they’ll follow you, and have faith in you, something that you have to earn. And you have to maintain. We had one high school in my county, and it had 2200 students, and my mother was the principal of that high school. So this is the opportunity to watch someone look at different parts of a large organization, you know, everything from teachers, to bus drivers, to coaches, and the students that were the core of the entire mission of that school. Riding back and forth from home to school every day or waiting outside of her office, and just picking up on a lot of leadership tips. How to persuade people to really help them understand that the ideas may be challenging, but nothing will change if we don’t give it a try. You know, I have to say that those two people are probably the role models that I I lean on their advice, more times now. I wish they were still here. But I carry them with me and I hear those sage words of you know, be still and listen to your inner voice. Follow your North Star. And you’ll be okay.

Maryann Kennedy 17:43
Yeah, I love it that thank you for sharing that with us Grovetta, that’s that’s a very good message. And I didn’t think it was corny or hokey, or whatever you characterize it couldn’t agree more. So you know, thanks, Grovetta, for sharing your career journey. It certainly has been impressive. You’ve done a lot of things in your career.

Kimberley Cole 18:04
This episode is brought to you by Protiviti. Protiviti is a global consulting firm with deep expertise in transformation, risk management and compliance, partner with Protiviti and face the future with confidence.

Maryann Kennedy 18:21
Let’s turn our attention to a little bit about the topic, which is, you know, regulatory priorities in in what are some challenging economic times for us. Certainly, economic conditions have been volatile post pandemic, we all know that. And then, just recently, there was sort of a calamity of events, if you will, that led to a banking crisis, not only here in the United States, but in Europe as well. So just a couple of questions here, do you think the root cause of the problems are the same in the US as they are in Europe?

Grovetta Gardineer 18:50
Well you know, I have given this one a lot of thought, and I don’t know if it’s the root cause it’s the same, but I’ll tell you where I see a commonality. And that is the speed with which information is made available. And that people react to it. This is a very different environment than what we’ve seen with previous, you know, we’ll call it a crisis. But this is different. Because as a general rule, and Maryann, you’re familiar, we see banks and they have concerns or issues and we can address those through a variety of tools we have, we have broad authorities, supervisory as well as enforcement, regulatory etc. Those problems usually take time to develop, time to address but we have the opportunity to put corrective actions and a map to help an institution recover. Now, one of the things I think that we’ve seen and we knew from a sustained low interest rate environment, one thing that my operational risk team did, I would say, going back, probably five years, was to just continue to alert institutions to the fact that we weren’t gonna be in this low interest rate environment forever. And there has to be a strategy that is present in order for a bank to understand and navigate its way once those rates began to rise. And that, of course, you know, meant manage what you’re doing today for the rates that you expect tomorrow. I think most institutions absolutely adhere to that. I think the speed with which things changed was a catalyst. So we have now the world of the internet, and Twitter, and you know, a lot of communication that may or may not be validated, but people react to it. Our institutions, as well as our agencies, we have to adjust to that level of speed, and be in a position where we can pivot and be nimble to react accordingly. And I think that’s one of the biggest commonalities in this disruption that I’ve seen, that has not been present, I think, in any other throughout my career.

Maryann Kennedy 21:32
And, you know, you mentioned a little bit about how your, your operational folks have been going out to banks and saying, hey, you know, don’t look at today, and you need to manage for tomorrow, but have have you or your staff, as a result of some of the events altered any guidance that’s been given to say the boots on the ground examiners that are doing their supervisory work on a day to day basis?

Grovetta Gardineer 21:55
So I, you know, the rules or the rules, and the guidance that we give, I think is pretty standard. It’s, it’s, it’s tried, tested and true. Let me put it that way. The one thing I would say I’m not asking our examiners to go out and do anything different. But I do think having the conversations with financial institutions is important. Helping them understand, you know, again, the messaging that we’ve been sending for the past five years. Are you managing this? Are you looking at these interest rates? Are you looking at your AOCI, do you have a handle on where you are and a strategy for rates that will increase? I would add to that, I think you also have a strategy, you have to have a strategy for communicating to your customers. Because there is a lot of information out right now about a variety of banks. And you know, some back of the envelope, some who have delved into it more, but they’re putting, you know, the media, and others are putting their foot forward as far as what they believe is the state of our banking system, financial institutions, this is where trust lives, and that trust is between you and your customers, your consumers, you have to be in a position to help them understand how you are weathering a disruption, how you are stabilizing your institution, how you are keeping their funds safe and sound. So it’s a it’s an age old message. So I don’t think we’re doing anything different. But I think those conversations we’re urging our examiner’s to have those conversations in real time.

Maryann Kennedy 23:49
Right. So certainly, as the current issues abate somewhat, I mean, it’s, you know, depending on what news program you listen to in the morning, but you and your staff and those conversations, you’re encouraging with the examiners with their bankers, how about looking around the corner to see that next risk that might be out there? I mean, we hear a lot in the press about credit risk, just some of those thoughts in terms of how you and your staff think about the next potential risks that could be out there.

Grovetta Gardineer 24:22
So Maryann, and you know, we’re always looking around the corner and we have so many great examiners, economists, you know, our attorneys, our policy folks, it takes the entire village of the OCC but what we do is look at both current market trends and future events in order to look around the corner. I don’t want to put a particular red flag on anything. I think it’s been an interesting time during COVID / Post COVID I think everybody’s been talking about the, you know, credit quality of what’s happening. At this point in time, you know, I would say the state of things are pretty much where we may have expected them to go. I think credit, you know, looks relatively solid, we keep our eyes on it. But I think that there’s no one potential risk area that I would focus on more than any other. I think that that’s a lesson I learned from the ’08 crisis. If you focus too much on one area, and tend to take your eye off the ball on a different one, you know, I think you’ve heard me say, you can pay me now and pay attention to everything, or you can pay me a whole lot more later at a at a much different cost. So I think our our mantra right now is to just look at the market, look at our institutions, gather the data that we get in, do those analyses. And if we do see something, I would like to believe that policy will be in that position to lead the charge. To put that communication out and raise the alerts, you know, we have a few communication mechanisms that we use at the OCC our semi annual risk perspective being one. And I think we’re due for an update in a couple of months. But again, this is where we look to highlight what we see as emerging risk. So right now I I’m, I’d like to get things hopefully back to a place of less disruption. I do think, overall, the state of the financial industry remains very strong.

Maryann Kennedy 26:45
Yes. Great. Thank you Grovetta for that. Let’s shift gears just a little bit, sort of an implicit theme and the 2023 bank supervision operating client plan from the OCC, as well as Protiviti’s executive perspectives on 2023 top risks, both highlight talent management to some degree, and building bent strength. As noted as risks across the industry, a lot of Chief Risk Officers are lamenting, I’ve talked to many audit departments that have said, we just can’t get the right talent, the right person in the right place that can address the right risks. So what in your view on the depth and talent and expertise across all risk stripes?

Grovetta Gardineer 27:33
It’s an interesting problem to have, because I think we’re all competing for the same talent. I used to hear this from the bankers. And now I think it’s even that you know, it’s even made its way to us. I can say at least in the bank supervision policy area, double digit turnover, at one point during COVID. And people not just retiring, but retiring to go to different jobs because of that demand for that level of talent. The expertise that’s needed these days, there’s the baseline fundamentals, but there’s something different that’s happening now. And I go back to my comments about speed. So I mentioned earlier that I have the Office of Innovation, which we are now will become a part of the Office of Financial Technology. We stood it up last week as a matter of fact and announced a new deputy comptroller who will be joining us very soon. I think when we initially began to think about innovation in the financial system, we saw a lot of things that I would call riding along in the sidecar to power this industry. I think that’s shifted over the past decade. And now financial technology, the technology of it seems to power this system and propels it forward at an incredible speed. That means we have to look at diversifying. We need the same talent, and we need different talent. We need to understand this technology and how it powers this engine and the engineers that are you know, what did you create? And does it work the way it was supposed to? And we need to do that with a lens towards all of the same laws and regulations that we expect our financial institutions to abide by. So this technology doesn’t necessarily change the calculations for what we think is a well capitalized institution. And it certainly does not and cannot introduce bias and discriminatory lending decisions. So we have to understand it better. And we have to apply it to a system that we know is tried and true. That means we’re all struggling for the same talent. And I don’t have an answer for that. I do believe that there is something unique and sustaining and fulfilling about public service.

Maryann Kennedy 30:24
Yes.

Grovetta Gardineer 30:24
And for many, that will be a big draw to come in and help propel what keeps the system safe. But you’re absolutely right. We are, we are looking for talent across the industry, both private and public.

Maryann Kennedy 30:40
And you’re right about the speed in which things are changing. Now, it’s all about artificial intelligence, machine learning. And you mentioned credit decisioning. So you’ve got a lot of interconnectivity of risks going on, which then challenges your policy folks I’m sure.

Grovetta Gardineer 30:40
Absolutely.

Maryann Kennedy 30:53
Great. And I know that you’re a big believer on mentoring, you yourself mentor, can you give us just a little highlight into how you employ different mentoring strategies for yourself and your staff?

Grovetta Gardineer 31:13
So I believe that mentoring can be, you know, in a variety of ways it can be done and accomplished. And it’s the formal mentoring that I think a lot of people think about, you know, getting a mentor, having a very dedicated check in time, maintaining that relationship, absolutely valuable, you know, having that anchor, if you will, to help guide you, or help work out difficult problems, or just rehashing a day, those relationships are invaluable, because you pick up such good tips from people who’ve been there before you or not, the just are incredible leaders or incredible listeners. But they have that. But I’m a big believer in informal mentoring as well, because I think those relationships can be equally as valuable. So I’m going to say that, you know, you should not be shocked by this. But Maryann, you were one of my informal mentors, when you were at the agency, and being able to walk down to your office or walk out of an executive committee meeting and have chit chat in the hallway and exchange ideas. I think a couple of times, we both had some ah ha moments about what we thought we heard and what we thought we could really do to propel the agency forward, always thinking about our our best and most important asset, our people as well as the industry. So you know, I have people who I meet with on a regular, and I want to give them insights and share with them what I see about their careers and, and how they can continue to grow. And not be afraid of of getting out of that comfort zone and doing something a little bit different, and not getting in your own way. And not not deciding that you have to check all 10 boxes, of the 10 items that are you know, being listed in a job, for example. It is something that I find people want to do they look at a potential opportunity. They look at the requirements, they see seven requirements, they say, Wow, I have five of those, I don’t have the last two. I don’t think I can do that. And as a mentor, I want to tell people, I don’t think I’ve ever had checked every single box for any job opportunity that someone tapped me on the shoulder for. But I felt that I had enough of the ones that I did check. And a thirst for learning and an ability to say I think I’m a quick study. I’ve done some of that I’m not going to get in my own way. And take myself out of the running. I’m going put my hat in the ring. Go the distance, put my best foot forward. And let’s see what happens. Because you know, nothing beats a no if you don’t try.

Maryann Kennedy 34:28
I couldn’t agree more and Grovetta, this has been fantastic. I really want to thank you so much for your time to tell today sharing your career journey as well as your view on the current economic environment with the audience and with me, it’s always good to connect with you. Perhaps we could do this again real soon. I know we could we could add a lot more time with the variety of topics the two of us could come up with. But again, thank you so much for Grovetta for today,

Grovetta Gardineer 34:55
Maryann thanks for the opportunity. It was great.

Kimberley Cole 34:59
Thank you for listening to this episode of Risky Women Radio, be part of the ongoing conversation and learn more about our events and other programs at riskywomen.org