Banks that have received TARP capital can expect to see some efforts by examiners to confirm compliance with the requirements of the Treasury Department's investment agreements. However, compensation plans for other banks will not escape attention. Banks should expect to see a growing focus on the incentives embedded in compensation plans, with examiners discouraging incentive structures that foster excessive risk-taking.
Finally, while I have talked about issues with the loans already on your books, it is especially important in this environment to be sure that you have the capacity to make – and are making – all possible loans to creditworthy borrowers. Making new loans and working out existing loans is hard work. It is even harder in stressed situations.