Federal Reserve Staffer Provides Overview of Ombuds Program

In testimony before Congress earlier this month, Kevin M. Bertsch, an Associate Director in the Federal Reserve System's Division of Banking Supervision and Regulation, addressed the role of the agency's External Ombudsman. In essence, he explained that the Federal Reserve System Ombuds provides an alternative dispute mechanism for bankers' concerns about the fairness of the Fed's supervisory process.

Here's an except from his testimony:

[T]he Federal Reserve also has an Ombudsman to provide banks with a means of raising issues regarding the examination process that are maintained in confidence. The Ombudsman also will provide information regarding the appeals process. The Ombudsman provides a neutral, independent, objective facilitator and mediator for the resolution of issues and complaints related to the System's regulatory and supervisory activities. The Ombudsman actively works with banking firms that have concerns about examinations and other supervisory matters, and works independently from the supervisory chain of command. The Ombudsman has broad authority to mediate complaints, including the authority to refer matters to the appropriate Federal Reserve Board committee.

The Federal Reserve maintains a strong anti-retaliation policy to protect any person who uses the appeals process or who contacts the Ombudsman with concerns. The Ombudsman reaches out to every institution that has filed an appeal within six months after the appeal has been decided to inquire whether retaliation has taken place. The Ombudsman also has broad authority to investigate claims of retaliation. Where appropriate, and when corrective action has not been taken, the Ombudsman reports retaliation complaints to the appropriate Federal Reserve Board committee.

The Federal Reserve continues to evaluate methods for improving its appeals process. At the same time, it has been our experience that most disagreements regarding supervisory matters are resolved promptly and informally through direct discussion between the Reserve Banks and the affected institutions, and we would not want to discourage this means of resolution. 

Bertsch appeared before the House Committee on Financial Services, Subcommittee on Financial Institutions and Consumer Credit, to discuss the Federal Reserve's perspective on HR 3461, the "Financial Institutions Examination Fairness and Reform Act." Among other things, that bill would create an "Examination Ombudsman" to independently investigate and adjudicate complaints about the bank examinations. Although the Fed's Ombuds program has a similar purview, it does not have investigatory or adjudicatory powers. The current Ombudsman for the Federal Reserve System is Margaret McCloskey Shanks, who also serves as the Associate Secretary of the Board. (Federal Reserve News; OpenCongress HR 3461.)

Related post:  Job Posting.

India's Universities Will Implement Ombuds for Students

India's Ministry of Human Resource Development has decided that higher education institutions shall have an Ombudsman to handle grievances from students and applicants. The new requirement will apply to all central universities, IITs, IIMs, NITS, IIITs, private and government-run deemed universities and all higher educational institutions under various Central government ministries. “The new system would be in place before the next academic year,” said HRD minister Kapil Sibal. 

 The HRD website provides more information about the scheme:

Applicants for admission and students can apply to the Ombudsman for redressal of grievances and the Ombudsman shall deliver his/her order within one month. Although the order would not be binding on the institution, the regulator would rely on the frequency of non-observance to decide on continued recognition to such institutions. 

The Ombudsman shall have the jurisdiction to hear grievances concerning denial of admission, non-observance of declared merit in admission, non-observance of applicable regulations for reservation, with-holding of documents and non refund of fees in case of withdrawal of admission, discrimination and other such matters concerning students in pursuit of studies in the institution. In case of matters concerning weaker sections such as SCs/STs/OBCs or minorities, the Ombudsman can co-opt a person of eminence from the area coming from the weaker section to assist him/her in arriving at a decision. 

Additional details are to be released by other regulatory agencies.  According to press reports, HRD decided to issue the executive order when Parliament failed to pass several higher education reform bills. (HRD Press Release; Times of India; Hindustan Times.)

Related posts: India Moves Forward with Health Ombuds; New Handbook of ADR in India Touts Role of Ombuds; India Commission Recommends Ombuds for New Universities; Job Posting: Eaton Corp. (India); Indian Software Lobby Urges Companies to Create Ombuds Programs.

The Ombuds Year in Review: 2011 (Part III)

Here are the top three Ombuds stories of 2011.

3.  The Promise of Dodd-Frank Begins to Yield Opportunities for Ombuds -- In 2010, sweeping financial reform legislation promised to create incentives and specific Ombuds programs, and politicians and lawyers voiced their support. The Dodd-Frank Act paid off with two high profile programs, one in the private sector: Pfizer; and one in the public sector, the new Consumer Financial Protection Bureau.

2. University of Iowa Ombuds Becomes a Lightening Rod for Bullying Issues -- The UI Ombuds have been outspoken on issues of civility and bullying, so it was a shock when an Associate Press story said the campus Ombuds Office had been “failing” to resolve bullying complaints. The AP report omitted details about the UI Ombuds’ work over the years and presented only a review of a small number of cases produced in response to a public records request. The current UI Ombuds did not address the matter, but fortunately the past Ombuds and the University president spoke out in support. The situation will no doubt be discussed by within the profession for many years.

1. Record Numbers of New Ombuds Offices Opened Their Doors -- On balance, it was a banner year for the Organizational Ombuds profession. The closure of five offices was more than offset by a record number of more than 30 new programs. The closed offices included: Ashford University; Portland State University; Jet Propulsion Laboratory; and Southern University.

On the other hand, new offices opened at: Kidsports; California Pharmacists Association; Jackson Community College; University of Cape Town; Florida International University; Ivy Tech Community College; Board of Realtors, Fort Collins, CO; Bauhaus-Universität Weimar; Northeastern University; California State University San Marcos; Prince George's County, MD Public Schools; Katimavik; Lake Superior State University; University of California San Francisco; Texas Southern University; University of Texas (Staff); Portland, OR Metropolitan Association of Realtors; University of Lethbridge; Universiti Sains Malaysia; North Georgia College & State University; Medical College of Wisconsin; Pennsylvania State University, College of Education; Palo Alto University; Minnesota Department of Transportation; Oakland, MI County Circuit Court; Goethe University; University of KwaZulu-Natal; University of South Florida Sarasota-Manatee; Oregon State University; American University in Cairo; and Consumer Financial Protection Bureau.

Related posts: The Ombuds Decade in Review; The Ombuds Year in Review: 2010;  The Ombuds Year in Review: 2011 (Part I); The Ombuds Year in Review: 2011 (Part II).

Congressional Budget Office Releases Cost Estimate for New TSA Ombuds Program

The federal agency that provides economic data to Congress has estimated the costs of implementing the Transportation Security Administration Ombudsman Act of 2011. The bill, HR 1165, would revise the Transportation Security Administration Ombuds program. Based on the appropriation figures contained in the bill, the CBO estimates that implementing HR 1165 would cost $1.725 million over the 2012-2014 period. Meanwhile, the bill itself languishes in the House Committee on Homeland Security. (Congressional Budget Office.)

Related posts: Inspector General Recommends Realignment of TSA Ombuds Program (2008); TSA Ombuds Surveys Visitor Satisfaction; Job Posting; House Bill Could Revise TSA Ombuds Program.

Chair of House Financial Services Committee Seeks Changes to Proposed SEC Ombuds Office

Representative Spencer Bachus (R-Ala) is proposing to restructure the Securities and Exchange Commission and modify some of the provision of the Dodd-Frank Act. One of the planned changes would realign the SEC Ombudsman to be more independent. According to a summary published by AdvisorOne:

• Although the Dodd-Frank Conference Committee adopted an amendment offered by Subcommittee Chairman Garrett to create an independent SEC Ombudsman in Section 919D, this provision was inexplicably altered by the Senate Conferees to have this new ombudsman report to the Office of the Investor Advocate, which negates the entire function of an ombudsman to interact with market participants without fear of reprisal by SEC staff. The legislation would restore the Garrett amendment and establish the ombudsman as an independent office reporting directly to the SEC Chairman. As Dodd-Frank confers new prudential regulatory authorities to the SEC, the SEC needs to emulate the prudential regulators and have an independent ombudsman to receive complaints and questions from regulated entities.

Bachus's proposal would bring the new SEC Ombuds in line with a position endorsed by the International Ombudsman Association last year.  Rep. Barney Frank (D-Mass), the leading Democrat on the House Financial Services Committee said the proposal was an attempt to limit regulation. “It’s an excuse for continuing to underfund the agency,” he said. (AdvisorOne; Washington Post.)

Related posts: Financial Regulatory Reform Will Create New Ombuds Programs; IOA Takes Position on Proposed SEC Ombuds Program.

Proposed Federal Whistleblower Legislation Would Create Ombuds Programs

A bipartisan group of senators has reintroduced the Whistleblower Protection Enhancement Act to bolster protection for government employees. Among other things Senate Bill 743 would establish Whistleblower Protection Ombudsmen to educate agency personnel about whistleblower rights.  The proposed programs would be affiliated with inspectors general in non-intelligence agencies.

S.743 provides in relevant part:

SEC. 120. WHISTLEBLOWER PROTECTION OMBUDSMAN.

(a) In General- Section 3 of the Inspector General Act of 1978 (5 U.S.C. App.) is amended by striking subsection (d) and inserting the following:

‘(d)(1) Each Inspector General shall, in accordance with applicable laws and regulations governing the civil service--

‘(A) appoint an Assistant Inspector General for Auditing who shall have the responsibility for supervising the performance of auditing activities relating to programs and operations of the establishment;

‘(B) appoint an Assistant Inspector General for Investigations who shall have the responsibility for supervising the performance of investigative activities relating to such programs and operations; and

‘(C) designate a Whistleblower Protection Ombudsman who shall educate agency employees--

‘(i) about prohibitions on retaliation for protected disclosures; and

‘(ii) who have made or are contemplating making a protected disclosure about the rights and remedies against retaliation for protected disclosures.

‘(2) The Whistleblower Protection Ombudsman shall not act as a legal representative, agent, or advocate of the employee or former employee.

‘(3) For the purposes of this section, the requirement of the designation of a Whistleblower Protection Ombudsman under paragraph (1)(C) shall not apply to--

‘(A) any agency that is an element of the intelligence community (as defined in section 3(4) of the National Security Act of 1947 (50 U.S.C. 401a(4))); or

‘(B) as determined by the President, any executive agency or unit thereof the principal function of which is the conduct of foreign intelligence or counter intelligence activities.’.

The bill was introduced on April 6th and has been referred to the Senate Committee on Homeland Security and Governmental Affairs. The Washington Post notes that the bill has been around for almost a dozen years and is skeptical about its prospects. (Open Congress, Washington Post.)

Related posts: Advice for Whistleblowers: Think Carefully and Talk to the Ombuds; Whistleblowers Mostly Unprotected; As Costs Discourage New Whistleblowers, Where Are Ombuds?

Corporate Secretary Magazine: Time for an Ombudsman?

The February 2011 issue of Corporate Secretary (the magazine for corporate secretaries, general counsel and governance professionals in North America) includes an article explaining why Organizational Ombuds are a logical response to recent whistleblower legislation.

Steven Norman and Jon McBride argue that the whistleblower protection provisions in the Dodd-Frank Act may encourage employees to sidestep internal channels and thus minimizing the opportunity for the company to investigate and promptly rectify the issue.  The authors point out that the widespread adoption of ethics offices, compliance offices, hotlines and other formal channels are not always effective because the workforce may be fearful of using them. One possible solution could be the creation of an independent ombudsman to deal with or minimize whistleblowing situations.

Norman and McBride also cite John Zinsser's research that demonstrates corporations will realize a significant return on investment in an Ombuds program. McBride is a management consultant focused on corporate governance issues and formerly conducted executive search. Norman is former Secretary and Corporate Governance Officer at American Express and now is a board governance consultant. (Corporate Secretary.)

Note: The journal article (click on image at right) differs from the version published at the Corporate Secretary blog.

Related posts: Ombuds are Valuable Supplement to Compliance Efforts; Leading Whistleblower Lawyer Says Dodd-Frank Act Creates Incentive for Ombuds Programs; As Costs Discourage New Whistleblowers, Where Are Ombuds?

House Bill Could Revise TSA Ombuds Program

Legislation introduced by Representative Sheila Jackson-Lee (D-TX) has the potential to change the features of the existing Ombudsman Office at the Transportation Security Administration. HR 1165 would amend Title 49 of the U.S. Code, "to establish an Ombudsman Office within the Transportation Security Administration for the purpose of enhancing transportation security by providing confidential, informal, and neutral assistance to address work-place related problems of ... employees...."

The bill aims to do the following:

Independence

• Requires that the Ombudsman report directly to the Administrator, or to the Chief Human Capital Officer (CHCO) in the event of an unresolved difference between the Ombudsman and the Administrator.
• Establishes the CHCO as the sole official responsible for appointing the Ombudsman.

Regional Ombudsmen

• Establishes regional ombudsmen, appointed by the Ombudsman, each of which is responsible for no more than three regions.
• Requires the regional ombudsmen to visit each region at least once per calendar year.

Outreach

• Requires the Ombudsman to conduct outreach to TSA employees and publicize a toll-free number where employees can report complaints.

With the exception of a mandate for regional offices, most of these are already attributes of the TSA Ombuds program. However, there is the possibility of further changes as the bill is receives further consideration by the House Committee on Homeland Security. (OpenCongress.org, HR 1165.)

Related posts: Inspector General Recommends Realignment of TSA Ombuds Program (2008); TSA Ombuds Surveys Visitor Satisfaction; Job Posting.

Representative Reintroduces Bill to Create Ombuds for Federal Air Marshals

On the first day of the 112th Congress, Representative Sheila Jackson-Lee (D-TX) introduced a bill, HR 71, that would create an Ombuds office for federal air marshals. although the text of the bill has not been published, it appears similar to legislation introduced by Rep. Jackson-Lee and approved by the House in 2009. The earlier bill did not come to a vote in the Senate.

HR 71 has been referred to the House Committee on Homeland Security for hearings. (Open Congress, HR 71.)

Related post: House Bill Would Establish Ombuds for Federal Air Marshals.

The Ombuds Year in Review: 2010

In the past year, IOA held its fifth annual conference, an attorney wrote the first guide for Ombuds, U.S. legislation created new federal Ombuds programs, FCO began its own training program, a campus suicide drew attention to the role of Ombuds in bullying cases, Cal Caucus resumed its annual meeting, nearly two dozen new offices opened, other Ombuds were newsworthy, certification became a reality, and several notable Ombuds passed away.

IOA Celebrates its Fifth Anniversary -- The association held its annual conference in New Orleans and nearly 300 Ombuds attended. The event was highlighted by keynote addresses from Dr. Michael Martin, André Marin, Chuck L. Howard, Prof. Sandra Stokes, and Prof. Robert C. Bordone. For the first time, non-attendees were able to follow the conference on Twitter. In addition, the conference featured the winner of IOA's first student writing competition.

ABA Publishes First Legal Guide for Organizational Ombuds -- In January, the American Bar Association released Chuck Howard's The Organizational Ombudsman: Origins, Roles and Operations-A Legal Guide. It which was quickly hailed as the first comprehensive textbook on the profession. Subsequently, Howard embarked on an ad hoc book tour with speaking engagements at: the IOA Annual Conference; East Coast Ombuds Group; Society of Corporate Compliance & Ethics; California Caucus of College & University Ombuds; Ombuds of Texas; Coalition of Federal Ombuds Conference; and Princeton University.

Congress Passes Law to Create New Federal Ombuds Offices -- The sweeping reform legislation signed into law by President Obama in July will establish new Ombuds programs for the Securities and Exchange Commission's Office of the Investor Advocate, the new Consumer Financial Protection Bureau, and for private student loan disputes. The SEC moved first to solicit public commentary and has already received feedback from many Organizational Ombuds and experts. Meanwhile, the Coalition of Federal Ombudsmen continued to collaborate with other federal agencies that were establishing Ombuds programs on their own mandates.

FCO Institute Debuts Ombuds Training -- In September, the Forum of Canadian Ombudsman Institute hosted its first ever course on Ombuds fundamentals featuring nearly two dozen Canadian Ombuds. Although intended primarily for new and intermediate-level Classical Ombuds, the two-day program is an important new resource for Organizational Ombuds as well, especially in Canada.
Correction 12/20/10:  The FCO has been offering courses since 2004. In 2010, the FCO Institute was created as an umbrella organization for training, conferences and research.

Tragedy at UVA Highlights Growing Concern Over Bullying -- One of the many stories of bullying reported in the mainstream press involved the Ombuds at the University of Virginia. In August, an editor of The Virginia Quarterly Review took his own life after complaining about workplace bullying. Although the victim allegedly contacted the UVA Ombuds shortly before his death, the Ombuds was steadfast in protecting his confidentiality. Ultimately, an internal audit found that the University took "appropriate actions" in handling the situation and reiterated that it would have had no notice of complaints heard by the Ombuds. The incident highlighted the relationship between Ombuds and bullying, which was further explored in an article for the LERA Newsletter and an entire issue of the Journal of IOA, and at meetings of the Ombuds of Texas, ENOHE-ACCUO, and the Midwest University & College Ombuds.

Cal Caucus Returns Reinvigorated-- In 2009 the California Caucus of Colleges and University Ombuds did not meet for the first time in nearly four decades due to declining attendance. After retooling, Cal Caucus returned to the Asilomar Conference Center in Pacific Grove in November 2010 with an impressive list of presenters from the U.S. and Canada.

Many New Programs Open -- Organizations established or reopened 22 Ombuds offices in 2010. Most of the good news came from the education sector: Newark NJ Public Schools; Ashford University; University of New Mexico; University of Miami School of Medicine; University of Missouri, Kansas City; John F. Kennedy University; University of Calgary; Lawrence Berkeley National Laboratory; Greenstar Cooperative Market; Ohio State University; Tyco Electronics; Washington University in St. Louis; Michigan State University; University of Ottawa; European Organization for Nuclear Research (CERN); Office of Personnel Management; Swiss Federal Laboratories for Materials Testing and Research (EMPA); Algoma University; Colorado College; New Hampshire Department of Health and Human Services; Amherst MA Regional Public Schools; Northwestern University; Shawnee State University; and Cleveland State University. Meanwhile, there were no reported Ombuds office closures.
Update 12/22/10: Add one more,  Washtenaw Community College.

Other Ombuds Dominate the Popular News -- For better or worse, Ombuds that made headlines in 2010 were not Organizational Ombuds, but their stories were among the most read on the Ombuds Blog: The BP Ombuds received significant attention in the wake of the gulf oil spill and was eventually slated for closure; National Public Radio will be hiring a new Ombuds; and a high profile Executive Ombuds had a dispute with a Canadian flight crew that garnered unwanted attention.

Certification Becomes a Reality -- Early in the year, the Board of Certification for Certified Organizational Ombudsman Practitioners Board announced the results of the first certification examination. The test has now been administered multiple times and is available to international applicants. So far, 45 Ombuds have passed the exam and certification screening and are eligible to use the CO-OP designation.

In Memoriam -- Several notable Ombuds passed away in 2010, including: Elizabeth Walsh Pino (Palmer & Dodge and McKinsey & Co.); Eugene Vasilew (Binghamton University); Milton J. Brawer (Western Michigan University); and William T. Mason III (John Hopkins Applied Physics Laboratory).  Their contributions to the field and to their constituencies were invaluable, and they will be missed.

Related post: The Ombuds Decade in Review.

Leading Whistleblower Lawyer Says Dodd-Frank Act Creates Incentive for Ombuds Programs

Jason Zuckerman, an attorney who represents whistleblowers, says that the financial reforms provide a strong incentive for employers to encourage voluntary internal disclosures of securities law violations.

In the latest newsletter of the ABA Section of Labor and Employment Law, Zuckerman wrote:

The whistleblower rewards provisions of Dodd-Frank give employees a strong incentive to report securities law violations directly to the SEC, rather than disclosing violations internally. Accordingly, companies will need to establish effective internal reporting mechanisms that respond appropriately to whistleblower disclosures. To ensure that employees perceive internal reporting mechanisms as legitimate (rather than as “window-dressing” intended to protect upper management), employers must conduct prompt and thorough investigations and keep the whistleblower in the loop about corrective actions. If whistleblowers believe that their employers are not taking their concerns seriously, they will likely report their concerns directly to the SEC. Companies should consider establishing organizational ombuds programs to offer independent, impartial, and confidential assistance to employees who seek to correct unlawful conduct. [Emphasis added.]

Zuckerman has previously endorsed Ombuds as an effective complement to whistleblower programs. (ABA Section on Labor and Employment Law Flash; The Employment Law Group.)

Related posts: Advice for Whistleblowers: Think Carefully and Talk to the Ombuds; Could an Ombuds Progam Have Saved Lehman Bros.?; Ombuds are Valuable Supplement to Compliance Efforts; Financial Regulatory Reform Will Create New Ombuds Programs

IOA Takes Position on Proposed SEC Ombuds Program

The International Ombudsman Association has submitted a statement to the Securities and Exchange Commission regarding the new Ombudsman for the Office of the Investor Advocate that will be implemented pursuant to the Dodd-Frank Act. IOA President Jennifer Moumneh's statement said:

I submit these comments on behalf of the International Ombudsman Association (IOA), whose mission is to support and advance the global organizational ombudsman profession and ensure that practitioners work to the highest professional standards. IOA is the largest professional association of organizational ombudsman, representing members from the corporate, nonprofit, and government sectors.

As President of IOA, I encourage the Securities and Exchange Commission to define the proposed ombudsman role as a confidential outlet for concerns to be surfaced, and a trusted method for trends and systemic issues to be conveyed to decision-makers. An ombudsman creates an extra safety net for an organization to deal with potentially high stakes concerns while increasing the efficiency of issue resolution; it provides an important layer of oversight without adding to the bureaucracy of the system.

If the SEC intends to have the ombudsman abide by principles of confidentiality, impartiality, independence and informality, then it would make sense for the role to be modeled according to the Standards of Practice and Code of Ethics set forth by IOA – therein creating an “organizational ombudsman” position. IOA believes that the principle of confidentiality is of utmost importance to provide individuals with a safe place to ask questions or raise concerns about compliance with securities laws and the operation of regulatory authorities.

The proposed ombudsman role is currently structured to serve the public as a resource for the informal resolution of disputes and concerns. In addition to the public, the SEC should consider adding the internal workforce of the SEC to the constituents being served so that concerns within the organization also have an informal channel for being surfaced. To ensure that the neutrality of the position is not compromised, the SEC should structure the reporting relationship of this role to be independent from traditional channels of reporting. According to IOA Best Practice, an ombudsman should report to the highest level possible in the organization, such as the Chairman of the SEC.

Regardless of the ombudsman model used (organizational, classical, advocate, etc.) it is essential that the SEC implement a carefully-defined ombudsman office, as the role provides an ethical foundation to an organization deeply tied to the financial well being of the economy. In fact, because the role of an ombudsman is so valuable to the ethical viability of any institution, the SEC should consider a mandate that all regulated financial firms of over 500 employees employ an ombudsman to encourage ethical behavior and bring greater faith in the system.

Speaking on behalf of the Association, I would like to commend your efforts to enhance the SEC governance structure, and I would like to offer the expertise of IOA as an ongoing resource for the SEC to establish an effective ombudsman office which meets the specific goals of the agency. For example, we can provide information on best practices for establishing an office; contacts within the federal government of people who have established ombudsman offices; training for ombudsman staff; and any additional consultation that would be helpful in this process.

Lastly, I am appreciative of your solicitation of feedback since an effective ombudsman function is largely based on the planning that goes into establishing the office. Without careful planning, it is unlikely that an ombudsman officer will serve an organization optimally. We applaud your efforts and hope to support you.

This marks the first time that the IOA has taken a public position on a proposed federal action to create an Ombuds office.  Moumneh's statement supplements comments previously submitted by many other Ombuds and ADR experts. (SEC Comments.)

Related posts: ABA Offers Guidance on Patent Office Ombuds Pilot; Public Invited to Comment on Proposed SEC Ombuds Office.

Financial Regulatory Reform Will Create New Ombuds Programs

The sweeping reform legislation signed into law by President Obama on July 21 will establish an Ombuds programs for the Securities and Exchange Commission concerns and two programs within the new Consumer Financial Protection Bureau. An early version of the legislation also included an Ombuds program for the Public Company Accounting Oversight Board, but this was not included in the final version.

The new SEC Ombuds will be named by the head of the Office of the Investor Advocate, who is appointed by the SEC Chair. The Investor Advocate will be responsible for assisting individual investors with issues involving the SEC or other self-regulatory organization such as the New York Stock Exchange. The new Ombuds would serve as a confidential liaison for the same population. The bill does not provide any guidelines for implementing the Ombuds program, so details need to be worked out. The bill does state, however, that the new Ombuds office will not replace or diminish any existing agency Ombuds.

The reform bill also establishes two Ombuds programs in the Consumer Financial Protection Bureau. The first serves as the Agency Ombuds for the Bureau -- essentially a confidential liaison for individuals with problems relating to the activities of the Bureau, resulting from the regulatory activities of the Bureau. The details of this new Ombuds program are undefined.

In addition, there will be a separate Ombuds program to mediate disputes between student borrowers and private lenders. Here again, there are few details, but it is expected that the new Ombuds will resemble the existing Ombuds at the Department of Education which serves students with federal student loan issues. (Open Congress, HR 4173; NY Times Overview.)

It is clear that the new Ombuds programs to be enacted need to be further defined. How and when this will happen remains to be seen. Unfortunately, there is no indication that any Ombuds of any type or any Ombuds professional associations are even participating in the process. On the positive side, the Coalition of Federal Ombudsmen has been an important resource for new Ombuds programs in the federal sector in the past. Hopefully they will fill the need.

Related posts: NASDAQ and Banking Lobby Endorse Ombuds for Accounting Oversight (2007); Ombuds as Solution to the Financial Meltdown; Congress Must Resolve Ombuds Issue Before Passing Financial Reform Bill; COFO Collaborating With Federal Agencies Creating New Ombuds Programs.

Financial Reform Bill Likely to Include New SEC Ombuds Program

Securities industry expert James Hamilton reports that the Financial Reform Conference Bill (reconciling differences between HR 4173 and S 3217) includes an Ombuds program for the Securities and Exchange Commission.

Hamilton's summary of the reconciliation efforts indicate that Senate approval depends on placing the SEC Ombudsman within the new Office of Investor Advocate. (Jim Hamilton’s World of Securities Regulation.)

Prior posts: House Passes Bill to Create Two New Federal Ombuds Programs; Congress Must Resolve Ombuds Issue Before Passing Financial Reform Bill.

Congress Must Resolve Ombuds Issue Before Passing Financial Reform Bill

As the U.S. Senate grapples with legislation that would overhaul financial regulation, two proposed Ombuds programs could become an issue. The recently approved House bill would create Ombuds programs for the Securities and Exchange Commission and the Public Company Accounting Oversight Board. As currently drafted, the Senate bill does not.

In December, the House of Representatives passed the Wall Street Reform and Consumer Protection Act of 2009 (HR 4173), which included new Ombuds programs for the SEC and PCOAB. These two Ombuds programs would act as confidential liaisons between the agencies and individuals or firms with concerns regarding regulatory activities. As such, the Ombuds programs would would be similar to the Office of the Ombudsman for the Financial Industry Regulatory Authority.

Although some in the financial services industry have been calling for Ombuds program for years, the pending Senate bill (S 3217, "Restoring American Financial Stability Act of 2010") does not mention Ombuds. If the Senate bill is passed, a conference committee would need to resolve the differences between the two bills, including the proposed Ombuds programs. (Open Congress bill information: HR 4173, S 3217.)

Related posts: SEC Affirms Role of NASD Ombuds; NASDAQ and Banking Lobby Endorse Ombuds for Accounting Oversight; House Passes Bill to Create Two New Federal Ombuds Programs; Ombuds as Solution to the Financial Meltdown.

Note: It's Gordon Gecko.

Could an Ombuds Progam Have Saved Lehman Bros.?

According to the New York Times, formal channels at Lehman Bros. failed to alert senior management about issues that ultimately lead to the compay's demise.  John Zinsser deconstructs the situation further and argues that an Ombuds program could have saved the investment bank.

Think for one moment about an alternative scenario. Mr. Lee approaches the Lehman Organizational Ombudsman, a skilled professional, operating a properly structured program, with appropriate reporting lines to the Chairman of the Board and the Audit Committee. The issues are safely raised. Lehman’s board leads a responsible set of counter measures. The Investment Bank does not collapse. The rest of the financial system is concerned, but not at risk. The Bailout is not required, or only at a fraction of the amount actually spent in our reality.

How different would the economy, our political situation, our future be, had this alternative scenario occurred?

Zinsser says that an effective Ombuds would have cost pennies on the dollar compared to the ultimate loss. He also points out that the Times article appears facing an update on financial regulation reform legislation. He urges Senator Dodd to require Organizational Ombuds for the financial sector. (Conflict Benefit Blog.)

Related posts: House Passes Bill to Create Two New Federal Ombuds Programs; Why Doesn't the Ethics Resource Center Acknowledge Ombuds?; Ombuds as Solution to the Financial Meltdown.

House Bill Would Establish Ombuds for Intelligence Security Clearance Issues

On February 26, the U.S. House of Representatives passed the Intelligence Authorization Act for Fiscal Year 2010. In addition to authorizing appropriations for intelligence-related activities, HR 2701 would require the Director of National Intelligence to appoint an Ombudsman to handle concerns, complaints and questions from people applying for intelligence community security clearances. The bill does not further define the rights and responsibilities of the DNI Ombuds, but there are Ombuds programs fro employees in other security agencies. The legislation has been forwarded to the Senate for consideration. (Open Congress.)

Related Posts: Inspector General Recommends Realignment of TSA Ombuds Program; Has the CIA Created Another Ombuds Program?; Job Posting: Federal Bureau of Investigation; CoFO Elects Officers.

House Passes Bill to Create Two New Federal Ombuds Programs

Friday, the US House of Representatives passed the Wall Street Reform and Consumer Protection Act of 2009 by a vote of 223 to 202. HR 4173 is intended to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, and to regulate the over-the-counter derivatives markets. Included in the reforms are new Ombuds programs for the Securities and Exchange Commission and the Public Company Accounting Oversight Board. The SEC Ombuds would act as a liaison between the SEC and anyone by SEC regulatory activities, advising the SEC and individuals regarding compliance with Federal securities laws, and maintain confidentiality of communications with individuals. The PCAOB Ombuds act in a similar role for the PCAOB and registered public accounting firm with respect to PCAOB the regulatory activities, including the duty to preserve confidentiality. (GovTrack; OpenCongress; LA Times.)

These two proposed Ombuds programs would be similar to the robust Office of the Ombudsman for the Financial Industry Regulatory Authority (formerly the National Association of Securities Dealers). The financial services industry has been calling for this type of external Ombuds program for years. The Senate is expected to move forward on their version of the financial services reform fill next year.

Related posts: NASDAQ and Banking Lobby Endorse Ombuds for Accounting Oversight; SEC Affirms Role of NASD Ombuds; Banking Expert Recommends Ombuds for Accounting and Securities Industries.

House Bill Would Fund School Conflict Resolution Programs

In November, Representative Bobby Rush (D-IL) introduced the Conflict Resolution and Mediation Act of 2009. HR 4000 would authorizes the Secretary of Education to award grants to school boards for the development and implementation of conflict resolution and mediation programs for students, teachers, and other school personnel at schools most directly affected by conflict and violence. The bill has been referred to the House Committee on Education and Labor where it will likely expire unless it receives some high profile attention. However, if passed this bill could increase funding for school district Ombuds programs. (GovTrack; OpenCongress; Campus ADR Blog.)

House Bill Would Create External Ombuds for SEC

Earlier this month, the House Financial Services Committee approved H. 3817, which would reform the Securities and Exchange Commission and strengthen its powers to protect investors and to regulate the securities markets. A late amendment by Kevin McCarthy (R-CA22) to the bill would create an Ombuds position reporting directly to the SEC Chairperson. The proposed SEC Ombuds would serve as a confidential liaison and be able to make policy recommendations. Rep. McCarthy sponsored a similar bill in the last legislative session that was unsuccessful. (GovTrack, H. 3817 status; McCarthy Amendment.)

Related post: House Bill Would Create SEC Ombuds Office.