U.S. banks examine controls after SocGen

By John Poirier and Martha Graybow

WASHINGTON (Reuters) - U.S. banks are reviewing their internal controls in the wake of the trading scandal at French bank Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz), a top banking regulator said on Wednesday.

"All the firms are re-looking at their controls very carefully," John Dugan, who heads the Office of the Comptroller of the Currency, told the Reuters Regulation Summit.

"Needless to say we've had questions with respect to firms that we regulate, that there is a re-looking at this and trying to determine if they have the right internal controls in place and systems to deal with this," Dugan told Reuters.

SocGen unveiled the 4.9 billion euros ($7.2 billion) of losses on January 24, blaming rogue deals by Jerome Kerviel, a 31-year-old junior trader at the bank. Kerviel has said that he accepts a measure of responsibility but would not be turned into a "scapegoat."

Dugan, whose agency regulates some of the biggest U.S. banks and is part of the Treasury Department, said his office is "asking questions at our firms but at this point we're not planning any new guidance" on risk management systems.

He declined to comment on which U.S. banks had undertaken the reviews, but said they have been doing "some head scratching" in recent days as they try to understand how the massive losses occurred at SocGen and whether they involved actions by only one person or perhaps others.

"That's the kind of things they are trying to get a handle on -- what happened here-- and trying to see if that particular set of breaches could occur at their own institutions," he said.

Also on Wednesday, the acting chairman of the Commodity Futures Trading Commission said the agency is having discussions with the futures trading firms it regulates to make sure they have procedures and safety walls in place to prevent rogue traders.  Continued...