By Stephanie K. Mann, J.D.
As financial regulators continue to look for a solution to the one-size-fits-all approach and the subsequent over-regulation of community banks, the Office of the Comptroller of the Currency is working with members of Congress on potential legislation that would ease the regulatory and supervisory burden on community banks, according to Comptroller of the Currency Thomas J. Curry. The OCC’s goals include making charters more flexible, creating a Volcker Rule exemption, and reducing examination frequency, he said in remarks prepared for the Depositors Insurance Fund.
Curry noted that Massachusetts grants flexible state charters that establish the same banking powers, investment authorities, and supervisory requirements for all state-chartered institutions, regardless of the type of charter an institution holds. This lets Massachusetts bankers run their businesses in the way that adapts to changing conditions without converting between charters.
Federal savings associations should have the same ability, in Curry’s opinion. The OCC is cooperating with members of Congress to draft legislation that would remove from federal law the requirement that a specified percentage of a thrift’s balance sheet must be home mortgages. Federal thrifts would be able to diversify their loan portfolios better without changing supervisors, and that would mean no increased safety and soundness risks, according to the Comptroller.
Examination cycle. Healthy, well-managed community banks only need to be examined once every 18 months, Curry believes. If Congress raises the asset threshold for the 18-month examination cycle to $750 million, from the current $500 million, several hundred community institutions—including more than 100 supervised by the OCC—would qualify for the 18-month examination cycle, he pointed out.
This change would help community banks by reducing their regulatory burden. It also would help regulators by allowing them to focus their resources on institutions that present higher risks.
Volcker Rule. “We do not believe it is necessary to include smaller institutions under the Volcker Rule in order to realize congressional intent,” Curry asserted. Banks and thrifts with less than $10 billion in assets should be exempt from the restrictions on proprietary investments and involvement with investment funds.
Cybersecurity. However, Curry encouraged community bankers to consider more cooperation in creating a defense against cyberattacks. All financial institutions, no matter what their size, are at risk for cyberattacks, noted Curry.
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