The U.S. Office of the Comptroller of the Currency (OCC) proposed rules and issued guidance on Monday to help reduce the regulatory burden for community banks.
First, the OCC announced that it is removing fixed examination requirements for community banks and instead tailoring the examination scope and frequency to be consistent with risk-based supervision. This approach reduces supervisory burden, maintains the value of the federal charter and preserves banks’ safety and soundness. The OCC said it ensures regulatory oversight but does not distract banks from serving their communities.
Further, the OCC said that it will only use the core assessment standards in the Community Bank Supervision booklet of the Comptroller’s Handbook to examine for retail non-deposit investment products.
“Community banks have an outsized impact on lending and are vital to the strength of the U.S. economy. Today’s actions relieve these banks of regulatory burden and unproductive reporting requirements, so they are better positioned to support their communities and drive economic growth,” Comptroller of the Currency Jonathan Gould said. “The OCC will continue to tailor our risk-based supervision to focus on material financial risk.”
Also, in a separate bulletin, the OCC clarified its expectations on how community banks should tailor model risk management practices. In particular, it said that the OCC’s model risk management guidance does not impose prescriptive requirements, such as annual model validations. The OCC is also considering additional steps to enhance flexibility and reduce burden related to model risk management.
In addition, the OCC requested comments on two proposed rules. One rule proposes rescinding the Fair Housing Home Loan Data System regulation, removing largely duplicative data collection requirements for national banks. The OCC also proposed broadening eligibility for expedited or reduced licensing procedures to community banks. This proposal would reduce the burden for community banks and tailor requirements to the size and risk profile of an institution.
Both of these proposed rule changes are intended to facilitate an increase in corporate activities and transactions by community banks.
The Independent Community Bankers of America (ICBA) expressed support for the OCC’s series of regulatory relief measures.
“ICBA and the nation’s community bankers commend the OCC for today’s announcement on the meaningful steps it is taking to reduce unnecessary regulatory burdens on community banks, which recognizes the outsized impact of community bank lending on the U.S. economy,” ICBA President and CEO Rebeca Romero Rainey said.