Occ Reduces Regulatory Burden On Community Banks Ahead Of Broader Industry Reforms

“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 V. Gould said in a Monday press release. “The OCC will continue to tailor our risk-based supervision to focus on material financial risk.”

In one bulletin released Monday, the OCC said it is replacing fixed examination requirements for community banks with a tailored examination scope and frequency that is consistent with risk-based supervision.

The OCC said in another new bulletin that when examining for retail nondeposit investment products, it will use only the core assessment standards in the Community Bank Supervision booklet of the Comptroller’s Handbook.

In a third bulletin, the regulator said that its model risk management guidance does not impose prescriptive requirements, such as annual model validations, and that community banks should tailor model risk management practices to their risk exposures, business activities, and the complexity and extent of their model use.

“The OCC is also considering additional steps to enhance flexibility and reduce burden related to model risk management,” the regulator said in its press release. “This bulletin is just the first step in refining model risk management guidance for all of the OCC’s regulated institutions.”

One of the proposed rulemakings released Monday by the OCC would rescind its Fair Housing Home Loan Data System regulation. The regulator said this move would remove data collection requirements that are largely duplicative.

The second new proposed rulemaking would provide community banks with greater access to expedited or reduced licensing procedures, a move the OCC said would reduce the regulatory burden and tailor the requirements to the institution’s size and risk profile.

“The OCC will continue to prioritize reforms targeted to community banks ahead of broader reforms for the industry,” the release said.

When appearing before the Senate Banking Committee as OCC nominee in March, Gould said that “in the years since 2008, bank regulators have at times tried to eliminate rather than manage risk, frustrating the ability of banks to fulfill their function.”

Gould said that “this blinkered approach to risk management has implications for the cost and availability of credit, the system’s ability to absorb shocks, and its adoption of new technologies and embrace of innovation.”