Thought Leadership

The OCC is Busy: Regulatory Update

The Office of the Comptroller of the Currency (OCC) shared several updates over the past six weeks that require the attention of financial institution leaders. In fact, some changes go into effect as soon as December 1, 2017.

On September 28, the Committee on Bank Supervision (CBS) for the OCC released its Bank Supervision Operating Plan for fiscal year 2018 which outlines the OCC’s supervision priorities, including but not limited to the following focus areas:

  1. cybersecurity and operational resiliency
  2. commercial and retail credit loan underwriting, concentration risk management, and the allowance for loan and lease losses
  3. business model sustainability and viability and strategy changes
  4. Bank Secrecy Act/anti-money laundering (BSA/AML) compliance management
  5. change management to address new regulatory requirements.

This plan guides the development of supervisory strategies for individual national banks, federal savings associations, federal branches, and federal agencies, and related service providers. Managers and staff in CBS operating units—the Office of the Chief National Bank Examiner (CNBE), Compliance and Community Affairs (CCA), Large Bank Supervision (LBS), and Midsize and Community Bank Supervision (MCBS)—will use this plan to guide their supervisory priorities, planning, and resource allocations for fiscal year 2018.

The OCC will provide periodic updates about supervisory priorities and horizontal risk assessments in the fall and spring editions of the Semiannual Risk Perspective.

More information on this release can be found here.

On October 6, the OCC, the Fed and the FDIC issued a joint notice and request for comment on a proposal to combine the agencies’ separate but identical stress test report forms into a new (single) Federal Financial Institutional Examination Council (FFIEC) report (FFIEC 016) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).

On October 27, the OCC issued a proposal to modify its “stress test” rules for covered financial institutions, as required by Dodd-Frank. The proposal would:

  1. extend the range of possible “as-of” dates used in the trading and counterparty default component of the annual stress tests by three months. The rule currently states that the as-of date may occur between January 1 and March 1 of the calendar year of the stress test. The proposed rule extends this window to incorporate the prior three months, so that the new window would be October 1 through March 1.
  2. extend the transition process for certain covered national banks and federal savings associations that cross the $50 billion asset threshold.
  3. make technical and linguistic changes to the OCC’s stress testing regulation in order to promote clarity. The proposed rule would remove certain obsolete transition provisions. The proposed rule would also change the defined term “over $50 billion covered institution” to “$50 billion or over covered institution” in order to be more precise.

Comments for the proposed “stress test” rule changes must be received on or before December 26, 2017.

On October 31, the OCC updated its policies and procedures regarding bank enforcement action and related matters for national banks, federal savings associations, and federal branches and agencies. This policy becomes effective on December 1, 2017.

More information on recent OCC activity can be found here.

Depending on the size and type of your financial institution, some of these changes may not impact your financial institution directly. But many of these changes will guide future compliance efforts and should be reviewed carefully. Now may be an opportune time to reexamine your compliance programs.