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OCC BULLETIN 2014-1
Subject: Heightened Standards for Large Banks; Integration of 12 CFR 30 and 170
Date: February 5, 2014
To: Chief Executive Officers of All National Banks and Federal Savings Associations, Federal Branches and Agencies, Department and Division Heads, All Examining Personnel, and Other Interested Parties
Description: Notice of Proposed Rulemaking
The Office of the Comptroller of the Currency (OCC) has issued a notice of proposed rulemaking that would establish minimum standards for the design and implementation of a risk governance framework (framework) for large insured national banks, insured federal savings associations, and insured federal branches of foreign banks with average total consolidated assets of $50 billion or more (covered banks). The proposal also would establish minimum standards for an institution’s board of directors (board) in overseeing the framework’s design and implementation. Both sets of standards are issued pursuant to a federal statute that authorizes the OCC to prescribe, by guideline, operational and managerial standards for national banks and federal savings associations. The standards (referred to in this bulletin as guidelines) would be enforceable under the terms of that same statute.
In addition, as part of the agency’s ongoing efforts to integrate the regulations of both the OCC and the former Office of Thrift Supervision (OTS), the OCC is requesting comment on its proposal to make 12 CFR 30 and all of its respective appendixes applicable to federal savings associations and to remove part 170 of the OCC’s regulations as unnecessary. Parts 30 and 170 both implement the federal statute that authorizes the OCC’s issuance of the guidelines and are nearly identical, except that part 30 includes an appendix governing residential mortgage lending.
The comment period for the proposed rule ends March 28, 2014.
Risk Governance Framework
Board of Directors
Enforceability of the Guidelines
The financial crisis and the accompanying legislative response enacted in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 20101 (Dodd-Frank) highlight the importance of strong bank supervision and regulation of the financial system. In particular, large, complex institutions that may have a significant impact on capital markets and the economy warrant enhanced supervision and regulation.
Following the financial crisis, the OCC developed a set of “heightened expectations” to enhance its supervision and strengthen the governance and risk management practices of large national banks. In 2010, the OCC began communicating and applying the heightened expectations to institutions in the Large Bank program2 through the agency’s supervisory function. The OCC also has applied aspects of the heightened expectations to institutions in the Midsize Bank program to promote stronger governance and risk management.
The OCC is proposing standards developed from the heightened expectations in the form of enforceable guidelines. The OCC is proposing to issue the guidelines as a new appendix D to part 30 of the OCC’s regulations. The proposal furthers the goal of Dodd-Frank to strengthen the financial system by focusing management and boards on strengthening risk management practices and governance, with a goal of minimizing the probability and impact of future crises.
Please contact Molly Scherf, Deputy Comptroller, Large Bank Supervision, at (202) 649-7298; Stuart Feldstein, Director, or Andra Shuster, Senior Counsel, Legislative and Regulatory Activities Division, at (202) 649-5490; or Martin Chavez, Attorney, Securities and Corporate Practices Division, at (202) 649-5510 or (202) 649-5400.
Amy S. Friend
2 The OCC began applying the heightened expectations standards to federal savings associations in the Large Bank program in late 2011 after assuming supervisory responsibility for these institutions from the OTS pursuant to Dodd-Frank.