Economics Working Groups and Active Output
Find a list of our active working groups and their output below. You can also access all OCC Economics publications here.
Nonperforming Loans (NPL)
This working group will provide immediate knowledge about how the COVID-19 pandemic is affecting the banking system, build a new in-house capability for forecasting NPLs, create opportunities for publishing in professional journals, and develop knowledge enabling the OCC to assist member banks with CECL compliance.
Consumer Protection and Financial Inclusion
This working group supports the OCC's mission to ensure fair access to financial services and fair treatment for customers of supervised institutions. As part of that objective, the group will analyze new approaches to ensuring fair access to financial services and the potential links between innovative financial technologies and access and use of financial services. It will also support the continued progress made in modernizing the Community Reinvestment Act (CRA) framework to ensure that it achieves its intended purpose in an effective, transparent, and objective way.
Bundling, Unbundling, Value Creation in Banking; Fintech Chartering and Its Regulation
This is a working group divided into two sub-groups—one on bundling, unbundling, and bank valuation analysis; and another on the fintech future of banking services and the chartering of novel banks. Initially, it makes sense to combine these sub-groups into one large group because there are conceptual synergies between the two sets of questions they address (which require knowledge of issues revolving around corporate structure, valuation, and industrial organization, as well as the economics of network structure and stability). The current OCC initiatives in chartering novel banks and considering the advantages of allowing banks to unbundle financial services are closely aligned with this working group's focus.
Stress Tests 2.0
Stress tests are a recent invention (the stress tests that the OCC implements were mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010). This is an aspect of prudential regulation that is likely to see major improvement over the next decade. Stress testing currently focuses on the effects of shocks on tangible assets and assesses the performance of the stressed bank on the basis of its exit ratio of tangible net worth to tangible assets. But banks are service companies, and intangible assets (which measure the discounted value of current and anticipated cash flows that are unrelated to tangible assets on the balance sheet) are a major driver of banks' enterprise values. Stress is properly defined as a sudden change in the value of the whole banking enterprise, and a successful exit from a stress test is properly defined as its ability to exit with a sufficiently high ratio of enterprise equity value relative to total assets. The frontier of stress testing is to find ways to provide measures of bank enterprise value and stress that reflect this understanding.