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Comptroller of the Currency Thomas Curry discussed the challenges banks are facing with regulatory compliance and the regulatory burdens faced by smaller institutions in a speech before the New England Council in Boston, Massachusetts, on Friday.
Curry said financial institutions became subject to "numerous regulatory requirements" addressing financial stability that were written into the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Those regulations also address certain consumer protection issues that the crisis brought to light, according to Curry.
While acknowledging that banking has always been among the most heavily regulated industries, Curry said that the impact of the new (and and in some ways tougher) regulations can be felt at financial institutions in two different ways:
- The risk that banks will damage their reputations and subject themselves to regulatory penalties if they happen to run afoul of the regulations.
- Banks are devoting time and resources toward regulatory compliance, which prevents those resources from being used to serve their customers and communities. Community banks and smaller institutions where the compliance officer will have multiple responsibilities will be impacted by this the most.
Noting the legal as well as practical responsibility that federal banking agencies have to minimize unnecessary regulatory burden, Curry pointed out the OCC is currently engaged in a federally-mandated regulatory review (by the Economic Growth and Regulatory Paperwork Reduction Act of 1996).
"In this collaborative interagency process, the OCC and other federal banking agencies are conducting outreach meetings around the country to collect comments from bankers and concerned members of the public about our regulations," Curry said. "In May, I joined several of my colleagues here in Boston, where we learned a great deal from participants about specific regulations that are outdated, unnecessary, or needlessly burdensome."
The public benefits most regulations provide outweigh the burdens they impose, Curry said. The challenge regulators are facing is "balancing the benefits of regulation against its burdens where Congress has not already made that judgment."
