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OCC Raises Governance, Risk Management Standards for Large Financial Institutions


The Office of the Comptroller of the Currency (OCC) announced on September 2 that it has published final guidelines for large financial institutions regarding the strengthening of governance and risk management practices for those institutions.

Organizations covered by the guidelines are insured national banks, federal savings associations, and branches of foreign banks whose average total consolidated assets total $50 billion or more, according to the OCC. Institutions with average total consolidated assets totaling less than $50 billion whose parent company controls an institution covered by the guidelines will also be affected.

Covered institutions will now be required to control and manage risk-taking activities by following a written risk governance framework under the new guidelines, the OCC announced. The guidelines also set forth a set of minimum standards to govern the overseeing of that framework by the institutions' boards of directors.

"The 2008 financial crisis demonstrated that much stronger supervisory standards would be necessary to manage the risks associated with large, complex financial institutions,” Comptroller of the Currency Thomas J. Curry said. "As a result, the OCC raised its standards for risk management, corporate governance, and control to help ensure these institutions effectively anticipate, evaluate, and mitigate the risks they face. The guidelines finalized today are an important step in making our federal system of banks and thrifts stronger and more resilient."

According to the OCC, institutions with more than $750 billion in total average consolidated assets must comply with the newly published guidelines immediately, while the compliance date is six months from the effective date published in the Federal Register for institutions with between $100 billion and $750 billion in assets. Institutions with between $50 billion and $100 billion in assets will be required to comply with the new guidelines within 18 months of the effective date published. If a bank currently under the $50 billion threshold and is not covered by the guidelines due to its parent company owning a covered institution, but that bank crosses the $50 billion threshold at some point, it will have 18 months from the date it exceed the threshold to comply with the guidelines.

The finalized guidelines are essentially the same as those proposed by the OCC in January 2014. Changes were made to the final guidelines for the purposes of clarity and ensuring that board members were not given management responsibilities.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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