The Office of the Comptroller of the Currency has advanced three specific legislative proposals aimed at eliminating regulatory burden on community banks and financial institutions, according to an address from Comptroller of the Currency Thomas J. Curry at the Interagency Outreach Meeting on The Economic Growth and Regulatory Paperwork Reduction Act (EGRPA) in Chicago this week.
The first of these proposals is that a greater number of healthy, well-managed community banks and financial institutions ought to qualify for the 18-month examination cycle, according to Curry.
“That would not only reduce the burden on those well-managed institutions, it would allow the federal banking agencies to focus our supervisory resources on those banks and thrifts that present capital, managerial, or other issues of significant supervisory concern,” Curry said, also noting that the House voted earlier in October to raise the asset threshold to $1 billion and he hopes the Senate will follow suit.
According to the Congressional Budget Office, as many as 600 additional banks would qualify for the 18-month cycle under the higher threshold, Curry said.
The second proposal the OCC has advanced to reduce regulatory burden is a community bank exemption from the Volcker Rule, which is the portion of Dodd-Frank enacted earlier this year that bans commercial banks and their affiliates from proprietary trading and restricts their investment in hedge funds and private equity.
“We don’t believe it is necessary to include smaller institutions under the Volcker Rule in order to realize Congressional intent, and we recommend exempting the more than 6,000 banks and thrifts with less than $10 billion in assets,” Curry said, adding that he was pleased that Senate Banking Committee Chairman Richard Shelby included this provision in his regulatory relief proposal.
“I think these legislative proposals are meaningful steps which could help a great number of smaller institutions. But we shouldn’t stop there."
The third proposal from the OCC would provide federal savings associations with greater flexibility to expand their business model without changing their governance structure, according to Curry.
“It’s important that federal savings associations, like other businesses, have the flexibility to adapt to changing economic and business environments in order to meet the needs of their communities, and they shouldn’t have to bear the expense of changing charters in order to do so,” he said.
Curry said the OCC recommends authorizing a basic set of powers that can be exercised by both federal savings associations and national banks, which would permit savings associations to change business strategies without changing charters. He said this proposal was currently being considered on Capitol Hill and is hopeful it will be enacted into law soon.
“I think these legislative proposals are meaningful steps which could help a great number of smaller institutions,” Curry said. “But we shouldn’t stop there. We should be looking at every approach that might help community banks thrive in the modern financial world. One especially promising approach involves collaboration, which was the subject of a paper we issued recently. By pooling resources, smaller institutions can trim costs and serve customers that might otherwise lie beyond their reach.”
Click here to see the entire text of Curry’s address.