Curry: No Need for Prolonged Review to Lighten Regulatory Load

WASHINGTON — Policymakers should pull the trigger on easing certain rules for small banks — including exempting them from the Volcker Rule — even before a formal process to consider regulatory relief is completed, Comptroller of the Currency Thomas Curry said Tuesday.

Federal regulators are currently undergoing a decennial review of potentially outdated or overly burdensome rules mandated by the 1996 Economic Growth and Regulatory Paperwork Reduction Act. The process, which includes getting industry feedback on which regulations should be eliminated or revised, is expected to last into 2016.

But Curry, who spoke with other regulators at the first of several banker outreach sessions that are part of the EGRPRA process, echoed other officials in saying some changes may be able to be enacted sooner. Yet he noted that certain reforms would require congressional action.

The Office of the Comptroller of the Currency "will not wait until the end of the EGRPRA process to make changes when a solid case has been made for reform," Curry said at the event held in Los Angeles.

"If it is clear that a regulation is unduly burdensome, and if we have authority to make changes to eliminate that burden, we will act. Many regulatory requirements are rooted in laws passed by Congress, though, and changes may require legislative action. In those cases, we will work with Congress to remove unnecessary burdens."

Curry said a clear exemption for community banks from the Volcker Rule — a provision in the Dodd-Frank Act that bans banks from proprietary trading — is "ripe for congressional action." He noted that Federal Reserve Board Gov. Daniel Tarullo has also suggested such a step.

"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 banks and thrifts with less than $10 billion in assets," he said.

The OCC is not the first agency to embrace making certain changes early on in the EGRPRA process. In late November, the Federal Deposit Insurance Corp. announced it was already clarifying the de novo chartering process, which industry insiders see as possibly paving the way for more applications. The FDIC also eliminated application requirements for state-chartered banks looking to engage in new business through limited liability companies. Both changes were requested in the first round of EGRPRA comment letters.

In addition to a Volcker Rule exemption for small banks, Curry also reiterated a position made by another OCC official at a recent Senate hearing that more banks should be able to qualify for the longer 18-month examination cycle, as opposed to 12 months. The comptroller said raising the asset threshold to $750 million, from $500 million, would qualify 300 more institutions for the longer cycle.

"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 may present capital, managerial, or other issues of supervisory concern," he said.

Finally, Curry proposed steps to allow federal thrifts to expand their business activities without their having to apply for a different type of charter.

"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. "We recommend authorizing a basic set of powers that both federal savings associations and national banks can exercise, regardless of their charter, so that savings associations can change business strategy without moving to a different charter."