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Despite an attempt in Dodd-Frank to preserve thrift institutions, a recent report on the elimination of the OTS is bolstering the view that the charter will exist in name only.
February 3
WASHINGTON — The limits on a national bank or thrift's exposure to a single borrower will now also include counterparties in derivatives transactions, according to an
As required under the Dodd-Frank Act, the Office of the Comptroller of the Currency released the new rule Wednesday revising the definitions of its lending limits.
Generally, secured "loans and extensions of credit" by thrifts and national banks to any one borrower cannot exceed 25% of the institution's "unimpaired" capital and surplus. (That limit drops to 15% for unsecured credits.)
Dodd-Frank expanded the definition to include credit exposures stemming from derivatives deals, repurchase agreements, reverse repurchase agreements and securities financing transactions.
The new regulation incorporates the broader definition for both national banks and thrifts. Consistent with the OCC's taking over supervision for thrifts after the Office of Thrift Supervision was eliminated in Dodd-Frank, the new rule also streamlines the lending limits for national banks and thrifts.
"These changes will eliminate duplication and create efficiencies by establishing a single set of lending limit rules for national banks and savings associations, without substantially changing the requirements," the OCC said in the regulation.
The OCC's rule was released on an interim basis, meaning it will go into effect as is but is subject to change following a public comment period ending August 6. The rule's effective date is now July 21.
