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The Office of the Comptroller of the Currency is likely to make changes to its proposal outlining the "heightened expectations" the largest banks must face after the industry raised concerns that certain provisions could backfire.
April 15 -
Comptroller of the Currency Thomas Curry sought to reassure community bankers this week that the agency does not expect them to comply with its "heightened expectations" proposal aimed at bolstering risk management and improving governance at the biggest banks.
April 11 -
The Office of the Comptroller of the Currency proposed official guidelines describing its "heightened expectations" for how large banks and thrifts control risk.
January 16
WASHINGTON The Office of the Comptroller of the Currency has finalized its long-awaited risk management guidelines for larger banks known as the agency's "heightened expectations," but the implementation deadline will vary based on an institution's size.
The guidelines, which have been a part of OCC examinations in one form or another since the crisis but were made formal on Tuesday, establish procedures for banks to develop risk management programs and make boards of directors responsible for overseeing risk governance.
The new standards generally apply to any bank with over $50 billion in average total assets. A smaller bank must comply if its parent also owns a bank meeting the asset threshold.
"The 2008 financial crisis demonstrated that much stronger supervisory standards would be necessary to manage the risks associated with large, complex financial institutions," said Comptroller of the Currency Thomas Curry in a press release. "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."
The OCC tweaked its January proposal mainly to provide further clarification to banks about senior managers' responsibility for strengthening risk management as opposed to that of the board. The revision came after commenters had called on the agency to ease boards' operational burden. The OCC also released a breakdown of the implementation dates that that are tiered based on the asset size of the institution.
For example, institutions with at least $750 billion in average assets must comply immediately upon the effective date, which is 60 days after the rule is published in the Federal Register. Institutions with between $100 billion and $750 billion in assets must comply within the next six months, and institutions with assets between $50 billion and $100 billion have 18 months from the effective date to comply.
The final guidelines also extend to banks below the $50 billion-asset threshold if the parent company controls at least another institution that's already covered by the guidelines.
Banks with less than $50 billion in assets, that must comply, have the same implementation deadline as that of any larger bank within their corporate structure. Any bank that reaches the $50 billion threshold after the guidelines have been published must be in compliance within 18 months.
