Office of the Comptroller of the Currency
Congress and the Trump Administration may be embarking on making far-reaching changes that will recalibrate the manner in which financial services are regulated in the United States, including amending the Dodd-Frank Act and its implementing rules. We expect to see vigorous debate regarding the appropriate approach to financial services regulation, leading to rewrites of the structures and goals of federal banking and securities agencies and other government agencies.
This page is dedicated to tracking legislative and regulatory developments related to the OCC.
For more information, please contact David L. Ansell, David J. Harris or Robert J. Rhatigan.
Date | ActionH.R. 4790 Sponsor: Rep. Hill (R-AR) House Financial Services Committee passed 50-10, March 21, 2018. Key ProvisionsThe Bill would give the FRB sole rulemaking authority for the Volcker Rule as compared to the current joint rulemaking authority that is shared among the FRB, FDIC, OCC, SEC and CFTC. The Bill would also allocate examination and enforcement authority for the Volcker Rule so that the primary Federal banking agency (as defined in the Bill) for a banking entity would have sole authority to conduct examinations of the all affiliates of the banking entity and to enforce Volcker Rule with respect to the affiliates consistent with the FRB’s interpretations. The Bill would also exclude community banks from the Volcker Rule by providing an exemption from banking entity status to any entity that has total consolidated assets of $10 billion or less. Potential ImpactThe Volcker Rule’s requirement for cooperation among five financial regulatory agencies has been widely viewed as complicating and impeding the rulemaking and interpretation processes for the Volcker Rule. This problem would be addressed by the Bill. The Bill, similar to S. 2155 which recently passed the Senate with bipartisan support, would provide an exemption from the Volcker Rule for smaller institutions. The broad bipartisan support for the Bill suggests that Congress may be prepared to pass a significant relaxation of the Volcker Rule during this session. | Important Links |
Date | ActionEconomic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) Sponsor: Sen. Mike Crapo (R-ID) (Co-Sponsors – 13R, 12 D, 1 I) Senate Banking Committee passed 17-6, December 5, 2017. Senate passed 67-31, March 14, 2018. House passed 258-159, May 22, 2018. Key ProvisionsAmong other things, the Bill would: Provide qualified mortgage status safe harbor to loans meeting certain requirements that are originated and retained by community banks (banks with less than $10B in consolidated assets). (Title I) Allow a community bank to be deemed to have met applicable capital requirements if it meets a tangible equity leverage ratio of between 8-10% and is not disqualified for such treatment based on a bank regulatory agency risk review. (Title II) Exempt insured institutions with $10 billion or less in total consolidated assets (and controlled by a company with that level of consolidated assets) and limited trading assets from the Volcker Rule. (Title II) Narrow the scope of the naming restriction under the Volcker Rule for covered funds sponsored by banking entities to allow funds to share the same name or a variation of the same name with the fund’s investment adviser provided the investment adviser is not itself a bank holding company (or treated as a bank holding company) or insured depository institution, does not have the word “bank” in its name, and does not share the same name (or a variation thereof) with a depository institution or bank holding company. (Title II) Provide immunity from any civil or administrative proceeding to covered financial institutions and their covered employees for disclosing the suspected financial exploitation of seniors to appropriate agencies, as long as the disclosure is made in good faith and with reasonable care. (Title III) Raise the threshold for applying enhanced prudential standards on bank holding companies from $50 billion to $250 billion in consolidated assets, but would allow enhanced prudential standards to apply on a case-by-case basis to bank holding companies with at least $100 billion in consolidated assets. (Title IV) Require the Federal Reserve Board to conduct periodic stress tests on bank holding companies with consolidated assets of $100B to $250 billion. (Title IV) Require banking agencies to amend their liquidity coverage ratio regulations to include municipal obligations that are liquid and readily marketable and investment grade as level 2B liquid assets. (Title IV) Require Treasury to report on the risks of cyberattacks and for the SEC to report on the risks and benefits of algorithmic trading. (Titles II and V) Direct the SEC to revise any rules necessary to permit a registered closed-end fund to use the SEC’s securities offering and proxy rules currently available to other issuers (i.e., operating companies) that are required to file reports under the Securities Exchange Act of 1934. (Title V) Potential ImpactThis bill is much narrower in scope than the Financial CHOICE Act as passed by the House on June 8, 2017. However, it does include a number of relaxations of regulatory burdens on smaller institutions that have received a significant degree of bipartisan support. If signed by the President, several of the reforms will require updated guidance and policies or, in some cases, rulemaking by the regulators. | Important LinksBill Text |
Date | ActionFinancial Institution Customer Protection Act of 2017 (H.R. 2706) Sponsor: Rep. Luetkemeyer (R-MO) (Co-Sponsors – 19 R) House of Representatives passed 395-2, December 11, 2017 Key ProvisionsThe Bill would require that a formal or informal request or order by a federal banking agency to terminate (or otherwise restrict or discourage) a specific customer account or group of customer accounts be made in writing and that the agency must have a material reason for such request or order that is not based solely on reputation risk. A depository institution that terminates accounts due to such a request or order is generally required to inform the customers of the justification for the termination. Potential ImpactThe Bill is intended to restrict banking agency authority to participate in initiatives such as Operation Choke Point, which has been the subject of significant Congressional review and court challenges. | Important Links |
Date | ActionMain Street Regulatory Fairness Act (S. 1139) Sponsor: Sen. Tester (D-MT) (2 Co-Sponsors – 3 D, 2 R) Key ProvisionsThe Bill would increase the asset threshold at which banking organizations are required to conduct stress tests from $10 billion to $50 billion. For organizations that would still be subject to stress testing requirements, the Bill would replace an annual requirement with a less specific requirement for periodic stress testing. Potential ImpactThe enhanced prudential standards provisions of Dodd-Frank generally apply to banking organizations with assets of $50 billion or more. One exception is a $10 billion threshold for requiring an organization to conduct annual stress tests. According to a statement by Sen. Tester, the Bill’s move to a $50 billion threshold would remove this regulatory burden from 72 banks. | Important Links |
Date | ActionCommunity Lending Enhancement and Regulatory Relief Act (S. 1002) Sponsor: Sen. Moran (R-KS) (35 Co-Sponsors – 11 D, 23 R, 1 I) Key ProvisionsThe Bill would provide regulatory relief to community banking organizations in a number of respects. The Bill’s provisions include: (i) an exemption from the Volcker Rule for institutions under $10 billion in assets, (ii) providing qualified mortgage treatment to mortgage loans originated and held in portfolio for not less than three years by a depository institution which together with its affiliates has less than $10 billion in assets, and (iii) an exemption from certain escrow requirements for first lien mortgages on a principal residence for loans held by depository institutions with less than $10 billion in assets. Potential ImpactThe Bill is another example of proposed legislation intended to reduce the regulatory burden on smaller banking organizations. It is particularly notable in that five Democratic Senators are indicating a willingness to scale back to some extent the reach of the Volcker Rule. | Important Links |
Date | ActionPortfolio Lending and Mortgage Access Act (H.R. 2226) Sponsor: Rep. Barr (R-KY) (40 Co-Sponsors – 39 R, 1 D) House Committee on Financial Services: passed 55-0, January 18, 2018 House passed by voice vote, March 6, 2018 Senate version S. 2013 (identical bill) Sponsor: Sen. Perdue (R-GA) Key ProvisionsThe Bill would provide qualified mortgage (“QM”) loan treatment to residential mortgage loans originated and held in portfolio by a depository institution that meet certain requirements regarding prepayment penalties. The Bill would also provide favorable regulatory treatment to third party mortgage originators where (i) the creditor-depository institution informs the originator of its intent to maintain the loan on its balance sheet for the life of the loan, and (ii) the originator informs the consumer of the depository institution’s intent. Potential ImpactThe Bill would allow depository institutions to have the benefits of QM treatment for residential mortgage loans that they plan to hold in portfolio. This would expand a lender’s flexibility to use their own experience to design loans to meet consumer needs and preferences. | Important Links |
Date | ActionClarifying Commercial Real Estate Act (H.R. 2148) Sponsor: Rep. Pittenger (R-NC) (16 Co-Sponsors – 14 R, 2 D) House of Representatives passed by voice vote on November 7, 2017 Key ProvisionsThe Bill would narrow the current definition of “high volatility commercial real estate exposures” (“HVCRE”) which are credit facilities that prior to conversion to permanent financing finance the acquisition, development or construction of commercial real property, subject to certain exceptions, that are subject to higher capital requirements. Potential ImpactThe Bill is intended to address a concern that the current regulatory parameters for HVCRE are too broad in scope and are inappropriately increasing costs in construction lending and reducing availability of such financing. | Important Links |
Date | ActionCommunity Lending Enhancement and Regulatory Relief Act of 2017 (H.R. 2133) Sponsor: Rep Luetkemeyer (R-MO) (Co-Sponsors – 39 R) Key ProvisionsThe Bill includes a wide range of provisions aimed at reducing regulatory requirements on depository institutions. In regard to the CFPB the Bill would (i) raise the threshold for depository institutions to be subject to CFPB supervision from $10 billion to $50 billion, and (ii) would eliminate the CFPB’s authority with respect to “abusive” practices. The Bill would amend the Fair Housing Act (“FHA”) and the Equal Credit Opportunity Act to expressly provide that those laws prohibit “intentional” discrimination. This would have the impact of superseding the Supreme Court’s decision in Texas Dep’t of Housing & Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015) which held that FHA liability could be established based on disparate impact rather than intentional conduct. The Bill would seek to restrict Operation Choke Point by requiring that a formal or informal request or order by a federal banking agency to a depository institution to terminate a specific customer account or group of customer accounts must (i) be made in writing, and (ii) explain why such termination is needed including identification of any laws or regulations the agency believes are being violated. Potential ImpactThe Bill seeks to provide a range of regulatory relief to depository institutions, especially smaller institutions. | Important Links |
Date | Action21st Century Glass-Steagall Act of 2017 (S. 881) Sponsor: Sen. Warren (D-MA) (8 Co-Sponsors – 5 D, 2 I, 1 R) House version H.R. 2585 (substantially similar) Sponsor: Rep. Capuano (D-MA) (11 Co-Sponsors –10 D, 1 R) Introduced in House of Representatives May 22, 2017 Key ProvisionsThe Bill would reimpose Glass-Steagall Act restrictions on affiliations (including director and officer interlocks) between insured depository institutions and entities engaged in certain securities activities. The Bill would also repeal provisions of the Gramm-Leach-Bliley Act that permit financial holding companies to engage in a wide range of financial activities, including a full range of securities activities, insurance underwriting and merchant banking. The Bill would also prohibit insured depository institutions from affiliating with investment advisers and securities brokerage firms. The Bill would generally provide a five-year period for institutions to come into compliance with the new restrictions. Potential ImpactSee the discussion of the Return to Prudent Banking Act of 2017, which is substantially similar legislation in many respects for a discussion of the potential impact of this Bill. However, this Bill would go even further in mandating the separation of the commercial banking and securities business by prohibiting the affiliation of banks and any securities entity, including investment advisers and broker-dealers. Such affiliations generally have been permitted since the mid-1980s. A rollback of this authority presumably would require bank holding companies to spin off their proprietary mutual funds and securities brokerage businesses. At a hearing of the Senate Banking Committee on May 18, 2017, Treasury Secretary Mnuchin indicated that the Administration does not support the separation of banks from investment banks, but did not elaborate on what position the Administration would take with respect to its view of a 21st Century version of Glass-Steagall. | Important Links |
Date | ActionFinancial Institution Bankruptcy Act of 2017 (H.R. 1667) Sponsor: Rep. Marino (R-PA) (4 Co-Sponsors – 2 R, 2 D) House of Representatives passed by voice vote on April 5, 2017 Key ProvisionsThe Bill would establish a special resolution regime under a new subchapter of Chapter 11 of the Bankruptcy Code for bank holding companies and nonbank financial companies with at least $50 billion of assets (excluding stock brokers, commodity dealers, insurance companies and a range of depository institutions). It would authorize the formation of a bridge company to which certain assets and liabilities of the debtor could be transferred if a court found, among other things, that it was necessary to prevent serious adverse effects on financial stability in the U.S. The equity of the debtor would not be transferred to the bridge company and generally, the bridge company would not assume the debtor’s liabilities. The equity securities of the bridge company would be held by a special trustee and the proceeds of any sale of such securities would be held in trust pending distribution under an approved plan. The Act would entitle the FRB, SEC, OCC, CFTC and FDIC to be heard on any issue arising in a proceeding under the subchapter. Potential ImpactThe Bill would create an alternative to the Orderly Liquidation Authority provisions contained in Title II of the Dodd-Frank Act, which authorize the Secretary of the Treasury under extraordinary circumstances to appoint the FDIC as receiver for certain nonbank financial institutions under rules and procedures similar to the ones that apply to the receivership of an FDIC-insured depository institution. The Financial CHOICE Act, which was approved by the House Financial Services Committee in September 2016, contained provisions substantially identical to the Bill, but would have taken the additional step of repealing Title II. | Important Links |
Date | ActionMunicipal Finance Support Act of 2017 (H.R. 1624) Sponsor: Rep. Messer (R-IN) (18 Co-Sponsors – 12 D, 6 R) Senate version S. 828 Sponsor: Sen. Rounds (R-SD) (13 Co-Sponsors – 8 D, 5 R) Introduced in Senate April 5, 2017 Key ProvisionsThe Act would require the FRB, OCC and FDIC to amend their liquidity coverage ratio (LCR) rules to provide favorable treatment as level 2A liquid assets under the LCR rules to certain U.S. municipal obligations. Favorable treatment would be provided to obligations that qualify as liquid and readily marketable (as defined under the LCR rules) and that qualify as investment grade under the OCC investment securities rule. Potential ImpactUnder the FRB’s LCR rule certain municipal obligations qualify for treatment as level 2B liquid assets, which is significantly less favorable than level 2A treatment. Neither the OCC nor FDIC LCR rules treat municipal obligations as any form of high-quality liquid assets. The Act would improve the treatment of certain municipal obligations across all agencies and thereby enhance the attractiveness of qualifying municipal obligations to regulated entities that are subject to the LCR rules. | Important Links |
Date | ActionTaking Account of Institutions with Low Operation Risk Act of 2017 (“TAILOR Act”) (H.R. 1116) Sponsor: Rep Tipton (R-CO) (85 Co-Sponsors – 80 R, 5 D) House Committee on Financial Services: passed 39-21, October 21, 2017 House passed 247-169, March 14, 2018 Senate version S. 366 (substantially similar) Sponsor: Sen. Rounds (R-SD) (Co-Sponsors – 9 R) Key ProvisionsThe TAILOR Act would require regulatory agencies (FRB, OCC, FDIC, CFPB and NCUA) to fashion new regulatory actions (regulations, guidance and interpretations) to take into account the risk profile and business model of each type of institution or class of institutions subject to such actions. Agencies would be required to explain how they addressed this requirement in regard to new actions and to report to Congress. The agencies would also be required to conduct a look-back tailoring review of all regulations adopted after Feb. 16, 2010. Potential ImpactThere has been much discussion of the burdens that increased regulation imposes on depository institutions and the challenges this creates for smaller, less complex institutions. While the TAILOR Act would not amend existing laws to reduce the requirements they impose on institutions, it would seek to cause agencies to craft their regulatory actions in a manner that limits their impact and costs, as appropriate, based on the particular risk profile of an institution or class of institutions. | Important Links |
Date | ActionReturn to Prudent Banking Act of 2017 (H.R. 790) Sponsor: Rep. Kaptur (D-OH) (56 Co-sponsors – 54 D, 2 R) Key ProvisionsWould repeal provisions of the Gramm-Leach-Bliley Act (GLB Act) that permit financial holding companies to engage in a wide range of financial activities, including a full range of securities activities, insurance underwriting and merchant banking. Would reimpose Glass-Steagall Act restrictions on affiliations (including director and officer interlocks) between insured depository institutions and entities engaged in certain securities activities. Potential ImpactH.R. 790 would cause a dramatic rollback in the expanded activities authority the GLB Act provided to banking organizations nearly 20 years ago. As a result of the GLB Act securities activities are fully integrated into the operations of financial holding companies. Financial holding companies also have the authority to engage in a range of other activities not permitted to bank holding companies prior to the GLB Act. The possibility of reimposing some form of Glass-Steagall Act restrictions has been the subject of ongoing discussion since the 2008 Financial Crisis. A bill similar to H.R. 790 was introduced by Senators Elizabeth Warren and John McCain in 2015. The 2016 Republican and Democratic Party platforms both called for the enactment of a 21st Century version of Glass-Steagall. Treasury Secretary Mnuchin has indicated that the administration will be considering some form of a 21st Century version of Glass-Steagall. It remains to be seen whether some type of restrictions on banking organization activities will become an element of a broader financial regulation restructuring bill that might be acted on by both houses of Congress. | Important LinksSponsor's Remarks in the Congressional Record on Introduction |
Date | ActionFive bank regulatory agencies issue statement (“Interagency Statement”) clarifying role of supervisory guidance. Key ProvisionsThe Interagency Statement clarifies that, unlike a law or regulation, supervisory guidance does not have the force and effect of law and that the agencies do not take enforcement actions based on supervisory guidance. Rather, the purpose of supervisory guidance is to outline the agencies’ supervisory expectations or priorities and articulate the agencies’ general views regarding appropriate practices for a given subject area. In that respect, the agencies noted that supervisory guidance often provides examples of practices that the agencies generally consider consistent with safety and soundness standards. Perhaps most noteworthy, the agencies stated that they intend to limit the use of numerical thresholds or other “bright lines” in describing expectations in supervisory guidance. Where numerical thresholds are used, the agencies intend to clarify that the thresholds are exemplary only and not suggestive of requirements. Examiners will not criticize a supervised financial institution for a “violation” of supervisory guidance. The Interagency Statement was issued by the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Comptroller of the Currency and the Consumer Financial Protection Bureau. Potential ImpactThe Interagency Statement signals the agencies’ intention to move towards a more subjective approach in applying supervisory guidance that is more reliant on examiner judgement and less on bright line metrics. While it remains to be seen how the Interagency Statement will be applied in practice, one area that particularly bears watching is the impact on the Leveraged Lending Guidance issued by the agencies in 2013. Among other things, that guidance provides that a borrowers’ leverage level in excess of 6X EBITDA raises supervisory concerns for most industries. This metric has often been strictly applied by the regulators, which has had a chilling effect in some cases on banks’ ability to compete in the leveraged lending market. Several agency heads had previously expressed support for a less prescriptive approach to leveraged lending and the Interagency Statement is further evidence of the agencies’ intent to adopt a more flexible and risk-based approach not only to leveraged lending but also to other areas that are the subject of supervisory guidance. | Important Link |
Date | ActionOCC issues policy statement (“Policy Statement”) paving way for financial technology companies to apply for National Bank Charters. Key ProvisionsThe Policy Statement provides that the OCC will begin accepting applications from FinTech companies to apply for a National Bank Charter. Citing its authority under the National Bank Act and its implementing regulations, the OCC will allow FinTech companies that engage in one or more core banking activities, which include receiving deposits, paying checks or lending money, to apply for a National Bank Charter. The OCC will evaluate applicants based on criteria set forth in the OCC’s Licensing Manual supplement governing FinTech charter applications. Successful applicants will be subjected to the same or comparable prudential standards as full service national banks. Potential ImpactA special purpose national bank charter will allow many FinTech companies to be subject to a more uniform set of regulations and operate with more regulatory certainty. Currently, FinTech companies, such as marketplace lenders and technology companies in the digital asset space, may be subject to a variety of state licensing and other laws that can hamper the development of a national platform and be costly and difficult to maintain. At the same time, FinTech companies that become national banks will become subject to an extensive level of prudential regulation, such as capital, liquidity, financial inclusion and risk management requirements, which should be carefully evaluated by potential applicants as they consider whether a National Bank Charter fits within their business model. | Important Links |
Date | ActionOCC issues a notice (“Notice”) of proposed rulemaking seeking comments on the Volcker Rule’s implementing regulations (“Volcker Regulations”). Comments due by September 21, 2017. Key ProvisionsThe Notice requests public comment on the effectiveness of the Volcker Regulations and asks for areas of improvement. Specifically, the Notice focuses on: (i) the scope of entities subject to the final rule; (ii) the proprietary trading restrictions; (iii) the covered funds restrictions; and (iv) the compliance program and metrics reporting requirements. The OCC also is seeking input on ways to modify the Volcker Regulations so that banks with limited trading activities do not have to undertake the same efforts as banks with big trading operations. Potential ImpactThe Notice begins to raise the possibility that the Volcker Agencies will consider using their significant authority to modify the Volcker Regulations to address issues that both the regulators and banking organizations have identified. | Important Links |