Office of the Comptroller of the Currency Guidance and Rulemakings Aim to Streamline Bank Oversight

On October 6, the Office of the Comptroller of the Currency (OCC) announced new measures aimed at reducing regulatory burdens on community banks and optimizing supervisory resources, according to an article by Goodwin Law. 

The OCC plans to shift from prescriptive examination schedules to a more flexible, risk-based supervision model, concentrating oversight on material financial risks rather than routine reviews. The agency will also discontinue using the Retail Nondeposit Investment Products booklet’s specialized exam procedures for community banks, opting instead for the broader Community Bank Supervision standards.

Goodwin reports that the Office of the Comptroller of the Currency simultaneously issued guidance allowing community banks to tailor model risk management practices to their specific operations and risk profiles. Notably, the OCC clarified that annual model validations are not required and that reasonable, risk-based validation decisions will not be penalized. 

The OCC also proposed rescinding 12 CFR 27, which governs the Fair Housing Home Loan Data System, calling it obsolete and duplicative. A related proposal would expand eligibility for expedited licensing procedures to institutions with assets under $30 billion that are well-capitalized and not under enforcement orders.

On October 7, Goodwin notes, the OCC and FDIC jointly proposed defining “unsafe or unsound practice” under the Federal Deposit Insurance Act to limit enforcement ambiguity and restrict the issuance of matters requiring attention (MRAs). A separate joint proposal aims to define “reputation risk” and prohibit regulators from penalizing institutions solely based on customers’ political, social, or religious affiliations.

For compliance officers, these developments highlight a regulatory shift toward risk-based supervision and clearer enforcement boundaries. Comments on the proposed rules are due within 30 or 60 days of their publication in the Federal Register.