Bank Regulation

Interim OCC Chief Wants More Individual Discretion For Bank Examiners

While a top U.S. bank regulator has been working to ensure that examiners go easier on the institutions they inspect, he pointed out that those changes will not happen overnight.

According to news from Reuters, bankers at institutions regulated by the Office of the Comptroller of the Currency (OCC) have said they have not experienced much change from examiners. But acting Comptroller of the Currency Keith Noreika said the adjustments are being made.

“I’ve spent a lot of time in the field, and we are starting to get a sense that examiners are listening,” said Noreika, who announced last week that he will resign from his role after Congress confirms President Donald Trump’s choice for a permanent comptroller.

The OCC is “at the front end of this,” he added. “I think we’ll see the fruits of that later.”

Some of the financial institutions regulated by the OCC include JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley and Wells Fargo, as well as a large number of regional and community banks across the country. Examiners inspect loan-level data on balance sheets, as well as firm-wide risk-taking and cultural issues.

During the Obama administration, examiners toughened up on big banks regarding issues like leveraged lending and exposure to energy and auto-loan defaults. But the Trump Administration has pledged to cut that regulatory red tape.

Noreika has helped the President Trump deliver on his promise, opening up the Volcker rule for public comment, the first step before changing the regulation. He expects a proposal for Volcker revisions to be ready by spring.

In addition, Noreika believes bank examiners should be able to use their own judgment rather than simply enforce rules handed down by lawmakers and bureaucrats.

“It has the effect of undermining bank regulators’ ability to do their job,” he said.

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