OCC Overhauls Bank Supervision Framework to Prioritize Material Financial Risks
The Office of the Comptroller of the Currency (OCC) has revised its bank supervision and enforcement framework, directing examiners to focus on material financial risks and substantive legal violations rather than minor procedural deficiencies.
The OCC released two updated policy manuals alongside a joint final rule with the Federal Deposit Insurance Corporation. The proposed rules divide legal violations into 'substantive' and 'technical' categories based on potential customer harm.
Under the new framework, examiners will consider the financial risk, legal violation, and institution's size and complexity when deciding whether formal action is warranted. Larger institutions face greater supervisory expectations due to their operations and failures posing broader financial risks.
The changes aim to improve consistency in bank supervision and enforcement, with Comptroller Jonathan Gould describing it as a return to 'risk-based supervision.'