As the Office of the Comptroller of the Currency considers changes to banks’ recovery planning requirements, they should tailor such requirements to banks’ distinctive business models and risk profiles, the American Bankers Association and Bank Policy Institute said today in a joint letter.
The OCC last month proposed revising its guidelines establishing standards for recovery planning for national banks with more than $100 billion in assets, down from the current threshold of $250 billion. The proposal would also incorporate a testing standard for recovery plans and clarify the role of nonfinancial risk—including operational and strategic risk—in recovery planning.
In their letter, the associations said the OCC should replace the proposed “validation” testing standard, which would be impracticable to implement, with a flexible and risk-based “capabilities assessment” standard; that it should revise the proposal expressly recognize the fundamental distinction between the roles of financial and nonfinancial risks in recovery planning; and that it should revise and clarify various aspects of the proposed compliance timelines.
“We also urge the OCC not to further expand recovery planning requirements, whether by reducing the asset threshold below $100 billion or otherwise,” they said.
