The Office of the Comptroller of the Currency today announced several actions to reduce the regulatory burden on community banks by tailoring the frequency and scope of bank examinations to the risk presented by bank operations, and by focusing examinations on material financial risk.
The OCC defines community banks as financial institutions with less than $30 billion in assets. According to an announcement, today’s actions are part of a larger effort by the agency “to tailor its regulatory and supervisory frameworks to minimize burden for its regulated institutions and promote economic growth.” They are:
- Starting Jan. 1, 2026, the OCC will remove all examination requirements set by agency policy rather than regulation or statute. Instead, “OCC examiners will tailor their examination of a community bank’s specific activities in light of its size, complexity and risk profile, with heightened focus on material financial risks.”
- The OCC will no longer examine banks based on the procedures and standards in the “Retail Nondeposit Investment Products” booklet of the Comptroller’s Handbook. The booklet defines RNDIPs to include any product with an investment component that is not insured by the FDIC. Common RNDIPs include mutual funds, exchange-traded funds, variable and fixed rate annuities, equities and fixed income securities.
- The OCC will not provide negative supervisory feedback to a bank solely for the frequency or scope of the model validation that the bank used to determine its risk exposures.
- The OCC is proposing to eliminate the Fair Housing Home Loan Data System, which was created in 1979 to monitor national bank compliance with the Fair Housing Act and the Equal Credit Opportunity Act. In a notice in the Federal Register, the OCC said the regulation is obsolete and largely duplicative of other legal authorities that require national banks to collect and retain certain information on home loan applications.
- The OCC is proposing to ease its licensing requirements by creating a new definition of “covered community bank or covered community savings association.” The agency’s current licensing requirements generally apply equally regardless of the size of the institution. Institutions that apply for a license under the proposed definition can expect expedited or reduced filing procedures.
The OCC added that it is continuing to work on other reforms that could benefit community banks, including proposals adjusting the community bank leverage ratio framework and a simplified strategic plan process to comply with the Community Reinvestment Act.
In a statement, ABA President and CEO Rob Nichols said the OCC’s policy actions reflect the agency’s strong commitment to regulatory tailoring and risk-based supervision for the nation’s community banks.
“The guidance and proposed rulemakings will help ensure that individual institutions are subject to supervision that is appropriate to the risks presented by their products and services and that regulators keep their focus on material financial risks that directly affect the safety and soundness of the nation’s banks and our financial system,” Nichols said.
