Letter to the OCC on Community Bank Licensing Amendments

Dear Sir or Madam,

The American Bankers Association (ABA) appreciates the opportunity to comment on the Office of the Comptroller of the Currency's (OCC) proposal to amend its licensing regulations to provide expedited and reduced filing requirements for certain activities and transactions involving community national banks and community Federal savings associations. ABA strongly supports this proposal and commends the OCC for its efforts to reduce regulatory burden while maintaining the integrity of the supervisory framework.

The proposal reflects a thoughtful approach to tailoring regulation based on risk and complexity. Community banks, which the proposal defines as institutions with less than $30 billion in total assets that meet well-capitalized standards, engage in activities that pose significantly lower systemic risk compared to larger, more complex institutions. By extending expedited and reduced filing procedures to these banks, the OCC acknowledges that a one-size-fits-all regulatory model is neither efficient nor necessary. This recognition is critical to ensuring that regulation remains proportionate and does not impose undue costs on institutions that serve as lifelines to local economies.

The streamlined licensing processes enabled by this proposal will allow community banks to allocate resources more effectively, focusing on customer service and innovation rather than navigating unnecessary administrative hurdles. Faster approvals for routine transactions such as branch relocations, capital changes, and operating subsidiary activities will enable these institutions to respond promptly to market needs. By reducing delays and simplifying procedural requirements, the OCC will help ensure that community banks can remain agile and competitive in serving their customers and communities.

Clarifying the standard for what constitutes a significant adverse comment will enhance transparency and predictability in the licensing process. This improvement reduces uncertainty that can otherwise delay sound business decisions and provides institutions with greater confidence in the fairness and consistency of OCC review. By defining when a concern is considered significant, the OCC ensures that expedited review remains efficient while preserving appropriate safeguards, ultimately strengthening the ability of community banks to compete and thrive in a rapidly evolving financial landscape.

While ABA fully supports the proposal, we encourage the OCC to remain flexible in its implementation and ensure that the $30 billion asset threshold remains meaningful over time. Regulatory thresholds that remain fixed in nominal terms inevitably erode in relevance as the economy grows, creating unintended consequences such as burdening institutions never meant to be captured, discouraging organic growth, and diluting supervisory resources. To avoid this regulatory "drift," ABA recommends that the OCC index the $30 billion threshold to nominal GDP.

Indexing is a low-cost, high-impact reform that improves transparency, reduces arbitrary burden, and ensures that regulatory distinctions continue to reflect size, complexity, and risk. Linking the threshold to nominal GDP will create a durable framework that adapts to economic realities and prevents the threshold from becoming an artificial barrier to growth. We also urge the OCC to consider transition periods for institutions crossing the indexed threshold to mitigate cliff effects and support orderly growth.

In conclusion, ABA commends the OCC for advancing a proposal that promotes proportional regulation and operational efficiency without compromising safety and soundness. We urge the OCC to finalize these amendments promptly to provide certainty and allow institutions to align their compliance and strategic planning accordingly. Thank you for your attention to this matter. Should you have any questions, please do not hesitate to contact the undersigned.

Thank you for your attention to this matter. Should you have any questions, please do not hesitate to contact the undersigned at [email protected] or (202) 663-5353.

Sincerely,
Tyler Mondres
Senior Director