Letter to the OCC, Board and FDIC on the Joint Interim Final Rule re: Expanded Examination Cycle

Ladies and Gentlemen:

The American Bankers Association (ABA) appreciates the opportunity to comment on the joint interim final rule and request for comment issued by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC) (collectively, the Agencies) implementing section 903 of the 21st Century ROAD to Housing Act. The interim final rule increases to $6 billion the asset threshold for certain supervised institutions eligible for an 18-month on-site examination cycle. The rule also makes conforming revisions to the Agencies' regulations governing examination cycles for U.S. branches and agencies of foreign banks, consistent with the International Banking Act of 1978.

ABA strongly supports the Agencies' interim final rule implementing the 21st Century ROAD to Housing Act by expanding community banks' eligibility for extended examination cycles. This targeted change appropriately aligns supervisory requirements with institutional size and risk, preserving safety and soundness while reducing unnecessary regulatory burden. We appreciate the Agencies' continued commitment to tailoring regulatory requirements in a manner that enables banks to better serve their customers and communities.

While ABA strongly supports the interim final rule, we encourage the Agencies to adopt two enhancements as they finalize it. First, the Agencies should clarify whether the extended examination cycle applies to de novo banks during their first three years of operation. Second, the Agencies should provide guidance identifying early warning indicators, such as rapid asset growth, that may justify more frequent examinations of otherwise eligible institutions.

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