Letter to the OCC on the Heightened Standards for Large Banks Proposal

To Whom it May Concern:

The American Bankers Association (ABA) appreciates the opportunity to respond to a proposed rulemaking (Proposal) by the OCC to amend its guidelines relating to heightened standards for insured national banks, insured Federal savings associations, and insured Federal branches (Guidelines). The OCC is proposing to increase the average total consolidated assets threshold (Asset Threshold) for applying the Guidelines from $50 billion to $700 billion.

ABA endorses the Proposal and concurs with the OCC's view that the Guidelines, as currently formulated, establish overly prescriptive standards for banking organizations' design and implementation of a risk governance framework and how boards of directors must carry out their oversight responsibilities.

Based on the experience of our members since the Guidelines were enacted in 2014, ABA recommends that the OCC completely rescind the Guidelines. The OCC's rationale for removing the Guidelines for banks between $50 billion and $700 billion is equally compelling as to those banks that would remain covered under the Proposal, and large banks will still be required to operate in a safe and sound manner. Moreover, OCC supervised financial institutions with bank holding companies exceeding $50 billion in total consolidated assets remain subject to the risk management standards established by the Board of Governors of the Federal Reserve System's (FRB) Enhanced Prudential Standards (12 C.F.R. part 252 (Regulation YY)). The OCC has authority to ensure banks are operating in a safe and sound manner and a full rescission of the Guidelines aligns with the OCC's objectives of ensuring banks are focusing on material financial risks by enabling banks to establish institution appropriate risk management frameworks.

If, however, the OCC determines it is necessary and appropriate to retain some aspects of the Guidelines, we recommend that the OCC rescind the Guidelines and then re-issue them in a revised form as nonbinding, principles-based supervisory guidance, aligning with the OCC's determination to focus supervisory and enforcement activities on material financial risks.

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