Letter to the OCC on the Proposed Rescission of Guidelines Establishing Standards for Recovery Planning

Ladies and Gentlemen:

The American Bankers Association is pleased to support the proposal (Proposal) of the Office of the Comptroller of the Currency (OCC) to rescind its guidelines, codified at 12 CFR, Part 30, Appendix E, which established recovery planning standards for certain national banks, insured Federal savings associations, and insured Federal branches of foreign banks (Guidelines). As discussed in more detail below, ABA believes that this rescission will reduce regulatory burdens and inefficiencies without compromising the safety and soundness of institutions to which the guidance applies, whose business continuity plans and related preparations have always been subject to regular, detailed reviews through the examination process.

The Guidelines, adopted in 2016 and subsequently amended to change the scope of application, currently applies to "covered banks" having average total consolidated assets equal to or greater than $100 billion. In addition, a bank that later becomes a covered bank should generally be in compliance within 12 months of its assets’ crossing the $100 billion threshold. OCC also has the option to deem any other bank a covered bank if it is highly complex or otherwise presents a heightened risk as to warrant the application of the Guidelines.

As OCC notes in the Proposal, the Guidelines cause covered banks to direct significant resources towards developing responsive documentation, and in OCC’s experience, much of this documentation is scenario-dependent and/or conjectural and, therefore, is likely to be irrelevant when a covered bank faces stress. Furthermore, OCC acknowledges that covered banks are well attuned to indicia of stress without regard to the presence of the recovery planning triggers and escalation procedure expectations of the Guidelines.

Management of covered banks address the issues at which the Guidelines are directed as an integral part of bank risk management and business continuity. ABA agrees with OCC’s conclusion that proper risk management should be a dynamic process that involves real-time responses to the facts and circumstances of a stress event or periods of stress. For these reasons, ABA supports rescission of the Guidelines to improve the balance between regulatory and supervisory burden and prudent/flexible risk management that will be better able to respond as stress circumstances arise.

OCC also requests comment on whether it should codify the contingency funding plan expectations set forth in the Interagency Policy Statement on Funding and Liquidity Risk Management and the Addendum to the Interagency Policy Statement on Funding and Liquidity Risk Management: Importance of Contingency Funding Plans. Consistent with OCC's stated objectives of reducing regulatory burdens and inefficiencies and promoting flexible, situation-appropriate responses to stress situations, ABA recommends against codification.

ABA notes also that the annual processes covered banks carry out under the Guidelines requires significant staff time and governance processes. To achieve the Proposal’s intended burden reduction and permit covered banks’ own risk management procedures to operate in an efficient, firm-wide coordinated manner, OCC should finalize the Proposal as soon as practicable.

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Thank you for your attention to this matter. Should you have any questions, please do not hesitate to contact the undersigned at [email protected].

Sincerely,
Hu A. Benton
Senior Vice President and Policy Counsel