Letter to the OCC on the Proposed Rule Regarding Permissible Bank Premises

Chief Counsel’s Office
Office of the Comptroller of the Currency
400 7th Street, SW
Suite 3E–218
Washington, DC 20219

To Whom it May Concern:

The American Bankers Association (ABA) appreciates the opportunity to comment on the OCC’s National Bank and Federal Savings Association Premises proposal (Proposal). This Proposal is the outgrowth of a recent OCC “review of outdated or otherwise unnecessary regulatory provisions” that sought to “clarify or revise requirements imposed on national banks.” Following last year’s amendments to 12 C.F.R. part 7, the OCC decided to solicit comments on changing Section 7.1000, which will soon be redesignated as Section 7.1024. For reasons outlined in further detail below, ABA does not support this Proposal and believes that the OCC should withdraw it.

Currently, national banks and Federal savings associations (banks) are subject to the limitations found in Section 7.1000, which only permit banks to invest in real estate necessary for the transaction of their business. Among other things, banks may own and occupy their own premises, real estate intended for future expansion, and parking facilities. Notwithstanding these limits, both OCC and court precedent have long acknowledged what has become known as the excess capacity doctrine, which draws on the incidental powers of national banks and allows banks to make full economic use of the property they are permitted to hold to avoid economic loss or waste.

In essence, this Proposal seeks to set a new, bright-line minimum percentage of bank occupancy for the excess capacity doctrine as applied to bank premises. The Proposal contemplates requiring more than 50 percent of each building or severable piece of land to be used by bank persons, which notably includes facilities operated by third parties to provide amenities for and services to bank persons or otherwise facilitate bank business operations.

Download the comment letter to read the full text.