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Speaking at the sixth interagency outreach meeting on The Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) of 1996, Comptroller of the Currency Thomas J. Curry outlined specific legislative proposals that have been introduced to reduce regulatory burden on smaller banks.
The series of outreach meetings began last December 2 in Los Angeles, and the meetings have been hosted by the Federal Reserve System, the OCC, and the FDIC, to discuss their collective effort to reduce regulatory burden placed on insured deposit institutions by the EGRPRA. The meetings are part of the EGRPRA review to allow interested parties to comment on regulatory burden directly to the government agencies.
In the sixth and latest outreach meeting, which took place on December 2 in Washington, D.C.—the one-year anniversary of the first outreach meeting—Curry discussed two specific legislative proposals. First, the House voted in October to raise the asset threshold for small banks to $1 billion and is currently included in another funding measure that is likely to be signed by the President, Curry said. Raising the asset threshold to that level would qualify an additional 600 additional banks for the 18-month examination cycle.
“That would not only reduce the burden on those well-managed institutions, it would allow the federal banking agencies to focus our supervisory resources on those banks and thrifts that present capital, managerial, or other issues of significant supervisory concern,” Curry said.
Curry said the second proposal would provide federal savings associations with greater flexibility to expand their business model without changing their governance structure.
“It’s important that federal savings associations, like other businesses, have the flexibility to adapt to changing economic and business environments to meet the needs of their communities, and they shouldn’t have to bear the expense of changing charters in order to do so,” Curry said. “We have recommended authorizing a basic set of powers that both federal savings associations and national banks can exercise, regardless of their charter, so that savings associations can change business strategies without moving to a different charter.”
This second proposal recently passed in the House Financial Services Committee, and Curry said he hopes it soon goes for a full House vote.
While Curry said these legislative proposals are meaningful steps taken toward achieving relief from regulatory burden for community banks, he admitted there are other ways to make smaller institutions financially viable.
“One especially promising approach involves collaboration, which was the subject of a paper we issued recently,” he said. “By pooling resources, smaller institutions can trim costs and serve customers that might otherwise lie beyond their reach.”
