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International Review of OCC’s Supervision of Large and Midsize Banks

An International Review of OCC’s Supervision of Large and Midsize Banks, Recommendations to Improve Supervisor Effectiveness. December 4, 2013.

“The U.S. financial supervisory system in which the OCC operates is complicated. Commercial banks in the United States, particularly the large complex institutions, may be subject to multiple supervisory agencies including the Federal Reserve Board and district Federal Reserve Banks, the FDIC, state supervisors, the Consumer Financial Protection Bureau (CFPB), the U.S. Securities and Exchange Commission (SEC), and the U.S. Commodities Futures Trading Commission (CFTC). The mandates, objectives, and supervisory approaches of these various agencies may differ from those of the OCC. Supervisory responsibility for a given business line or activity may include several different agencies. Moreover, assignments of supervisory and regulatory responsibilities are still evolving as Dodd–Frank is implemented. Among other things, the supervisory authority of the Federal Reserve System (FRS), which has traditionally been responsible for the supervision of financial holding companies, has now been increased to include indirectly, some aspects of large national banks. The responsibility for supervision and regulation of consumer compliance is now predominantly with the CFPB for institutions over $10 billion. The FDIC has also been given additional powers with respect to resolving troubled banks outside of a formal bank receivership.  Given the complexity and overlapping responsibilities of the different agencies, each agency needs to have a well-defined mandate and clear priorities with respect to its supervisory responsibilities. There must be effective information sharing among the agencies to prevent duplication of efforts and avoid inconsistent messages being conveyed to the institutions. Because multiple agencies have the authority to conduct examinations and to require reports from institutions, good coordination both at the examination level, as well as at the policy level, is essential to avoid imposing an unnecessary burden on institutions. A common and shared view across all of the involved agencies of the overall financial condition, risks, and the significance of any deficiencies in the operations of the institution (at both a solo and consolidated level) is also important so that management of the institution has a clear idea of its priorities and the expectations of its supervisors…”


December 4, 2013

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