Washington DC | Dallas TX | Irvine CA
202.628.2000

WBK Industry News - Federal Regulatory Developments

OCC Amends Enforceable Guidelines Related to Recovery Planning Standards by Certain Large Financial Institutions

The Office of the Comptroller of the Currency (OCC) recently amended its enforceable guidelines relating to recovery planning standards for insured national banks, insured federal savings associations, and insured federal branches (Guidelines) by increasing the average total consolidated assets threshold for the Guidelines’ application from $50 billion to $250 billion.  The OCC also amended the Guidelines to decrease the time within which a bank should comply with the Guidelines after the bank becomes subject to them from 18 months to 12 months.

In response to the 2008 financial crisis, the OCC published the Guidelines on September 29, 2016.  The Guidelines established minimum standards for recovery planning by insured national banks, insured federal savings associations, and insured federal branches of foreign banks with average total consolidated assets equal to or greater than $50 billion.  Among other things, the Guidelines state that a recovery plan should identify: (1) quantitative or qualitative indicators of the risk or existence of severe stress that reflect a covered bank’s particular vulnerabilities; and (2) a wide range of credible options that a covered bank could undertake in response to the stress to restore its financial strength and viability.  According to the OCC, based on its experience to date in reviewing recovery plans, it is appropriate to raise the threshold for the Guidelines to focus on the larger, more complex, or potentially more interconnected institutions that present greater risk to the banking system.  The OCC stated that the revised Guidelines should provide regulatory burden relief to smaller, less complex institutions.  By increasing the average total consolidated assets threshold at which the Guidelines apply to banks from $50 billion to $250 billion, the OCC reduced the number of covered banks to which the Guidelines apply from 25 to 8, based on the most recent data available.

The revised Guidelines become effective on January 28, 2019.  A copy of the amendments is available here.