OCC Updates Guidance on Matters Requiring Attention
On October 30th, the Office of the Comptroller of the Currency (“OCC”) published revised policy and procedures for how it manages Matters Requiring Attention (“MRA”) resulting from its examination of supervised institutions. The updated MRA guidance emphasizes timely detection and sustainable corrective action of deficient bank practices before they affect the bank’s condition. The updated guidance standardizes MRA terminology, format, follow-up, analysis, and reporting across the agency. The guidance addresses recommendations from the international peer review of the OCC’s supervision of large and midsize institutions, which was conducted last year. The bulletin released by the OCC highlights changes to policy and procedures regarding MRAs, which have been incorporated into the “Bank Supervision Process,” “Large Bank Supervision,” “Community Bank Supervision,” and “Federal Branches and Agencies Supervision” booklets of the Comptroller’s Handbook and internal guidance. OCC Press Release.
National Survey of Unbanked and Underbanked Households
On October 29th, the Federal Deposit Insurance Corporation (“FDIC”) released the results of the 2013 FDIC National Survey of Unbanked and Underbanked Households. The survey indicates that the proportion of unbanked households declined from 8.2 percent in 2011 to 7.7 percent in 2013, while the share of underbanked households remained essentially unchanged at 20.0 percent. The decrease in the proportion of the unbanked can be explained by improving economic conditions and the changing demographic composition of households. New to the 2013 survey are questions related to how consumers access their bank accounts. Nearly two out of three households primarily used bank tellers or on-line banking when accessing their accounts. These banking methods, along with ATMs, were also the primary methods underbanked households used to access their account. Notably, underbanked households, however, were more likely to use mobile banking devices relative to other groups: 29.2 percent of underbanked households used mobile devices to access their account compared to 21.7 percent of fully banked households. FDIC Press Release.
Federal Reserve Board Issues New Rules and Policy Statement on Financial Market Utilities
On October 28th, the Federal Reserve Board (“Board”) issued a final rule that amends the Regulation HH risk-management standards for financial market utilities that have been designated as systemically important by the Financial Stability Oversight Council and for which the Board has standard-setting authority. The Board also announced final revisions to part I of the Federal Reserve Policy on Payment System Risk, which is applicable to financial market infrastructures more generally, including those operated by the Federal Reserve Banks. Key amendments to the rule and revisions to the policy include establishing separate standards to address credit risk and liquidity risk, new requirements on recovery and orderly wind-down planning, a new standard on general business risk, a new standard on tiered participation arrangements, and heightened requirements on transparency and disclosure. The final rule and policy are effective December 31, 2014. Institutions subject to the rule or policy will be expected to be in compliance with the requirements by the effective date. Later compliance dates apply to several new or heightened requirements. Federal Reserve Board Press Release.
OCC Northeastern District Loan Growth
On October 28th, the OCC reported improving conditions among community national banks and federal savings associations (“FSAs”) supervised by the OCC’s Northeastern District. Loan growth among banks and FSAs in the 16 states and Washington, D.C. comprising the district more than doubled to 4.4 percent as of June 30, 2014, from 2 percent a year earlier. While the OCC sees overall conditions improving, the agency noted that strategic vulnerabilities exist as banks and FSAs focus on loan growth, higher profit margin products and services, and cost cutting measures and initiatives to improve earnings. Approximately 12 percent of district institutions have high strategic risk, while 43 percent of the district’s banks have increasing strategic risk. OCC Press Release.
Mutual Savings Association Committee to Meet
The OCC’s Mutual Savings Association Advisory Committee will hold a public meeting on November 18, 2014 in Washington, D.C. The Committee advises the Comptroller of the Currency about mutual savings associations and assesses the current condition, regulatory changes that may ensure their health and viability, and other issues affecting these institutions. Public statements may be submitted to the Committee on or before November 14, 2014. OCC Press Release.
The OCC will host a workshop in Phoenix, Arizona on December 1-3, 2014 for directors of national community banks and federal savings associations. “Mastering the Basics: A Director’s Challenge” is a workshop designed exclusively for directors of institutions supervised by the OCC and provides practical information on the roles and responsibilities of board participation. OCC Press Release