Through federal charters and licenses, the Office of the Comptroller of the Currency (OCC) provides much value for national banks, federal savings associations, and federal branches and agencies of foreign banks. We continue to refine, update, and align the OCC’s supervisory approach to enrich the agency’s value to the American public as well as provide value-added supervision to banks.
Value-added supervision provides expert assessment of the health of a bank, its governance, and risk management, and provides insight that can only be gained from a broad national view of the marketplace paired with in-depth understanding of the local environment. Value-added supervision helps bankers manage their institutions more effectively through access to examiners; legal, economic, and policy experts; and other resources.
We are also working to enhance the value of the federal charter by, for example, promoting responsible innovation in the federal banking system. Innovations in the financial marketplace are changing how consumers interact with traditional banks and new financial service providers. Innovation offers consumers more tailored, responsive, and automated tools that support payments, promote savings, smooth income volatility, and provide personalized credit solutions.
The OCC’s initiatives include identifying ways to promote and support banks interested in engaging in responsible innovation by partnering with financial technology (fintech) and other nonbank companies in a safe and sound manner, reducing costs and increasing earnings, and serving their customers more effectively.
When the federal banking system’s condition is healthy and vibrant, it can power growth and prosperity for consumers, businesses, and communities across the country. Our role is to strike the right balance between prudent regulation and sound economic opportunities. The system works best when our appropriate supervision ensures safety, soundness, and regulatory compliance, but avoids imposing unnecessary burden or fostering an environment so risk averse that banks fail to meet the financial and credit needs of their customers.
Our system must also protect the people it is meant to serve. As such, I took action this year to highlight the negative effects of the Consumer Financial Protection Bureau’s (CFPB) arbitration agreements rule. Eliminating this costly and burdensome regulation reined in bureaucracy and halted an inadvisable regulatory action. It was a victory for consumers and small and midsize banks across the country because it stopped a rule that likely would have significantly increased the cost of credit for hardworking Americans and taken away a valuable tool for resolving differences between banks and their customers. The action preserved consumer choice among financial providers that offer services with arbitration clauses and those that do not.
Today, banks in the federal banking system are well positioned for growth because of their improved financial condition, the value they receive from the federal charter, and the OCC’s role as their prudential supervisor. This report reflects my view of the condition of the federal banking system, as well as an overview of how that system is poised to benefit from efforts to reduce regulatory burden and promote economic opportunity.