OCC Rescinds Recovery Planning Guidelines for Large Banks

The Office of the Comptroller of the Currency ("OCC") issued a final rule rescinding its recovery planning guidelines for large insured banks and savings associations.

The final rule removes Appendix E from OCC Rule Part 30 ("Safety and Soundness Standards"). Previously, the guidelines required covered institutions—defined as those with $100 billion or more in average total consolidated assets—to develop and maintain formal recovery plans. These plans were required to include quantitative and qualitative indicators of severe stress, credible options to restore the institution's financial strength and viability, and specific escalation and communication procedures.

The OCC highlighted that the rescission is part of an ongoing initiative to identify and eliminate unnecessary regulatory burdens. The agency concluded that the significant resources expended by covered banks to create formal recovery plans were not justified, observing that the resulting documentation is inherently "scenario-dependent or otherwise conjectural" and therefore "likely to be irrelevant or of limited utility when a covered bank faces stress." The OCC also announced that it declined to codify separate contingency funding plan expectations at this time, though it reiterated its expectation that all banks maintain formal contingency funding plans to address adverse conditions.

The OCC stated that eliminating the guidelines allows bank management to prioritize material financial risks over procedural documentation and non-financial risks. The agency noted that proper risk management should be a "dynamic process," and that freeing institutions from prescriptive frameworks restores management's ability to tailor risk strategies to their specific business models, structures, and real-time circumstances without compromising safety and soundness. The OCC estimated the final rule will result in approximately $20 million in annualized cost savings for covered banks.

The final rule is effective 30 days after publication in the Federal Register.