FRB and OCC Officials Detail Regulatory and Supervisory Actions

Federal Reserve Board ("FRB") Vice Chair for Supervision Randal K. Quarles and OCC Comptroller Joseph M. Otting described certain supervisory and regulatory actions to support "consumers, households and businesses" and ongoing activities to strengthen the banking system.

At a hearing held remotely by the Committee on Banking, Housing, and Urban Affairs, Mr. Quarles highlighted certain regulatory and supervisory efforts in response to the COVID-19 pandemic, including:

  • advising institutions on how to work "constructively" with their customers by offering services such as responsible loan modifications and small-dollar credit;

  • making adjustments to specific compliance and documentation requirements to secure the continued flow of credit while assuring that crucial consumer protections are maintained;

  • delaying the implementation of new regulatory measures and temporarily relocating supervisory activities to off-site monitoring for purposes of reducing operational encumbrances and allowing firms to focus on the needs of their customers;

  • shifting capital requirements to enable firms to utilize balance sheets to more effectively offer support to customers and the "functioning of financial markets"; and

  • supporting the ability of banks to meet customer requests by increasing discount window availability to meet liquidity needs and decreasing reserve requirements to zero.

In written testimony, Mr. Otting described OCC actions taken since the outbreak of the coronavirus, and also highlighted generally several measures taken by the OCC to strengthen the federal banking system. The latter include:

  • strengthening and modernizing the Community Reinvestment Act ("CRA") by jointly issuing a proposal with the FDIC to amend CRA regulations and reviewing comments received on the proposal;

  • promoting small-dollar lending consistent with a 2018 OCC bulletin setting forth principles for financial institution that offer such loans. These include (i) that bank products are consistent with safe and sound banking, fair treatment of customers, and compliance with applicable regulations, (ii) the effective management of product risks and (iii) underwriting credit products on the basis of reasonable and practical policies and guidelines;

  • streamlining Bank Secrecy Act and Anti-Money Laundering ("BSA/AML") regulations, including the OCC's joint effort with Federal Financial Institutions Examination Council agencies in amending and revising the BSA/AML examination manual and working to identify methods of reducing "unnecessary burdens" posed by the regulations; and

  • supporting responsible innovation by facilitating solution-centered discussions between banking organizations and FinTech companies.

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