Acting comptroller of the currency: Here are ways to reduce regulatory burden

It’s a good time to take stock of our financial system

Acting Comptroller of the Currency Keith Noreika sat before the Senate Committee on Banking, Housing, and Urban Affairs on Thursday to discuss ways to promote economic growth and reduce regulatory burden, expanding on comments he made shortly after accepting the position.

During his opening remarks before the committee, Noreika focused on two issues. The first issue involved reducing regulatory redundancy that results in waste and hinders economic growth. The second related to tailoring regulation to fit the size, complexity and risk of regulated institutions to prevent over-regulating or under-regulating particular entities and activities, the OCC explained.

Even though Noreika hasn’t been in the position long, he made clear in his first speech to Office of the Comptroller of the Currency staff that now is a good time to take stock of the rules implemented and actions taken after the financial crisis.

“Regulation doesn’t work when it chokes investment, and banks can’t fulfill their public purpose if they can’t support their local customers, business, and communities,” said Noreika in the introduction speech.

“At a very high level, we should seek opportunities to eliminate burden that does not make sense, while recommending and championing changes to legislation and regulation where it promotes the health and vitality of the federal banking system,” he continued.

Noreika's call for change echoed similar comments from other top Trump administration officials. The U.S. Treasury Secretary Steven Mnuchin recently unveiled the much-anticipated report on the department's assessment of the financial market as ordered by President Donald Trump earlier this year.

And similar to Noreika’s call for change, Mnuchin’s report detailed potential executive actions and regulatory changes that can be immediately undertaken to provide much-needed relief to the financial system.

Now nearly two months later, in a speech before the Senate Banking Committee, Noreika gave a list of ideas on how to address these financial issues.

Noreika’s full written testimony went more in-depth, but for time’s sake, he highlighted four ideas in his oral testimony before the committee on Thursday:

1. Streamline smaller, less complex bank regulation

Congress could streamline the regulation of smaller, less complex bank holding companies by amending the law so that when a small depository institution constitutes the majority of its holding company’s assets, the federal regulator of the depository institution would have sole examination and enforcement authority for the holding company as well.

2. Eliminate 19th century impediments

Congress could eliminate 19th century impediments for smaller, less complex national banks to operate without a holding company by allowing these banks to have the same access as state banks to the publicly traded markets.

3. Barriers to entry for community banks

Congress could eliminate a statutory barrier to entry for new community banks by allowing de novo banks to obtain deposit insurance automatically when chartered by the OCC.

4. Clarify the Volcker Rule

A bipartisan consensus is emerging that the Volcker Rule needs clarification and recalibration to eliminate burden on banks that do not engage in covered activities and do not present systemic risks. Various options exist that can be pursued at both the Congressional and agency levels. I hope that we, the agencies, can move forward on seeking public comment on this topic soon

“During my service, I look forward to engaging with my colleagues, stakeholders, and Congress to initiate a robust dialogue and explore opportunities to foster economic growth. For our part, we at the OCC will move ahead to do what we can within our current authorities to foster economic growth and opportunity,” Noreika said. 

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