The US was founded with three federal branches of government, but when the Interstate Commerce Commission was created in 1887 to constrain railroad rates, the “fourth branch” of government — regulatory agencies — was arguably born. New agencies were since formed, particularly so with the passage of the New Deal, with the types of authority that had originally been intended for Congress. A compromise was made in 1946 with the first regulatory reform bill, the Administrative Procedure Act. The legislation mandated that any regulations promulgated by a federal agency must at least be grounded in statutory law and that a public notice and comment period be established for certain types of rules, to be documented in the Federal Register for greater accountability.Those standards are alive and well today, with regulatory agencies churning out new or revised rules regularly. In March, the Office of the Comptroller of the Currency issued two final rules intended to reduce undue regulatory burden on community banks while maintaining core safety-and-soundness and fair-lending expectations.“Unfortunately, over the last couple of decades, regulatory burdens coupled with the proliferation of a one-size-fits-all supervisory framework have cut the number of community banks across our nation in half,” said Comptroller of the Currency Jonathan V. Gould. “I’ve prioritized addressing the challenges of community banks by streamlining regulation and tailoring supervision. Today’s actions execute on meaningful reforms as we continue working to help these institutions best serve the American people on a level playing field.”Streamlined Licensing Requirements for Community Banks Under the newly defined “covered community bank” or “covered community savings association,” banks can now apply for a broad range of corporate licenses using all currently available expedited or reduced filing procedures, according to the OCC’s amended licensing rule. To qualify, an institution must have less than $30B in total assets, not be affiliated with a depository institution or foreign bank with $30B or more in assets, be well capitalized, and not be subject to certain formal enforcement actions requiring improvement in financial condition. The OCC also retains discretion to determine that an otherwise qualifying institution is ineligible for expedited treatment.For qualifying institutions, the changes should reduce filing burden and, in some cases, shorten review timelines for routine, lower-risk transactions, including:
- Certain business combinations, including mergers where the resulting institution remains under $30B, may qualify for streamlined or expedited review
- Branch openings, relocations, and some other structural changes
- Capital changes, certain investments, and some subsidiary/organizational moves
For qualifying institutions, this boils down to shorter applications, fewer exhibits, and less back and forth with the OCC for routine, low-risk actions. These changes can also lead to faster regulatory decisions, so boards and management can plan M&A, branch strategies, and restructurings with more predictable timelines.
The OCC’s amended rule reduces baseline licensing and transactional friction for well-run community banks, which benefits incumbents just as much as any future de novos.The rule specifically streamlines review for certain business combinations when the resulting institution remains under $30B and meets the “covered community bank” standard.
Practically, that means:
The OCC’s amended rule reduces baseline licensing and transactional friction for well-run community banks, which benefits incumbents just as much as any future de novos.The rule specifically streamlines review for certain business combinations when the resulting institution remains under $30B and meets the “covered community bank” standard.
Practically, that means:
- Easier execution of in-market mergers or tuck-in acquisitions by healthy community banks
- Smoother internal reorganizations (e.g., holding company simplifications, consolidating charters) that support strategic pivots or cost savings
The rule streamlines filing procedures for certain lower-risk transactions; it does not broadly eliminate the OCC’s substantive review of business combinations.
OCC Rescinds Fair Housing Home Loan Data Rule (Part 27)The OCC’s second rule rescinded 12 CFR 27, the OCC-only Fair Housing Home Loan Data System, which the agency viewed as largely duplicative of other data sources. HMDA, ECOA, and Fair Housing Act requirements remain fully in force.
This removes obsolete and largely duplicative data collection requirements on applications for home loans that applied only to national banks and their subsidiaries, according to the OCC. The final rule eliminates regulatory burden for these institutions without having a material impact on the availability of data necessary for the OCC to conduct its fair housing-related supervisory activities.
In practice, this may let affected institutions spend less time on duplicative legacy reporting and more time on higher-value fair lending and compliance work, such as analytics, second look reviews, and risk-based monitoring. The OCC’s new rules regarding community bank licensing and fair housing data have the potential to greatly ease your regulatory burden. These are just the latest regulatory changes aimed at supporting a less strict regulatory landscape for community banks. Ultimately, the goal of these changes is to free up time previously spent on regulations so you can continue to thrive and enhance the vibrancy of your communities.
OCC Rescinds Fair Housing Home Loan Data Rule (Part 27)The OCC’s second rule rescinded 12 CFR 27, the OCC-only Fair Housing Home Loan Data System, which the agency viewed as largely duplicative of other data sources. HMDA, ECOA, and Fair Housing Act requirements remain fully in force.
This removes obsolete and largely duplicative data collection requirements on applications for home loans that applied only to national banks and their subsidiaries, according to the OCC. The final rule eliminates regulatory burden for these institutions without having a material impact on the availability of data necessary for the OCC to conduct its fair housing-related supervisory activities.
In practice, this may let affected institutions spend less time on duplicative legacy reporting and more time on higher-value fair lending and compliance work, such as analytics, second look reviews, and risk-based monitoring. The OCC’s new rules regarding community bank licensing and fair housing data have the potential to greatly ease your regulatory burden. These are just the latest regulatory changes aimed at supporting a less strict regulatory landscape for community banks. Ultimately, the goal of these changes is to free up time previously spent on regulations so you can continue to thrive and enhance the vibrancy of your communities.
