OCC Consults on Rules on Operations and Digital Activities of Banks
OCC published a notice of proposed rulemaking to update its rules regarding the activities and operations of national banks and federal savings associations. This proposal would update or eliminate outdated regulatory requirements that no longer reflect the modern financial system, clarify and codify recent OCC interpretations, integrate certain regulations for national banks and federal savings associations, and make other technical and conforming changes. OCC also released an advance notice of proposed rulemaking on the digital activities of national banks and federal savings associations. OCC is reviewing its regulations on bank digital activities to ensure that its regulations continue to evolve with developments in the industry. The comment period on both notices ends on August 03, 2020.
Proposal on Activities and Operations of National Banks and Federal Savings Associations
OCC is proposing to revise and reorganize subparts A through D of 12 CFR part 7, Activities and Operations. OCC also is proposing more general changes throughout part 7, including removing outdated or superfluous regulations, consolidating related regulations into one section, and making various technical changes. Finally, OCC is proposing to integrate a number of rules in part 7 to include federal savings associations. The key proposed changes include the following:
- Incorporating and streamlining OCC interpretations addressing permissible derivatives activities for national banks
- Codifying OCC interpretations to permit national banks and federal savings associations to engage in certain tax equity finance transactions
- Codifying OCC interpretations regarding national bank membership in payment systems and clarifying that federal savings associations are subject to the same requirements as national banks
- Expanding the ability of national banks to choose corporate governance provisions under state law
- Clarifying the extent to which a national bank may adopt anti-takeover provisions permissible under state corporate governance law
- Codifying OCC interpretations of the National Bank Act relating to capital stock issuance and repurchases
Advanced Notice on Rules on Bank Digital Activities
As part of its ongoing efforts to remain responsive to the evolution of the Federal banking system, OCC is undertaking a comprehensive review of subpart E of 12 CFR part 7 and 12 CFR part 155. As part of this review, OCC is inviting the public, including members of the financial service and technology sectors and consumer groups, to share their experiences and ideas. Based on the comments received, OCC may propose specific revisions to its rules, on which it would again seek public comment. The public is invited to respond to the questions in the advance notice, including the following:
- Whether the legal standards in 12 CFR 7, subpart E, and 12 CFR 155 are sufficiently flexible and clear in light of the technological advances that have transformed the financial industry over the past two decades
- Whether these legal standards create unnecessary hurdles or burdens to innovation by banks
- Whether there are digital banking activities or issues that are not covered by these rules that OCC should address
- What activities related to cryptocurrencies or cryptoassets are financial services companies or bank customers engaged in and what are the barriers or obstacles to further adoption of crypto-related activities in the banking industry
- How is distributed ledger technology used, or potentially used, in activities related to banking
- How are artificial intelligence and machine learning techniques used or potentially used in activities related to banking
- What new payments technologies and processes should OCC be aware of and what are the potential implications of these technologies and processes for the banking industry
- What new or innovative tools do financial services companies use to comply with regulations and supervisory expectations
- What issues are unique to smaller institutions regarding the use and implementation of innovative products, services, or processes that OCC should consider
- What other changes to the development and delivery of banking products and services should OCC be aware of and consider
- Whether there are issues OCC should consider in light of changes in the banking system that have occurred in response to the COVID-19 pandemic
Comment Due Date: August 03, 2020
Keywords: Americas, US, Banking, Governance, Cryptoassets, COVID-19, Artificial Intelligence, Distributed Ledger Technology, Fintech, OCC
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
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