WASHINGTON, D.C.— Shayna Olesiuk, Director of Banking Policy, issued the following statement in connection with the filing of a comment letter to the Office of the Comptroller of the Currency (OCC) on a proposal updating guidelines for recovery planning for large banks.
“Recent crisis periods have demonstrated that the larger and more complex a failing bank is, the more problematic its failure can be. To be successful and prevent a crisis that could devastate Main Street, a recovery plan requires careful and comprehensive preparation before problems arise to avoid sparking widespread financial instability. While we strongly support strengthening the guidelines for the largest banks’ recovery planning, we urge the OCC to take its proposed changes further.
“The OCC’s proposal contains three key changes that are intended to strengthen and expand the recovery plan guidelines last revised by the agency in 2018. First, the proposal expands the scope of coverage to apply to banks with an average of $100 billion in total assets, rather than the current $250 billion minimum. Second, banks will have to regularly test recovery plans. Third, banks will need to plan for recovery from non-financial threats, like operational risks or strategic risks.
“The OCC should adjust the proposed static $100 billion threshold level to incorporate additional measures of systemic risk beyond just asset size. The agency should also provide more specific directions for the testing framework so that banks, regulators, and the public clearly understand the Agency’s expectations for compliance. And lastly, the compliance period for all banks subject to the new guidelines should be 12 months instead of the proposed 18 months for some banks. Allowing a longer adjustment period would be a mistake and come at the expense of exposing Main Street Americans and the financial system to potential risk for even longer.
“Incorporating these changes into the OCC’s recovery planning framework will help reduce the risks of future taxpayer-funded bailouts.”
The comment letter is available here.
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