WASHINGTON, D.C.— Shayna Olesiuk, Director of Banking Policy, issued the following statement in connection with the Office of the Comptroller of the Currency (OCC) releasing final guidelines for recovery planning for large banks.

“Today’s action by the OCC to strengthen bank recovery guidelines is a move in the right direction to protect the financial system, the economy and the American people from the costly consequences of bank failures. The larger and more complex a failing bank is, the more catastrophic its failure can be and the greater the likelihood of taxpayer bailouts. Planning for potential problems before they occur is essential to prevent a crisis from spiraling out of control and devastating Main Street as happened in 2008, or merely causing contagion and costing Americans more than $40 billion as happened in 2023. The OCC’s new guidelines increase the scope and rigor of recovery planning that is required at the largest banks.

“The OCC’s new guidelines contain several key changes:

• First, the scope of coverage is expanded to apply to banks with at least $100 billion in total assets, rather than the prior $250 billion total asset minimum. This recognizes the systemic risk and contagion that exists at banks of this size, as was clearly demonstrated in the spring of 2023 when Silicon Valley Bank and other banks failed.
• Second, banks will have to regularly test recovery plans. This will ensure that banks proactively identify weaknesses and deficiencies before a failure and make corrections before a failure occurs.
• Third, banks must now plan for recovery from non-financial threats, like operational risks or strategic risks, as well as financial risks.

“While we are pleased with the progress made to fortify large banks’ recovery planning and preparedness, we were disappointed that the new guidelines increased the time period for compliance with the new guidelines. While banks must have ample time to develop a strong recovery plan, a longer compliance period also means that the financial system and Main Street Americans remain vulnerable to the chaos and financial losses of bank failures for longer. The delay was not necessary. We look forward to the OCC vigorously ensuring that the new rules are fully and faithfully implemented and adhered to.”

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