Big banks – those with at least $100 billion in assets – are expected to be well managed and have appropriate risk-management processes in place; thus, no guidelines on “recovery planning” are necessary, the national bank regulator proposed late Monday.
In a notice of proposed rulemaking, the Office of the Comptroller of the Currency (OCC) said it wants to rescind guidelines that took effect at the start of the year. The guidelines grew out of the effect of the 2008 financial crisis, the OCC said last year. In 2008, the agency said, it observed that many banks were not prepared to respond effectively to the financial effects of severe stress.
“The lack of or inadequate planning threatened the viability of some financial institutions, and many were forced to take significant actions without the benefit of a well- developed plan for recovery,” the agency said in its Federal Registernotice announcing the revised guidelines a year ago.
“For the OCC, this experience highlighted the importance of large, complex banks having strong risk governance frameworks, including plans for how to respond quickly and effectively to, and recover from, the financial effects of severe stress,” the agency said.
Now, however, the OCC said that banks “should” routinely assess and adjust operations to adapt to evolving risk factors and conditions.
“Risk management is a dynamic process that involves real-time responses to the facts and circumstances of a stress event or periods of stress,” the agency said Monday. “Relieving covered banks of the obligation to engage in prescriptive recovery planning activities is consistent with the OCC’s ongoing effort to identify and eliminate unnecessary regulatory burden.”
Comments will be due in 30 days from the date of publication of the proposal in the Federal Register.
PRESS RELEASE: OCC Requests Comments on Proposed Rescission of Its Recovery Planning Guidelines
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