OCC unveils new regulations hoping to strengthen risk management in major banks

Regulations follow a bumpy year for large financial companies

2013 was an expensive year for major banks, with the likes of J.P. Morgan Chase, Well Fargo and Bank of America all paying substantial tabs to settle probes around everything from shoddy derivatives trading operations to the quality of mortgage-backed securities. While those checks were for the most part made out to the Department of Justice, the Office of the Comptroller of the Currency (OCC) may be the face of big banking oversight in 2014.

The OCC announced on Jan. 16 a series of guidelines designed to strengthen the risk management standards of any operation with more than $50 billion in assets. The rules will make any entity that falls into that category responsible to a number of new rules, and will require each to form relationships with independent auditors to ensure there are open lines of communication to the OCC.

If you're going to be large and you're going to be complex, we expect more of you," Comptroller of the Currency Thomas Curry said in an interview with Bloomberg news. The rules imparted by the OCC build upon regulations it had already had in place, but crystalize “heightened expectations” the office has for larger banking institutions.

New guidelines include provisions that would have banks outline how risky they’re likely to be in the short term by requiring three-year strategic plans. The rules also proposed at least two independent members sit on the board of prominent banks and will hear comments on that concept for the next 60 days.

“In addition to reshaping the boards, banks also would have to maintain independent offices to track and monitor activity in all business lines. The leaders of the risk-and-audit offices, and their salaries, would have to be approved by the board and have an independent channel of communication with the board, though they would report to the chief executive on a day-to-day basis,” The Wall Street Journal reported.

While it is unknown how banks will react to these rules, it’s obvious that government regulators are taking a slightly more aggressive approach to banking mishaps following there rampancy in 2013.


For more on financial regulation, check out these stories:

JPMorgan settlement represents possible turning point for Eric Holder

Co-director of SEC enforcement division to step down

Feds expected to slap JPMorgan with fines in connection with Madoff scam

Executive Editor

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Chris DiMarco

Chris DiMarco, Executive Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

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