Washington D.C. — BPI yesterday filed two comment letters in support to the Office of the Comptroller of the Currency’s initiative to foster financial innovation. The OCC requested comments on two proposals that would update existing rules with the aim of establishing greater legal clarity for the operations and activities, including digital activities, of national banks and federal savings associations (FSAs). The BPI letters describe how banks could better serve their customer’s needs in a rapidly changing technological marketplace.
“Our proposals would enable banks to innovate to create more value for their customers,” stated BPI President & CEO Greg Baer. “The rules should apply to the current environment of business, and banks shouldn’t face a maze of murky regulatory legalese when they seek to develop solutions that are good for their customers and good for the economy. For too long, banks have operated in a small regulatory sandbox while FinTechs frolic on the beach.”
The first letter responds to an advanced notice of proposed rulemaking issued by the agency regarding digital activities of national banks and FSAs. The letter recommends that any rule that the OCC may adopt relating to digital activities should serve as a flexible and “technology-neutral” framework that does not require a case-by-case review of future digital products; instead, the agency should rely on core principles and appropriate guardrails that are applicable to both banks and non-banks and can be tailored to an institution’s level of risk. It also recommends that any institution receiving an OCC charter should be subject to the same prudential requirements, including those related to capital and liquidity, Bank Secrecy Act/anti-money laundering, fraud prevention, third-party service provider risk management and other compliance requirements.
The second letter responds to a notice of proposed rulemaking regarding the OCC’s “part 7” governing permissible activities, corporate governance and operations of national banks and FSAs. The letter offers several suggestions to refine and clarify the OCC’s proposal to codify recent OCC interpretations and update or eliminate outdated regulatory requirements that no longer reflect the modern financial system. The letter emphasizes that clear rules around permissible bank activities and the opportunity to engage with OCC’s legal and policy leadership to resolve questions of legal permissibility are a critical prerequisite for banks to effectively and efficiently innovate and operate in a competitive marketplace and respond to customer needs. They also serve to ensure that questions of safety and soundness, as overseen by examiners, remain separate and distinct from questions of legal permissibility, as established by law and regulation.
About the Bank Policy Institute. The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.