The Office of the Comptroller of the Currency (OCC) has enacted two new rules aimed at reducing the regulatory burden on smaller financial institutions. These rules are part of a broader initiative by the Trump administration to streamline the regulatory environment for banks, particularly those with assets below $30 billion.
The New Rules: A Step Towards Regulatory Relief
The first rule rescinds the OCC’s Fair Housing Home Loan Data System regulation. This regulation, the OCC has argued, is both obsolete and redundant, imposing unnecessary data collection requirements on national banks. The agency maintains that rescinding this rule will not significantly impact the availability of data required for its fair housing-related supervisory activities, but will alleviate compliance costs for banks.
The second rule amends the OCC’s corporate activity licensing rules. The revisions are intended to simplify the application process for banks with less than $30 billion in assets. The rule introduces a new category, known as a “covered community bank” or “covered community savings association”, providing these banks access to all existing expedited and/or reduced filing procedures. To qualify as “covered,” a bank must have under $30 billion in assets, not be affiliated with a larger institution, be “well capitalized” and not be subject to certain enforcement actions.
Community Banks: The Beneficiaries of Regulatory Relief
Jonathan Gould, the Comptroller of the Currency, has emphasized the critical role of community banks in supporting local economies. “Community banks serve critical constituencies and lend to Main Street businesses, that in turn support vibrant local economies,” Gould noted. He sees these new rules as a significant step towards helping these smaller institutions thrive by reducing regulatory burdens and tailoring supervision.
These actions follow a series of steps taken by the OCC under Gould’s leadership to lessen compliance burdens for community banks. Many of these institutions have highlighted the need for regulatory relief, arguing that regulations put in place following the 2008 Global Financial Crisis have been particularly burdensome.
Future Direction of Regulatory Changes
These changes are part of a broader trajectory of regulatory adjustments aimed at easing the burden on smaller banks. From January 1, 2026, the OCC has eliminated policy-based exam requirements not mandated by law. Examiners now have greater discretion in determining the type of examination to conduct on community banks, allowing for a more tailored approach based on each bank’s size, complexity and risk profile.
In addition, the OCC has requested information from public stakeholders regarding their core providers. This is part of an initiative to reevaluate third-party risk management rules in light of a highly concentrated market for core service providers. Banks and trade organizations have argued that a small group of providers dominates the market for critical back-end bank infrastructure, leading to rigid contracts and disincentivizing banks from changing providers.
In conclusion, the OCC’s new rules represent a significant step towards reducing the regulatory burden on community banks. By streamlining processes and tailoring supervision, these changes aim to support the efforts of these small institutions in serving their communities and contributing to local economies. For a more detailed overview of these changes, you can find the original article Here.
