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OCC sees need for soundness, not just safety

Acting Comptroller speaks of sea change in federal regulation

Keith Noreika, Acting Comptroller, believes the restrictive regulation banks currently face requires some opening up. Keith Noreika, Acting Comptroller, believes the restrictive regulation banks currently face requires some opening up.

“We can’t create a system so risk averse that we squeeze opportunity out of that system.”

In a speech to the Midsize Bank Coalition of America, Acting Comptroller Keith Noreika made it clear with this statement that his agency, and the Trump Administration at large, intends to reverse the direction of regulation taken since passage of the post-crisis Dodd-Frank Act.

“I think we have good reason for optimism,” said Noreika. “Today, we are having conversations that would have been impossible just a few months ago. Since taking on this role, I have been encouraged by the appetite for change among OCC staff, other regulators, and on Capital Hill.”

In an anecdote Noreika has been bringing up in recent appearances, he recalled how another former Acting Comptroller, John Walsh, once told him that regulators need to remember that “a healthy bank is a safe and sound one.” Regulating too conservatively, he has argued, keeps banks from generating the profits that keep them sound, and thus can imperil safety.

Changing attitudes in Congress

Noreika said he believes this attitude is supported on Capitol Hill now.

“I have had at least ten frank and productive conversations with members of the House and Senate, from both sides of the aisle,” he said. “Across the board, they are interested in ideas for meaningful reform.”

Among the ideas Noreika said he’s been circulating is the concept of “right-size” regulation—tailoring requirements appropriately to bank size and range of activities. He also referred to progress made towards revamping the controversial Volcker rule and simplification of bank capital rules.

Cybersecurity requires coordination

Noreika also believes a more unified regulatory approach to cybersecurity could help solve this ongoing challenge.

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“We recognize that there are numerous regulations and agencies with cyber oversight,” he said. “Rather than having a positive additive effect, the crowded regulatory space could result in confusion and even conflicting requirements. Those are the last things that you need when responding to potentially systemic concerns.”

In a similar vein, Noreika noted that he has testified in Congress regarding the need for banking regulators to better coordinate their activities when overlapping authorities have them dealing with a single institution. He calls these “regulatory traffic signals.”

Steve Cocheo

Steve Cocheo’s 38 years in financial journalism have taken him to all 50 states and nearly every corner of financial services in companies from fintech startups to community banks to regional and national giants. He is executive editor of Banking Exchange and digital content manager of www.bankingexchange.com. Previously he spent 36 years on the staff of ABA Banking Journal and 22 years concurrently as editor of ABA Bank Directors Briefing. He is the only journalist to have sat in on three federal banking exams, was a finalist for the Jesse H. Neal national business journalism awards, and a winner of multiple awards from the American Society of Business Publication Editors. In 2017 he received three awards from ASBPE: National Gold, National Bronze, and Regional Silver. Two years ago he finally gave up his cherished Blackberry for an iPhone, recently tried Uber, and has made it by Citibike from Battery Park to the Washington Bridge… and back. Connect with Steve Cocheo and Banking Exchange on LinkedIn. Follow Banking Exchange on Twitter

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