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GOVERNMENT SUPERVISION OF THE RANK

National banks are supervised and regulated by the OCC, which is an arm of the U.S. Department of the Treasury. The OCC regulates and supervises all national banks and federal branches of foreign banks in the United States. National bank facilities account for nearly two-thirds of the total assets of all U.S. commercial banks.

The OCC's nationwide jurisdiction over banks — from modest-sized community banks to some of the largest American banks in the world — also contributes to the agency's ability to develop and maintain expert credit examination and risk management capabilities that benefit all banks in the national banking system. The OCC has a nationwide reach, which enables it to take actions to protect customers regardless of the state in which they reside. The OCC's efforts to combat unfair or deceptive practices and its focused approach to customer privacy issues have had nationally recognized consumer benefits.

The Office of the Comptroller of the Currency

[1]

The OCC charters (licenses), regulates, and supervises all national banks. It also supervises the federal branches and agencies of foreign banks. Headquartered in Washington, D.C., the OCC has four district offices plus an office in London to supervise the international activities of national banks.

The OCC was established in 1863 as a bureau of the U.S. Department of the Treasury. The OCC is headed by the comptroller, who is appointed by the president of the United States, with the advice and consent of the Senate, for a five-year term. The comptroller also serves as a director of the FDIC and a director of the Neighborhood Reinvestment Corporation, which is mandated to uphold the principal of reinvesting banks' deposited money back in the communities from which they derived their deposits and not outside these communities. The OCC's nationwide staff of examiners conducts on-site close examinations and reviews of national banks and provides sustained supervision of bank operations. The agency issues rules, legal interpretations, and corporate decisions concerning banking, bank investments, bank community development activities, and other aspects of bank operations.

National bank examiners with the OCC supervise domestic and international activities of national banks and perform corporate analyses. Examiners analyze a bank's operations, compliance with the banking regulations, loan and investment portfolios, funds management, capital adequacy, earnings pattern, liquidity adequacy, sensitivity to market risk, and compliance with consumer banking laws, including the Community Reinvestment Act (CRA.) They review and evaluate the adequacy of the bank's internal controls, internal and external audits, and compliance with applicable laws and regulations. They also evaluate the bank management's ability to identify and control risk as well as management's succession plans in order to keep the safe and sound operational continuity of the institution.

In regulating national banks, the OCC has the power to:

■ Examine the banks.

■ Approve or deny applications for new charters (license), branches, capital, or other changes in corporate or banking structure.

■ Take supervisory actions against banks that do not comply with laws and regulations or that otherwise engage in unsound banking practices.

■ The agency can remove officers and directors, negotiate agreements to change banking practices using what is called a memorandum of understanding, and issue cease and desist orders (which would order bank to stop its lending activities and may be requiring the bank to divest part of its loan portfolio and may limit the bank from taking additional deposits), as well as civil money penalties (called C&D order by OCC). Issue rules and regulations governing bank investments, lending, and other practices.

  • [1] For more information about the OCC, contact the Office of the Comptroller of the Currency, Communications Division, Washington, DC 20219, via telephone at 202-874-4700, or via the Web at OCC.Treas.gov.
 
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