Office of the Comptroller of the Currency (OCC)
What it is:
The Office of the Comptroller of the Currency (OCC) is a division of the U.S. Treasury. It regulates and supervises national banks, including domestic branches of foreign banks. The U.S. Treasury created the OCC in 1863 as part of the National Act.
How it works (Example):
The primary task of the OCC is to regularly examine banks. These examinations include analyses of a bank's loans and investments, how it manages its funds, the risk profile of the bank (that is, the liquidity and profitability of the bank), and the bank's compliance with consumer banking laws. The OCC examiners also review the bank's internal controls and management ability.
The OCC also enforces Municipal Securities Rulemaking Board (MSRB) rules that apply to national banks that deal in municipal securities.
The OCC has a host of choices at its disposal when it comes to disciplining banks that violate banking laws or fail examination. Penalties can include simple requirements that a bank change its practices, cease and desist orders, fines, and even the removal of the bank's officers or directors. It can be difficult to find information about OCC actions against a particular bank because the law prohibits the OCC from releasing information from its examinations to the public. However, national banks must submit a Report of Condition and Income each quarter to the FDIC, and this is available to the public.
Washington, D.C. is home to the OCC headquarters, but a nationwide staff of bank examiners in over 50 field offices perform the onsite reviews of national banks. The OCC also has resident examiners at the 23 largest banking companies in the U.S., and it maintains an examining office in London. The OCC is divided into four geographic regions: Western (headquartered in Denver), Central (headquartered in Chicago), Southern (headquartered in Dallas), and Northeastern (headquartered in New York).
The head of the OCC is called the comptroller, who is appointed by the president of the United States with the advice and consent of the U.S. Senate. The comptroller serves a five-year term and is also a director of the Federal Deposit Insurance Corporation (FDIC) and the Neighborhood Reinvestment Corporation. The comptroller works with an executive committee composed of the heads of the OCC's major business units. The executive committee advises the comptroller on policy and other issues. Smaller committees also report to the comptroller and the executive committee. These committees are the audit, bank supervision, budget and finance, human capital, regulatory policy, legal and external affairs, and technology and systems committees.
The OCC is not funded by Congress. Its operating budget comes from assessments on national banks, which pay for their examinations and for processing certain applications. The OCC also supplements its budget with income on the investment of this revenue.
Why it Matters:
The OCC exists to ensure the safety of the banking system, foster banking competition, provide efficient supervision, and ensure "fair and equal access to financial services for all Americans." As such, it is a driving force in banking regulation. It polices the lending and investment activities of national banks, and it issues operating rules, legal interpretations, and important decisions regarding bank activities. The OCC also has the power to approve or deny charters for new banks or bank branches.
Although the OCC supervises national banks, it also supervises and regulates many of the operating subsidiaries of national banks. These operating subsidiaries are usually companies owned or controlled by the bank that offer specific products or services, such as mortgages or investment advice.
To learn more about the OCC, visit http://www.occ.gov.