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  • OCC updates Comptroller’s Handbook booklets, addresses trade finance and services activities

    Agency Rule-Making & Guidance

    On October 15, the OCC issued Bulletin 2018-38, which updates, among other things, the “Trade Finance and Services” booklet of the Comptroller’s Handbook previously issued in April 2015. The booklet provides guidance for OCC examiners to use in connection with the examination and supervision of national banks and federal savings associations that engage in international trade finance and services activites, including “letters of credit, guarantees, acceptances, open account financing, other specialized trade financing, financial supply chain solutions, prepayment, advising, trade collections, bank-to-bank reimbursement services, insourcing/outsourcing trade processing, and hedging services.”

    The updated booklet (i) incorporates references to relevant OCC issuances published since April 2015; (ii) reflects the integration of federal savings associations into certain regulations; and (iii) makes “clarifying edits regarding supervisory guidance, sound risk management practices, legal language, or the roles of the bank’s board or management.”

    Bulletin 2018-38 also updates the “Agricultural Lending” and “Oil and Gas Exploration and Production Lending” booklets and rescinds previously issued corresponding bulletins.

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Examination Bank Supervision

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  • OCC updates Comptroller’s Handbook with new TILA booklet

    Agency Rule-Making & Guidance

    On September 26, the OCC issued Bulletin 2018-31, which updates the “Truth in Lending Act” (TILA) booklet of the Comptroller’s Handbook, which previously was issued in December 2014. The booklet provides guidance for OCC examiners to be used in connection with the examination and supervision of national banks and federal savings associations, which offer or extend consumer credit products covered by TILA. The updates reflect changes made to Regulation Z, TILA’s implementing regulations, since the booklet’s previous release, and includes procedures implementing the CFPB’s TILA-RESPA integrated disclosure rule (TRID). Additional updates include, among other things, (i) special provisions on certain construction loans; (ii) special provisions relating to small creditors and rural or underserved areas; (iii) changes regarding appraisals for higher-priced mortgage loan exemptions; (iv) updates to mortgage origination examination procedures; and (v) updates to mortgage servicing rules and the small creditor definition.

    With the issuance of the new booklet, the OCC rescinds (i) OCC Bulletin 2014-61, “Truth in Lending Act: Revised Comptroller’s Handbook Booklet and Rescissions”; (ii) The TILA sections of OCC Bulletin 2015-27, “Revised Interagency Examination Procedures for Consumer Compliance”; and (iii) OCC Bulletin 2015-42, “Initial Examinations for Compliance With TILA-RESPA Integrated Disclosure Rule.”

    Agency Rule-Making & Guidance OCC Comptroller's Handbook TILA Examination Supervision TRID Regulation Z

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  • OCC updates Comptroller’s Handbook booklet to address deposit-related credit

    Agency Rule-Making & Guidance

    On September 12, the OCC issued Bulletin 2018-28, which updates the “Deposit-Related Credit” booklet of the Comptroller’s Handbook previously issued March 2015. The booklet provides guidance for OCC examiners to be used in connection with the examination and supervision of national banks and federal savings associations who offer small-dollar, unsecured deposit-related credit products and services, such as check credit, overdraft protection, and deposit advance products. The booklet also includes, among other things, (i) updated guidance following the rescission of OCC Bulletin 2013-40, “Deposit Advance Products: Final Supervisory Guidance,” (previously covered by InfoBytes here) and the issuance of OCC Bulletin 2018-14, “Installment Lending: Core Lending Principles for Short-Term, Small-Dollar Installment Lending” (previously covered by InfoBytes here); (ii) information concerning limitations and requirements for consumer credit products extended to active-duty servicemembers covered by the Military Lending Act; (iii) integrated citations to third-party risk management guidance and procedures; (iv) information pertaining to new products and services, including sound due diligence practices; and (v) prohibitions against unfair, deceptive, or abusive acts or practices under Dodd-Frank.

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Deposit Products Examination Supervision Military Lending Act

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  • OCC updates Comptroller’s Handbook, issues guidance on “other real estate owned”

    Agency Rule-Making & Guidance

    On August 31, the OCC issued Bulletin 2018-26, which updates the “Other Real Estate Owned” booklet of the Comptroller’s Handbook and provides guidance for examiners on the acquisition, reporting, management, and disposition of other real estate owned (OREO) held by supervised banks and federal savings associations. The OCC commented that while the booklet’s focus is on foreclosed real property, the guidance may also “apply to other types of foreclosed (repossessed) property, such as consumer and commercial goods, financial instruments, and intangible assets.” Foreclosed assets for reporting purposes include “loans where a bank has received physical possession of a borrower’s assets, regardless of whether formal proceedings take place.” Additional updates include (i) accounting changes for OREO sales by public and non-public business entities; (ii) interim guidance for federal savings associations on the OREO holding period; and (iii) clarifications concerning supervisory guidance and risk management practices, including third-party risk management guidance issued since the booklet was last published in 2013.

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Examination

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  • OCC issues guidance regarding implied sovereign support and credit risk ratings

    Agency Rule-Making & Guidance

    On August 28, the OCC issued Bulletin 2018-25, which provides guidance regarding the role of informal or implied expressions of support from foreign governments (implied sovereign support) in determining a borrower’s obligor and facility credit risk ratings. The Bulletin expands on Appendix E of the “Rating Credit Risk” booklet of the Comptroller’s Handbook and encourages banks to analyze, among other things, the sovereign’s legal and financial obligations and the relationship between the obligor and the sovereign. The OCC notes that the obligor’s importance to the sovereign’s local economy does not necessarily demonstrate “willingness to provide an obligor with financial support.” Additionally, the Bulletin provides guidance regarding bank policies regarding the use and application of implied sovereign support to determine a final regulatory risk rating. The OCC states that a sound policy would incorporate the following three elements: (i) defined criteria on how a risk rating may be changed for an obligor due to recognition of implied sovereign support; (ii) methods for determining whether implied sovereign support will be considered in the risk rating decision, including periodic reevaluations of the assessment; and (iii) appropriate documentation standards, including a tracking process that promotes “consistent and appropriate” application of the defined criteria.

    Agency Rule-Making & Guidance OCC Customer Due Diligence Comptroller's Handbook

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  • OCC issues update to Comptroller’s Handbook

    Agency Rule-Making & Guidance

    On July 23, the OCC issued Bulletin 2018-20, which announced revisions to the “Capital and Dividends” booklet of the Comptroller’s Handbook as mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act. The revised booklet—which applies to all OCC-supervised bank examinations—includes changes to the regulatory capital rule, reflects the integration of the OTS into the OCC, and includes expanded examination procedures for capital, dividends, and capital adequacy.  

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Examination S. 2155 EGRRCPA

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  • OCC issues updates to Comptroller’s Handbook

    Federal Issues

    On June 28, the OCC issued Bulletin 2018-18, which revises and updates certain booklets of the Comptroller’s Handbook. Among other things, the revisions and updates (i) clarify the applicability of each booklet to community, midsize, and large banks: (ii) incorporate Uniform Interagency Consumer Compliance Rating System revisions; (iii) provide asset management and Bank Secrecy Act/Anti-Money Laundering/Office of Foreign Assets Control risk assessment examiner guidance to ensure consistency with the Federal Financial Institutions Examination Council BSA/AML Examination Manual’s appendixes J and M; (iv) incorporate relevant aspects of the Dodd-Frank Act; (v) clarify the roles of banks’ boards of directors and management; and (vi) “include revised concepts and references regarding third-party risk management; new, modified, or expanded bank products or services; and corporate and risk governance.” The revised booklets are: Bank Supervision Process, Community Bank Supervision, Compliance Management Systems, Federal Branches and Agencies Supervision, and Large Bank Supervision.

    Federal Issues OCC Comptroller's Handbook Bank Secrecy Act Anti-Money Laundering Dodd-Frank Third-Party OFAC

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  • OCC updates Comptroller’s Handbook to include Military Lending Act booklet

    Agency Rule-Making & Guidance

    On May 11, the OCC issued the “Military Lending Act” (MLA) booklet of the Comptroller’s Handbook. According to the announcement, the booklet reflects the 2015 Department of Defense amendments, as well as the interpretive guidance published in 2016 and updated in 2017 (covered by InfoBytes here and here), and applies to the examinations of OCC-supervised institutions that establish consumer credit products covered by the MLA. The booklet includes, among other things, (i) rules for determining fees and charges included in the calculation of the military annual percentage rate (MAPR); (ii) rules for calculating the MAPR; (iii) required disclosures to be provided to covered borrowers; and (iv) consumer credit limitations for covered borrowers.

    Agency Rule-Making & Guidance OCC Military Lending Act Comptroller's Handbook Department of Defense

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  • OCC updates Comptroller’s Handbook to include recovery planning standards for large financial institutions

    Agency Rule-Making & Guidance

    On April 26, the OCC released the “Recovery Planning” booklet as part of its Comptroller’s Handbook. The booklet explains the purpose of effective recovery planning and provides guidance for OCC examiners to use when assessing the “appropriateness and adequacy of [a] covered bank’s recovery planning process and the integration of that process into the covered bank’s overall risk governance framework.” According to the OCC, unless determined otherwise, a bank is subject to the Recovery Planning guidelines if the bank has average total consolidated assets of (i) $50 billion or more; (ii) less than $50 billion, if the bank was previously a covered bank; or (iii) less than $50 billion, if the OCC determines that the bank is highly complex or otherwise presents a heightened risk. Recovery plans are designed to identify triggers and options for responding to a range of “severe internal and external stress scenarios” for the purpose of timely restoring financial strength and viability, and should, among other things, include measures to reduce risk as well as strategies to develop and maintain plans specific and appropriate to the size and complexity of the covered bank. The booklet states that recovery plans “may not assume or rely on any extraordinary government support.”

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Risk Management

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  • OCC Updates Community Bank Supervision Comptroller's Handbook

    Federal Issues

    On November 3, the OCC announced an update to the “asset quality core assessment procedures” in its Community Bank Supervision Comptroller’s Handbook (Handbook). Among other things, the revised Handbook:  (i) updates concentration risk management procedures and stress testing guidance for community banks; (ii) incorporates procedures for credit underwriting assessments; (iii) enhances appraisal, evaluation, allowance, and credit review examination procedures; and (iv) updates the asset quality references and standard request letter.

    Federal Issues Banking OCC Community Banks Risk Management Stress Test Comptroller's Handbook

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