The Office of the Comptroller of the Currency (OCC) has recently reported the key issues that are now said to be facing the US federal banking system in the Semiannual Risk Perspective for Fall 2025. The OCC reported that the strength of the federal banking system “remains sound.” Balance sheets remain satisfactory with high capital and liquidity ratios “that are positioned to absorb potential stress.” As noted in the update from the OCC, financial innovation presents banking “opportunities.”
A lack of investment in new technologies, products, and services “may present material risks to long-term bank performance and viability of institutions.”
The OCC fosters a regulatory environment “that enables banks to advance their businesses and client interests while managing financial risks and operating in a sound manner.”
The OCC highlighted “credit, market, operational, and compliance risks, as key risk themes in the report.”
Highlights from the report include:
- Commercial and retail loan portfolio delinquencies, loss rates, and noncurrent and classified levels remain manageable.
- Liquidity remains sound.
- The OCC has observed an increase in threats posed by foreign state-sponsored actors and sophisticated cybercriminal groups, targeting the financial sector.
- Banks continue to face challenges from elevated levels and sophistication of fraud, including scams.
As stated in another update, the OCC has now issued “proposed guidance for a simplified strategic plan process for community banks” in order to comply with the Community Reinvestment Act (CRA).
The OCC’s action builds on a series of reforms the OCC announced in October and November in order to “reduce burden and tailor examination activities for community banks.”
Comptroller of the Currency Jonathan V. Gould said:
“Community banks are important drivers of economic growth and require a tailored, proportional supervisory framework that reflects their critical role in local economies. By definition, community banks are focused on meeting the financial needs of their communities. Today’s proposal for a simplified CRA strategic plan enables them to better focus their resources on local credit needs. The OCC will continue to prioritize community bank reforms to reduce burden and strengthen their role as economic engines of America.”
The plan option enables a bank to “tailor its CRA examination based on the needs of its community and its ability to help address those needs based on its capacity and constraints, product offerings, and business strategy.”
The proposed simplified plan process would reduce burden for community banks by providing “clarity on the measurable goals and the other components of a strategic plan required by the CRA regulation and simplifying the method for drafting and submitting a proposed strategic plan to the OCC for approval.”
Given the flexibility provided by the strategic plan option, the OCC believes that it may be a “useful tool for reducing CRA-related regulatory burden for all community banks—from the smallest retail community banks to larger, non-traditional community banks that offer their products and services through the internet.”
Comments will be accepted on the proposed guidance on the Simplified Strategic Plan Process for Community Banks “for 60 days from the date of publication in the Federal Register.”
In another update, the OCC said that it has filed “an amicus brief with the United States Court of Appeals for the Tenth Circuit in connection with the litigation, National Association of Industrial Bankers v. Weiser.”
In advocating for the Tenth Circuit to consider “the case before its full court, the OCC’s brief details how the panel’s decision undermines the benefits of the federal interest rate framework that Congress granted to state banks and places them at a competitive disadvantage compared to national banks.”
The OCC’s action builds upon Comptroller of the Currency Jonathan V. Gould’s statement of Dec 9, noting that the panel “decision of the Tenth Circuit is inconsistent with Congress’s efforts to create competitive equality between state and federally chartered banks.”
The OCC supports the dual banking system, including “the preemption of state laws for state-chartered banks as permitted by law.”
The OCC commends the FDIC for taking steps in order to “support these Congressionally-granted benefits, including its filing of an amicus brief as well.”