WASHINGTON Acting
Comptroller of the Currency Julie L. Williams noted recent developments in
federal/state jurisdiction over national banks and discussed how those
developments relate to the history and characteristics of the national banking
system and the bank supervisory process.
She emphasized that the heart of the OCCs responsibility is to assure
that national banks are safe and sound and conduct their business in accordance
with law, and that this helps assure that national banks have the capacity to
lend to credit-worthy borrowers and serve all their customers and communities
fairly and with integrity.
When national banks
meet these standards, the national banking system benefits all Americans and
strengthens our economy, Ms. Williams said in a speech before the New York
Bankers Association.
The Comptrollers
responsibility to assure that national banks conduct their business in
accordance with law is not one-dimensional, Ms. Williams said. It is not just
a policing function to verify and enforce compliance with restrictions and
requirements in applicable laws. We
also have a responsibility to assure that national banks have the ability to
operate consistent with safety and soundness in accordance with
applicable law, including the powers granted to them and supervisory regime
provided for them under federal law.
Since the 1860s,
Congress vested the OCC with exclusive visitorial powers, which included
comprehensive authority to examine, supervise, regulate, and sanction a
national bank, Ms. Williams said.
Preemption isnt a new concept and has long been recognized with respect
to the powers and authorities granted national banks under the National Bank
Act. Together, the uniformity of powers
and operating standards that result from Federal preemption, coupled with the
OCCs exclusive visitorial authority, have long been recognized as defining
characteristics of the national bank charter.
Ms. Williams noted that
when the OCC takes a position that, because of the OCCs exclusive visitorial
authority, a state official does not have jurisdiction over a national bank,
sometimes the reaction is to point to the number of public enforcement the
agency has brought and contend that the OCC wont be tough enough.
This perception
profoundly misunderstands the character and effectiveness of the bank
supervision process, she said.
Ms. Williams
highlighted how the bank supervisory process, for both national and state
banks, is uniquely extensive and comprehensive and exerts extraordinary
authority through ongoing supervisory communication and other informal
means. Additionally, the supervisory
process entails constant adjustments, corrections and remediation by banks base
on the communications between the regulated bank and the bank supervisory
agency.
When supervisors
identify an issue, we expect it to be fixed, promptly, without having to resort
to subpoenas for the information we need or to enforcement action to achieve
the result we seek, Ms. Williams said.
We certainly have the ability to bring formal enforcement cases against
banks, and we do not hesitate to do so when appropriate, but, in practice, the
need to do so is infrequent.
No one is suggesting
that banks are perfect, but do those outside the banking industry make the
connection between the fundamental health, stability, integrity and attention
to reputation of todays banking system, on the one hand, and the role of bank
supervision, on the other, she asked. Perhaps not, but they should not assume
that the work of the bank supervisorsthe business of principled bank
supervisionisnt being conducted with the utmost vigor simply because waves of
press releases announcing formal enforcement actions are not forthcoming.
Because of the
confidentiality of bank supervision and examination, there are no headlines to
trumpet those accomplishments, Ms. Williams stated. The very openness and candor that make the bank supervisory
process so effective are premised on the confidentiality of bank-supervisor
communication.
She concluded her
remarks by stating the OCC must always be thorough and use sound judgment and
balance in supervision; that the agency cannot rush to judge issues before all
the relevant facts are on the table; and that the OCC must not hesitate to take
strong action when it is warranted.
Ultimately, our goal
is not simply wielding enforcement authority or gaining publicity, Ms.
Williams said. It is about ensuring
that national banks are in compliance with the law so they can fulfill their
responsibilities to their customers, their communities, and to their country.
# # #
The Office of the
Comptroller of the Currency was created by Congress to charter national banks,
to oversee a nationwide system of banking institutions, and to assure that
national banks are safe and sound, competitive and profitable, and capable of
serving in the best possible manner the banking needs of their customers.