WASHINGTON -- Comptroller of the Currency John D. Hawke, Jr.
told a House panel today that the national banking system is in excellent
health and that national banks are continuing to play their traditional role of
providing investment capital to Americas businesses and communities.
By historical standards, the system is exceedingly well
capitalized, he said in testimony before the House Financial Services
Committee. Today all national banks, with minor exceptions, have risk-based
capital above 8 percent, and less than one percent of national banks have
risk-based capital below ten percent. In 2003, the national banking system set
new earnings records, as measured by return-on-equity and return-on-assets.
The OCC is also in sound financial condition, he said. We have focused on modernizing our
financial operating systems and ensuring that we manage our financial resources
wisely. The agencys budget has been balanced every year during my tenure as
Comptroller, and we have been building our strategic contingency reserve to
ease the impact of unforeseen disruptions to our operations or unexpected
demands on our resources.
The OCC expects to reach its goal of building reserves equal
to six months operating expenses by the middle of 2005, Mr. Hawke said.
The Comptroller also discussed two recent regulations that
clarify the types of state laws that apply to national banks and the OCCs
exclusive authority to supervise national banks.
Let me state emphatically that neither regulation involves
any fundamental shift in regulatory roles or responsibilities; neither alters
the OCCs continuing commitment to consumer protection; and neither should
impose new or unmanageable burdens on our enforcement and compliance
resources, Mr. Hawke said.
Indeed, our new preemption rule materially strengthens our
ability to fight predatory lending by prohibiting national banks from making
any consumer loan based predominantly on the foreclosure or liquidation value
of a borrowers collateral, and disregarding the crucial question whether the
borrower can afford the loan, Mr. Hawke added.
The Comptroller said the OCC has a proud record of
protecting consumers against abusive and unfair banking practices. The OCC has
pioneered supervisory innovations that have been emulated by other agencies,
including its use of Section 5 of the Federal Trade Commission Act as a basis
to take administrative enforcement actions against banks that engage in unfair
and deceptive practices. In addition,
the OCC thwarted efforts of payday lenders to use national bank charters to
evade state and local consumer protection laws and adopted special procedures
to assure full and prompt consideration of customer complaints referred to the
OCC by state officials.
Mr. Hawke said that compliance with consumer laws and
regulations is a high priority for the OCC and is handled by examiners located
throughout the country, supplemented by the OCCs Customer Assistance Group
(CAG), a sophisticated, state-of-the-art call center in Houston.
Over 100 OCC examiners throughout the country are
compliance specialists; they not only perform detailed compliance examinations,
but also serve as expert advisors on consumer protection issues to other
examiners, he said. And our 1700 person-strong field examination staff is
backed by dozens of attorneys, Mr. Hawke added.
While some have mistakenly concluded that CAG is the means
by which we carry out our enforcement and compliance responsibilities, that is
not at all the case, Mr. Hawke said. Enforcement and compliance remains
first and foremost -- the responsibility of our large battery of examiners and
attorneys. But CAG is a very important adjunct to that resource.
The Comptroller also told the committee that work on the
proposed Basel Capital accord is far from over. Before final implementing
regulations can be adopted, he said, regulators must complete a number of
tasks, including a quantitative impact study and an economic impact analysis.
I am confident that as this process moves ahead we will
uncover a great many more issues that will require us to go back to the Basel
Committee for appropriate responses, and I also feel confident that the current
implementation date of year-end 2006 will be difficult, if not impossible, to
realize, he said.
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The OCC charters, regulates
and examines approximately 2,000 national banks and 51 federal branches of
foreign banks in the U.S., accounting for more than 56 percent of the
nations banking assets. Its mission is to ensure a safe and sound and
competitive national banking system that supports the citizens, communities
and economy of the United States.
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