Title III of the Dodd-Frank Act transferred to the OCC all functions of the former Office of Thrift Supervision (“OTS”) and the Director of the OTS relating to federal savings associations. 12 U.S.C. § 5412(b)(2)(C). This effectively dissolved the OTS and brought the chartering and primary supervisory responsibilities as to federally chartered banks and savings associations under one agency. As part of its efforts to streamline the supervisory process, reduce regulatory duplication, promote fairness in supervision, eliminate unnecessary burden consistent with safety and soundness, and create efficiencies for both national banks and federal savings associations, the OCC initiated a review of the existing separate regulations for the two types of institutions. As part of this review, the OCC issued a notice of proposed rulemaking designed to integrate its rules relating to corporate activities and transactions involving national banks and federal savings associations. See 79 Fed. Reg. 33260 (June 10, 2014).
On May 18, 2015, the OCC published in the Federal Register its final rule on integration of licensing-related regulations. 80 Fed. Reg. 28346 (May 18, 2015). When the OCC speaks in terms of “licensing,” it is not referring to a license in the sense of receiving a license to engage in a certain activity. Rather, it is referring to activities that are subject to review by the District Licensing Division of one of the OCC’s four regional districts. The revised regulations will consolidate most licensing provisions for federal savings associations into the existing national bank rule in 12 C.F.R. Part 5, and eliminate several of the existing rules applicable only to federal savings associations. For example, some of the consolidated rules are: (a) organizing an institution (§ 5.20); (b) charter conversion (§ 5.25); (c) fiduciary powers (§ 5.26); (d) business combinations (§ 5.33); (e) investments in bank service companies (§ 5.35); (f) investment in bank premises (§ 5.37); (g) change in location of main office (§ 5.40); (h) corporate title (§ 5.42); (i) voluntary liquidation (§ 5.48); (j) change in control (§ 5.50); (k) changes in directors and senior executive officers (§ 5.51); (l) change of address (§ 5.52); and (m) substantial asset change (§ 5.53).
While several of the regulations respecting licensing and other corporate activities will change, others will not. Examples of regulations that will not change for federal savings associations include: (a) federal mutual savings association charter and bylaws (§ 5.21); (b) federal stock savings association charter and bylaws (§ 5.22); (c) conversion to become a federal savings association (§ 5.23); (d) establishment, acquisition, and relocation of a branch, or establishment of an agency office of a federal savings association (§ 5.31); (e) operating subsidiaries of a federal savings association (§ 5.38); (f) increases in permanent capital of a federal stock savings association (§ 5.45); (g) capital distributions by a federal savings association (§ 5.55); (h) inclusion of subordinated debt securities and mandatorily redeemable preferred stock as supplementary (tier 2) capital (§ 5.56); (i) pass-through investments by a federal savings association (§ 5.58); and (j) service corporations of federal savings associations (§ 5.59). 80 Fed. Reg. at 28347.
In addition to the integration of many of the regulations relating to licensing and corporate activities, the OCC is in the latter stages of developing an electronic applications filing system capable of handling applications and other filings from both national banks and federal savings association. 80 Fed. Reg. at 28346. This is similar to the electronic filing system already in place for regulatory applications filed with the Federal Reserve System – “E-Apps.” The transition from hard copy to an electric filing system will have substantial benefits akin to the transition among court systems from paper filing to electronic filing. With respect to OCC filings and communications, the transition to electronic filing, combined with the OCC’s BankNet portal, will vastly simplify the way that banks and their advisors communicate with the OCC.
Travis P. Nelson is a member of Reed Smith’s Financial Services Regulatory Group, resident in the New York and Princeton offices. Travis is formerly an Enforcement Counsel with the Office of the Comptroller of the Currency, U.S. Treasury Department, and regularly represents clients in regulatory compliance, corporate governance, transactions, and examinations and enforcement actions. Travis is also adjunct faculty at Villanova Law School, where he teaches Financial Institutions Regulation, editor-in-chief of the ABA’s Banking Law Committee Journal, Vice-Chair of the Banking Law Section of the New Jersey State Bar, and president of the OCC Alumni Association.