New comptroller of currency calls for moderate fixes to post-crisis banking rules

New comptroller of currency calls for moderate fixes to post-crisis banking rules
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The top United States bank overseer told reporters Wednesday that he supports moderate changes to the strict post-crisis rules placed on banks.

Comptroller of the Currency Joseph Otting said during a roundtable with reporters that the Dodd-Frank Act of 2010 helped make banks more aware of their risk, but needed to be revised to loosen the burden on smaller firms.

“The banking industry is in the best shape it’s ever been” said Otting, a former bank CEO who was confirmed by the Senate on Nov. 16.

“There were a lot of risks that a lot of institutions didn’t know they had, or weren’t cognizant of” before the crisis, Otting said, referring to the large national and international footprints.

But Otting said “most of us would say there are changes that could be made” to Dodd-Frank to loosen rules on smaller banks that don’t have the “resources, talent, or infrastructure” to handle the sweeping financial reform law. He said his primary concerns were burdens smaller banks face adhering to anti-money laundering and fraud laws, and with capital requirements meant to weed out risk.

Otting said he supports a bipartisan Senate Banking Committee bill that would scale back some of those rules for small and mid-sized banks.

Sponsored by Banking Committee Chairman Mike CrapoMichael (Mike) Dean CrapoHillicon Valley: Trump signs off on sanctions for election meddlers | Russian hacker pleads guilty over botnet | Reddit bans QAnon forum | FCC delays review of T-Mobile, Sprint merger | EU approves controversial copyright law Trump authorizes sanctions against foreign governments that interfere in US elections Cruz gets help from Senate GOP in face of serious challenge from O’Rourke MORE (R-Idaho), the legislation has enough support among Democrats to avoid a filibuster. That’s largely because it focuses on scaling back federal oversight of banks without touching other portions of the law that Democrats are determined to protect.

But House Republicans have given the bill a chilly reception, saying it doesn’t include the transformative changes needed for Dodd-Frank and the agency it created, the Consumer Financial Protection Bureau.

Otting praised Crapo and Senate leaders for narrowing down the bill to moderate fixes with wide agreement, and insisted that strong regulation was important to preserve the banking sector.

“Our priority is to ensure the safety and soundness of the US banking system,” Otting said.

“There’s a clearly a line between the OCC and a bank, but I think we have common goals.”

Otting was the president and CEO of OneWest Bank, a regional bank formed from the failed assets of IndyMac, a bank seized during the financial crisis by the Federal Deposit Insurance Corporation.

Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Cohen reportedly questioned over Trump dealings with Russia | Trump hails economy | Tells workers to 'start looking' if they want a better job | Internal poll shows tax law backfiring on GOP Trump announces tariffs on 0B in Chinese goods Trump: China tariff announcement to come Monday afternoon MORE, then-chairman of OneWest, recruited Otting from U.S. Bancorp to help run the bank, which purchased thousands of failing subprime mortgages from IndyMac.

Mnuchin and Otting presided over hundreds of thousands of foreclosures at OneWest Bank, which has been investigated for multiple federal and state housing violations. Otting signed a settlement with federal regulators who accused the bank of automatically signing foreclosure papers without reviewing them properly, called “robo-signing.”

Otting has insisted that his time OneWest was smeared by a “false narrative,” and that he and the bank worked tirelessly to save thousands of customers from foreclosures.

“If we did not sign that consent order, I don’t think our bank would have the ability to operate,” Otting said, comparing the troubles faced by bankers after to a nation at war.

“You make decisions and they might not be the best decisions,” Otting said. “It’s incredibly emotional to lose your home,” he said, “but there are a lot of good stories that people miss.”

Otting said that regulators and lawmakers should review the Community Reinvestment Act (CRA), a law that grades banks based on their contributions to economically distressed areas they serve. He said that giving back to communities is a priority for banks, but that the CRA grading process needs to be fixed.

“We have an incredibly complex process," Otting said. “The community groups don’t like how CRA is today, the regulators don’t like how CRA is today, and the banks don’t like how CRA is today."

Otting said the law makes it easy to barely pass, but too difficult to meet the highest grade. He said the CRA should be focused more on the end results of a bank's actions in the communities it serves and less on the specific steps it takes to achieve them.