OCC White Paper Points to CUSO Benefits

It was interesting how during the testimony at the Feb. 10, 2015 Senate Banking Committee meeting regarding regulatory relief, Toney M. Bland, senior deputy comptroller of mid-sized and community bank supervision at the Office of the Comptroller of the Currency, who was sitting right next to Larry Fazio when he was requesting additional regulatory authority for NCUA rather than how to provide regulatory relief, talked about how the OCC had prepared and released a white paper to community banks about how to create collaborative efforts to share resources, reduce costs and leverage specialized expertise.

This white paper from the OCC is essentially encouraging mid-sized and community banks to form the banking equivalent of CUSOs! All the while, the NCUA representative to the Senate Banking Committee hearing sitting next to him (Larry Fazio) has been sending negative messages to credit unions doing the same thing with CUSOs, through CUSO risk weighting in RBC2 and the CUSO regulation and by requesting “vendor authority” for the NCUA to have direct regulatory authority over CUSOs (as well as credit union vendors).

I have no doubt that this is a perfect example of small banks and their regulator learning that they need to be more like credit unions, and the OCC is actively encouraging community banks to set up service corporations to do so. I also have no doubt that Mr. Bland’s comments fell on the deaf ears of a fellow regulator (if he paid any attention to the bi-partisan comments being make by the Senators) charged with reducing the regulatory burden for credit unions and creating a regulatory environment that encourages and rewards innovation.