What is the Office of the Comptroller of the Currency (OCC)?

How many normal people have the slightest clue what the Office of the Comptroller of the Currency (OCC) is or does?

First, the OCC is a bureau of the U.S. Department of the Treasury. It does have a lot to do with money and banking, but little to do with "currency" per se.

The simple answer is that the Office of the Comptroller of the Currency (OCC) charters, regulates, and supervises all national banks.

Individual states regulate state-chartered banks and the Federal Reserve regulates bank holding companies, but the OCC is responsible for all national banks. The Federal Reserve does have a role in regulation of national and state banks as well, but that's another story.

You might be wondering why OCC has "currency" rather than "bank" in its name. As you might expect, there is a story, a history there.

The short version of the story is that the OCC was founded to fund the Civil War by chartering banks that would buy the debt of the U.S. government in exchange for the right to issue standardized national bank notes based on U.S. bonds held by the banks. The slightly fuller version of the story from the OCC web site:

In 1861, Secretary of the Treasury Salmon P. Chase recommended the establishment of a system of federally chartered national banks, each of which would have the power to issue standardized national bank notes based on United States bonds held by the bank. In the National Currency Act of 1863, the administration of the new national banking system was vested in the newly created OCC and its chief administrator, the Comptroller of the Currency.

The law was completely rewritten and re-enacted as the National Bank Act. That act authorized the Comptroller of the Currency to hire a staff of national bank examiners to supervise and periodically examine national banks. The act also gave the Comptroller authority to regulate lending and investment activities of national banks.

One of the reasons Congress created a banking system that issued national currency was to finance the Civil War. Although national banks no longer issue currency, they continue to play a prominent role in the nation's economic life. The OCC regulates and supervises about 1,600 national banks and 50 federal branches of foreign banks in the U.S., accounting for nearly two-thirds of the total assets of all U.S. commercial banks (as of March 31, 2009).

The web site also tells us that:

The OCC was established in 1863 as a bureau of the U.S. Department of the Treasury. The OCC is headed by the Comptroller , who is appointed by the President, with the advice and consent of the Senate, for a five-year term. The Comptroller also serves as a director of the Federal Deposit Insurance Corporation (FDIC) and a director of the Neighborhood Reinvestment Corporation.

The OCC's nationwide staff of examiners conducts on-site reviews of national banks and provides sustained supervision of bank operations. The agency issues rules, legal interpretations, and corporate decisions concerning banking, bank investments, bank community development activities, and other aspects of bank operations.

National bank examiners supervise domestic and international activities of national banks and perform corporate analyses. Examiners analyze a bank's loan and investment portfolios, funds management, capital, earnings, liquidity, sensitivity to market risk, and compliance with consumer banking laws, including the Community Reinvestment Act. They review the bank's internal controls, internal and external audit, and compliance with law. They also evaluate bank management's ability to identify and control risk.

The OCC also supervises the federal branches and agencies of foreign banks.

Headquarters is in Washington, D.C. There are four district offices.

An office in London supervise the international activities of national banks.

That's OCC today. But... Treasury just came out with a reform proposal today which proposes to create a new agency within the U.S. Treasury called the National Bank Supervisor (NBS) that will "conduct prudential supervision and regulation of all federally chartered depository institutions, and all federal branches and agencies of foreign banks." This new agency will subsume the OCC as well as the Office of Thrift Supervision (OTS), which currently supervises federally chartered thrifts and thrift holding companies. The proposal says that "The NBS should be an agency with separate status within Treasury and should be led by a single executive."

In any case, NBS or OCC, at least you now know what this strange creature called the Office of the Comptroller of the Currency (OCC) is all about.

-- Jack Krupansky