Charles Taylor, a top OCC official who focuses on capital and
regulations, said the majority of the complex banks his agency
oversees are implementing "simplification" projects.
"We plan to initiate a project soon to compile data that will assist
the industry and other regulators in assessing the impact of these
actions," Taylor said in remarks prepared for a conference hosted by
the Institute of International Bankers.
Regulators are still grappling with how to deal with the risks that
complex, banking giants pose to the financial system, almost six
years after the housing market crash brought the largest U.S. banks
to their knees.
Congress passed the 2010 Dodd-Frank law to crack down on "too big to
fail" banks, or firms that would topple financial markets if they
failed. Regulators have since begun to address the possibility that
some banks are too big to manage.
The OCC, which supervises the nation's largest banks, in recent
months has been pressing firms to examine their organizational
structures, identify unnecessary or overlapping businesses, and pare
down. It calls this effort "legal entity simplification."
The debate over whether mega banks are unmanageable intensified
after the so-called "London whale" situation, in which top officials
at JPMorgan Chase were taken by surprise in 2012 when a trader in
the firm's London office lost billions of dollars on risky trades.
The OCC bore much of the criticism from lawmakers and pro-financial
reform advocates for failing to spot JPMorgan's London problem.
Officials have since announced several initiatives aimed at banks'
risk management and structure.
[to top of second column]
The OCC also oversees the other big banks, including Citigroup, Bank
of America and Wells Fargo.
Its legal entity simplification program ties into other, ongoing
efforts to force banks to examine their businesses and plan for
their own hypothetical demise, such as the living wills required by
the Dodd-Frank law.
Taylor said selling off or consolidating legal entities also could
help firms reduce legal costs, control accounting fees and deal with
The program has shown some results already, he said. Reviewing legal
structures has helped some banks meet tougher expectations that the
OCC has put in place for risk management, Taylor said.
(Reporting by Emily Stephenson; editing
by Karey Van Hall and Andrea Ricci)
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