The OCC wants banks to be able to show exam findings to a merger counterparty, and says the criminal penalty its own rule warns of is outside its authority
The rule says something the agency now says it cannot enforce.
In a proposal filed at 08.45 Eastern on Tuesday, the Office of the Comptroller of the Currency asks to rewrite the rules governing what banks may do with the material their supervisors give them, and it makes an unusual admission on the way. The current rule warns that unauthorised disclosure may bring criminal penalties under 18 U.S.C. 641. That reference, the proposal says, may be contrary to controlling legal authorities and plainly falls outside of the OCC's enforcement authorities.
It would come out. The agency says the warning has chilled disclosure that was lawful all along.
Six doors, each with a lock on it
The substance is a two-tier framework. The proposal carves confidential supervisory information out of the broader category of non-public OCC information and lets a supervised bank disclose it without asking the agency first, in six situations, each of which names who may receive it and on what terms.
They are: an affiliate; a service provider; a candidate for a senior executive officer job; a potential counterparty in a business combination; that counterparty's United States based consultants and attorneys; and a not-for-profit entity, including a trade association.
The current exception list is far narrower. Under 12 CFR 4.37(b)(2) a bank may go to its attorneys, its auditors and its independent auditors, and beyond that it writes to the agency and waits.
The conditions vary by door. A service provider has to be incorporated in the United States or a territory of it, have a business need, and have a formal agreement. A senior executive candidate has to sign a qualifying confidentiality agreement and be approved by the board, and the bank may talk to only one candidate at a time for a given position, having formally ended discussions with the last one. The positions in question are the ones listed in the OCC's own definition: president, chief operating officer, chief financial officer, chief lending officer, chief investment officer and chief risk officer. The affiliate door has no conditions attached at all, and the agency states it has not limited that route to domestic affiliates, while asking whether it should.
What the agency left out, and why
The proposal does not extend any of this to a parent holding company. The OCC says it considered exactly that, and describes what such an exception would have allowed, then declines to propose it on the ground that it does not supervise the holding company and would have less visibility into whether the confidentiality agreements and disclosure logs were being kept. It invites comment on whether to put the exception back in the final rule.
The agency also states the case against its own proposal, in its own words. Inadequately controlled disclosure, it says, could implicate a supervised entity's financial condition, including by driving away customers, investors and business partners and potentially leading to bank runs.
The same document adds expedited processing for freedom of information requests, revisiting a 2024 proposal that drew five comments and was never finalised. Jonathan V. Gould, the Comptroller, signed it. Comments run for 60 days from publication.
