Federal banking regulators finalized an interagency rule requiring bank examiners to focus supervision on financially material risks rather than process-based compliance checklists on Aug. 28, the Office of the Comptroller of the Currency announced.
The rule represents a significant deregulatory shift in bank examination philosophy, moving away from what critics have called “check-the-box” reviews toward evaluations centered on whether banks are managing risks that could threaten their financial health, the OCC said.
The change takes effect immediately and affects all federally supervised banks. The rule was issued on an interagency basis, involving the OCC and other federal banking regulators.
Under the previous framework, bank examiners routinely issued findings on procedural deficiencies — such as incomplete documentation or minor policy deviations — regardless of whether those issues posed material financial risk. Banks were required to respond to all findings, consuming significant compliance resources.
The new approach is expected to reduce the volume of lower-priority examination findings, particularly for well-managed community and regional banks that have long argued the compliance burden is disproportionate to their risk profile.
Consumer advocacy groups have expressed concern that risk-based supervision could reduce early detection of systemic weaknesses and allow problems to grow before they attract examiner attention.
The final rule is one of several banking regulatory actions issued Thursday, including a separate OCC package overhauling enforcement transparency and advance-notice requirements for Matters Requiring Attention.
The shift mirrors a broader deregulatory trend across financial regulation, as the administration seeks to reduce what it characterizes as excessive compliance costs while maintaining core safety and soundness standards.