The Office of the Comptroller of the Currency (OCC) – the primary federal bank regulator for a broad cross-section of U.S. banks, from community banks to the largest banks in the country – issued its Semiannual Risk Perspective (the Report) on June 29, 2020. The Report sets forth the OCC’s views on the economy, as well as key supervisory and compliance risks that the nation’s top banking regulator has identified for heightened concern by its regulated institutions. As such, the Report is considered a must read for all financial institutions.
The majority of the Report provides the OCC’s review and analysis of the substantial downturn in the U.S. economy due to the COVID-19 pandemic. The OCC notes that before the economic downturn brought on by the pandemic, the banking sector was in a position of considerable strength, with sound capital and liquidity, low problem assets and effective risk management systems. According to the OCC, matters requiring attention (MRAs) and banks rated 4 and 5 were at 10-year lows, reflecting the strong economy and banks’ sound risk management practices. The OCC linked this strong foundation to the banking system’s ability “to proactively…
