- Key Insight: Comptroller of the Currency Jonathan Gould says "debanking" is something that is, in his mind, primarily a problem at the largest banks.
- Expert Quote: "This is not about trying to force banks to engage in activities where they have no competence at all to do so, we're just trying to really be targeted in what we look at, where we think there may have been problems in the past, and try to make sure it doesn't happen again." — Comptroller Gould
- Forward look: Gould says new reputational risk rules and anti-money-laundering simplification are in the works.
Comptroller of the Currency Jonathan Gould said the agency is scouring third-party "complaint data" in an effort to identify and crack down on big banks that denied services to politically controversial clients, saying he is not aware of small banks engaging in so-called "debanking."
In the remarks, delivered in a fireside chat held last week before a crowd at the AI‑Native Banking and Fintech Conference in Utah, Gould touched on a number of issues, including tailoring regulations, promoting new technologies at banks and discouraging banks from terminating relationships with controversial clients.
"This is not about trying to force banks to engage in activities where they have no competence at all to do so, we're just trying to really be targeted in what we look at, where we think there may have been problems in the past, and try to make sure it doesn't happen again," he said. "That's why we [are using] the licensing process and the Community Reinvestment Act process as well as a way to surface, you know, any allegations of this … pouring through our own complaint data and working with third parties for their complaint data … that's a challenge on debanking to us: What do we mean by it and to what extent it's actually occurring, and then where has it occurred, and what banks? ... my anecdotal evidence that I have suggests it's really only the very large banks."
President Trump in August
The Office of the Comptroller of the Currency last month
Gould said the agency will have a "reputational risk" rulemaking released in the near future that will "tie [regulators'] hands," and prevent them from denying controversial clients access to bank accounts. One rule will clarify that reputational risk cannot be a pretext for denying banking services, Gould said, adding that he wants to simplify anti-money-laundering compliance, an area that he said is "crying out for reforms and automation."
"I have a lot of good friends who are in the operational weeds on how to make these relationships work," Gould said. "My friends have assured me this is definitely solvable, and so I'm working actively with them to chart a path forward so that banks can actually partner with fintechs. It is a huge burden for banks, and we need to think of a better way to do it, still achieving, again, the very important policy, public policy objectives that underlie our [Bank Secrecy Act/ anti-money-laundering] laws."
Gould also said he is bringing a sense of urgency to dismantling burdensome regulation on banks and simplify supervision of the nationally chartered financial firms OCC oversees.
Before his current position, Gould worked for Sen. Mike Crapo, R-Idaho, and helped engineer the Economic Growth, Regulatory Relief, and Consumer Protection Act, known as S.2155 or the "Crapo bill." The Crapo bill directed regulators to calibrate post-2008 reforms to bank size, with an eye toward reducing the regulatory burdens on small and midsize banks. Critics of lighter touch regulation
With the caveat that asset thresholds are, as he says, "inherently rather a poor proxy for business model or complexity," Gould says he wants to implement tailoring to the maximum extent possible, but that, "we kind of reserve the right to move things around as we see fit based on actual risk profiles."
"I also have a pretty broad-based experience in risk management generally, including from before 2008, so I know what the world looked like from a supervisor and regulatory point of view," Gould said. "Some of the changes that were made [were] understandable, some I think were misinformed and counterproductive. Congress meant it when they passed [the Crapo bill], and it's my obligation to ensure that we comply with both the letter and the spirit of the law."
Gould also says he wants to take a longer-term perspective of risk and what it means to foster healthy evolution in bank regulation. Past Democratic administrations, in his mind, erred too heavily on the side of caution, effectively barring novel technologies from interacting with the regulated system. Gould says he is more concerned about the risks of moving too slowly to adopt new technology.
"Engaging in new activities or embracing new technologies, sure, can be a source of risk, but so too can the failure to embrace them as well," Gould said. "So I think my job is to ensure that banks have as many paths to long term viability and relevance as possible, and that includes ensuring that banks can, if they so desire, embrace new activities and new technologies consistent with law and in a safe and sound manner. One of the things I think has occurred in the past is that regulators have sometimes taken the view that risk management means risk elimination and trying to build a wall around the banking system."
