WASHINGTON The bank and thrift regulators want to increase the fees they charge for supervising institutions with poor safety and soundness ratings doubling them for thrifts and substantially raising them for national banks.
The Office of the Comptroller of the Currency and the Office of Thrift Supervision are funded by assessments on the entities they regulate, and both already charge poorly rated institutions higher-than-average fees to compensate for the extra cost of examining them.
But both agencies want to go further. They have recently published plans in the last several months to increase the surcharges on institutions judged to be among the least safe or sound.
We have always recognized that it is not necessarily fair for all savings institutions to pay for the higher costs associated with examination and supervision of troubled institutions, said Deborah Dakin, deputy chief counsel for regulations and legislation at the OTS.
That judgment is based on regulators Camels system, which grades institutions according to six categories: capital, asset quality, management, earnings, liquidity, and sensitivity to risk. Institutions are rated in each category on a scale of 1 to 5, with 1 the best and 5 the worst. They also receive a composite rating using the same scale.
It is that composite rating that the OCC and OTS use to determine which banks pay a surcharge for their examinations.
Both agencies arrive at the overall charge to an institution by adding a number of individual charges based on factors such as its size and business lines.
The OCC currently computes the surcharge on poorly rated banks by increasing the size-based element of the assessment, by 50% for 3-rated banks, and by 100% for 4- and 5-rated banks.
Under a preliminary proposal published April 4, the agency would expand the surcharge formula to include all elements of the banks assessment, meaning that a bank rated Camels 3 would be charged 50% more than a bank of similar size and structure with a 1 or 2 rating. Banks rated 4 or 5 would be charged a 100% more than comparable institutions rated 1 or 2.
The current surcharge on poorly rated institutions regulated by the OTS is determined by adding 25% to the size component of the assessment on 3-rated thrifts and 50% to the size component of 4- and 5-rated thrifts.
On May 1 the agency proposed a rule that would double those surcharges, to 50% of the size assessment for 3-rated institutions and 100% for 4- and 5-rated institutions.
The majority of banks and thrifts would not be affected by the rule change.
Specific data on national banks was not available, but at the end of 2000, 80% of all commercial banks held one of the top two Camels ratings. Approximately 19% were rated Camels 3, and only 1% were in the 4 or 5 categories.
According to the OTS, at the end of 2000 there were 98 savings banks rated Camels 3, and 15 rated 4 or 5. The remainder of the 1,590 institutions regulated by the agency were rated in one of the top two categories.