The Office of the Comptroller of the Currency hasn't moved as quickly as it could to address risks posed by large national banks, according to an external review released Thursday.
The OCC has lagged in issuing guidance addressing bank risks and should revise its bank risk-rating system to better capture brewing problems, the report from a team of international regulators said. The OCC oversees national banks.
The report said the OCC, which shares industry oversight with the Federal Reserve and the Federal Deposit Insurance Corp., can wait too long before acting while it forges consensus with other regulators.
Comptroller Thomas Curry requested the report, prepared by international regulators, as part of an effort to improve oversight by the agency, which has faced criticism in the wake of the 2008 financial crisis and subsequent large losses incurred by banks.
Curry vowed to develop plans within four months for addressing issues raised in the report, which focused on oversight of large and mid-sized banks.
One the largest changes recommended in the report is a departure from the OCC's policy of stationing its overseers at the offices of banks, a practice in place since 1986. The report recommended that the OCC instead house examiners from multiple banks in a shared office.
Such a change could be costly if it forces the agency to open up new offices or spend more on travel, but it could save money by reducing staffing needs, Mr. Fiechter said. He added that placing examiners from different banks together would help the OCC ensure that risk-management practices are consistent across the industry.
The report also targeted the decades-old rating system known as CAMELS, which helps regulators decide whether to curb a bank's risk-taking or charge it a higher premium for deposit insurance. Other countries have pulled ahead of the U.S. in designing ratings for banks that do a better job of measuring future potential risks, and the U.S. should work to catch up
The report also said the OCC should clarify that preserving the safety and soundness of banks is more important than other objectives that the agency has outlined, such as fostering banks' ability to compete.
The report warned that the OCC may face staffing shortfalls in the next five years as many senior examiners retire and recommended the agency step up its ability to accommodate people joining the agency at the middle of their careers, rather than straight out of college.