Office of the Comptroller of the Currency 

Mission Statement 

To ensure a safe and sound national banking system for all Americans. 

Program Summary by Budget Activity 

Dollars in Thousands 

FY 2009 FY 2010 FY 2011

Actual Estimated Estimated $ Change % Change

 Supervise $597,859 $661,039 $694,220 $33,181 5.0%

 Regulate $94,511 $104,499 $109,744 $5,245 5.0%

 Charter $23,628 $26,125 $27,436 $1,311 5.0%

Total Resources $715,998 $791,663 $831,400 $39,737 5.0%

Total FTE 3,104 3,216 3,263 47 1.5%

FY 2010 Priorities 

• Regulate and supervise 1,564 national bank charters and 51 federal branches of 

foreign banks with total assets of approximately $8.3 trillion, as of September 30, 

2009; 

• Conduct examinations based on the risk profile of individual national banks to ensure 

they are safe and sound, sufficiently capitalized, and comply with consumer 

protection laws and regulations; 

• Anticipate and proactively address potential adverse changes in national bank asset 

quality, liquidity and consumer risk profiles and allocate supervision resources 

accordingly; 

• Assess the adequacy of national banks’ credit, liquidity, internal controls, compliance, 

and corporate governance processes and require corrective action when deficiencies 

or undue risk concentrations are found; 

• Resolve problem bank situations effectively by identifying problems at the earliest 

possible stage, clearly communicating concerns and expectations to bank 

management through appropriate enforcement actions, and ensuring timely follow-up 

on needed corrective actions; 

• Continue to work closely with the Department of Treasury to implement provisions of 

the administration’s Financial Stability and Regulatory Reform plans; 

• Work with other domestic and international supervisors to strengthen supervisory 

processes and industry risk management practices, drawing upon key lessons learned 

from the global disruption in financial markets; 

• Maintain a highly skilled and experienced workforce by continuing efforts to identify 

and develop the next generation of bank supervision leadership, strengthen the 

breadth and depth of examiner specialty skills, and recruit and retain entry-level 

examiners; 

• Combat fraud and money laundering, and protect the integrity of the financial system 

through national banks’ compliance with the Bank Secrecy Act/Anti-money 

laundering (BSA/AML), and the Uniting and Strengthening America by Providing 
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) 

Act laws and regulations; 

• Continue to support a competitive national banking system through entry of new 

charters, other bank structure transactions, and expansion of bank services and 

products in a safe and sound manner; and 

• Continue to refine and improve the Comprehensive Report on Mortgage Performance 

and develop enhanced supervisory analytics with granular data on major national 

banks’ credit card, home equity, and syndicated loan portfolios. 

Information regarding the Administration’s comprehensive regulatory reform proposals is 

provided in a separate budget chapter.

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Table of Contents 

Office of the Comptroller of the Currency ..................................................................... 0

Section 1 – Purpose ........................................................................................................... 3

1A – Description of Bureau Vision and Priorities .......................................................... 3

1B – Program History and Future Outlook ..................................................................... 4

1C – Industry Outlook .................................................................................................. 16

Section 2 – Budget Adjustments and Appropriation Language ................................. 17

2.2 – Operating Levels Table ........................................................................................ 17

2.3 – Resource Detail Table .......................................................................................... 18

2B – Appropriations Language and Explanation of Changes ....................................... 18

Section 3 – Budget and Performance Plan ................................................................... 19

3.1 – Budget by Strategic Outcome .............................................................................. 19

3.2.1 – Supervise Budget and Performance Plan .......................................................... 20

3.2.2 – Regulate Budget and Performance Plan ........................................................... 22

3.2.3 – Charter Budget and Performance Plan .............................................................. 23

Section 4 – Supporting Materials .................................................................................. 24

4A – Human Capital Strategy Description ................................................................... 24

4.1 – Summary of IT Resources Table ......................................................................... 26

4B – Information Technology Strategy ........................................................................ 27

4.2 – Program Evaluation ............................................................................................. 29

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Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Office of the Comptroller of the Currency (OCC) was created by Congress to charter 

national banks, oversee a nationwide system of banking institutions, and ensure national 

banks are safe and sound, competitive and profitable, and capable of serving in the best 

possible manner the banking needs of their customers. 

The OCC supervises 1,564 national bank charters and 51 federal branches of foreign 

banks in the United States. Total assets under the OCC supervision are approximately 

$8.3 trillion or 70 percent of total U.S. commercial banking assets. The average size and 

complexity of the institutions in the national banking system continue to grow, creating 

increasing and diverse challenges for the OCC. 

As the regulator of national banks, the OCC has established four strategic goals that help 

support a strong economy for the American public: 1) a safe and sound national banking 

system; 2) fair access to financial services and fair treatment of bank customers; 3) a 

flexible legal and regulatory framework that enables the national banking system to 

provide a full competitive array of financial services; and 4) an expert, highly motivated, 

and diverse workforce that makes effective use of OCC resources. The OCC organizes 

its activities under three programs: (1) Supervise, (2) Regulate, and (3) Charter, to 

achieve the goals and objectives outlined in its strategic plan. 

The OCC’s priorities for fiscal year (FY) 2010 include supervisory issues related to 

continued adverse changes in national bank asset quality and risk profiles: working with 

the U.S. Treasury and other supervisors domestically and internationally to strengthen 

supervisory processes and banks’ capital, liquidity, corporate governance, risk 

management practices; assessing the potential impact of, and ensuring national banks’ 

compliance with any new applicable statutory, regulatory, and accounting standards; 

identifying and resolving potential problem banks at the earliest possible stage; further 

enhancing the OCC’s supervisory analytical tools, including the joint OCC and Office of 

Thrift Supervision (OTS) mortgage metrics database and reports; and encouraging 

national banks to continue to meet the needs of credit worthy borrowers, including 

appropriate and effective residential mortgage modification programs, and ensuring that 

they comply with Community Reinvestment Act (CRA), fair lending, and other consumer 

protection laws and with BSA/AML and USA PATRIOT Act requirements. 

Assessing the adequacy of national banks’ credit and liquidity risk management and 

consumer compliance practices, and obtaining corrective action to address any identified 

safety and soundness and consumer compliance weaknesses will continue to be a major 

focus of the OCC on-site supervisory activities in FY 2010. Coordination and 

cooperation with state officials will be a significant focus for the agency. Maintaining 

and enhancing examiners’ skill sets, recruiting entry-level examiners and enhancing their 

retention at the critical three/four-year point of their careers, and continuing to develop 

the next generation of bank supervision leadership are also critical initiatives of the OCC. 

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1B – Program History and Future Outlook 

The OCC has its headquarters in Washington, D.C., and operates four district offices in 

Chicago, Dallas, Denver, and New York, and field and satellite offices throughout the 

United States. Resident examiner teams are located in the largest banking companies, 

and there is an examining office in London, England. 

Operations are funded primarily (approximately 96 percent) from semiannual 

assessments levied on national banks. Revenue from investments in U.S. Treasury 

securities and other income comprise the remaining 4 percent of the OCC’s funding. The 

OCC does not receive congressional appropriations to fund any portion of its operations. 

The OCC and the banking industry continue to operate in a highly challenging and 

volatile environment. The financial condition and performance of national banks 

continue to be adversely affected by deterioration in the housing market and decline in 

general economic conditions. While economic conditions are expected to improve in FY 

2010, the pace and scope of recovery may vary considerably across sectors and 

geographic markets. Credit conditions in many sectors will continue to deteriorate and 

national banks will continue to have significant volumes of problem loans and borrowers. 

As a result, the OCC is expected to experience an increase in the number of problem 

banks and bank failures. In addition, there will be heightened compliance, reputation, 

and strategic risks posed by significant changes in the statutory, regulatory, and 

accounting requirements for various bank products, services, and transaction structures 

that banks will need to successfully integrate into their operations. These changes may 

foster fundamental shifts in some banks’ business models and strategic plans. 

Responding to deteriorating credit quality and ensuring adequate liquidity, loan loss 

reserves, and capital buffers are maintained, will continue to be major focal points for the 

agency and the industry in the coming year. To address these challenges, the OCC is 

identifying those banks which are the most vulnerable to the impact of current economic 

conditions, and coordinating and allocating bank supervision resources to the areas and 

institutions of highest risk. 

The following are highlights of the OCC’s FY 2009 accomplishments and specific FY 

2010 challenges. 

Supervisory Activities 

As the supervisor of national banks, the OCC has various ways to influence the national 

banking system: policy guidance and regulations that set forth standards for sound 

banking practices; on-site examinations and ongoing off-site monitoring that enable us to 

assess compliance with those standards and to identify emerging risks or trends; and a 

variety of supervisory and enforcement tools – ranging from matters requiring 

management’s attention to informal and formal enforcement actions – that are used to 

obtain corrective action to remedy weaknesses, deficiencies, or violations. 

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The federal banking agencies regularly share supervisory information and undertake 

coordinated enforcement actions. As an example, when the OCC issues a remedial 

enforcement action against a national bank, the Federal Reserve Board will often take a 

complementary action with respect to the bank’s holding company. Pursuant to an 

interagency sharing agreement, the federal banking agencies regularly exchange 

documents and information concerning fraudulent activities, including suspicious activity 

reports that involve suspected illegal activities at multiple financial institutions, and 

notify each other of enforcement actions against banks and individuals. 

The OCC also coordinates extensively with other regulatory agencies and with law 

enforcement authorities. The OCC has entered into similar information sharing 

agreements with most state banking agencies, and all 50 state insurance departments, and 

regularly shares information with the Securities and Exchange Commission (SEC). The 

agency makes enforcement referrals to all of these regulators, as well as to state licensing 

boards and state professional ethics and responsibility boards, with respect to misconduct 

by attorneys, accountants, real estate agents, appraisers, and other professionals. The 

agency also makes enforcement referrals and cooperates in investigations conducted by 

several federal agencies, including, for example, the Financial Crime Enforcement 

Network (FinCEN), the Department of Labor (DOL), the Internal Revenue Service (IRS), 

the Department of Housing and Urban Development (HUD), the Federal Election 

Commission (FEC), and the Federal Trade Commission (FTC). In FY 2009, the OCC 

entered into an information-sharing agreement with the FTC to enhance the ability of 

both agencies to pursue activities of fraudulent payment processors and telemarketers. 

Suspected criminal violations, including evidence of fraud, are referred to the Department 

of Justice (DOJ). The OCC assists the DOJ, the Federal Bureau of Investigation (FBI), 

and the Secret Service in their investigations and prosecutions of fraud, as appropriate, by 

providing the OCC examiners to serve as special agents to the grand jury and as expert 

banking witnesses for the prosecution at trial. The OCC is a member of the National 

Interagency Bank Fraud Working Group and belongs to the President’s Corporate Fraud 

Task Force. 

The OCC continuously supervises banks through examination in its community bank, 

midsize and credit card bank, and large bank programs. A supervisory strategy is 

developed based on each banking institution’s risk profile and condition. Examination 

activities focus on safety and soundness, consumer compliance, BSA/AML, USA 

PATRIOT Act, fair lending, asset management, bank information technology, and the 

CRA. 

The OCC monitors and alerts the industry to emerging risks and practices that could 

adversely affect a bank’s safety and soundness or compliance with banking laws and 

regulations through policy programs. Over the last several years, the OCC issued a series 

of supervisory guidance to address weaknesses in bank underwriting standards and credit 

practices. These guidelines addressed credit card account management; loss allowance 

practices; sound risk management practices for concentration loans in commercial real 

estate (CRE) lending; credit risk management for home equity lending; and 

nontraditional and subprime mortgage products. More recently, the OCC has issued 

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guidance on the increased credit risk found in many banks’ investment securities 

portfolios. 

In FY 2009, the OCC supervisory activities centered on monitoring and responding to 

adverse conditions in the credit and financial markets, and national banks’ loan 

portfolios. A primary focus of the OCC on-site supervisory activities has been the 

quality of national banks’ credit risk management practices, as evidenced by effective 

credit risk rating systems and problem loan identification, adequate loan loss reserves in 

light of deteroriating credit quality, and effective loan work-out strategies. The OCC 

continues to encourage bankers to work with credit worthy borrowers who may be facing 

financial difficulties. Other areas of emphasis have been on sound liquidity risk 

management, with diversified funding sources and realistic contingeny funding plans, and 

strengthening capital buffers to weather further earnings pressures and asset quality 

deterioration. While assessing credit quality, adequacy of loan loss reserves, liquidity, 

capital, and risk management practices have been and continue to be the OCC’s primary 

focus, the OCC also remains cognizant of the continuing need to address supervisory 

issues in the areas of fair lending, consumer protection, BSA/AML, and information 

security. 

Monitoring Credit Quality 

Monitoring and evaluating the quality of the loans and investments made by national 

banks are a fundamental component of the OCC’s supervision program. Examiners 

evaluate asset quality and the adequacy of a bank’s credit and investment risk 

management and controls through their on-site examination activities. They also ensure 

the bank has properly recorded any losses that have occurred in their loans or 

investments, and that the bank maintains adequate reserves for inherent losses in their 

loan portfolio. 

In addition to individual bank examinations, the OCC conducts a variety of other 

activities aimed at identifying and responding to systemic trends and emerging risks that 

could adversely affect asset quality or the availability of credit at national banks and the 

banking system. Fiscal year 2009 activities included: 

• Annual Survey of Credit Underwriting Practices - This annual survey, conducted by 

the OCC examiners and Credit Risk staff, identifies trends in lending standards and 

credit risk for the most common types of commercial and retail credit products 

offered by national banks. It provides an aggregate snapshot of how various factors, 

such as competition, are affecting how banks price and underwrite loans and whether 

the OCC believes the inherent credit risk in banks’ portfolios are increasing or 

decreasing. The 2009 survey included examiner assessments of credit underwriting 

standards at the 59 largest national banks with assets of $3 billion or more. This 

population covers loans totaling $3.6 trillion as of December 2008, approximately 84 

percent of total loans in the national banking system. The 2009 survey indicates that 

the trend of tighter underwriting that began in mid-2007 continued through 2008, as 

the majority of the banks surveyed tightened underwriting standards for both 

commercial and retail loans. This tightening offsets widespread easing that occurred 

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during prior periods and is a measured response to a slowing economy and pockets of 

deteriorating product performance. Survey results indicate that the majority of banks 

now use generally the same underwriting standards regardless of the intent to hold or 

distribute. A key lesson learned from the financial market disruption is the need for 

bankers to apply sound, consistent underwriting standards regardless of whether a 

loan is originated with the intent to hold or sell. In releasing this year’s survey, the 

OCC reminded bankers that underwriting standards should not be compromised by 

competitive pressures or the assumption that the loan will be sold to third parties; 

• Shared National Credit Review - The annual Shared National Credit (SNC) review is 

a joint program conducted by the OCC, the Board of Governors of the Federal 

Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and OTS. 

The SNC review addresses large syndicated loans held by multiple banks. The 2009 

review covered 8,955 credit facilities with commitments totaling $2.9 trillion. A 

SNC Press Release with results of the review will be published in late September. 

The OCC continued work on an interagency project to modernize the collection and 

analysis of SNC data and to improve the program’s efficiency and effectiveness. 

• Risk Concentrations - The market turmoil and subsequent economic downturn have 

highlighted the risks posed by undue asset or liability concentrations in banks’ 

portfolios. Community banks can be especially prone to such concentrations as their 

lending portfolios tend to be highly concentrated in their local markets. As noted 

above, the OCC and other federal banking agencies warned financial institutions of 

the risks that were accumulating in many banks’ CRE loan portfolios. During the last 

four years, the OCC has conducted asset quality reviews of all the OCC community 

and mid-size banks that have significant CRE concentrations to ensure that the banks 

have adequate credit underwriting, problem loan identification, and loan loss reserves 

for these portfolios. More recently, the OCC and other federal banking agencies have 

issued for comment, guidance on managing concentrations risk that may emerge from 

various correspondent banking relationships. These concentrations may emerge as 

credit exposures to banks that are lending or placing funds with a correspondent bank 

(e.g., selling excess federal funds) or as a liability exposure for banks that are 

obtaining funds from downstream correspondents; and 

• Enhanced Credit Data Analytics - To improve the OCC’s ability to monitor credit 

quality trends at the largest national banks and to identify potential trends that could 

pose systemic risks to the industry as a whole, during FY 2009 the OCC awarded 

contracts to several data aggregators to collect, validate, and aggregate data on home 

equity, credit card and large corporate syndicated credits. These efforts build off of 

the highly successful mortgage metrics project that the OCC initiated in FY 2008. 

 

Restoring Financial Stability and Strengthening Prudential Supervision 

The OCC has and continues to actively support the administration’s efforts to restore 

stability to the U.S. financial sector and overall economy. The OCC is also working 

closely with other domestic and international supervisors, including the President’s 

Working Group (PWG), the Basel Committee on Bank Supervision, the Financial 

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Stability Board (FSB) and the Senior Supervisors’ Group (SSG), to identify and 

coordinate actions aimed at both restoring functioning markets and strengthening risk 

management and disclosure practices. For example, the FRB and the OCC are working 

with the Federal Reserve Bank of New York, the SEC, and other key global regulators 

and market participants to strengthen the operational infrastructure and backroom 

processes used for various over-the-counter derivative transactions. Through the OCC’s 

ongoing supervisory process, the OCC monitors and benchmarks the efforts of the largest 

national banks to implement various recommendations and best practices that have been 

identified in various reports issued by the PWG, SSG, Financial Stability Forum and 

Basel Committee. 

Other key initiatives are highlighted below: 

• Troubled Assets Relief Program (TARP) - The OCC worked closely with the U.S. 

Treasury Department to provide technical assistance on the design and operation of 

various initiatives under TARP, including the Capital Purchase Program (CPP). The 

OCC, along with the other federal banking agencies and Treasury, developed a 

uniform application form for Qualified Financial Institutions (QFIs) that wanted to 

participate in the TARP CPP and used common evaluation factors and decision forms 

to review and provide recommendations on those applications to Treasury. As part of 

this process, the OCC supervisory staff reviewed all CPP applications submitted by 

national banks to evaluate their eligibility for the program and to provide 

recommendations to Treasury. The OCC also chaired and provided secretariat 

support to the interagency TARP CPP Council that is an advisory body to Treasury. 

For much of FY 2009, the OCC also provided on-site staff to assist Treasury in 

developing an effective administrative and oversight function for the TARP program. 

The OCC staff also worked with Treasury to develop reporting mechanisms to 

monitor and assess the use and effectiveness of TARP CPP proceeds by QFIs; 

• Supervisory Capital Assessment Program - In conjunction with Treasury’s Capital 

Assistance Program, the OCC, the FRB, and the FDIC, conducted a comprehensive, 

forward looking assessment of the financial condition of the nation’s 15 largest bank 

holding companies to determine if those companies had sufficient capital buffers to 

withstand losses and sustain lending during a sustained economic downturn. This 

assessment involved staff from the OCC’s on-site supervisory teams and policy and 

economic divisions. Institutions that needed to augment their capital levels were 

required to submit detailed capital plans and the OCC is closely monitoring national 

banks’ compliance with those plans. Since the results of these assessments were 

announced in May, national banking organizations have raised or converted over 

$108 billion in core capital instruments; 

 

• Residential Mortgage Lending, Loan Modifications, and Reporting Metrics - 

Continued strains in the housing markets are having an adverse affect on national 

banks’ residential mortgage and home equity loan portfolios. To improve the OCC’s 

ability to monitor conditions in this important market segment, in FY 2008 the OCC 

began requiring the nine largest national bank mortgage servicers to submit 

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comprehensive mortgage data to the OCC on a monthly basis. In the summer of 

2008, the OCC established the first loan-level source of mortgage performance data 

with the OTS by gathering validated information and reporting on more than 34 

million first-lien mortgages, which represents 64 percent of all mortgages in the 

country. In FY 2009, the OCC and OTS refined and expanded the data collected to 

include information on the performance of modified loans, the sustainability and 

changes in payments that result from loan modifications, and the types of actions 

taken to modify loans. 

The OCC also continues to encourage national banks to work constructively with 

borrowers who may be facing difficulties with their current mortgage obligations and 

to continue to meet the needs of credit worthy borrowers. In November 2008, the 

OCC and other federal banking agencies issued the Interagency Statement on Meeting 

the Needs of Creditworthy Borrowers. The OCC also has worked closely with 

Treasury and the HUD on formulating various programs to assist homeowners, 

including Treasury’s Home Affordable Mortgage Program (HAMP). To ensure that 

regulatory capital was not hindering banks’ ability to participate in this program, in 

November 2009 the OCC and other federal banking agencies issued a final rule that 

provides a common interagency capital treatment for mortgage loans modified under 

HAMP. The rule provides that loans modified under HAMP will retain the capital 

risk-weight assigned to a loan prior to its modification, so long as the loan continues 

to meet other applicable prudential criteria; 

• Enhanced Liquidity Risk Management - In September 2008, the OCC joined other 

global supervisors in endorsing the Basel Committee’s Principles for Sound Liquidity 

Risk Management and Supervision. The principles underscore the importance of 

establishing a robust liquidity risk management framework that is well integrated into 

the bank-wide risk management process. In June 2009, the OCC and other U.S. 

federal banking agencies issued for comment, guidance on the application of these 

principles to U.S. depository institutions; 

• Basel II Capital Rules - The recent market turmoil highlighted areas where the current 

Basel II capital framework needed to be strengthened. The OCC has been actively 

involved in the package of measures announced by the Basel Committee in July 2009 

to strengthen the 1996 rules governing the capital required for trading activities and to 

enhance the three pillars of the Basel II framework. The refinements announced in 

July include: 1) higher capital requirements to capture the credit risk of complex 

trading activities, including a stressed value-at-risk requirement designed to dampen 

the cyclicality of the minimum regulatory capital framework; and 2) higher capital 

requirements for re-securitizations to better reflect the risk inherent in these products, 

and for short-term liquidity facilities to off-balance sheet conduits. Banks will also be 

required to conduct more rigorous credit analyses of externally rated securitization 

exposures and to comply with higher supervisory standards for firm-wide risk 

governance and risk management. 

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These measures are part of the Basel Committee’s broader program to strengthen 

capital by: 1) promoting the build-up of capital buffers that can be drawn down in 

periods of stress; 2) strengthen the quality of bank capital; and 3) introduce a leverage 

ratio backstop to Basel II for countries that currently do not have a leverage-based 

capital ratio. The U.S. agencies will jointly consider the adoption of these and other 

changes to the Basel II Accord for U.S. institutions through the agencies’ notice and 

comment process; and 

• Accounting and Financial Disclosure Issues -The OCC and other federal banking 

agencies continue to work closely with the SEC and the Financial Accounting 

Standards Board (FASB) on various accounting and disclosure issues related to the 

recent market disruptions, including various interpretations and application of 

guidance related to mortgage loan modifications, fair value measurement in illiquid 

markets, and accounting for asset-backed commercial paper and structured financial 

instruments. The agencies provided input as needed to the FASB as it developed 

revised accounting and disclosure standards governing securitization transactions and 

off-balance sheet entities that culminated in the FASB’s Statements of Financial 

Accounting Standards Nos. 166 and 167 (FAS 166 and FAS 167), published in June 

2009. These statements amend Statement of Financial Accounting Standards No. 

140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments 

of Liabilities (FAS 140), and FASB Interpretation No. 46(R), Consolidation of 

Variable Interest Entities. These changes will have material effects on banking 

organizations’ accounting for off-balance sheet items as well as the regulatory capital 

requirements for these items. In September 2009, the OCC and other federal banking 

agencies issued a proposed rulemaking for comment on the regulatory capital 

treatment and impact of the new standards. A final rule is expected before year end. 

 

Under Comptroller Dugan’s chairmanship of the Financial Stability Board’s Working 

Group on Provisioning, the OCC is also actively involved with banking supervisors 

and accounting standard setters world-wide to ensure that banks have the ability to 

strengthen their loan loss reserves at an appropriate time in the credit cycle, as their 

potential future loan losses are increasing. A more forward-looking “life of the loan” 

or “expected loss” concept would allow provisions to incorporate losses expected 

over a more realistic time horizon, and would not be limited to losses incurred as of 

the balance sheet date, as under the current regime. Such a revision would help to 

dampen the decidedly pro-cyclical effect that the current rules are having today. 

Resolving Problem Banks 

The goal of the OCC’s supervision is to identify and correct potential issues at an early 

stage, before they adversely affect the safety and soundness of the banking system or the 

viability of any individual bank. Despite these efforts, given current market conditions, 

the OCC expects to see an increase in problem banks that will require more in-depth 

supervisory attention. As a bank reaches this stage, the OCC’s efforts focus on 

developing a specific plan that takes into consideration the ability and willingness of 

management and the board to correct deficiencies in a timely manner and return the bank 

to a safe and sound condition. In most instances these efforts, coupled with the 

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commitment of bank management, result in a successful rehabilitation of the bank. The 

OCC makes every effort to address and seek correction of bank problems through its 

examination program. However, when problems are serious and well-documented, 

enforcement action may be warranted to address violations of laws, rules, and 

regulations; unsafe or unsound banking practices and breaches of fiduciary duty; and 

noncompliance with the OCC directives or orders by national banks, their insiders, and 

other affiliated parties. 

The OCC has used a variety of tools that were helpful in dealing with the industry-wide 

increase in problems and troubled institutions in FY 2009, including statutory Prompt 

Corrective Action determinations when a bank’s capital deteriorates below specified 

thresholds, requirements for increased capital and liquidity sources, required changes in 

bank management, and prior OCC approval of changes in business plans. 

In combating mismanagement during FY 2009, the OCC took such formal enforcement 

actions as final cease and desist orders, removal or prohibition orders, Civil Money 

Penalties, and formal agreements. Documents relating to the OCC enforcement actions 

can be found on the OCC’s Web site at (www.occ.gov). 

There will be cases, however, where the situation is of such significance that the OCC 

will require the sale, merger, or liquidation of the bank, if possible. Where that is not 

possible, the FDIC may be appointed as receiver. The OCC works closely with the FDIC 

in these cases to affect least cost resolution, consistent with the provisions of the Federal 

Deposit Insurance Corporation Improvement Act. For FY 2009 there were 13 national 

bank failures where the OCC appointed the FDIC as receiver. In the first two months of 

FY 2010 there were nine failures. 

Bank Secrecy Act/Anti-Money Laundering 

Through on-site examination activities, the OCC examiners evaluate banks’ 

compliance with BSA/AML requirements and, where weaknesses are noted, seek 

corrective action. The OCC has also developed a Money Laundering Risk System 

(MLRS) that provides approximately 1,500 national community bank charters with 

succinct BSA/AML risk assessment information. This information also enhances the 

OCC’s effectiveness in BSA/AML supervision. In FY 2009, FinCEN and the OCC each 

assessed Civil Money Penalties of $5 million against a foreign bank branch for alleged 

violations of the Bank Secrecy Act, which the bank agreed to pay under a consent order. 

Fair Access to Financial Services and Fair Treatment of Bank Customers 

The OCC fulfills its strategic goal of fair access to financial services and fair treatment of 

bank customers through its ongoing supervisory programs for national banks and their 

operating subsidiaries. These programs include ongoing supervisory examinations to 

ensure compliance with fair lending laws, the CRA, section 5 of the Federal Trade 

Commission Act (prohibiting unfair or deceptive acts and practices), and other consumer 

laws and regulations. In addition to supervisory activities, the OCC issues guidance and 

handbooks, and offers training to bankers and bank directors to help them understand and 

meet their compliance and CRA obligations. 

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Fair Lending

The OCC’s fair lending supervisory process is designed to assess and monitor the level of 

fair lending risk in every national bank. The OCC assesses compliance with fair lending 

laws and regulations; obtains corrective action when significant weaknesses or 

deficiencies are found in a bank’s policies, procedures, and controls relating to fair 

lending; and ensures enforcement action is taken when warranted. This includes referrals 

to the DOJ and notifications to the HUD. 

As described in more detail in the Supervision section, the OCC responded to the 

mortgage crisis by encouraging national banks to work with consumers, supporting 

private and public sector initiatives and programs that seek to assist these borrowers, and 

collecting and analyzing extensive mortgage lending and workout data from the largest 

national banks. 

Community Development 

The OCC actively supports the efforts of national banks to engage in sound and 

successful community development activities and processes community development 

investment notices and proposals under title 12, Code of Federal Regulations Part 24. 

The federal financial institution regulatory agencies published new and revised 

Interagency Questions and Answers Regarding Community Reinvestment, and proposed 

revisions to regulations implementing the CRA to require consideration of low-cost 

education loans provided to low-income borrowers when assessing a financial 

institution’s record of meeting community credit needs. The proposal also addresses 

crediting an institutions involvement with minority- and women-owned institutions. The 

OCC also conducts outreach with a variety of organizations, including advocacy groups, 

research organizations, community development practitioners, and community 

development membership organizations whose constituencies include or affect low- and 

moderate-income consumers, distressed communities, and small and minority-owned 

businesses. The OCC was particularly active in FY 2009 in identifying potential bank 

responses to the foreclosure crisis, such as working with community development 

organizations to rehabilitate foreclosed properties and stabilize neighborhoods, including 

use of the HUD’s Neighborhood Stabilization Program and use of new markets and low 

income housing tax credits. The agency sponsored a series of banker community 

development workshops and participated in Hope Now mortgage foreclosure prevention 

events. Also in FY 2009, the bank regulatory agencies extended by an additional three 

years the period during which loans, investments, and services that help stabilize the 

areas impacted by Hurricanes Katrina and Rita will receive positive CRA consideration. 

While maintaining its consumer help website, which was launched in 2007 

(www.helpwithmybank.gov), the OCC continued to seek ways to work with the other 

federal financial regulatory agencies to better assist consumers when they have questions 

or need help in resolving issues with their banks. The agency also issued Community 

Development Insights reports on uses of the Historic Tax Credit and on bank sponsorship 

of school-based savings program, and also published a Community Developments

newsletter focusing on financial literacy. 

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Consumer Protection 

During FY 2009, the OCC continued its work with the other federal banking agencies to 

improve consumer protection. In December 2008, the agencies issued a revised Identity 

Theft brochure to assist consumers in preventing and resolving identity theft. In April 

2009, the OCC issued a consumer advisory to help homeowners avoid scams that claim 

to help them save their homes, but can cause them to lose their homes and their money. 

The OCC is also leading the interagency effort to implement the registration requirements 

of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act). 

In June 2009, the agencies issued a proposal that establishes the registration requirements 

for mortgage loan originators employed by agency-regulated institutions as well as 

requirements for these institutions, including the adoption of policies and procedures to 

ensure compliance with the S.A.F.E Act and final rule. As required by the law, the 

proposal also requires these mortgage loan originators to obtain a unique identifier 

through the Registry that will remain with that originator, regardless of changes in 

employment. When the system is fully operational, consumers will be able to use the 

unique identifiers to access employment and other background information of registered 

mortgage loan originators. The OCC is also taking the lead in developing interagency 

guidance for managing the risks presented by reverse mortgage loan products. A key 

aspect of the guidance is to ensure that there are appropriate consumer safeguards with 

these products as the market for them expands. The OCC anticipates that this guidance 

will be published for comment in the near future. The OCC also created public service 

announcements in English and Spanish advising consumers of the potential risks of 

reverse mortgage products. 

Enforcement 

As needed, the OCC uses its enforcement authority to address problems and 

noncompliance arising from unfair treatment of bank customers, including failure to meet 

requirements for proper disclosures relating to financial products and services. 

In FY 2009, the OCC entered into an amended settlement agreement directing a national 

bank to make restitution to consumers harmed by its relationships with telemarketers and 

third party processors. As a result of the OCC’s actions, which were based on findings of 

unsafe and unsound practices, and unfair practices in violation of the Federal Trade 

Commission Act, the bank issued checks totaling over $150 million to more than 74,000 

consumers. The OCC took a total of 346 enforcement actions against banks and 333 

enforcement actions against institution-affiliated parties during FY 2009. In FY 2010, 

the OCC expects to continue to be active on mortgage and credit fraud and fair treatment 

issues, through agency enforcement processes and in conjunction with interagency 

efforts. 

Customer Assistance 

The OCC’s Customer Assistance Group (CAG) assists consumers who have questions or 

complaints about national banks and their operating subsidiaries. As of September 30, 

2009, the CAG had received 144,505 contacts from consumers in the form of telephone 

calls, letters, faxes, and e-mails of which 61,679 were consumer complaints. The 

OCC - 13 
majority of complaints received by the CAG involve credit card, retail checking and 

mortgage issues. 

During FY 2009, outreach activities to state bank regulators continued. Memorandums 

of Understanding (MOU) have now been signed between the OCC and 45 state banking 

departments and the Commonwealth of Puerto Rico with several others in process. The 

agreements detail ways to gain efficiencies in processing cases by streamlining the way 

the states and the CAG exchange bank customers’ complaint information. The CAG 

goals for FY 2010 include a continuation of outreach activities to state regulators and 

others. 

Regulatory Activities 

As one of its four strategic goals, the OCC strives to maintain a flexible legal and 

regulatory framework that enables the national banking system to provide a full, 

competitive array of financial services. 

In FY 2009, the federal financial agencies, including the OCC, issued proposed rules 

requiring mortgage loan originators who are employees of agency-regulated institutions 

to meet the registration requirements of the S.A.F.E. Act. These mortgage loan 

originators must be registered with the Nationwide Mortgage Licensing System and 

Registry, a database established by the Conference of State Bank Supervisors and the 

American Association of Residential Mortgage Regulators. As part of the registration 

process, mortgage loan originators will be subject to a background check. When the 

system is fully operational, consumers will be able to use unique identifiers to access 

employment and other background information of registered mortgage loan originators. 

The proposal also establishes requirements that financial institutions adopt policies and 

procedures to ensure compliance with the S.A.F.E. Act and the rules. 

As required by the Fair and Accurate Credit Transactions Act (FACT Act), the federal 

financial agencies and the FTC published final rules and guidelines to promote the 

accuracy and integrity of information furnished to credit bureaus and other consumer 

reporting agencies. This information is widely used to determine credit eligibility and 

access to employment, insurance and rental housing. Among other provisions, a 

consumer may submit a dispute directly to an entity that provided information to a 

consumer reporting agency for investigation. The rules are effective July 1, 2010. The 

agencies, at the same time, issued an Advanced Notice of Proposed Rulemaking to 

identify possible additional information that entities must provide to consumer reporting 

agencies when furnishing credit information. 

With regard to capital requirements, the federal financial agencies issued an interim final 

rule in June 2009 and a final rule in November 2009 specifying a 50 percent risk weight 

for loans modified pursuant to the Treasury’s HAMP. The federal banking and thrift 

agencies also issued a final rule permitting a reduction in the amount of goodwill a 

covered financial institution must deduct from Tier 1 capital equal to an associated 

deferred tax liability. 

OCC - 14 
The OCC initiated a review of its regulations dealing with the scope of visitorial powers 

under the National Bank Act, in light of the U.S. Supreme Court decision in Cuomo, 

Attorney General of New York v. Clearing House Association, L.L.C., et al. 

In FY 2010, the OCC will continue regulatory work on implementation of Basel II capital 

requirements and in response to accounting standards developments. Regulatory efforts 

related to Treasury, the FRB and other U.S. Government actions to address the recent 

market crisis are also expected to continue. 

The OCC’s strategic objectives emphasize regulatory oversight practices that support 

national banks’ ability to compete while maintaining safety and soundness. The OCC 

issued its annual publication, “2008 Significant Legal, Licensing, and Community 

Development Precedents for National Banks” as well as the cumulative companion 

edition of “Permissible Activities for a National Bank.” Analysis during FY 2009 

included proposed reforms of the over-the-counter derivatives markets, proposed 

amendments to securities laws, and permissibility of various capital and securities 

structures and instruments. The agency provided legal analysis for bank participation in 

the TARP, Term Asset Backed Securities Loan Facility (TALF) and Public-Private 

Investment program (PPIP) participation. The agency also reviewed affiliate transactions 

and lending limits topics, including expansion of Supplemental Lending Limits for 

qualifying banks. In FY 2010, the agency will continue to consider and issue opinions 

regarding the safe and sound implementation of bank activities and products. The OCC 

will also continue to provide case-by-case analysis, when appropriate, with respect to the 

enforcement of state law in cases involving national banks and their subsidiaries. 

Charter Activities 

The OCC made several significant licensing decisions in FY 2009 involving national 

bank business realignments and acquisitions. In order to address potential safety and 

soundness problems before they arise, the OCC may impose conditions upon bank 

transaction approvals covering, for example, capital and liquidity arrangements and 

deviations from business plans. In FY 2009, the OCC responded quickly and effectively 

in reviewing and making decisions on applications related to resolving problem 

conditions brought on by the mortgage and credit crises. The Licensing Department 

works closely with Supervision and Law units in consideration of the viability and 

legality of proposals for dealing with problem banks. Proposed restructurings that may 

avoid bank failures and their associated costs can include mergers, purchases and 

assumptions, and temporary bridge banks. 

In FY 2009, the agency conditionally approved the first “shelf charter” to expand the 

pool of qualified bidders for troubled institutions. The new mechanism involves the 

granting of preliminary approval to investors for a national bank charter. Shelf charters 

remain inactive until such time as the investor group holding the charter is in a position to 

acquire a troubled institution. This process expands the pool of potential buyers available 

to purchased troubled institutions. 

 

OCC - 15 
1C – Industry Outlook 

Turmoil in the financial markets, the mortgage and foreclosure crises, and the long and 

deep recession have all added to the challenges facing the banking system. Past 

experience says that growth in the banking system is likely to resume when the economy 

emerges from the current recession. Further, the long-term trend of bank consolidation is 

likely to continue and will accelerate in the near term, as the credit cycle culls out weaker 

performers. If bank assets continue to grow at about the rate of nominal Gross Domestic 

Product (GDP), and if GDP growth returns to its historical average over the next five 

years, assets could grow and the number of banks could shrink, as shown in the following 

table. 

 

Share of Total System Assets

Assets ($t) Number Assets ($t) Number in Banks Over $10M

2008 12.3 7,085 8.5 1,537 71.8%

2013e1 15.7 6,460 10.8 1,401 85.0% 1

 e - Estimated

Commercial Banks National Banks

But the depth, breadth, and duration of this downturn suggest that when recovery does 

come, bank assets and loans could grow more slowly than in the recent past. The 

combination of recession and financial crisis has already caused widespread deleveraging 

among both households and firms. Most expect this to continue, reducing the rate of 

credit growth throughout the economy. This could limit the pace of bank lending and 

asset growth as the economy begins to recover, as happened after the 1990-91 recession. 

Large banks will continue to dominate the industry. Banks with over $10 billion in assets 

now account for 80 percent of national bank system assets. This share has been 

increasing, and the trend is expected to continue. The financial crisis could increase 

consolidation among these large banks, thinning their ranks from the 86 that exist now. 

As several non-banks have recently been brought into the banking system, the relative 

size of the banking system has increased. This trend may continue as well. 

Until about six years ago, national banks consistently accounted for about 56 percent of 

all commercial bank assets. Since then, a series of mergers and conversions have 

increased the national bank share to approximately 70 percent of commercial bank assets. 

Risks to the banking system include continued problems in the credit markets, and a slow 

recovery from the real estate slump and the recession. 

OCC - 16 
Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Office of Comptroller of the Currency FY 2009 

Obligated

FY 2010 

Estimated

FY 2011 

Estimated

 

FTE 3,104 3,216 3,263

Object Classification: 

11.1 - Full-time permanent 347,999 387,216 395,762

11.3 - Other than full-time permanent 8,821 9,256 9,782

11.5 - Other personnel compensation 1,820 2,301 10,623

12 - Personnel benefits 124,954 137,866 145,706

13 - Benefits for former personnel 108 195 206

21 - Travel and transportation of persons 45,246 51,552 54,484

22 - Transportation of things 2,913 2,668 2,819

23.1 - Rental payments to GSA 2,524 2,524 2,668

23.2 - Rental payments to others 35,787 37,272 39,392

23.3 - Comm, utilities, and misc charges 11,311 11,839 12,512

24 - Printing and reproduction 1,015 1,118 1,181

25.1 - Advisory and assistance services 21,095 37,219 39,336

25.2 - Other services 15,075 19,085 20,170

25.3 - Other purchases of goods and services from Govt. 5,285 6,871 7,262

accounts 

25.4 - Operation and maintenance of facilities 4,847 5,790 6,119

25.7 - Operation and maintenance of equip 51,926 52,335 55,312

26 - Supplies and materials 3,956 6,835 7,224

31 - Equipment 17,015 13,171 13,920

32 - Land and structures 14,112 6,320 6,679

42 - Insurance claims and indemnities 189 230 243

Total Budget Authority $715,998 $791,663 $831,400

 

Budget Activities: 

Supervise 597,859 661,039 694,220

Regulate 94,511 104,499 109,744

Charter 23,628 26,125 27,436

Total Budget Authority $715,998 $791,663 $831,400

 

OCC - 17 
2.3 – Resource Detail Table 

% Change

FY 2009 FY 2010 FY 2011 FY 2010

Obligated Budget Estimated to FY 2011

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue / Offsetting Collections

Assessments $751,181 $800,100 $844,500 5.55%

Interest 21,525 25,300 26,600 5.14%

Other Income 1,996 1,700 1,700 0.00%

Total Revenue / Offsetting Collections $774,702 $827,100 $872,800 5.53%

 Unobligated balances, Start of year $660,261 $671,332 $682,948 1.73%

 Recoveries of prior year obligations 0 0 0 0.00%

 Net transfers (includes capital transfers) 0 0 0 0.00%

Total Budgetary Resources Available $1,434,963 $1,498,432 $1,555,748 3.83%

Expenses/Obligations

Supervision 2,592 $597,859 2,671 $661,039 2,710 $694,220 1.46% 5.02%

Regulate 410 94,511 447 104,499 454 109,744 1.57% 5.02%

Charter 102 23,628 98 26,125 99 27,436 1.02% 5.02%

Total Expenses / Obligations 3,104 $715,998 3,216 $791,663 3,263 $831,400 1.46% 5.02%

2B – Appropriations Language and Explanation of Changes 

The OCC receives no appropriations from Congress. 

OCC - 18 
Section 3 – Budget and Performance Plan

This table lists all FY 2010 resources by strategic goal, objective and outcome outlined in 

the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan is a 

corporate level plan for the Department that provides a description of what the agency 

intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treasury.gov/offices/management/budget/strategic_plan.shtml

3.1 – Budget by Strategic Outcome 

Dollars in Thousands 

Treasury Strategic Outcome FY 2010 

Estimated

FY 2011 

Estimated Percent Change

 Economic competitiveness 130,624 137,180 5.02%

 Fin. & econ.crises 661,039 694,220 5.02%

Total $791,663 $831,400 5.02%

3A – Supervise ($661,039,000 from reimbursable programs): The Supervise program 

consists of those ongoing supervision and enforcement activities undertaken to ensure 

that each national bank is operating in a safe and sound manner and is complying with 

applicable laws, rules, and regulations relative to the bank and the customers and 

communities it serves. This program includes bank examinations and enforcement 

activities; resolution of disputes through the National Bank Appeals process; ongoing 

monitoring of banks; and analysis of systemic risks and market trends in the national 

banking system or groups of national banks, the financial services industry, and the 

economic and regulatory environment. 

OCC - 19 
3.2.1 – Supervise Budget and Performance Plan 

Supervise Budget Activity

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $528,622 $565,921 $597,859 $661,039 $694,220

Total Resources $528,622 $565,921 $597,859 $661,039 $694,220

Budget Activity Total $528,622 $565,921 $597,859 $661,039 $694,220

Supervise Budget Activity

Measure

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Target Actual Target Target

Percent of national banks with composite 96 92 90 82 90 90 

CAMELS rating 1 or 2 

Percentage of national banks that are categorized 99 99 95 86 95 95 

as well capitalized 

Percentage of national banks with consumer 97 97 94 97 94 94 

compliance rating of 1 or 2 

Rehabilitated national banks as a percentage of 52 47 40 29 40 40 

problem national banks one year ago (CAMEL 

3,4, or 5) 

Total OCC costs relative to every $100,000 in 8.89 8.39 9.22 8.81 9.22 9.22 

bank assets regulated ($) 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B - baseline 

Description of Performance: 

Well Capitalized National Banks 

The Federal Deposit Insurance Act established a system that classifies insured depository 

institutions into five categories (well capitalized, adequately capitalized, 

undercapitalized, significantly undercapitalized, and critically undercapitalized) based on 

their capital levels relative to their risks. Through September 30, 2009, 86 percent of 

national banks were classified as well capitalized. This decline is reflective of the 

increasing number of problem national banks whose capital levels have been adversely 

affected by substantial asset quality problems or who may otherwise meet the minimum 

ratios to be considered Well Capitalized but are not considered so under Prompt 

Corrective Action as they are under a capital order, Cease and Desist, Formal Agreement 

or Prompt Corrective Action Directive to reflect increased risks to their capital. The 

OCC works closely with problem banks to develop rehabilitation plans. Such plans 

typically include directives to improve or restore capital levels. More broadly, the OCC is 

working with other regulators both domestically and internationally to strengthen capital 

standards and improve credit risk management practices. 

National Banks with Composite CAMELS Rating of 1 or 2 

The composite CAMELS (Capital adequacy, Asset quality, Management, Earnings, 

Liquidity, and Sensitivity to market risk) rating reflects the overall condition of a bank. 

Bank regulatory agencies use the Uniform Financial Institutions Rating System, 

CAMELS, to provide a general framework for evaluating all significant financial, 

operational, and compliance factors inherent in a bank. The rating scale is 1 through 5 of 

which 1 is the highest rating granted. CAMELS ratings are assigned at the completion of 

every supervisory cycle or when there is a significant event leading to a change in 

OCC - 20 
CAMELS. Through September 30, 2009, 82 percent of national banks earned composite 

CAMELS rating of either 1 or 2. The increase in the number of banks with lower 

composite CAMELS ratings is not unexpected at this stage of the credit cycle and reflects 

impaired asset quality and earnings that is affecting many banks. Our primary focus is to 

ensure that CAMELS ratings are an accurate reflection of each bank's current financial 

position and thus we would not take action to prematurely restore a favorable CAMELS 

rating even though the current distribution of ratings is below our target. As bank 

performance and asset quality improves, we would expect CAMELS ratings to adjust 

accordingly. 

Rehabilitated National Banks

Problem banks ultimately can reach a point at which rehabilitation is no longer feasible. 

The OCC’s early identification and intervention with problem banks can lead to 

successful remediation of these banks. The OCC recommends corrective actions to 

problem banks for improving their operations and, as a result, 29 percent of banks with 

composite CAMELS ratings of 3, 4, or 5 one year ago have improved their ratings to 

either 1 or 2 this year. As with the other measures, this target benchmark has been 

adversely affected by the underlying economic conditions facing the banking industry. 

The number of serious problem banks, where successful resolution is more difficult, has 

increased. In addition, the sharp contraction in certain segments of the economy, 

including the real estate sector, has resulted in a more rapid deterioration in some banks' 

financial condition. 

National Banks with Consumer Compliance Rating of 1 or 2 

To ensure fair access to financial services and fair treatment of bank customers, the OCC 

evaluates a bank’s compliance with consumer laws and regulations. Bank regulatory 

agencies use the Uniform Financial Institutions Rating System, Interagency Consumer 

Compliance Rating, to provide a general framework for assimilating and evaluating 

significant consumer compliance factors inherent in a bank. Each bank is assigned a 

consumer compliance rating based on an evaluation of its present compliance with 

consumer protection and civil rights statutes and regulations, and the adequacy of its 

operating systems designed to ensure continuing compliance. Ratings are on a scale of 1 

through 5 in increasing order of supervisory concern. National banks continue to show 

strong compliance with consumer protection regulations with 97 percent earning a 

consumer compliance rating of either 1 or 2 through September 30, 2009.

Total OCC Costs Relative to Every $100,000 in Bank Assets Regulated 

Beginning in FY 2006, the OCC implemented a performance measure—Total OCC Costs 

Relative to Every $100,000 in Bank Assets Regulated—that reflects the efficiency of its 

operations while meeting the increasing supervisory demands of a growing and more 

complex national banking system. The OCC costs are those reported as total program 

costs on the annual audited Statement of Net Cost. Bank assets are those reported 

quarterly by national banks on their Reports of Condition and Income. Total national 

bank assets represent the growth and complexity of the national banking system. This 

measure supports the OCC’s strategic goal of efficient use of agency resources. The 

OCC - 21 
OCC’s ability to control its costs while ensuring the safety and soundness of the national 

banking system benefits all national bank customers. 

3B – Regulate ($104,499,000 from reimbursable programs): The Regulate program 

consists of those ongoing activities that result in the establishment of regulations, 

policies, operating guidance, and interpretations of general applicability to national 

banks. These regulations, policies, and interpretations may establish system-wide 

standards, define acceptable banking practices, provide guidance on risks and 

responsibilities facing national banks, or prohibit (or restrict) banking practices deemed 

to be imprudent or unsafe. This program includes the establishment of examination 

policies, handbooks, and interpretations for examiners as well as representation of the 

OCC’s regulatory authorities and interpretations in administrative, judicial, and 

congressional hearings. 

3.2.2 – Regulate Budget and Performance Plan 

Regulate Budget Activity

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $91,296 $87,583 $94,511 $104,499 $109,744

Total Resources $91,296 $87,583 $94,511 $104,499 $109,744

Budget Activity Total $91,296 $87,583 $94,511 $104,499 $109,744

Regulate Budget Activity

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Actual Target Target

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B - baseline 

There are no measures specified at this time. 

3C – Charter ($26,125,000 from reimbursable programs): The Charter program 

involves those ongoing activities that result in the chartering of national banks as well as 

the evaluation of the permissibility of structures and activities of national banks and their 

subsidiaries. This includes the review and approval of new national bank charters, 

federal branches and agencies, mergers, acquisitions, conversions, business 

combinations, corporate reorganizations, changes in control, operating subsidiaries, 

branches, relocations, and subordinated debt issues. 

OCC - 22 
3.2.3 – Charter Budget and Performance Plan 

Charter Budget Activity

Resource Level

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Obligated Obligated Obligated Estimated Estimated

 Appropriated Resources $0 $0 $0 $0 $0

 Reimbursable Resources $18,515 $20,212 $23,628 $26,125 $27,436

Total Resources $18,515 $20,212 $23,628 $26,125 $27,436

Budget Activity Total $18,515 $20,212 $23,628 $26,125 $27,436

Charter Budget Activity

Measure FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Actual Actual Target Actual Target Target

Percentage of licensing applications and notices 96 95 95 95 95 95 

completed within established timeframes 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC – discontinued, and B - baseline 

Description of Performance: 

Licensing Applications and Notices Completed within Time Frames The OCC’s timely 

and effective approval of corporate applications contributes to the nation’s economy by 

enabling national banks to complete various corporate transactions and introduce new 

financial products and services. Delays in providing prompt decisions on applications 

and notices can deprive a bank of a competitive or business opportunity, create business 

uncertainties, or diminish financial results. Time frames have been established for 

completing each type of application and notice. The OCC completed 95 percent of 

applications and notices within the time standard through September 30, 2009. 

Institutions receiving decisions on their corporate applications and notices rated the 

OCC’s overall licensing services an average of 1.2. The licensing survey is based on a 

five-point rating scale, in which 1 indicates outstanding and 5 indicates significantly 

deficient. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: http://treas.gov/offices/management/budget/

 

OCC - 23 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

The OCC has developed bureau-specific human capital goals to meet its overall strategic 

goals of ensuring the safety and soundness of national banks and maintaining an expert, 

highly motivated, and diverse workforce. The first is to align and employ the OCC 

workforce resources consistent with current and projected agency priorities. To help 

achieve this goal, on an annual basis, the OCC identifies business changes and 

imperatives, and assesses its current staffing structure to identify potential recruitment 

challenges and skill imbalances/gaps. The agency then develops strategies to meet these 

challenges and approve incentives specifically designed to address them. Other strategies 

include: 1) using all qualified personnel on priority assignments, realizing the increasing 

dependence and need for “fungibility” among and within various disciplines; 2) using the 

midsize/community banks area as the primary entry-level recruitment, training, and 

development vehicle to provide a diverse bank examiner selection pool for many 

departments and divisions in the bureau; and 3) identifying skill gaps and using them to 

establish recruitment and training priorities as part of the OCC’s ongoing strategic 

planning process. The OCC has implemented a number of programs to increase and 

strengthen its examiner and leadership pools. The OCC has a highly successful college 

hiring and training team program to ensure a steady pipeline of entry-level bank 

examiners. Since the program’s inception in FY 2003, 833 examiners have been hired, 

including 128 in FY 2009. While the OCC expects hiring to continue at current levels, 

strategies are being reviewed to ensure that the OCC has an integrated staffing process 

that allows supervision resources to be deployed to their highest and best use and 

maximizes staff development opportunities in alignment with the OCC’s national 

priorities. 

The OCC has focused heavily on recruiting the expertise needed to fill positions in the 

agency’s Chief National Bank Examiner’s office and Large Bank Supervision line of 

business. The OCC has also recognized the challenge of ensuring that it has the skill sets 

needed now and in the future to supervise the increasingly complex array of activities and 

businesses found in the national banking system. As a result, the OCC uses a framework 

to assess where and when specialized skills are needed and to ensure it has the staffing 

necessary to meet those needs. This framework, the Specialty Skills Assessment, allows 

the OCC to measure gaps in its current skill levels in eight critical business areas (Asset 

Management, Bank Information Technology, Capital Markets, Compliance, Commercial 

Lending, Retail Lending, Mortgage Banking, and Operational Risk) and to develop 

strategic plans to fill those gaps. It establishes a standard process to identify an 

individual’s specialty skills, which can be compared to actual examination resources 

necessary for the effective supervision of national banks. These skill level designations 

are made on an annual basis. Also, on an annual basis, there is a review of the policy to 

ensure that the criteria used to determine assignment complexity and assess examiner 

skill levels in each specialty remain current and relevant as the industry evolves. 

OCC - 24 
OCC - 25 

Assessment results aid examination staffing and recruiting initiatives, and provide 

employees and managers with a valuable tool that can be used to identify developmental 

opportunities to further an individual’s career objectives. 

In further recognition of the need to provide expert-level support related to the current 

financial and housing market situations, the OCC requested and was granted authority to 

waive the dual compensation reduction to reemploy certain annuitants. The extensive 

knowledge and superior skills reemployed annuitants have developed in specific specialty 

areas are an invaluable resource. 

A second human capital goal is to develop current and future leaders who demonstrate 

strong strategic, people management, and technical skills. To achieve this goal, the OCC 

has implemented a leadership development program, LeaderTRACK, based on identified 

competencies. The program, which began in FY 2007, offers participants three sixmonth assignments, with significant managerial and supervisory roles, that will develop 

leadership skills rather than prepare them for a specific position. There have been ten 

participants in this program since its inception, eight of whom have already been placed 

in permanent managerial positions. The OCC also continues to focus on aligning 

leadership performance expectations with organizational goals, and preparing leaders to 

create and sustain a productive work environment and assume responsibility for 

developing staff. 

The OCC operates under a merit-based pay and performance system. Annual across-theboard increases are not granted. Salary increases are awarded based on merit to reward 

employee performance, employee development that is relevant to the OCC’s needs, and 

employee contributions to the OCC’s priorities. 

Therefore, a third human capital goal is to maintain strategic compensation/benefit 

programs and performance systems that link with organizational goals and mission 

accomplishment, enable the OCC to recruit and retain critical positions, and reward high 

performers. To assure the agency accomplishes this goal, the OCC is nearing completion 

of a study of the compensation program to assess the appropriateness of the pay bands, 

evaluate the relationship between performance management and merit pay systems, and 

evaluate the current compensation policies and programs to ensure they support the OCC 

in attracting, retaining, and motivating a high-caliber workforce. 

The OCC is confident these strategies will enable it to avoid any critical deficiencies in 

terms of having the right numbers of people with the right skills to accomplish its 

mission. 
4.1 – Summary of IT Resources Table 

Dollars in Thousands 

% Change 

FY 2009 FY 2010 from FY 09 to FY 2011 

Major IT Investments / Funding Source Budget Activity Obligated Estimated FY 10 Estimated 

Fiscal Management Manage 1,920 1,930 0.52% 2,000 

Total, Major IT Investments $1,920 $1,930 0.52% $2,000 

OCC - 26 
4B – Information Technology Strategy 

The OCC’s capital planning process ensures that all Information Technology (IT) 

investments are aligned with its mission, goals, and objectives, and target architecture 

before a project is selected for funding. The capital planning process ensures business 

cases are reviewed to leverage opportunities to use existing technology, to capitalize on 

enterprise opportunities as well as ensure there are no redundancy in IT systems that are 

considered for the portfolio. 

The Department’s overall strategy to effectively use technology to support the mission, 

goals, and objectives of the agency is enforced by the Investment Review Board (IRB), 

comprised of business unit and IT representatives from across the agency. The IRB 

makes recommendations to the OCC’s Technology and Systems Subcommittee (TSS). 

Both the IRB and TSS meet regularly to select, monitor, and control IT investments. 

This process ensures that the overall IT strategy has adequate funding, resources, and 

prioritization. 

Linkage to the OCC programs and strategic goals are documented in each 

project business case and prioritized by the IRB and TSS. Performance metrics are 

linked to the delivery, alignment, and achievement of the OCC strategic program 

objectives. 

The OCC developed a Technology Vision 2012 Roadmap that aligns to the agency’s core 

mission to ensure a safe and sound national banking system for all Americans. In 

addition, in FY 2009, the OCC established specific IT goals to leverage information 

technology as a strategic business enabler to support the OCC’s strategic goals. 

Additionally, the OCC implemented a Modernization Vision & Strategy (MV&S) 

initiative. Modernization Vision & Strategy is a business-driven initiative that brings 

together multiple business organizations and follows best-practice methodologies to 

develop an IT “roadmap” based on the OCC business needs. The results of the MV&S 

will be integrated into the OCC target enterprise architecture and enhance the OCC’s IT 

investment decision-making process to reduce costs and align IT with current and 

anticipated business needs. 

FY 2010 Plans 

Even though there are no new major IT initiatives planned in FY 2010, the OCC will 

continue to implement the OCC Technology Vision 2012 Roadmap with a focus on 

enterprise data analytics and information sharing, optimizing technology solutions for the 

mobile workforce, aligning IT investment decision making with the enterprise 

architecture and business objectives and managing the risk to OCC assets and improving 

internal efficiency and effectiveness. 

To address the challenges faced by the OCC mobile workforce, the OCC will continue 

the Integrated-Mobile Employee Technical Refresh & Optimization (I-METRO) 

initiative. I-METRO will provide new laptops, PCs, and other peripheral devices and 

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provide enhanced connectivity and mobile access. This initiative will reduce the costs of 

desktops, laptops and peripheral devices through a strategic sourcing service management 

approach. Examiners in the field will now have access to the best providers of wireless 

services commensurate with the geographic location of their bank examination. 

The OCC will continue to modernize the agency’s technical infrastructure. The Data 

Center Modernization & Optimization (DCM&O) initiative began in FY 2009 and 

focuses on the development and implementation of strategies and initiatives for 

infrastructure optimization. The DCM&O will maximize service delivery of the OCC 

data center and includes investing in human capital by addressing training needs; 

realigning multiple contract vehicles to better deliver core services and lower total cost of 

ownership for these services; and improving processes and reducing the number of 

servers to attain a "green" data center. 

Homeland Security Presidential Directive 12 (HSPD-12) 

In FY 2009, the OCC continued to develop an HSPD-12 program for SmartID card 

issuance and subsequent use of that card for both physical access to the OCC facilities 

and logical access to the OCC information systems. Among the bureau’s 

accomplishments for FY 2009, the OCC activated and issued SmartID cards to its 

employee population and began contractor enrollment and activations. The OCC also 

successfully integrated the HSPD-12 enrollment procedures into existing on-boarding 

and personnel security programs. The OCC also began using HSPD-12 compliant 

SmartIDs for physical access at the OCC facilities and is credited with being among the 

first to enable Physical Access Control System (PACS) card interoperability with other 

federal agency issued HSPD-12 cards. In addition, during FY 2009, the OCC completed 

five new HSPD-12 compliant PACS installations and upgrades at the OCC facilities. 

In FY 2010 the OCC will continue to install and upgrade HSPD-12 compliant PACS 

completing an additional 14 locations nationwide. In addition, the OCC will completely 

phase out existing proximity security cards, transitioning exclusively to HSPD-12 

SmartID cards for all OCC employees and contractors. During FY 2010 the OCC will 

begin to integrate HSPD-12 policy, procedures and SmartID card usage into other 

existing agency processes moving towards full HSPD-12 compliance by the established 

Treasury and Federal milestones. 

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4.2 – Program Evaluation 

Program Name: Bank Supervision 

Assessment and Improvement Actions 

• Regulatory agencies that include the OCC, OTS, FDIC, FRB, National Credit Union 

Administration, Federal Housing Finance Agency, and the SEC continue to share 

their strategic plans, performance budgets, and performance measures on a regular 

basis. This allows each agency to consider the approaches used by other agencies 

when developing or revising their goals and measures. 

 

• The OCC and OTS, as bureaus in the Department of Treasury, continue to work 

together to maintain alignment of their performance measures.