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Office of the Comptroller of the 

Currency

FY 2013

President’s Budget

Submission
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Table of Contents

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

1A – Mission Statement.............................................................................................................. 3

1.1 – Resource Detail Table........................................................................................................ 3

1B – Mission Priorities and Context........................................................................................... 3

Section 2 – Budget Adjustments and Appropriation Language............................................. 12

2B – Appropriations Language and Explanation of Changes................................................... 13

2C – Legislative Proposals........................................................................................................ 13

Section 3 – Budget and Performance Report and Plan........................................................... 14

3A – Supervise.......................................................................................................................... 14

3.1.1 – Supervise Budget and Performance Report and Plan ................................................... 18

3B – Regulate............................................................................................................................ 19

3.1.2 – Regulate Budget and Performance Report and Plan..................................................... 20

3C – Charter.............................................................................................................................. 20

3.1.2 – Charter Budget and Performance Report and Plan ....................................................... 21

Section 4 – Supplemental Information...................................................................................... 22

4A – Capital Investment Strategy............................................................................................. 22
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Section 1 – Purpose

1A – Mission Statement

To assure the safety and soundness of, and compliance with laws and regulations, fair access to 

financial services, and fair treatment of customers by national banks and federal savings 

associations 

1.1 – Resource Detail Table

Dollars in Thousands 

% Change

FY 2011 FY 2012 FY 2013 FY 2012

Actual/1 Estimated/2 Estimated/2 to FY 2013

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

Budgetary Resources:

Revenue/Offsetting Collections

Assessments $864,524 $967,400 $986,748 2.00%

Interest $21,153 $16,800 $17,136 2.00%

Other Income $9,828 $22,200 $22,644 2.00%

Total Revenue/Offsetting Collections $895,505 $1,006,400 $1,026,528 2.00%

 Unobligated balances, Start of year $847,259 $1,163,000 

$1,163,000

$801,000 (31.13%)

Unobligated balance transferred $245,034 

Total Budgetary Resources Available $1,987,798 $2,169,400 $1,827,528 (15.76%)

Expenses/Obligations

Supervise 2,740 $707,845 3,280 $1,052,200 3,345 $942,000 2.00% (10.47%)

Regulate 334 $95,699 445 $142,800 454 $127,870 2.00% (10.45%)

Charter 76 $21,450 97 $31,079 99 $27,830 2.00% (10.45%)

Total Expenses/Obligations/3 3,150 $824,994 3,822 $1,226,079 3,898 $1,097,700 2.00% (10.47%)

Net Results ERR $1,162,804ERR $943,321 ERR $729,828 (22.63%)

(1) Effective July 21, 2011, the OCC assumed responsibility for regulating federal savings associations.

(2) FY 2012 and FY 2013 estimates include the cost of regulating the national banks and federal savings

associations.

(3) Estimates of total budgetary obligations in FY 2012 do not match those presented in the President's Budget due 

to inclusion of the OTS Public Enterprise Fund, which was included in error.

1B – Mission Priorities and Context

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. Effective on July 21, 2011, Title III of the DoddFrank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), transferred to OCC

responsibility for the supervision of federal savings associations (thrifts) and rulemaking 

authority for all savings associations. 

The OCC supervises 1,400 national bank charters and 48 federal branches of foreign banks in the 

United States with total assets of approximately $8.9 trillion as of September 30, 2011. Effective

July 21, 2011, with the OCC/Office of Thrift Supervision (OTS) integration, the OCC assumed

supervisory responsibility of 637 federal savings associations, which include 216 mutuals, with 

total assets of over $922 billion. The average size and complexity of the institutions in the 

national banking system continue to grow. This, combined with the OCC’s supervision of 

federal savings associations and responsibility for the Home Owners’ Loan Act, creates 

increasing and diverse challenges for the OCC.
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The OCC has established four strategic goals outlined in its strategic plan that help support a 

strong economy for the American public: 1) A safe and sound system of national banks and 

federal savings associations; 2) Fair access to financial services and fair treatment of national 

bank and federal savings association customers; 3) A flexible legal and regulatory framework 

that enables national banks and federal savings associations to provide a full, competitive array 

of financial services consistent with statutory and prudential safety and soundness constraints; 

and 4) A competent, 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 its goals and objectives. Effective supervision, supported by a 

comprehensive regulatory framework, are the key tools the OCC uses to ensure that national 

banks and federal savings associations operate in a safe and sound manner and that they provide 

fair access to financial services and fair treatment of their customers. A robust chartering 

program allows new entry into the financial services sector while ensuring that such new entrants 

have the necessary capital, managerial, and risk management processes to conduct activities in a 

safe and sound manner.

The OCC’s priorities focus on strengthening the resiliency of the institutions subject to its 

jurisdiction through our supervisory and regulatory programs and activities. A stronger and 

more resilient banking system directly supports the Department of the Treasury’s (Treasury) 

strategic goals to: 1) Continue to repair and reform the financial system and support the recovery 

of the housing market; 2) Enhance U.S. competitiveness and promote international financial 

stability and balanced global growth; 3) Protect our national security through targeted financial 

actions; 4) Pursue comprehensive tax and fiscal reform; and 5) Manage the government’s 

finances in a fiscally responsible manner.

Through on-site examinations, the OCC works to ensure that national banks and federal savings 

associations appropriately identify, account for, and follow prudent strategies for problem assets; 

and instill a strong corporate governance culture that fosters sound loan underwriting standards, 

properly aligned incentive compensation structures, and strong internal controls, risk 

management, and compliance functions. Other supervisory priorities will be identifying and 

resolving potential problem banks at the earliest possible stage; encouraging national banks and 

federal savings associations to meet the needs of creditworthy borrowers, including appropriate 

and effective residential mortgage modification programs; ensuring that institutions comply with 

the Community Reinvestment Act (CRA), 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 requirements and that they 

maintain strong controls and risk management processes for information security; and further 

enhancing the OCC’s supervisory analytical tools. 

Operations are funded primarily (approximately 97 percent) from semiannual assessments levied 

on national banks, and federal savings associations. Revenue from investments in Treasury 

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

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

The OCC has various ways to influence the banking system: 1) Policy guidance and regulations 

that set forth standards for sound banking practices; 2) On-site examinations and ongoing off-site 

monitoring that enable the OCC to assess compliance with those standards and to identify 

emerging risks or trends; and 3) A variety of supervisory and enforcement tools – ranging from 

matters requiring board’s and management’s attention to informal and formal enforcement 

actions – that are used to obtain corrective action to remedy weaknesses, deficiencies, or 

violations. 

The OCC supervisory activities in FY 2011 centered on evaluating and strengthening the quality 

of banks’ risk management to identify, measure, monitor, and control the build-up of risk, both 

on and off-balance sheet. A primary focus of on-site supervisory activities was the quality of 

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 lenders to work with 

creditworthy borrowers who may be facing financial difficulties. Other areas of emphasis were 

sound interest rate risk and liquidity risk management, with diversified funding sources and 

realistic contingency funding plans, and strengthening capital buffers to address 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 is cognizant of the continuing need to address supervisory issues 

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

In addition to its ongoing supervisory activities, the OCC undertook the following initiatives in 

FY 2011:

 Integration of OTS Supervisory Responsibilities: Much of the OCC’s activities during 

FY 2011 focused on ensuring a smooth transition. During fourth quarter of FY 2011, the 

integration of OTS staff was successfully completed and the supervision of federal savings 

associations was integrated into the OCC’s bank supervision operations. The integration 

efforts are now focused on coordinating and consolidating the various rules and policies that 

apply to national banks and federal savings associations. As part of this effort, the OCC is 

undertaking a comprehensive, multi-phased review of the OCC and OTS regulations to 

eliminate duplication and reduce unnecessary regulatory burden.

 Transfer of Functions to the Consumer Financial Protection Bureau (CFPB): Pursuant to 

Section 1061 of the Dodd-Frank Act, effective July 21, 2011, the responsibility for certain 

consumer protection examination functions for institutions over $10 billion in assets was 

tranferred to the CFPB. The OCC worked closely with Treasury and CFPB staff to facilitate 

this transition of responsibilities and to support the creation of the CFPB.

 Establishment of the Office of Minority and Women Inclusion (OMWI): Pursuant to Section 

342 of the Dodd-Frank Act, effective January 21, 2011, the OCC established the Office of 

Minority and Women Inclusion and appointed an executive director.
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 Supervisory and Enforcement Actions for Mortgage Foreclosure and Servicing Activities: In 

the wake of the reported improprieties in the foreclosure processes used by several large 

mortgage servicers, in the Fall of 2010, the OCC initiated a horizontal, on-site review at the 

eight largest national bank mortgage servicers. On April 13, 2011, the OCC announced 

formal enforcement actions against these servicers and two third-party servicers for unsafe 

and unsound practices related to residential mortgage loan servicing and foreclosure 

processing. The enforcement actions, among other things, require the servicers to make 

significant improvements in practices for residential mortgage loan servicing and foreclosure 

processing. This process has two components—a coordinated claims process that will 

review cases based on borrowers’ requests and a ―look-back‖ review that will examine cases 

sampled by the independent consultants. For any financial injury that the reviews identify, 

the consent orders require financial remediation.

In addition to these actions against specific mortgage servicers, the OCC is working with 

other federal regulators to develop a set of comprehensive and robust, nationally applicable 

mortgage servicing standards that would apply to all servicers. Work on this project will 

continue in FY 2012.

 Implementation of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 

(S.A.F.E. Act) Registration Requirements: The OCC led the interagency effort to implement 

the registration requirements of the S.A.F.E. Act. The Registry became operational for

federal registrations in January 2011. The OCC worked with the CFPB to ensure a smooth 

transition of responsibility for the software development contract effective with the CFPB 

transition date.

 Quarterly Mortgage Metrics Reporting: The OCC’s quarterly report covers approximately 

63 percent of all first-lien mortgages in the United States, representing $5.7 trillion in 

outstanding balances. The Dodd-Frank Act amended Section 104 of the Helping Families 

Save Their Homes Act of 2009, which requires the OCC to provide Mortgage Metrics data to 

Congress separately for each state. The OCC began providing this required state-by-state 

information with the fourth quarter 2010 report, issued in March 2011.

 Enhanced Real Estate Appraisals and Evaluations: In December 2010, the OCC and other 

federal financial regulators issued final supervisory guidance on sound practices by financial 

institutions for real estate appraisals and evaluations. The agencies’ guidelines emphasize 

the importance of institutions maintaining strong internal controls to ensure reliable 

appraisals and evaluations. The guidelines also remind institutions of the need to monitor 

and periodically update valuations of collateral for existing real estate loans and for 

transactions, such as modifications and workouts, according to the guidelines.

 Enhanced Practices for Sound Risk Model Management: Banks routinely use models for a 

broad range of activities, including underwriting credit; valuing exposures, instruments, and 

positions; measuring risk; managing and safeguarding client assets; and determining capital 

and reserve adequacy. To address observed weaknesses and strengthen practices, in April 

2011, the OCC and Federal Reserve Board (FRB) of Governors issued Supervisory Guidance

on Model Risk Management. This guidance articulates the elements of a sound program for 
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effective management of risks that arise when using quantitative models in bank decision 

making. It also provides guidance to OCC examining personnel and financial institutions on 

prudent model risk management policies, procedures, practices, and standards.

 Enhanced Practices for Customer Authentication in Internet Banking Environment: 

Financial institutions and their customers are subject to increasingly sophisticated attacks on 

the security of their financial data and transactions. In June 2011, the OCC and other federal 

financial regulators issued supplemental guidance to the industry on authentication practices 

for Internet banking transactions. The guidance updates the agencies’ expectations regarding 

customer authentication, layered security, or other controls in the increasingly hostile online 

environment.

 Effective Counterparty Risk Management: Counterparty Credit Risk (CCR) arises in 

derivative transactions and is the risk that the counterparty to a transaction could default or 

deteriorate in creditworthiness before the final settlement of a transaction’s cash flows. The 

financial crisis revealed weaknesses in CCR management at many banks. In response to 

these weaknesses, the OCC and other federal banking agencies issued guidance in July 2011 

to set forth expectations for effective CCR management. The guidance stresses the 

importance of sound corporate governance and also covers risk management and 

measurement issues to effectively identify and control these risk exposures. 

Enforcement Activities

As needed, the OCC uses its enforcement authority to address safety and soundness violations 

and noncompliance with laws and regulations. In addition to the enforcement actions for 

mortgage foreclosure and servicing activities described previously, the OCC and OTS issued 

184 enforcement actions against financial institutions and 240 enforcement actions against 

individuals in FY 2011. Significant actions included:

 A settlement with Woodforest National Bank, The Woodlands, Texas, that required the bank 

to pay approximately $32 million in reimbursement to consumers who were harmed by the 

bank's overdraft program, plus a Civil Money Penalty (CMP) of $1 million. The bank agreed 

to change its overdraft program in order to correct any violations of law. The OCC 

concluded that the bank engaged in unfair or deceptive practices that violated the Federal 

Trade Commission (FTC) Act. Specifically, the bank assessed excessive amounts of 

overdraft fees and improperly assessed recurring fees, or "continuous overdraft fees" against 

certain consumers.

 A Formal Agreement against Bank of America, N.A., Charlotte, North Carolina, requiring 

payment of restitution plus prejudgment interest ($9.2 million to 38 municipalities and nonprofit organizations) and Formal Agreement against JPMorgan Chase requiring payment of 

restitution plus prejudgment interest ($13 million to 48 such counterparties) and CMP of 

$22 million in connection with a scheme to rig bids and fix prices in the sale of derivative 

products to municipalities. Settlement also resulted in multi-million dollar global settlements 

with the Department of Justice, Internal Revenue Service, Securities and Exchange 

Commission, FRB and 25 State Attorneys General.
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 A Cease and Desist Order against HSBC Bank USA, N.A., McLean, Virginia, for violating 

the Bank Secrecy Act, concurrent with a Board of Governors of the Federal Reserve System 

Cease and Desist Order upon Consent with the bank's parent company, HSBC North 

America Holdings, Inc.

 Assessment of CMPs against Zions First National Bank, Salt Lake City, Utah and Pacific 

National Bank, Miami, Florida for unrelated violations of the Bank Secrecy Act and USA 

PATRIOT Act.

 Assessment of a CMP against JPMorgan Chase Bank, N.A., related to the marketing and sale 

of a credit protection product by Chase Auto Finance, a division of the Bank. The OCC 

found that Chase Auto used written scripts together with oral high-pressure sales tactics that 

included statements which were materially false, deceptive or otherwise misleading in 

violation of the FTC Act. The bank took remedial actions to correct violations of law and/or 

other deficient practices, including distributing nearly $25 million to affected customers.

Regulatory Activities 

The OCC devoted a significant amount of resources in FY 2011 to regulatory activities relating 

to implementation of the Dodd-Frank Act, including preparation of studies, interagency 

consultation, issuance of rulemaking proposals, and support of the Acting Comptroller’s 

participation on the Financial Stability Oversight Council.

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

banks’ and federal savings association’s ability to compete while maintaining safety and 

soundness. During FY 2011, the OCC issued legal interpretations allowing its regulated 

institutions to support the value of foreclosed properties and contribute to community economic 

stability. The OCC will continue its legal work of analysis and interpretation of national bank 

powers and authorities during FY 2012. This work is being carried forward to include the 

federal savings association industry. 

Charter Activities 

In FY 2011, the OCC issued 1,382 corporate licensing decisions, with a 97 percent on time rate. 

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 2011, the OCC continued to experience 

a significant share of applications involving resolution of problem financial institutions. 

FY 2012 and 2013 Priorities

A major focus of the OCC’s supervisory, regulatory, and administrative programs in FY 2012 

and 2013 will be implementing applicable provisions of the Dodd-Frank Act and the enhanced 

capital framework under Basel III. Work will also continue to fully integrate the applicable 

regulatory, supervisory policy and examination platforms for national banks and federal savings 

associations and to ensure that these institutions comply with applicable new statutory and 

regulatory requirements. Priorities and activities include the following:
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 Conduct examinations based on the risk profile of individual national banks and federal

savings associations to ensure they are safe and sound, sufficiently capitalized, and comply 

with consumer protection laws and regulations1;

 Assess the adequacy of national banks and federal savings associations credit, liquidity, 

internal controls, compliance, and corporate governance processes and require corrective 

action when deficiencies or undue risk concentrations are found;

 Continue to monitor and assess the effectiveness of national bank and federal savings 

association mortgage servicers’ loan modification and foreclosure actions, including needed 

actions to improve the corporate governance of their processes;

 Resolve problem national banks and federal savings associations 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; 

 Strengthen the credit culture across the national banking system and federal savings 

associations to ensure prudent underwriting standards are maintained;

 Develop and implement policies to ensure that national banks and federal savings 

associations establish and maintain incentive compensation policies that are consistent with 

principles of safety and soundness and do not encourage imprudent risk-taking; 

 Work with other domestic and international supervisors to implement stronger capital and 

liquidity requirements and more robust risk management standards for large financial 

institutions;

 Enhance the OCC’s ability to anticipate, identify, and respond to build-ups in risk and 

emerging issues through improved supervisory analytical tools, stress testing, and market 

intelligence capabilities; 

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

national banks’ and federal savings associations’ compliance with the BSA/AML, USA 

PATRIOT Act laws and regulations;

 Work with Treasury and other federal financial regulators to implement the Dodd-Frank Act; 

 Continue to support a competitive national banking and federal savings association system 

through entry of new charters, other bank and federal savings association structure 

 

1 Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection

Bureau was given the authority to supervise and examine insured depository institutions with total assets over $10 

billion for compliance with federal consumer financial laws. The OCC will continue to conduct examinations to

assess compliance with consumer protection issues for national banks and federal savings associations with $10 

billion or less in total assets, and to examine all national banks and federal savings associations for compliance with 

the Bank Secrecy Act, flood insurance regulations, and the Community Reinvestment Act.
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transactions, and expansion of national bank and federal savings association services and 

products in a safe and sound manner; and

 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.

Industry Outlook

The OCC and the national banking and federal savings association industry continue to operate 

in a highly challenging environment. While economic conditions are expected to improve in 

FY 2012, many institutions will continue to have significant volumes of troubled loans and 

borrowers that will consume resources and, for some, strain earnings and capital. In addition, the 

shadow inventory of distressed residential properties will continue to strain the housing market 

recovery. Geopolitical uncertainties and volatility in commodity prices may elevate and amplify 

risk exposures in the system. 

National banks and federal savings associations will face heightened compliance, reputation, and 

strategic risks as a result of significant changes in the statutory, regulatory, and accounting 

requirements for various bank products, services, and transaction structures. National banks and 

federal savings associations will need to successfully integrate these changes into their 

operations and it is likely that some of these changes will foster fundamental shifts in some 

national banks’ and federal savings associations’ business models and strategic plans. 

To address these challenges, the OCC will need to conduct ongoing assessments of emerging 

risks and the underlying condition of national banks and federal savings associations, and to 

prioritize and allocate resources to the areas and institutions of highest risk. 

National banks and federal savings associations have endured several years of disruption to 

financial markets, a crisis in the mortgage sector, and now a slow recovery from a long and deep 

recession. The long-term trend of national bank and federal savings association consolidation is 

likely to continue. If national bank and federal savings association assets continue to grow at 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 in the way shown in Table A which follows. 

In this table, estimates for the number of institutions and for share of assets at banks over $10 

billion in size are based on an assumption of a continuation of trends experienced between 2000 

and 2010. Trust companies and foreign branch offices are excluded from the projections because 

compared to national banks and federal savings associations, their growth is less closely linked 

to underlying economic trends.

Table A

Estimated 

Change

Number of 

Institutions Assets

Share of Total System Assets in 

Institutions with Assets >$10 Billion

OCC 

Banks

OCC 

Thrifts

All OCC-Supervised 2010 90.5%

2010 to 2015 -23% -15% +28% 2015e 94.0%

 e = estimated
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Loan demand has been growing more slowly than usual for an economic recovery, in part 

because the economy as a whole has been growing much slower than as is usual after a 

recession. The combination of recession and financial crisis has already caused widespread 

deleveraging among both households and firms, cutting into the demand for loans. Although 

business capital spending continues to improve, banks have not seen much increase in 

commercial loan demand, as many firms have accumulated cash reserves, and even medium-size 

firms can now borrow long-term at low rates in bond markets. Most expect these trends to 

continue, limiting the pace of bank lending and asset growth.

Large national banks and federal savings associations will continue to dominate the industry. 

Financial institutions with over $10 billion in assets now account for over 90 percent of system 

assets. This share has been increasing, and the trend is expected to continue. There are 64 OCCsupervised institutions of this size that exist now; most observers expect this number to fall as

consolidation continues.

Credit losses rose sharply during the financial crisis and recession, but are now receding for most 

loan categories. To shore up their positions in the aftermath of the crisis, many banks raised 

additional capital. The result is a stronger banking system than existed two years ago. Risks to 

the system include continued problems in the credit markets, and a slower than normal economic

recovery, which could lead to lower than expected growth in revenues. 
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Section 2 – Budget Adjustments and Appropriation Language 

2.2 – Operating Levels Table 

Dollars in Thousands

 FY 2011 FY 2012 FY 2013

Office of Comptroller of the Currency Actual/1 Estimated/2/3 Estimated/2

FTE 3,150 3,822 3,898

Object Classification

11.1 - Full-time permanent $382,144 $472,904 $493,086

11.3 - Other than full-time permanent 9,508 12,030 12,545

11.5 - Other personnel compensation 2,729 2,750 2,867

11.9 Personnel Compensation (Total) $394,381 $487,684 $508,498

12.0 - Personnel benefits 173,529 302,027 229,027

13.0 - Benefits for former personnel 263 195 195

21.0 - Travel and transportation of persons 48,165 65,062 68,285

22.0 - Transportation of things 2,214 3,790 2,186

23.1 - Rental payments to GSA 2,705 2,773 3,650

23.2 - Rental payments to others 38,511 49,845 65,611

23.3 - Communication, utilities, and misc charges 8,297 12,607 16,594

24.0 - Printing and reproduction 745 862 800

25.1 - Advisory and assistance services 30,334 42,148 40,158

25.2 - Other services 16,600 24,083 22,946

25.3 - Other purchases of goods and services from Govt. accounts 9,599 13,485 12,848

25.4 - Operation and maintenance of facilities 5,204 16,969 16,168

25.7 - Operation and maintenance of equip 59,646 73,055 69,607

26.0 - Supplies and materials 7,786 8,928 9,103

31.0 - Equipment 18,917 32,801 21,841

32.0 - Land and structures 7,896 89,535 9,953

42.0 - Insurance claims and indemnities 202 230 230

Total Budget Authority $824,994 $1,226,079 $1,097,700

Budget Activities:

Supervise 707,845 1,052,200 942,000

Regulate 95,699 142,800 127,870

Charter 21,450 31,079 27,830

Total Budget Authority $824,994 $1,226,079 $1,097,700

(1)

 Effective July 21, 2011, the OCC assumed responsibility for regulating federal savings associations. 

(2)

 FY 2012 and FY 2013 estimates include the cost of regulating the national banks and federal savings 

associations. 

(3) FY 2012 budget estimate contains one-time costs attributable to the Dodd-Frank Act. 
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2B – Appropriations Language and Explanation of Changes

The OCC receives no appropriations from Congress.

2C – Legislative Proposals

The OCC has no legislative proposals.
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Section 3 – Budget and Performance Report and Plan

3A – Supervise

($1,052,200,000 from reimbursable resources): 

An effective supervision program is the cornerstone of the OCC’s activities that support its 

strategic goals. Specifically, the Supervise program consists of ongoing supervision and 

enforcement activities that directly support the OCC’s strategic goals to 1) ensure that each 

national bank and federal savings association is operating in a safe and sound manner and is 

complying with applicable laws, rules, and regulations relative to the financial institution and the 

customers and communities it serves, and 2) provide fair access to financial services and fair 

treatment of customers. Assessing the condition and risk management practices of national 

banks and federal savings associations, and requiring corrective actions when weaknesses are 

found, directly supports Treasury’s goal of repairing and reforming the financial system.

The Supervise program includes national bank and federal savings association examinations and 

enforcement activities; resolution of disputes through the national bank and federal savings 

association appeals process; ongoing monitoring of national banks and federal savings 

associations; and analysis of systemic risks and market trends in the national banking system or 

groups of national banks and federal savings associations, the financial services industry, and the 

economic and regulatory environment. 

The goal owner for this budget activity is the Acting Comptroller of the Currency, John Walsh.

Description of Performance:

Percentage of National Banks and Federal Savings Associations 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 or savings 

association. 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 national bank or federal savings association. The rating 

scale is 1 through 5 of which 1 is the highest rating granted. These CAMELS ratings are 

assigned at the completion of every supervisory cycle or when there is a significant event leading 

to a change in CAMELS. 

The OCC has established a target outcome measure that 90 percent of the institutions under its 

supervision have a composite CAMELS rating of 1 or 2. Such a rating is consistent with the 

strategic goal of a safe and sound banking system, that banks maintain adequate capital and 

liquidity and have strong risk management practices. For FY 2011, 75 percent of national banks

earned composite CAMELS ratings of either 1 or 2. Beginning with FY 2012, federal savings 

associations will be included in the performance measure. The increase in the number of 

national banks with less favorable composite CAMELS ratings is not unexpected at this stage of 

the credit cycle and reflects impaired asset quality and earnings that is affecting many 

institutions. Degradation in CAMELS can also reflect weaknesses in risk management systems 

that need corrective action. Consistent with Treasury’s goal of repairing and reforming the 

financial system and supporting the recovery of the housing market, the OCC has instructed bank 
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examiners to identify and seek corrective action at an earlier stage to address potential problems 

or weaknesses. The OCC’s primary focus is to ensure that CAMELS ratings are an accurate 

reflection of each institution's current financial position and thus the OCC would not take action 

to prematurely restore a favorable CAMELS rating even though the current distribution of 

ratings is below the target. As national bank or federal savings association performance and 

asset quality improves and directed corrective actions are implemented, the OCC expects 

CAMELS ratings to gradually improve. 

Percentage of National Banks and Federal Savings Associations that are considered Well 

Capitalized

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. The OCC has established a target outcome measure that 95 percent of 

national banks and federal savings associations will meet or exceed the well capitalized 

threshold. Beginning in FY 2012, federal savings associations will be included in the 

performance measure.

The economic environment and resulting increase in problem assets placed a strain on some 

banks’ capital buffers that has resulted in levels below the OCCs’ target performance measure. 

The OCC works closely with problem national banks and federal savings associations to develop 

rehabilitation plans. Such plans typically include directives to improve or restore capital levels. 

These efforts, combined with a more stable operating environment, have resulted in 

improvement in this performance goal since FY 2009. For FY 2011, 93 percent of national 

banks were classified as well capitalized. Beginning in FY 2012, federal savings associations

will be included in the performance measure.

More broadly, the OCC is working with other regulators both domestically and internationally to 

strengthen capital standards and improve credit risk management practices. These actions mean 

that the standards for meeting the ―well capitalized‖ threshold will become higher and may 

require some national banks and federal savings associations to further strengthen their capital 

bases. To help prepare financial institutions to meet these higher standards, the OCC and other 

federal regulators will publish proposed changes for notice and comment and will likely propose 

that the higher standards be phased in over a period of time. 

Percentage of National Banks and Federal Savings Associations with Consumer Compliance 

Rating of 1 or 2

To ensure fair access to financial services and fair treatment of national bank and federal savings 

association customers, the OCC evaluates an institution’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 evaluating 

significant consumer compliance factors inherent in an institution. Each institution 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 of which 1 is 

the highest rating granted. National banks and federal savings associations continue to show 
OCC - 16

strong compliance with consumer protection regulations with 94 percent of national banks 

earning a consumer compliance rating of either 1 or 2 for FY 2011. Under the Dodd-Frank Act, 

this rating will now change to those institutions with total assets of no more than $10 billion for 

which the OCC has enforcement and supervisory authority. Beginning in FY 2012 federal 

savings associations will be included in the performance measure and the target for FY 2012 and 

2013 will remain unchanged at 94 percent.

Rehabilitated National Banks and Federal Savings Associations as a percentage of problem of 

National Banks and Federal Savings Associations One Year Ago

Problem national banks and federal savings associations ultimately can reach a point at which 

rehabilitation is no longer feasible. The OCC’s early identification and intervention with 

problem financial institutions can lead to a successful remediation. For FY 2011, 22 percent of 

national 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 has been adversely 

affected by the underlying economic conditions facing the banking industry and is below the 

OCC’s target of 40 percent. The number of serious problem financial institutions, 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 institutions' financial condition. Under the Dodd-Frank Act, the OCC

assumed responsibility on July 21, 2011 for the supervision of federal savings associations. 

Federal savings associations will be incorporated into this measure in the future.

As has been previously noted, the OCC is taking a number of steps through its Supervise and 

Regulate programs to repair and make national banks and federal savings associations more 

resilient to financial stresses and to identify and obtain corrective action at an earlier stage, when 

problems can be most successfully addressed. These efforts include heightened capital and 

liquidity standards and increased emphasis on the need for stress testing, designed to provide 

financial institutions with stronger capital buffers to withstand unforeseen events. These are 

multi-year efforts that will continue in FY 2012. The OCC is also updating its guidance and 

strengthening its expectations with regard to credit concentrations. Such concentrations were a 

major contributing factor to many, if not most of the recent problem national banks reflected in 

this measure. As these efforts progress and the operating condition for the financial sector 

improves, this performance measure is likely to improve to the target level.

Total OCC Costs Relative to Every $100,000 in National Bank and Federal Savings Association 

Assets Regulated

Beginning in FY 2006, the OCC implemented a performance measure 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. National bank and federal savings association assets are those reported quarterly by 

national banks and federal savings associations (effective March 2012) on the Reports of 

Condition and Income. Total national bank and federal savings association assets represent the 

growth and complexity of the financial institutions under the jurisdiction of the OCC. This 

measure supports the OCC’s strategic goal of efficient use of agency resources. The OCC’s 
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ability to control its costs while ensuring the safety and soundness of national banks and federal 

savings associations benefits all national bank and federal savings association customers. The 

OCC plans to retain this target threshold for FY 2012 and 2013 and will continue its efforts to 

ensure that resources are used prudently and that programs are carried out in a cost effective 

manner. In FY 2011, the OCC expended $8.49 per $100,000 in national bank assets regulated 

compared to the target of $9.22. Beginning in FY 2012, federal savings associations will be 

included in the performance measure.
OCC - 18

3.1.1 – Supervise Budget and Performance Report and Plan

Dollars in Thousands 

Supervise Budget Activity

Resource Level FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Actual Actual Actual/1 Estimate/2 Estimate/2

 Reimbursable Resources $471,882 $528,622 $565,921 $597,859 $618,254 $707,845 $1,052,200 $942,000

Total Resources $471,882 $528,622 $565,921 $597,859 $618,254 $707,845 $1,052,200 $942,000

Budget Activity Total $471,882 $528,622 $565,921 $597,859 $618,254 $707,845 $1,052,200 $942,000

Measure FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Actual Actual Actual/3 Target/4 Target/4

Percentage of National Banks 

and Federal Savings Associations 

with Composite CAMELS 

Rating of 1 or 2

95.0 96.0 92.0 82.0 70.0 75.0 90.0 90.0

Percentage of National Banks 

and Federal Savings Associations 

that are considered Well 

Capitalized

99.0 99.0 99.0 86.0 90.0 93.0 95.0 95.0

Percentage of National Banks 

and Federal Savings Associations 

with Consumer Compliance 

Rating of 1 or 2

94.0 97.0 97.0 97.0 95.0 94.0 94.0 94.0

Rehabilitated National Banks and 

Federal Savings Associations as 

a percentage of problem of 

National Banks and Federal 

Savings Associations One Year 

Ago (CAMEL 3, 4, or 5)

46.0 52.0 47.0 29.0 23.0 22.0 40.0 40.0

Total OCC Costs Relative to 

Every $100,000 in National Bank 

and Federal Savings Association 

Assets Regulated ($)

8.57 8.89 8.39 8.81 9.28 8.49 9.22 9.22

Key: DISC - Discontinued and B – Baseline

(1) Effective July 21, 2011, the OCC assumed responsibility for regulating federal savings associations.

(2) FY 2012 and FY 2013 estimates include the cost of regulating the national banks and federal savings

 associations.

(3) FY 2011 actual data through September 30, 2011 does not include the federal savings associations.

(4)

 FY 2012 and FY 2013 targets are subject to revision based on the impact of integrating OTS functions relating 

 to federal savings associations into the OCC and the transfer of designated OCC functions into the CFPB.
OCC - 19

3B – Regulate

($142,800,000 from reimbursable resources): 

The Regulate program supports the OCC’s strategic goals of 1) assuring the safety and 

soundness of institutions subject to its jurisdiction; 2) fair access to financial services and fair 

treatment of national bank and federal savings association customers; and 3) a flexible legal and 

regulatory framework. Specifically, the Regulate program consists of ongoing activities that 

result in the establishment of regulations, policies, operating guidance, and interpretations of 

general applicability to national banks and federal savings associations. These regulations, 

policies, and interpretations may establish system-wide standards, define acceptable national 

banking and federal savings association practices, provide guidance on risks and responsibilities 

facing national banks and federal savings associations, or prohibit (or restrict) national banking 

or federal savings association practices deemed to be imprudent or unsafe. They also establish 

standards for ensuring fair access to financial services and fair treatment of national bank and 

federal savings association customers. This program includes the establishment of examination 

policies and handbooks; interpretations in administrative, judicial, and congressional 

proceedings; and establishing the applicable legal and supervisory framework for new financial 

services and products.

Specific activities undertaken in FY 2011 as part of this program were described earlier and 

included the issuance of various supervisory guidance on real estate appraisals, risk model 

management, Internet Banking, and Counterparty Credit Risk Management. Significant 

resources were also spent on various Dodd-Frank rulemakings, including those pursuant to 

section 171(b) regarding minimum risk-based capital requirements; section 742(c)(2) related to 

certain off-exchange foreign currency transactions with retail customers; section 939A pertaining 

to removing the reliance on credit ratings; section 956 pertaining to incentive-based 

compensation arrangements; section 941 pertaining to risk retention requirements and associated 

minimum underwriting standards for asset securitizations; and sections 731 and 764 related to 

capital requirements and margin requirements on certain swap transactions. In FY 2012 and 

2013, the OCC will continue to support operations of the FSOC and issue Dodd-Frank 

rulemakings, as well as complete the comprehensive integration of OTS rules into the OCC 

regulatory structure. This effort will be accomplished through a robust internal project 

management system and consultative and joint rulemaking processes with other regulatory 

entities. 

The goal owner for this budget activity is the Acting Comptroller of the Currency, John Walsh.
OCC - 20

3.1.2 – Regulate Budget and Performance Report and Plan

Dollars in Thousands 

Regulate Budget Activity

Resource Level FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Actual Actual Actual/1 Estimate/2 Estimate/2

 Reimbursable Resources $70,992 $91,296 $87,583 $94,511 $97,735 $95,699 $142,800 $127,870

Total Resources $70,992 $91,296 $87,583 $94,511 $97,735 $95,699 $142,800 $127,800

Budget Activity Total $70,992 $91,296 $87,583 $94,511 $97,735 $95,699 $142,800 $127,870

(1)

 Effective July 21, 2011, the OCC assumed responsibility for regulating federal savings associations.

(2)

 FY 2012 and FY 2013 estimates include the cost of regulating the national banks and federal savings

 associations.

3C – Charter

($31,079,000 from reimbursable resources): 

The Charter program consists of ongoing activities that result in the chartering of national banks 

and federal savings associations and the evaluation of the permissibility of structures and 

activities of national banks and federal savings associations and their subsidiaries. This includes 

the review and approval of new national bank and federal savings association charters, federal 

branches and agencies, mergers, acquisitions, conversions, business combinations, corporate 

reorganizations, changes in control, operating subsidiaries, branches, relocations, and 

subordinated debt issuances. By supporting the entry of new products and institutions into the 

financial system in a manner consistent with safety and soundness, the Charter program supports 

the OCC’s strategic goals of assuring safety and soundness while allowing national banks and 

federal savings associations to offer a full competitive array of financial services.

The goal owner for this budget activity is the Acting Comptroller of the Currency, John Walsh.

Description of Performance:

Percentage of Licensing Applications and Notices Completed within Established Time Frames

The OCC’s timely and effective approval of corporate applications contributes to the nation’s 

economy by enabling national banks and federal savings associations 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 or federal savings association 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. For 

FY 2011, the OCC completed 97 percent of national bank applications and notices within the 

time frame. The OCC will continue to meet its Charter program goals by providing staff 

training, coordination between charter and supervisory staff on safety and soundness and 

compliance matters, issuance of updated procedures, and maintaining an emphasis on 

accessibility and early consultation with national bank and federal savings association organizers 

and others proposing national bank and federal savings association structure changes.
OCC - 21

3.1.2 – Charter Budget and Performance Report and Plan

Dollars in Thousands 

Charter Budget Activity

Resource Level FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Actual Actual Actual/1 Estimate/2 Estimate/2

 Reimbursable Resources $13,952 $18,515 $20,212 $23,628 $24,434 $21,450 $31,079 $27,830

Total Resources $13,952 $18,515 $20,212 $23,628 $24,434 $21,450 $31,079 $27,830

Budget Activity Total $13,952 $18,515 $20,212 $23,628 $24,434 $21,450 $31,079 $27,830

Measure FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Actual Actual Actual/3 Target/4 Target/4

Percentage of Licensing 

Applications and Notices 

Completed within 

Established Timeframes 

94.0 96.0 95.0 95.0 96.0 97.0 95.0 95.0

Key: DISC - Discontinued and B – Baseline

(1) Effective July 21, 2011, the OCC assumed responsibility for regulating federal savings associations.

(2) FY 2012 and FY 2013 estimates include the cost of regulating the national banks and federal savings 

 associations.

(3) FY 2011 actual data through September 30, 2011 does not include the federal savings associations.

(4) FY 2012 and FY 2013 targets are subject to revision based on the impact of integrating OTS functions relating

 to federal savings associations into the OCC and the transfer of designated OCC functions into the CFPB.

Detailed information about each performance measure, including definition, verification and 

validation is available.
OCC - 22

Section 4 – Supplemental Information

4A – Capital Investment Strategy

The OCC’s Information Technology (IT) strategic plan aligns information technology initiatives 

and investments to the OCC’s core mission. In addition, the plan addresses key legislative 

requirements for the integration of the OCC with the OTS, including both the integration of OTS 

applications and capabilities and disposition of redundant or end-of-lifecycle applications, 

capabilities, and services. 

The IT strategic plan is implemented through the budget formulation process and the Capital 

Planning and Investment Control (CPIC) process. These processes ensure that all IT investments 

are aligned with the OCC’s mission, goals, objectives, and target enterprise architecture before a 

project is funded. The capital planning process reviews and prioritizes detailed business cases to 

promote technology reuse, to capitalize on enterprise opportunities, and to reduce redundant and 

obsolete capabilities and services. Investment evaluation control actions ensure that the OCC IT 

strategy has adequate funding and staff resources to address IT investment priorities, and 

considers risk mitigation strategies for IT investments that are not meeting stated cost, time, and 

performance goals. Performance metrics are linked to the delivery, alignment, and achievement 

of the OCC strategic program objectives. Cost effectiveness for each investment is evaluated 

through regular benchmarking studies, featuring peer group organizations. Key metrics used to 

evaluate infrastructure include availability, reliability, utilization, defects, and customer 

satisfaction.

FY 2012 and 2013 Plans

The OCC has three major IT initiatives in FY 2012 and 2013. 

Mainframes & Servers Support Services (MSSS) 

The MSSS supports the OCC’s mainframe computer operations and maintenance (O&M). 

Support services include data center systems O&M, mainframe and server O&M, and disaster 

recovery testing.

As part of this initiative, the OCC is consolidating and relocating the data center infrastructure 

to a third-party co-location facility commencing in FY 2012, with an anticipated completion in 

FY 2013. Based upon detailed alternatives analysis conducted in FY 2011, it was determined 

that the OCC’s main data center, located in Landover, MD, cannot meet the capacity 

requirements for growth forecasts. Relocation of the OCC’s data center will provide the OCC 

with access to basic facilities and environmental services (floor space, power cooling, network 

and physical security) while supporting mandates for data center consolidation from Treasury 

and the Office of Management and Budget (OMB). The facility will provide redundant services 

and capabilities and can be managed remotely by the OCC infrastructure and operations staff 

with minimal new technology or process enhancements.

Telecommunications Services and Support (TSS)

The TSS includes telecommunications wide area network and local area network infrastructure. 

Remote access to the OCC systems is facilitated via a virtual private network, dial-in, and 
OCC - 23

cellular wireless access using two-factor authentication. This investment also includes 

messaging services supporting highly mobile bank examiners and the OCC staff. 

End User Services and Support (EUSS)

The EUSS includes help desk/customer service support, personal computer hardware and 

software O&M, desktop engineering and image management, and asset management.

A summary of capital investment resources, including major information technology and nontechnology investments is available.