Banking and Finance Law Daily Wrap Up, COMMUNITY DEVELOPMENT—Trades comment on OCC community bank licensing proposal, (Jan 23, 2026)

By Charles A. Menke, J.D.

The OCC has proposed streamlining requirements as part of an effort to reduce regulatory burdens on community banks.

Better Markets, the National Community Reinvest Coalition, and the Independent Community Bankers Association have each submitted comments on an Office of the Comptroller of the Currency proposal to revise licensing requirements for community banks. The October 2025 proposal would broaden eligibility for expedited or reduced licensing procedures to community banks by, among other things, automatically making community banks with less than $30 billion in total assets “covered institutions” in relation to licensing requirements, and expediting licensing processes such as branch applications (see Banking and Finance Law Daily, Oct. 7, 2025).

Better Markets. Better Markets expressed support for “expedited or reduced filing procedures for true community banks” but “strongly oppose[d]” the OCC’s definition of community banks used in the Proposal” arguing that the definition is “baseless” and “nonsensical.” According to Better Markets, “[b]anks that have $30 billion in assets—or anywhere close to that asset size—are not community banks and should not benefit from expedited or reduced filing procedures.”

The organization urged the OCC to revise the definition of community banks used in the proposal and, instead, use the definition used by the Federal Deposit Insurance Corporation. “The FDIC definition is a superior definition because it is a multi-faceted definition that takes into account the combination of types of activities conducted, geographic market area, and a reasonable inflation adjusted asset size metric.”

In a statement accompany the release of the comment letter, Phillip Basil, Director of Economic Growth and Financial Stability at Better Markets, said the OCC “is undermining true community banks and making the grossly unlevel playing field they face even worse.” Basial added that the proposal “is nothing more than a giveaway to midsized banks that will result in them being under-supervised and under-regulated and give them a competitive advantage. Banks at or anywhere near that size are not community banks and should not benefit from reduced supervision and regulation.”

NCRC. The NCRC opposed the proposal arguing that it “risks depriving the agency of sufficient time to evaluate how complex and/or significant changes in banks’ operations affect their capacities to serve communities safely and equitably.” According to NCRC, “[t]he OCC does not explain in its proposal how a short timeline for decisions will enable it to carefully consider the managerial, safety and soundness, and convenience and needs factors involved in bank applications.”

The NCRC believes the proposal will have “deleterious impacts on the OCC’s ability to adequately consider convenience and needs factors.” The organization contended that “[t]he incidence of fraudulent and risky activity is increasing” and, as a result, “the OCC needs more time, not less, for considering bank applications.” The NCRC also argued that shortening the time frame for processing bank application is not warranted as these “applications are currently processed in an expedited manner.”

ICBA. ICBA, on the other hand, supported the proposal, saying it “applauds the OCC’s efforts to address undue regulatory burden imposed on community banks, and reforming the licensing process is a welcome step in the right direction.” The organization expressed concerns, however, “that aggregating affiliated depository institutions or aggregating a community bank with its holding company for purposes of the covered community bank definition would undermine the intent of the proposal.” ICBA urged the use of a “tiered regulatory approach” rather than the OCC’s proposed “aggregation approach” to define “covered institutions.”

ICBA additionally supported the proposal’s expedited review period for branch applications and director residency waivers, as well as the streamlining of requirements relating to capital distribution, operating subsidiaries, and savings associations charters and conversions.

The American Bankers Association has also expressed its support for the proposal (see Banking and Finance Law Daily, Jan. 21, 2026).

Companies: American Bankers Association; Better Markets; Independent Community Bankers Association; National Community Reinvest Coalition

RegulatoryActivity: BankingOperations CommunityDevelopment FinancialStability PrudentialRegulation