Banking and Finance Law Daily Wrap Up, FINANCIAL STABILITY—OCC proposes increasing heightened standards threshold from $50B to $700B, (Jan 2, 2026)

By Jonathan Anderson

The change would allow smaller institutions to design and implement more suitable risk governance frameworks and foster innovation, the federal agency said.

The Office of the Comptroller of the Currency (OCC) has issued a notice of proposed rulemaking to increase the heightened standards threshold for covered banks. Under the proposal, the average total consolidated assets threshold at which the guidelines apply would increase from $50 billion to $700 billion. The rulemaking would also clarify certain compliance dates and make other technical amendments. The OCC said the measure is part of the agency’s efforts to “tailor its regulations and eliminate unnecessary regulatory burden.” The OCC said the changes will allow more institutions to adopt risk governance frameworks better suited to their size, and foster innovation in risk management practices. Comments on the proposal are due by March 2, 2026.

Background. Following the 2008 financial crisis, the OCC in 2010 instituted a program referred to as “heightened expectations” to enhance the agency’s supervision and strengthen the governance and risk management practices of large institutions. The OCC formalized this program in 2014 by adopting the guidelines pursuant to section 39 of the Federal Deposit Insurance Act. The guidelines generally establish minimum standards for the design and implementation of an institution’s risk governance framework and set forth minimum standards for a board of directors in overseeing the risk governance framework’s design and implementation. The guidelines apply to “covered banks.”

Definition of “covered bank.” The proposal would amend the guidelines’ definition of “covered bank” to mean any insured national bank, insured federal savings association, or insured federal branch of a foreign bank (i) with average total consolidated assets equal to or greater than $700 billion; (ii) with average total consolidated assets less than $700 billion if that bank’s parent company controls at least one covered bank; or (iii) with average total consolidated assets less than $700 billion if the OCC determines the bank’s operations are highly complex or otherwise present a heightened risk. The proposed rule would not apply to community banks.

Rulemaking rationale. Citing supervisory experience, the “extreme prescriptiveness” of the existing guidelines, and the associated regulatory burden, the OCC in its notice said the guidelines “may only be justified for the largest and most complex institutions.” The OCC further noted the existence of “other laws and regulations that address and incentivize covered banks and their boards to implement and adhere to appropriate corporate governance processes and procedures.”

The OCC argued that the change would enable excluded institutions to design and implement more suitable risk governance frameworks, foster innovation in risk management practices, and allow excluded institutions’ boards to “refocus on executing their core responsibilities.” The OCC further argued that its operations could be made more efficient under the proposed changes.

“This recalibration would reduce regulatory burden while refocusing the guidelines on institutions whose size, complexity, and risk profile pose the greatest risk to the banking system,” the agency said in OCC Bulletin 2025-51.

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