Reference: Bulletin 2025-51
Memorandum for Client Review
Executive Summary
- Action: The Office of the Comptroller of the Currency (OCC) has approved a notice of proposed rulemaking (NPRM) to amend existing guidelines regarding heightened standards for large insured institutions.
- Threshold Change: The primary alteration involves increasing the average total consolidated assets threshold required for applying the heightened standards from $50 billion to $700 billion.
- Scope: The proposed amendments apply to insured national banks, insured federal savings associations, and insured federal branches.
- Process: This change is currently in the proposal stage, meaning it is subject to public comment before final adoption.
- Impact: The adjustment represents a significant shift in the supervisory footprint, potentially reducing the number of institutions subject to the most stringent oversight protocols.
What the Regulator Issued
On December 23, 2025, the Office of the Comptroller of the Currency issued Bulletin 2025-51, formally titled Guidance on Heightened Standards for Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches. This document serves as a Notice of Proposed Rulemaking. The Office of the Comptroller of the Currency (OCC) has explicitly stated that the proposal aims to modify the asset eligibility criteria currently contained within the heightened standards.
The core mechanism of the proposal focuses on a dramatic expansion of the asset threshold for eligibility. Under current interpretations, institutions with average total consolidated assets of $50 billion or more were subject to specific heightened standards designed to ensure robust compliance, risk governance, and consumer protection measures.
The text of the proposal indicates that the OCC has determined that the $50 billion threshold may be too restrictive for current market conditions or supervisory priorities. Consequently, the OCC proposes to raise the bar significantly, setting the new floor at $700 billion. This implies that the vast majority of banks currently falling between the $50 billion and $700 billion mark would cease to be subject to the specific heightened standards that were previously mandatory under the older guidelines.
The document emphasizes that this action is procedural and administrative. It does not explicitly repeal the standards themselves for larger banks, but rather adjusts the definition of who qualifies as a “large” bank for the purposes of these specific guidelines. The OCC states that the goal is to ensure that the heightened standards are applied to institutions where the regulatory burden is justified relative to their size and complexity.
This regulatory update is part of a broader effort to align supervisory expectations with the evolving landscape of the U.S. financial system. By increasing the threshold, the OCC effectively narrows the scope of the heightened standards, suggesting a focus on the largest, most complex financial institutions rather than a broader application across a wider cohort of national banks and federal savings associations.
The OCC is soliciting public comments on this proposal. It recognizes that such a significant change could alter compliance strategies for many mid-sized to large institutions. The text explicitly invites feedback on the feasibility and impact of the proposed asset threshold adjustment. The document is published on the OCC website, where the full text of the proposed rulemaking is available for download and review.
Who Is Impacted
The primary impact of this proposal is on institutions that previously met the $50 billion asset threshold but fall below the proposed $700 billion floor. These institutions would no longer be subject to the specific heightened standards under the proposed rule. This shift has several implications:
- Mid-to-Large Banks: National banks and federal savings associations with assets between $50 billion and $700 billion are the direct targets of this change. They would transition from the heightened standards regime to a potentially lower-tier supervisory regime, unless other factors qualify them for heightened standards.
- Compliance Burden: These institutions may face a reduction in the specific compliance reporting and governance requirements associated with the heightened standards. This could translate into cost savings related to compliance technology and staffing.
- Systemic Risk Considerations: Conversely, this change does not mean these banks are deemed less risky. The OCC may be relying on other supervisory tools to address risks in institutions that no longer meet the heightened standards criteria. The document notes that banks must still adhere to capital adequacy requirements and consumer protection laws regardless of their classification under the heightened standards.
- Consumer Protection: Consumer protection mandates (e.g., Fair Credit Reporting, Reg E, Reg Z) remain in full force. The change in the heightened standards does not relieve banks of their general consumer protection obligations, which are mandated by statute.
- Regulatory Capital: Capital adequacy requirements (e.g., Basel III) are separate from the heightened standards. This proposal does not alter the minimum capital ratios or liquidity coverage ratios that all banks must maintain.
- Stress Testing: Large banks are typically subject to the Dodd-Frank stress testing regime. This regime applies to banks over $100 billion. The change in the heightened standards does not directly affect the applicability of the stress testing regime, which is a separate Dodd-Frank requirement.
Important Dates
While the document is published today (December 23, 2025), the proposal is currently in the notice stage. No specific compliance dates are mentioned in the text provided, as the dates are contingent on the completion of the public comment period and subsequent rulemaking. The document directs interested parties to the Federal Register for official publication dates and comment deadlines. The final rulemaking will be subject to the Administrative Procedure Act, allowing for a standard public comment review period.
Checklist for Compliance Officers
- [ ] Assess the current asset level of the institution to determine if the new $700 billion threshold impacts your classification.
- [ ] Review current compliance programs to identify elements specifically mandated by the heightened standards that would no longer apply.
- [ ] Engage with legal counsel to understand the implications of the new threshold on your risk governance framework.
- [ ] Update internal policies and procedures to reflect the new eligibility criteria.
- [ ] Monitor the Federal Register for official comment deadlines associated with the proposed rulemaking.
- [ ] Consider stakeholder impacts, including board members and shareholders, on the change in regulatory burden.
- [ ] Prepare a transition plan for resources currently allocated to the heightened standards compliance.
- [ ] Evaluate the impact on consumer protection metrics to ensure all statutory requirements are still met.
Open Questions and Considerations
As with any proposed rulemaking, several questions remain pending until the finalization of the rule. The primary question is whether the $700 billion threshold is intended to be an absolute bar or if other qualitative factors could still bring an institution into the heightened standards category. The OCC has stated that the proposal is based on the average total consolidated assets, but it is worth monitoring if other factors (e.g., specific risk profiles) will be considered.
The document does not detail the specific mechanisms that would replace the heightened standards for institutions moving below the threshold. It is assumed that these institutions would fall back under general supervisory expectations and standard compliance requirements, but the exact nature of this shift requires careful analysis.
There is also the question of how this proposal aligns with other regulatory bodies, such as the Federal Reserve or FDIC, which may have different or overlapping thresholds for large institution oversight. While the OCC manages national banks, the coordination between regulators is a critical factor in a stable financial system.
The change in thresholds represents a significant shift in the regulatory landscape. While it offers relief from specific compliance burdens, it also signals a re-evaluation of how systemic risk is monitored across the banking sector. The OCC has expressed a commitment to ensuring that the heightened standards are applied where they are most effective and necessary. The final rule will provide clarity on the exact application of these standards post-amendment.
For clients and stakeholders, the message is clear: monitor the development of this rule closely. The asset threshold is a key determinant of regulatory burden. A shift from $50 billion to $700 billion is a material change that warrants a review of strategic planning and compliance allocation. The OCC is moving to streamline the application of these standards, potentially making the regulatory environment less burdensome for mid-sized large banks while maintaining rigorous oversight for the largest institutions.
This guidance is critical for compliance officers, risk managers, and legal teams. It requires a proactive review of the bank’s regulatory status. The document serves as a formal invitation to participate in the rulemaking process, ensuring that the final rule reflects a wide range of viewpoints and concerns from the banking community.
