OCC Proposes Deregulatory Streamlining of Public Welfare, CLO Risk Retention, and FSA Nondiscrimination Rules

Reference: Bulletin 2026-16

Official publication: Read the full Bulletin 2026-16 on the agency website

The Office of the Comptroller of the Currency (OCC) has signaled a significant shift in its approach to administrative oversight with the issuance of a Notice of Proposed Rulemaking (NPRM) aimed at streamlining several core regulatory frameworks. This move, rooted in the principles of Executive Order 14219 and the broader “Department of Government Efficiency” (DOGE) initiative, seeks to prune regulations that the agency now deems unnecessary, duplicative, or lacking a firm statutory foundation. By focusing on the “best reading” of underlying laws rather than expansive administrative interpretations, the OCC is inviting a fundamental re-evaluation of how national banks and federal savings associations navigate community investments, capital markets participation, and nondiscrimination compliance.

Executive Summary

• Regulatory Rescission: The OCC proposes to rescind or significantly amend regulations within 12 CFR parts 24, 43, and 128, targeting rules that are identified as burdensome or unsupported by clear statutory authority.
• DOGE Alignment: This rulemaking is a direct implementation of Executive Order 14219, focusing on streamlining government operations and eliminating “regulatory overhang” that exceeds the agency’s primary mandate.
• Public Welfare Investments: Proposed changes to Part 24 may alter the notice and application processes for national banks making community development investments, potentially reducing the administrative hurdles for projects targeting low- and moderate-income areas.
• CLO Risk Retention: The NPRM addresses Part 43 (Credit Risk Retention), specifically targeting requirements for Open Market Collateralized Loan Obligations (CLOs) that may no longer be viewed as consistent with the best reading of the Dodd-Frank Act.
• FSA Nondiscrimination: The proposal aims to remove duplicative nondiscrimination requirements for Federal Savings Associations (FSAs) in Part 128, favoring reliance on broader, cross-industry civil rights and fair lending statutes.
• Statutory Interpretive Shift: The OCC is explicitly moving away from “permissible” interpretations toward a “best reading” standard, suggesting a more restrained approach to future agency rulemaking.

What the Regulator Issued

On April 24, 2026, the OCC published Bulletin 2026-16, titled “Notice of Proposed Rulemaking: Streamlining Regulations Concerning Public Welfare Investments, Open Market Collateralized Loan Obligations, and Federal Savings Association Nondiscrimination Requirements.” The bulletin introduces a formal NPRM that targets three specific areas of the Code of Federal Regulations (CFR): Part 24 (Community and Economic Development Entities, Community Development Projects, and Other Public Welfare Investments), Part 43 (Credit Risk Retention), and Part 128 (Nondiscrimination Requirements).

The OCC states that the proposal is designed to “rescind or amend certain regulations that are unnecessary, based on anything other than the best reading of the underlying statutory authority, or lacking clear statutory authority.” This language reflects a high-level policy directive to ensure that the agency’s regulatory footprint does not exceed the explicit powers granted to it by Congress. The agency specifically cites Executive Order 14219 as the catalyst for this review, positioning the OCC as an active participant in the administration’s broader deregulatory agenda.

Who Is Impacted

The scope of this NPRM is broad, affecting various segments of the financial services sector and the communities they serve. Primary stakeholders include:

• National Banks: Specifically those active in community development and public welfare investments under 12 CFR Part 24. These institutions may see a shift in how they report or seek approval for projects intended to benefit low-income populations.
• Federal Savings Associations (FSAs): These entities are the primary targets of the proposed changes to Part 128. The removal of specific nondiscrimination regulations in favor of general statutes will require FSAs to review their internal compliance and auditing procedures.
• CLO Managers and Investors: Participants in the securitization markets, particularly those involved with Open Market Collateralized Loan Obligations, will be impacted by changes to the credit risk retention rules in Part 43.
• Community Development Entities (CDEs): Organizations that partner with banks for public welfare projects should monitor these changes, as the ease of bank funding may be affected by the proposed streamlining of Part 24.
• Compliance and Risk Officers: Personnel responsible for navigating the intersection of agency-specific rules and broader federal laws will need to adjust their monitoring frameworks to account for the rescission of specific OCC-level requirements.

Key Dates and Deadlines

The OCC has not specified the exact date for the close of the comment period within the summary bulletin. Typically, such notices of proposed rulemaking provide a 30-day or 60-day window following official publication in the Federal Register. Stakeholders should monitor the Federal Register for the formal publication date to calculate the final deadline for submitting technical comments. Given the emphasis on the “Department of Government Efficiency,” it is expected that the agency will move toward a Final Rule expeditiously following the comment period.

Practical Action Checklist

1. Audit Part 24 Portfolios: Review current and planned public welfare investments to determine if they rely on specific regulatory safe harbors in the current version of Part 24 that may be subject to amendment.
2. Evaluate CLO Structures: For institutions involved in the CLO market, assess how the potential removal of certain risk retention requirements under Part 43 would impact existing deal structures and future issuances.
3. Review FSA Compliance Programs: Federal Savings Associations should compare their current Part 128 compliance manuals against broader fair lending laws (such as the Equal Credit Opportunity Act) to ensure no gaps emerge if the specific FSA rules are rescinded.
4. Engage in the Comment Process: Prepare detailed, evidence-based comments regarding the practical impact of these rescissions. Focus specifically on whether certain “unnecessary” rules actually provided helpful clarity or “safe harbor” protections.
5. Analyze “Best Reading” Implications: Consult with legal counsel to understand how the OCC’s shift to a “best reading” statutory interpretation might affect other areas of bank regulation not explicitly mentioned in this NPRM.
6. Monitor CRA Alignment: Public welfare investments (Part 24) are often used to satisfy Community Reinvestment Act (CRA) requirements. Ensure that streamlining Part 24 does not inadvertently create friction with CRA compliance.
7. Assess Reporting Systems: If the NPRM leads to a reduction in notice or application requirements, determine if internal reporting systems can be simplified to reduce administrative overhead.
8. Coordinate with Capital Markets Teams: Ensure that teams managing credit risk retention are aware of the potential shift in the OCC’s enforcement of Part 43, particularly regarding the “open market” exemption.
9. Update Nondiscrimination Training: If Part 128 is rescinded, update training materials for FSA employees to emphasize reliance on the remaining, broader federal nondiscrimination statutes.
10. Track DOGE Initiatives: Stay informed on subsequent OCC bulletins, as this is likely only the first wave of deregulatory actions tied to Executive Order 14219.

Open Questions / Watch Items

While the intent of the NPRM is clarity through reduction, several open questions remain for the industry to monitor:

• Definition of “Best Reading”: How will the OCC define the “best reading” of a statute in instances where the law is silent or ambiguous? This shift suggests a potential vulnerability for established regulatory interpretations that lack explicit textual support.
• Impact on Public Welfare Certainty: Part 24 currently provides a framework for what constitutes a “public welfare” investment. Will the removal of “burdensome” regulations also remove the certainty that banks currently rely on when committing capital to these projects?
• CLO Market Reaction: If risk retention requirements for Open Market CLOs are rescinded, how will investors react to the perceived change in alignment between managers and noteholders?
• Enforcement Continuity: For FSAs, will the rescission of Part 128 lead to a different examination cadence or a change in how the OCC evaluates fair lending compliance during routine audits?

This legal update is published by My Law Tampa as part of our ongoing commitment to providing timely regulatory analysis for the financial services community. Our focus remains on translating complex agency actions into actionable insights for legal and compliance professionals.

The information provided in this memorandum is for general informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by the publication or receipt of this update. For specific legal inquiries regarding the impact of these proposed rules on your institution, please consult with qualified legal counsel.

Source Materials

• Official publication: Bulletin 2026-16
• Regulator archive: OCC memo archive
• Memo library: browse the full regulatory memo archive
• Related memo: Community Bank Leverage Ratio Framework: Comprehensive Analysis of the 2026 Final Rule
• Related memo: OCC Bulletin 2026-14 and the Spring 2026 Interest Rate Risk Statistics Report
• Related memo: OCC Bulletin 2026-13: The New Interagency Standard for Model Risk Management