Rodney Hood, the new acting head of the Office of the Comptroller of the Currency, outlined his priorities Tuesday and emphasized his commitment to reducing regulatory burdens on community banks and strengthening the financial system.

While speaking at the American Bankers Association’s Conference for Community Bankers in Phoenix, Hood touched on several topics, including financial inclusion, technology, cybersecurity and compliance with the Bank Secrecy Act.

Hood, the former chair of the National Credit Union Administration, was named acting comptroller this month. President Donald Trump has since tapped OCC vet Jonathan Gould to lead the agency, pending confirmation by the Senate. 

Here are the five key takeaways from Hood’s first public appearance as the head of the OCC. 

Financial inclusion

Hood noted that 40% of U.S. households cannot obtain a $400 emergency loan and estimated that 70 million people are “credit-invisible.”

“I continue … to believe that financial inclusion is undeniably the civil rights issue of our time,” Hood said.

Hood also highlighted the need to provide wealth management and investment opportunities beyond basic checking and savings accounts to clients.

One size doesn’t fit all

Hood stressed the importance of tailoring regulations to bank size and complexity and advocated for a principles-based approach when fighting cyber fraud. He highlighted ongoing threats from malicious actors and urged banks to implement multifactor authentication, while emphasizing the importance of operational risk management based on bank asset size.

Hood said the OCC would offer better clarity and guidance on regulatory frameworks that will contain differences between smaller banks with around $100 million in assets and larger institutions with more than $1 billion.

Hood said it’s unfair to think that a $100 million-asset bank should use the same risk weights and level of due diligence as that of a multibillion-dollar bank.

In “my time as acting comptroller” – and not an “inactive” one, Hood said, “I will certainly be going through the rules to make sure that we are looking at appropriate opportunities to reduce regulatory burden by determining what needs to be adjusted, and again, not looking at everything through a one-size-fits-all approach.”

Raising the BSA reporting threshold

Hood said he wants to focus on the OCC’s efforts to police banks’ exposure to bad actors amid the greater use of digital assets and cryptocurrencies.

“I do think it's time that we look at maybe raising that limit for the reporting threshold, rather indexing it to inflation or something of that nature. But until that day comes, I'm hoping that we can work together around strengthening our BSA and [anti-money laundering] protocol, but without it being deleterious to your bottom line,” Hood said.

Financial institutions, including banks and credit unions, must report any illegal transaction of over $5,000 to the Financial Crimes Enforcement Network.

Timely mergers

Hood identified major problems in how merger applications are evaluated. Community banks seeking mergers face hurdles since credit union market share is not included in market concentration calculations, he said.

“When you're looking at the merger applications, you could not get the accurate score of market share because the credit unions, their market share is not included in the reports,” Hood said. “It may appear as if you're going to have this 50% market share where we could include the market share data for the credit unions, you would be able to get those mergers approved in a timely manner.”

The omission skews the results, making bank mergers appear to create higher market concentration than actually exists. Hood said he would contact the Justice Department's antitrust division, with the aim of establishing a memorandum of understanding. If credit union market share data is included in merger reviews, it would help to prevent delays in bank merger approvals, Hood said.

Clarity on fintech partnerships

Hood called fintech partnerships “critically important” for banks to continue serving their clients.

He emphasized the need for the OCC to strengthen its “technology shop.” He said the NCUA used a cloud-based environment in the exam process, eliminating mounds of paper in favor of uploaded data.

Hood urged banks to read opinions and keep asking questions about risk management to third-party vendors.

Hood said he wants to use a regulatory sandbox so products are tested before they go live.

He also encouraged more interaction between banks and their examiners.

“I would encourage you all to not only pursue the partnerships, but I'm going to encourage you all to talk to your supervisory examiners,” Hood said. “No one wants to be surprised. So bring your examiners into the process early so that they can understand what it is that you're hoping to achieve with some of the partnerships.”