Magazine article American Banker

Comment: Lunch, Food for Thought at the OCC

Magazine article American Banker

Comment: Lunch, Food for Thought at the OCC

Article excerpt

Whenever I'm with a group of bankers, we get around to the question of why banks want national charters when state charters are much cheaper. Should my mythical Schmidlap National Bank be renamed Schmidlap State Bank?

I traveled to Washington recently to get the opinion of Comptroller of the Currency John D. Hawke Jr.

National banks pay 100% of the cost of their supervision. State-chartered banks pay about 22%, and the rest is picked up by the Federal Deposit Insurance Corp. and Federal Reserve. As Mr. Hawke pointed out over lunch at his office, national banks' contributions to the FDIC insurance fund account for 55 cents of each dollar spent on supervising state banks. On average, national banks pay two and a half times what state banks pay for exams.

Many state bank supervisors have used these figures to convince national banks to convert. Yet there are still 2,200 with national charters, of which 2,000 have less than $1 billion of assets.

Mr. Hawke says it's because national banks get more than just an examination out of the deal.

"Our examiners are like consultants," he said. "They help national banks with interest rate risk, credit and liquidity issues, loan review, and technology. In fact, many state banks would like to see our work in this latter area."

The OCC has an early-warning system, called Project Canary used not only by national bank examiners to identify problems, but by many national banks themselves. It has an outreach program to help in agriculture banking and other fields. …

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