national
banking system, under OCC supervision, fueled the extraordinary productivity
and prosperity that has improved the lives of tens of millions — exactly
as Lincoln and his colleagues in Congress intended.
Today
also marks the official start of the OCC's celebration of our 140th
anniversary. Our goal is to acquaint — or, hopefully, to reacquaint
— all OCC employees with the proud tradition of service that has
characterized the Office and its people since 1863. This afternoon we were
extremely fortunate to have most of the living former Comptrollers together for
the first time in years to engage in what I'm sure those of you who were there
would agree was a fascinating discussion of the trials, tribulations, and
satisfactions of their time in office. It was an unforgettable experience
— but it's just the beginning of what we have in store to mark 140 years
of OCC history. There will be guest lectures, historical displays, contests, an
anniversary yearbook, and articles profiling OCC employees, past and present,
in SuperVisions.
If
today's events are any indication, it should be an exciting year.
Last but
not least, this evening we come together for the first time under the auspices
of the OCC alumni association. I can hardly express my pride in seeing this
distinguished group of former OCC employees together in one place — or
how grateful I am to my good friend and colleague, Bob Serino, who made it all
possible. I've known Bob for many years, and I've never known him to shrink
from a challenge. This time was no different. We're here tonight because Bob
had the persistence, endurance, and organizational skill to see it through.
Bob, you have my great admiration and thanks for all you have done — and,
hopefully, will do going forward, with the help of your many friends and
associates.
Each of
you also deserves thanks for responding to the call and for your commitment to
the OCC's values and interests. Already you are 400 strong — a number
that I suspect will increase quickly and substantially when the word of this
event and the ideals to which the association is dedicated become common
knowledge. I look forward to visiting with you in the years to come - and to
becoming one of you (although I'm prepared to bide my time for a while before I
reach eligibility for membership). When I do become eligible, I hope to be a
member for many, many years.
I am now
more than four years into my service as the 28th Comptroller, and the years
— those spent outside the agency as well as within — have given me
a clear perspective on what makes the OCC such a special place — and why
we are still here to talk about it 140 years after its creation. By itself,
that's no small accomplishment — not when you consider the ways in which
our mission has changed or how many times it was proposed that the OCC be
abolished as part of some reorganization or another of the federal bank
regulatory structure. That history goes back at least to 1913, when the Federal
Reserve was created, and newly appointed officials of the Fed sought to sweep
any competitors from the field of banking and bank supervision. They failed to
do it then, and they and others have failed to do it since. The reasons why
they failed, I think, are worth considering.
The
answer lies partly in the absolute validity of the core mission entrusted to
the Office by Congress in 1863. It was a mission that lost none of its urgency
when the much-heralded national currency was finally withdrawn from circulation
beginning in the 1930s.
As
important as the currency question was to the Congress that passed the National
Currency Act, its primary focus was on banks and on creating a permanent basis
for economic growth. In this regard, most scholars of the subject have gone
astray in dwelling on considerations of short-term expediency and Civil War
financing in Congress's calculations. The truth is that, in passing the
National Currency Act, Congress's motives were no different from what they were
in passing such landmark Civil War-era legislation as the Land Grant Colleges
and Pacific Railroad Acts. In each of these cases, while immediate economic and
political pressures undoubtedly came into play, Congress's vision was fixed
firmly on the future prosperity of the nation. And banks — as the
providers of commercial financing and depository services and as engines of the
nation's economic growth and development — were seen as crucial to that
fundamental goal.
In order
to accomplish it, Congress endowed the OCC and the national bank charter with
distinct and enduring attributes. Congress made specific provision for the
safety and soundness of national banks, but, just as important, it gave
national banks the ability to adapt to the inevitable changes in financial
markets. Thus, it included in the statute the famous language authorizing
national banks to exercise "all such incidental powers as shall be
necessary to carry on the business of banking" — a clause that the
courts have consistently interpreted to include all financial powers not
expressly prohibited by law.
One
enormously important consequence of this grant of authority — and
essential to its execution — was that national banks would be clothed
with broad immunity from state and local laws that might interfere with the
conduct of their business and their achievement of the broader goals of
economic productivity and prosperity.
As the
lawyers and history buffs among you know, this was no idle concern. One of the
great Supreme Court cases of the early republic, McCulloch vs. Maryland,
centered on attempts by that state to tax the Second Bank of the United States,
an early version of a central bank. The Court, speaking through Chief Justice
John Marshall, invalidated the Maryland action, arguing that the states had no
power, "by taxation or otherwise, to retard, impede, burden, or in any
manner control the operations" of any federal agency. Coupled with the
supremacy clause of the U.S. Constitution, which provides that Federal law
prevails over any conflicting state law, national banks had an expansive grant
of authority to achieve the important objectives that Congress set forth.
It
speaks volumes that, 140 years after these principles were written into the
National Currency Act, and despite their repeated ratification by the courts,
including the Supreme Court of the United States, the right of national banks
to exercise the full range of banking powers and to operate unimpeded by most
state laws is still being challenged, day in and day out.
Of
course, the OCC has always been on the front lines of that battle. This, too,
is as Congress intended. The law entrusts the OCC with a heavy responsibility:
ensuring the safety and soundness of national banks; overseeing the products
and services offered by national banks; and assuring that national banks are
playing an appropriate role in the national economy. That responsibility has
sometimes brought us into conflict with the banks we supervise, when we deem
their business practices to be incompatible with high standards of safety and
soundness. It has brought us into conflict with the states, when they have
overstepped their bounds in the manner I've just described. And it has brought
us into conflict in the courts, on those occasions — rare and fleeting
though they've been — when our legal authority has been challenged.
It's
even brought us into occasional conflict with agencies of the executive branch
and with Congress. In the early years, it was not uncommon for legislators to
try to influence OCC decisions on a particular charter decision or enforcement
action, or to have a political favorite appointed as a national bank examiner
or receiver. In more recent times, we have seen attempts to harness OCC
supervision to the exigencies of national economic policy.
But we
have been able to resist such pressures, in large part because Congress
empowered us to do so. By statute, we are not subject to the normal budget and
appropriations process; our legislative recommendations are immune from prior
approval or review in the Executive Branch; and, again by statute, the Treasury
Department is forbidden from intervening in any matter or proceeding before us,
or from delaying or preventing the issuance of any rule or regulation by the
OCC.
To be
sure, our history has not been without a few awkward moments, especially when
we've had to defend our actions and answer for our errors, real and alleged.
Bank supervision, as you know, is part art and part science. It relies to a
large degree on instincts — instincts sharpened and informed by solid
training in fundamentals and hardened by experience in the field. But the fact
remains that we have a track record of quite astonishing success that is widely
acknowledged throughout the banking community here and around the world. I take
particular delight, as I'm sure you do, to hear testimonials from bankers
acknowledging — frequently long after the fact — the correctness of
advice or direction they were getting from us, even though they may have
complained bitterly at the time.
Fortunately,
most bankers do a good job of running their business, and most appreciate the
value of the advice they get from our experts. Indeed, if they're smart —
and most are — they respect and depend on that advice. That's especially
true for community bankers, who may lack the staff resources to deal with some
of the complex issues that our people handle routinely. Bankers tell me all the
time that they don't know what they'd do without us.
Technical
expertise is only one of the strengths we've been bringing to the table for the
last 140 years — and only one of the reasons why we're still there.
Integrity is another. We have seen isolated cases of the politicization of the
supervisory process — and even more isolated cases of illegal activity by
OCC employees — but our organization's professionalism, rectitude and
reputation for honest dealing has never been seriously impugned. Considering
the temptations that our people have faced and the pressures under which they
operate, that's an extraordinary commentary on who we are and what we stand
for.
Another
thing I've discovered since becoming Comptroller is that this is an
organization that genuinely cares about its people as people, off the job as
well as on. I know it's a cliché, but there's a real sense of family
here. Perhaps it's because we're a relatively small organization in which it's
entirely possible to have met almost everyone personally and to know them by
name. If I haven't met or appeared before every member of the organization at
least once, I've sure come close. That puts a human face on the decisions that
we make — for better or worse. And I'm convinced that, at the end of the
day, it explains the extraordinary loyalty and commitment to the organization
that our people bring to their workplaces.
A third
attribute — one that applies to our organization as such as well as to
the individuals who make it up — is flexibility. It's not enough that we
have permitted the national banking system to evolve in a way that has kept
them vibrant and competitive and responsive to the needs of our economy. The
OCC has itself had to keep up with the times to be an effective supervisor.
Comptroller Jim Saxon spurred the Office — and the industry — to
modernize when he sensed that the financial markets were leaving national banks
and their supervisor in the dust. Jim Smith brought in Haskins and Sells to
conduct a complete review of our procedures and to come up with a new
supervisory approach when he sensed that we were no longer able to effectively
supervise a rapidly evolving national banking system. John Heimann recognized
that the industry was no longer a monolith, if it ever was, and that large
banks and small banks required very different approaches to supervision. Bob
Clarke took it a step further, adopting a formal risk-based methodology that
helped make our limited resources go farther at a time of prolonged crisis in
the banking system. Gene Ludwig not only carried on the great tradition of
innovation in national bank powers, but also brought great energy to the
campaign for expanded access to credit and the battle to assure that national
banks retained maximum freedom to operate through subsidiaries.
Their
collective tenures covered little more than a quarter of the whole span of OCC
history. But what these leaders accomplished made it possible for us to
continue carrying out the historic mandates of Congress and the American people
at a time of rapid change in the banking business - change that, as I've said,
the OCC itself helped to make possible. To each of you — and to all who
assisted them in their important work — I and my successors and every OCC
employee present and future owe a very distinct debt of gratitude. We walk in
your footsteps.
A record
like the one that the OCC has compiled deserves celebration — and a
toast. So let me propose that we lift our glasses to 140 years — and 140
more to come.
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