New York Bank Regulator Blasts OCC's Bid to Lure Foreign Banks
(Bloomberg) -- New York’s banking overseer punched back at comments delivered in Tokyo by the head of the U.S. Office of the Comptroller of the Currency, who urged foreign lenders to ditch state regulators in favor of the supervisory efficiency of his office.
“No regulator should seek to entice institutions to engage in regulatory arbitrage in return for light supervision and enforcement," Maria Vullo, Superintendent of New York’s Department of Financial Services, said in a statement. "And no law-abiding institution would accept such an offer for some perceived short-term benefit."
The remarks by Comptroller Joseph Otting, delivered Wednesday, come just a year after his office fast-tracked the request by Bank of Tokyo Mitsubishi UFJ to move from state oversight to a national charter.
Bank of Tokyo-Mitsubishi UFJ applied for conversion to the OCC’s oversight in October 2017 and received approval eight days later. The Tokyo lender then sued DFS to halt the New York regulator’s oversight of its activities.
Responding to that suit, Vullo declared that the OCC license was “contrary to law, invalid and not effective,” calling the action arbitrary and capricious. She accused the bank of trying to avoid the consequences of misconduct in New York. The matter is pending.
In its application to the Comptroller’s office, the bank noted that it had four distinct state regulators overseeing branches in New York, California, Texas and Illinois. The lender also owns and operates Union Bank in California, which is supervised by the Comptroller’s office.
The federal regulator approved the conversion in early November 2017 before DFS had responded to the OCC’s notice about the potential move. The switch took effect the following day. The OCC’s acting chief at that time was Keith Noreika, a Simpson Thacher & Bartlett lawyer who had done work for Bank of Tokyo and other global banks. Later that month, Otting was sworn in as OCC chief.
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