Stricter Regulation of Trust Companies

Obama’s financial reform bill is folding the Office of Thrift Supervision (OTS) into the Office of the Comptroller of the Currency (OCC) starting next summer. At this time, the OCC will take over supervision of 745 trust companies, thrift-structured lenders, and other institutions. Trust companies that received a charter from OTS still have the charter, but no new national thrift charters will be issued. Regulation will be stricter, however, and there will be more stringent capital rules regarding problem loans.

Many thrift-chartered lenders are currently carrying a large amount of bad debt on their books that met expectations of OTS but won’t pass under the OCC. Some of these lenders may convert to a state charter while others may stick with their original charter, complying with stricter regulation.

See Scott Martin, Obama’s New Bank Rules “Grandfather” OTS Trust Banks, The Trust Advisor Blog, July 24, 2010.