Contents I. Comptroller’s Viewpoint................................................................................................. 1 II. The Comptroller and the Executive Committee........................................... 5 III. History of the Office of the Comptroller of the Currency..................... 7 IV. Profile............................................................................................................................................ 9 The National Banking System........................................................................................................... 9 The Office of the Comptroller of the Currency................................................................................. 9 V. National: Ensuring the Safety and Soundness of the National Banking System................................................. 11 Fostering Better Management of Credit Risk.................................................................................. 11 Reaffirming Credit Quality....................................................................................................... 11 Surveys of Credit Risk ............................................................................................................. 12 Helping To Stabilize Mortgage Markets.......................................................................................... 14 Addressing Concentrations in Commercial Real Estate Lending ................................................... 14 Updating the Allowance for Loan and Lease Losses ...................................................................... 15 Promoting Better Risk Management of Innovative Markets and Products..................................... 15 Doing Business with Hedge Funds .......................................................................................... 15 Complex Financial Products .................................................................................................... 16 Dealing in Derivatives.............................................................................................................. 16 Sidebar: Dugan Sees Growing Role for President’s Working Group on Financial Markets........... 17 Finalizing New Capital Rules.......................................................................................................... 18 Providing Regulatory Relief to National Banks.............................................................................. 18 Helping in the Fight against Terrorism and Money Laundering ..................................................... 19 Protecting National Banks against Mismanagement....................................................................... 20 Enforcement Actions against Bank Insiders and Third Parties ................................................ 20 Strengthening the Legal and Regulatory Framework...................................................................... 21 Litigation .................................................................................................................................. 21 Sidebar: The Watters Decision Clears the Air ................................................................................. 22 Legal Opinions ......................................................................................................................... 22 Licensing Decisions ................................................................................................................. 23 Sidebar: Working To Address the Needs of Minority Banks........................................................... 25 Events .............................................................................................................................................. 26 VI. International: National Banks and OCC Supervision in a Global Economy.............................................................. 29 National Banks’ International Exposures ........................................................................................ 29 OCC’s International Focus .............................................................................................................. 30 Supporting International Risk Supervision ..................................................................................... 31 International Analysis............................................................................................................... 31 International Policy Development............................................................................................ 31 External Supervisory Relations................................................................................................ 32 Foreign Technical Assistance ................................................................................................... 33 Sidebar: China–U.S. Bank Supervisory Relationship Nurtured by Dugan Visit............................. 34 Events .............................................................................................................................................. 35 FISCAL YEAR 2007 i VII. Communities: The Bedrock of a Strong National Economy.............. 37 Community Banks and Examinations: Setting Standards for Safety .............................................. 37 OCC Measures Effectiveness of Supervisory Process .................................................................... 38 OCC Outreach and Education: Creating a New Bank Director Workshop ..................................... 38 Banks Help Meet Community Needs .............................................................................................. 38 Sidebar: Comptroller Dugan and Chief of Staff Walsh Participate in a Community Bank Examination ........................................................................................................................... 39 Comptroller Brings Supervisory Message to Communities............................................................ 40 Sidebar: OCC Facilitates Solutions to a Branch Closing Dilemma ................................................ 41 Sidebar: OCC Staff Join the Comptroller in Improving D.C. Affordable Housing Complex......... 42 Community Banks and the Global Economy .................................................................................. 43 Events .............................................................................................................................................. 44 VIII. Consumers: Promoting Fairness and Transparency.............................. 47 Consumer Protection through Bank Supervision ............................................................................ 47 Nontraditional and Subprime Mortgage Guidance .................................................................. 47 Mitigating the Impact of Mortgage-Market Turmoil ............................................................... 48 Sidebar: Dugan Receives “Making-the-Difference” Award from Credit Counseling Foundation.................................................................................................................... 49 Protecting Consumer Privacy................................................................................................... 50 Fair Lending ............................................................................................................................. 50 Consumer Protection through Public Information .......................................................................... 50 OCC Initiatives To Improve Bank Disclosures........................................................................ 51 OCC Public Information Initiatives ......................................................................................... 52 Sidebar: OCC Acts To Root Out Mortgage Fraud........................................................................... 52 Sidebar: Consumers Help Themselves with a Click ....................................................................... 54 Consumer Protection through Complaint Resolution...................................................................... 55 Sidebar: Comptroller Showcases OCC Consumer Complaint Process........................................... 55 Complaint Sharing.................................................................................................................... 56 Events .............................................................................................................................................. 57 IX. On Making the OCC a Great Workplace........................................................... 59 In Pursuit of Excellence................................................................................................................... 59 Recruitment and Retention .............................................................................................................. 59 Developing a Highly Skilled Workforce ......................................................................................... 60 Equal Opportunity and Workplace Fairness.................................................................................... 61 Technology ...................................................................................................................................... 61 Information Technology Security and Emergency Preparedness.................................................... 61 Process Improvement .....................................................................................................................