The original national banking laws essentially forbade national banks from making residential mortgage loans. Savings institutions—variously known as savings and loans, savings banks, and building associations—helped fill the gap. The U.S. thrift industry’s roots date back to 1831, when townspeople in Frankford, Pennsylvania, agreed to pool their money to purchase their own homes. The result was the Oxford Provident Building Association, which lasted until all 40 original members had been given the opportunity to become home owners. The Oxford’s example of cooperative finance to promote home ownership inspired the founding of other associations across the country. By 1893, there were nearly 6,000 such institutions in the United States.

The Great Depression brought a wave of foreclosures and thrift institution failures. In response, Congress created a federal thrift charter, administered by the Federal Home Loan Bank Board and funded by the Federal Home Loan Bank System, and the Federal Savings and Loan Insurance Corporation to protect thrift depositors. This structure remained in place for the next half-century. At their height, savings institutions originated two-thirds of the nation’s home mortgages.

The deregulation of financial markets in the 1970s and 1980s threatened the thrift business model, which depended on low-cost retail deposits. Congress broadened thrift powers, which led many institutions to venture into riskier investment and lending activities. In the late 1980s and the 1990s, hundreds of savings institutions failed. To revive and supervise the struggling industry, the Office of Thrift Supervision (OTS) was created under the Treasury Department to replace the independent Federal Home Loan Bank Board. During its more than 20 years, the OTS regulated institutions that helped millions of Americans achieve the dream of home ownership.

OTS is Now Part of the Office of the Comptroller of the Currency

NOTE: On July 21, 2011, the Office of Thrift Supervision became part of the Office of the Comptroller of the Currency. Goal is to produce one common set of supervisory policies that will apply to both federal savings associations and national banks, while recognizing differences anchored in statute.

OTS Integration

Effective July 21, 2011, the Office of Thrift Supervision (OTS) has merged with the Office of the Comptroller of the Currency (OCC). The following links provide policy guidance related to the integration of the two agencies.

Throughout the OCC’s policy review and integration process, it has been clear that there are significant similarities and overlap in the guidance that the OCC and the former OTS issued. The two agencies shared objectives that institutions

• Soundly manage their risks,
• Maintain their ability to compete effectively with other providers of financial services,
• Meet the needs of their communities for credit and financial services,
• Comply with laws and regulations, and
• Provide fair access to financial services and fair treatment of their customers.

In addition, both agencies based their examination objectives on the Uniform Financial Institutions Rating System, which the bank regulatory agencies developed under the auspices of the FFIEC. Because of these similarities, the OCC is using the framework outlined above in its examination of FSAs. OCC examiners will rely primarily on OCC-issued examination procedures. Although the OTS published numerous examination procedures addressing specific subject areas, the OCC is not, at this time, rescinding those OTS-issued examination procedures (except as specifically identified in this bulletin or in previous bulletins that have rescinded OTS-issued guidance). OTS-issued examination procedures will be rescinded as part of our future review of the related subject matter handbook section.

Even before the policy integration is completed, FSAs and national banks may find guidance issued to the other charter type useful for informational purposes. For example, an FSA may find more detailed OCC guidance on a particular topic, such as commercial lending, or a national bank may find more current guidance issued by the OTS on a particular topic, such as mortgage banking. In the course of ongoing supervision the OCC may direct national banks and FSAs to consult such guidance for further information on the subject area or to address supervisory concerns. The OCC will not cite noncompliance with the requirements included in such guidance, however, until application of these requirements has been officially communicated and related OTS-issued guidance, if any, has been rescinded.

As the OCC continues the policy integration process, it will provide periodic updates by issuing additional OCC bulletins.

The OCC is committed to evaluating former OTS guidance thoughtfully, to addressing common supervisory issues consistently, and to accommodating regulatory and statutory differences appropriately. The OCC’s intent is to integrate OCC and OTS guidance as quickly and accurately as possible and in an orderly and transparent manner that minimizes burden to national banks, federal savings associations, and OCC examination staff.

OTS Origin

Established by Congress as a bureau of the Department of the Treasury on August 9, 1989, OTS charters, examines, supervises, and regulates federal savings associations insured by the Federal Deposit Insurance Corporation (FDIC). OTS’s primary statutory authority is the Home Owners’ Loan Act originally enacted in 1933. OTS also examines, supervises, and regulates state-chartered savings associations insured by the FDIC and provides for the registration, examination, and regulation of savings and loan holding companies (SLHCs) and other affiliates.

The thrift charter has several unique characteristics including nationwide branching under a single charter, a holding company structure offering a single regulator for the holding company and its subsidiary depository institution, and authority to preempt state laws and regulations that impose non-uniform requirements. OTS is the only federal-banking agency that both charters depository institutions and supervises their holding companies. The holding companies are diverse, ranging from large, multinational corporations to small companies with few assets other than their thrift charter.

OTS was headquartered in Washington, D.C. with five regional offices located in Jersey City, Atlanta, Chicago, Dallas, and San Francisco. The headquarters office develops nationwide policies and programs for the agency and coordinates the operations of OTS. The regional offices examine and supervise institutions and process most corporate applications. Approximately 75 percent of OTS’s staff of nearly 1,000 employees work in the regions.

The President, with Senate confirmation, appoints OTS’s Director for a five-year term. OTS’s Director also serves as a member of the Board of Directors of the FDIC, a member of the Federal Financial Institutions Examination Council (FFIEC), and a director of NeighborWorks® America.

OTS receives no appropriated funds from Congress. The income of the bureau is derived principally from assessments on savings associations and their holding companies. OTS’s budget supports its strategic and performance goals that provide for proactive supervision of the thrift industry, reduced regulatory burden, and ongoing credit availability. OTS tailors supervisory examinations to the risk profile of regulated institutions and holding companies under its jurisdiction, while effectively allocating resources to oversee and assess the performance record of the thrift industry. OTS faces the following key strategic issues and challenges:

•  Comprehensive and Risk Focused Examinations,
•  Interest Rate and Credit Risks,
•  Compliance Risks, Financial Crimes, Data Breaches, and Information Security,
•  Disaster and Emergency Preparedness,
•  Global Financial Services,
•  Regulatory Burden Reduction,
•  Communicate the benefits of the Thrift Charter, and
•  Succession Planning and Management of OTS Resources.

Vision

To perform, and to be recognized, as the premier regulator of financial institutions and holding companies.

Mission

To supervise savings associations and their holding companies in order to maintain their safety and soundness and compliance with consumer laws and to encourage a competitive industry that meets America’s financial services needs.

Guiding Principles

These principles guide the mission and operations of OTS and support our core values:

Integrity OTS conducts internal and external actions with the highest degree of honesty, fairness, transparency, and accountability, fostering confidence in OTS by the public, the thrift industry, and its employees.

Professionalism OTS values its employees as critical assets to achieve excellence in regulating the thrift industry. Flexible human capital strategies ensure a talented staff ready to meet regulatory challenges in a productive and satisfying work environment. OTS’s staff works in an environment built on fairness, trust, respect, teamwork, communication, creativity, diversity, and empowerment.

Efficiency OTS is committed to excellence and efficiency. Management provides quality-focused leadership and technical excellence to enable OTS to meet its regulatory responsibilities in a cost-effective and timely manner.

Partnerships OTS works with other financial institution regulators to achieve consistency in policy and regulation. OTS seeks to minimize regulatory burden to the extent consistent with effective supervision.

Responsiveness OTS listens to, learns from, and collaborates with the institutions it regulates and the public it serves on how best to address their needs. OTS addresses industry and individual risks in a proactive, efficient, and effective manner.

The Office of Thrift Supervision (OTS) was created when the Financial Institutions  Reform, Recovery, and Enforcement Act of 1989 (FIRREA) abolished the Federal Home Loan Bank Board (FHLBB) and transferred all examination and supervisory activities to OTS under the Department of the Treasury.

The primary functions of OTS are to:

• (1) charter federal savings and loan associations;
• (2) adopt regulations governing the operation of the thrift industry;
• (3) conduct examinations of federal and state chartered savings institutions and their holding companies; and
• (4) supervise compliance with federal laws and regulations and OTS directives, taking measures needed to enforce such compliance and rehabilitate troubled institutions.

FIRREA provides that OTS assess the institutions it regulates to recapture operating costs. Assessments are collected semiannually on January 31 and July 31.

Dodd-Frank Wall Street Reform

On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which includes the Enhancing Financial Institution Safety and Soundness Act of 2010 (the “Act”). The Act abolishes OTS and transfers its duties to the Office of the Comptroller of the Currency (OCC), the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) on July 21, 2011 (the “transfer date”). Under the Act, the transfer of OTS functions to the OCC includes rule making authority, personnel, property and funds relating to Federal savings associations.

Upon enactment of the Act, the OTS must pay the OCC for such amounts the OCC determines necessary for expenses associated with the transfer of functions, including the expenses for personnel, property and administrative services, during the period beginning on the date of the enactment of the Act and ending on the transfer date.

OTS has historically prepared its financial statements in accordance with generally accepted accounting principles based upon accounting standards issued by the Financial Accounting Standards Board (FASB), the private-sector standards-setting body. In October 1999, the American Institute of Certified Public Accountants designated the Federal Accounting Standards Advisory Board (FASAB) as the standards-setting body for financial statements of federal government entities with respect to the establishment of generally accepted accounting principles. FASAB has indicated, in the Statement of Federal Financial Accounting Standards (SFFAS) No. 34 “The Hierarchy of Generally Accepted Accounting Principles, Including the Application of Standards Issued by the Financial Accounting Standards Board,” that financial statements prepared based upon accounting standards published by the FASB may also be regarded as being in accordance with generally accepted accounting principles for those federal entities such as OTS that have issued financial statements based upon FASB accounting standards in the past. Accordingly, consistent with historical reporting, OTS financial statements are presented in accordance with accounting standards published by FASB.