Community banks were not the focus of much regulatory attention in the past week, but other developments warrant some review. The several government actions against Commerzbank are, if nothing else, an object lesson in BSA/AML compliance. The Federal Reserve released its Comprehensive Capital Analysis and Review in which it did not object to 28 of the 31 participating bank holding companies' capital plans. Cybersecurity issues are now the subject of several pieces of proposed legislation and are the topic of the week for hearings by a number of House Committees.

The full set of developments over the past week is as follows: 

Community Banking

BSA/AML

CFPB

  • CFPB issues Arbitration Study (Mar. 10).
    • Study required by Dodd-Frank § 1028(e).
    • Study indicates that arbitration agreements restrict consumers’ relief for disputes with financial service providers by limiting class actions.
    • Study finds that more than 75 percent of consumers surveyed did not know whether they were subject to an arbitration clause in their agreements with their financial service providers, and fewer than 7 percent of those covered by arbitration clauses realized that the clauses restricted their ability to sue in court.
    • Study, press release, and fact sheet available at http://www.consumerfinance.gov/newsroom/cfpb-study-finds-that-arbitration-agreements-limit-relief-for-consumers/.
  • CFPB issues Supervisory Highlights, Winter 2015 (Mar. 11).

Credit Unions

  • NCUA: state-level data shows credit unions’ loan growth continues (Mar. 12).
  • NCUA Chairman Matz states 2015 year of regulatory relief (Mar. 9).
    • NCUA initiatives include:
      • Counting certain forms of debt as supplemental capital
      • Making it easier for federal credit unions to expand their fields of membership
      • Removing the 5% cap on fixed-assets limit
      • Permitting asset securitization
      • Easing member business lending burdens
    • Press release available at http://www.ncua.gov/News/Pages/NW20150309MatzGAC.aspx.

Cybersecurity

  • Senate Select Committee on Intelligence approves S. __, the Cybersecurity Information Sharing Act of 2015 (Mar. 12).
    • Approved by vote of 14 to 1.
    • The Cybersecurity Information Sharing Act of 2015:
      • Directs increased sharing of classified and unclassified information about cyber threats with the private sector, including declassification of intelligence as appropriate.
      • Authorizes private entities to monitor their networks or those of their consenting customers for cybersecurity purposes.
      • Requires the establishment of a capability (sometimes referred to as a “portal”) at the Department of Homeland Security (DHS).
      • Provides liability protection for companies’ appropriate use of additional cybersecurity authorities.
      • Requires reports on implementation and privacy impacts by agency heads.
  • Press release available at http://www.intelligence.senate.gov/press/record.cfm?id=358711.
  • Hearings by various House committees on March 18 and 19.  See Congressional Events – Upcoming below.
  • Acting Assistant Treasury Secretary Gerety remarks at CUNA Governmental Affairs Conference (Mar. 11).
    • Credit unions’ cybersecurity has a direct impact on financial standing.
    • The possible financial impacts of cyber incidents can be felt not only as a result of fraud and theft, but also from the significant business interruption that could occur in the event of a destructive attack.
    • Importance of cybersecurity information.
    • National and organizational incident response plan that makes response and recovery processes more efficient, effective, and predicable.
    • Remarks available at http://www.treasury.gov/press-center/press-releases/Pages/jl9994.aspx.

Internet/Net Neutrality

Payment Systems

  • Federal Reserve opens registration for Payment System Improvement Task Forces (Mar. 16).
  • Payments Innovation Alliance issues white paper, Leveraging the Mobile Channel for ACH Payment Innovation (Mar. 10).

Privacy

Reporting

Student Loans

  • White House releases A Student Aid Bill of Rights (Mar. 10).

Too Big to Fail

  • Federal Reserve releases results of Comprehensive Capital Analysis and Review (CCAR) for 31 systemically important banking firms in the U.S. (Mar. 11).
    • No objection to capital plans of 28 bank holding companies participating in CCAR.
    • Conditional non-objection issued to Bank of America; new capital plan required by Sept. 30, 2015.
    • Objection to plans of Deutsche Bank Trust and Santander on qualitative grounds.
    • U.S. firms have substantially increased their capital since the first round of stress tests led by the Federal Reserve in 2009.
      • Common equity capital ratio of the 31 bank holding companies in the 2015 CCAR more than doubled from 5.5 percent in the first quarter of 2009 to 12.5 percent in the fourth quarter of 2014, reflecting an increase in common equity capital of more than $641 billion to $1.1 trillion during the same period.
    • Comprehensive Capital Analysis and Review 2015: Assessment Framework and Resultsavailable at http://www.federalreserve.gov/newsevents/press/bcreg/20150311a.htm.
  • Financial Stability Oversight Council meeting (Mar. 11).
  • “Enhancing Prudential Standards in Financial Regulations,” Federal Reserve Bank of Philadelphia Working Paper No. 14-36.
    • Paper discusses academic research and expert opinions on:
      • Systemic risk.
      • Level of complexity in financial regulations.
      • Greater transparency.
      • Bank stress testing.
      • Too-big-to-fail policies
      • Mortgage crisis and reform.
    • Paper available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2541672#

Congressional Activity

  • Senate Intelligence Committee approves Cybersecurity Information Sharing Act of 2015 (Mar. 12). See Cybersecurity above.

Congressional Events – Upcoming

  • Mar. 17
    • Senate Banking Committee, “Systemically Important Financial Institution Threshold.”
  • Mar. 17
    • House Committee on Financial Services, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System.”
  • Mar. 18
    • House Committee on Financial Services, “Preserving Consumer Choice and Financial Independence.”
    • House Commerce and Energy Committee hearing, "Discussion Draft of H.R. ___, Data Security and Breach Notification Act of 2015."
    • House Committee on Oversight and Government Reform, "Cybersecurity: The Evolving Nature of Cyber Threats Facing the Private Sector."
  • Mar. 19
    • House Committee on Financial Services, “Oversight of the SEC’s Division of Enforcement.”
    • House Intelligence Committee, "The Growing Cyber Threat and Its Impact on American Business."
  • Mar. 19
    • Senate Banking Committee, “Systemically Important Financial Institution Threshold.”
  • Mar. 24
    • Senate Banking Committee, “Financial Stability Oversight Council Accountability and Transparency.”

Upcoming Events

  • Mar. 16-18
    • OCC Workshop, Building Blocks for Directors: Keys to Success, San Antonio TX.
  • Mar. 17-18
    • FOMC meeting.
  • Mar. 18
    • FDIC Event, Money Smart Train-the-Trainer Online Live Meeting. 
  • Mar. 24
    • Federal Reserve Bank of Boston, CRA for Community-Based Organizations: Partnering for Success.
  • Mar. 25
    • NCUA Event, Successful Strategies for Field of Membership Expansion.
  • Mar. 30 – Apr. 1
    • Federal Reserve Bank of Atlanta, 20th Annual Financial Markets Conference, Central Banking in the Shadows: Monetary and Financial Stability Postcrisis.
  • Mar. 31
    • Federal Reserve Bank of Kansas City, Midwest Anti-Money Laundering Conference.
  • Apr. 13-15
    • OCC Director Workshop, Building Blocks for Directors: Keys to Success, Indianapolis, IN.
  • Apr. 21
    • OCC Director Workshop, Compliance Risk, Denver, CO.
  • Apr. 22
    • OCC Director Workshop, Credit Risk, Denver, CO.
  • May 4
    • EGRPRA outreach meeting, Boston MA.
  • May 5
    • OCC Director Workshop, Risk Governance, Louisville, KY.
  • May 6
    • OCC Director Workshop, Compliance Risk, Louisville, KY.
  • May 19
    • OCC Director Workshop, Risk Governance, Birmingham, AL.
  • May 20
    • OCC Director Workshop, Compliance Risk, Birmingham, AL.
  • May 20 – 21
    • Federal Reserve Bank of New York, Mortgage Contract DesignImplications for Households, Monetary Policy, and Financial Stability.
  • Jun. 14 – 17
    • ABA National Regulatory & Compliance Conference.

Regulatory Comment Deadlines

  • Mar. 23 – CFPB: revisions to Regulations E and Z covering prepaid cards.
  • Mar. 24 – FinCEN: renewal of information collection in existing regulations requiring development and implementation of written anti-money laundering programs.
  • Mar. 25 – FSOC: U.S. financial stability and asset management products and activities.
  • Mar. 28 – CFTC: position limits for physical commodity derivatives and aggregation.
  • Mar. 30 – CFPB: amendments to mortgage rules regarding small creditor status, creditors in rural or underserved areas, and qualified mortgages.
  • Mar. 30 – CFPB: safe student account scorecard.
  • Mar. 31 – FDIC: definition of qualifying master netting agreement and related terms.
  • Apr. 3 – Federal Reserve: methodology for determining capital surcharge on U.S. GSIBs.
  • Apr. 20 – SEC: disclosure of permissibility of hedging of equity securities of company by directors or employees.
  • May 14 – Federal Reserve/OCC/FDIC: EGRPRA review of regulations covering banking operations, capital, and CRA.
  • 60 days after publication in Federal Register – Federal Reserve: inclusion of legal entity identifiers in certain FR Y reports.