Perhaps the most noteworthy event for community banks since the beginning of the month was the FDIC's publication of its Winter 2015 edition of Supervisory Insights. The edition contains useful articles on the FDIC's expectations about cybersecurity and marketplace lending.  Additionally, probably in light of the FOMC's liftoff of the federal funds target rate, the FDIC has updated its videos on interest rate risk.  Community banks also might want to note the CFPB's recent concern about access to checking accounts; while the CFPB does not have jurisdiction over community banks, the CFPB's activities nevertheless may be instructive.  Finally, federal state agencies are continuing to wind down enforcement activity regarding mortgage servicing and foreclosure, most recently with a settlement last week with HSBC.

The full set of developments over the last week includes:

The Economy

Auto Lending

Checking Accounts

Cybersecurity

  • "A Framework for Cybersecurity" published by FDIC in Winter 2015 edition of Supervisory Insights (Feb. 1).
    • Article describes "the evolving cyber threat landscape and the U.S. government’s response to enhance the security and resilience of the nation’s critical infrastructure sectors. The article discusses how components of financial institutions’ information security programs, including corporate governance, security awareness training, and patch-management programs, should be enhanced to address cybersecurity risks, and concludes with an overview of actions taken by the federal banking agencies to respond to cyber threats."
    • Supervisory Insights available at https://www.fdic.gov/regulations/examinations/supervisory/insights/index.html

Financial Literacy

Interest Rate Risk

  • As part of Community Banking Initiative, FDIC updates videos on management of interest rate risk (Feb. 3).
    • "Financial institution balance sheets continue to reflect a heightened mismatch between asset and funding maturities that, coupled with tighter net interest margins, have left financial institutions more vulnerable to rising interest rates."
    • Videos and other materials available at https://www.fdic.gov/news/news/financial/2016/fil16010.html.

Marketplace Lending

  • "Marketplace Lending," published by FDIC in Winter 2015 edition of Supervisory Insights(Feb. 1).
    • Article "is intended to heighten bankers’ and examiners’ understanding of marketplace lending and potential associated risks, including those arising in third-party arrangements. The article also highlights the importance of a pragmatic business strategy that considers the degree of risk together with the potential revenue stream, and emphasizes the importance of banks exercising the same due diligence they practice whenever they extend credit to a borrower."
    • Supervisory Insights available at https://www.fdic.gov/regulations/examinations/supervisory/insights/index.html.

Monetary Policy

Mortgage Origination, Servicing, and Foreclosure

  • Federal and state agencies announce settlement of claims against HSBC North America and HSBC Finance for deficiencies in origination, servicing and foreclosure processing (Feb. 5).

Mortgage-Backed Securities

  • FDIC (as receiver for three failed banks) settles claims against Morgan Stanley for alleged misrepresentations in offering documents for 14 RMBS purchased by banks (Feb. 2).

Payment System

Too Big to Fail

Congressional Activity – Upcoming

  • Feb. 10
    • House Financial Services Committee hearing.
      • "Monetary Policy and the State of the Economy."
  • Feb. 11
    • Senate Banking Committee hearing.
      • "The Semiannual Monetary Report to Congress."
    • House Financial Services Committee hearings.
      • "The Future of Housing in America: Examining the Health of the Federal Housing Administration."
      • "Short-term, Small Dollar Lending: The CFPB's Assault on Access to Credit and Trampling of State and Tribal Sovereignty."
  • Mar. 3
    • Senate Banking Committee hearing.
      • "Regulatory Reforms to Improve Equity Market Structure."

Congressional Activity – Recent

Upcoming Events

  • Feb. 7-10
    • National Interagency Community Reinvestment Conference, Los Angeles CA.
  • Feb. 22-17
    • America Saves Week.
  • Feb. 23
    • FDIC Comprehensive Deposit Insurance Seminar.
  • Feb. 29-Mar. 2
    • OCC Director Workshop, "Building Blocks for Directors: Keys to Success," Memphis TN.
  • Mar. 15
    • OCC Director Workshop, "Risk Governance – Improving Director Effectiveness," Atlanta GA.
  • Mar. 15-16
    • FOMC meeting.
  • Mar. 16
    • OCC Director Workshop, "Compliance Risk: What Directors Need to Know," Atlanta GA.
  • Mar. 22
    • OCC Director Workshop, "Credit Risk: Directors Can Make A Difference," Santa Ana CA.
  • Mar. 23
    • OCC Director Workshop, "Compliance Risk: What Directors Need to Know," Santa Ana CA.
  • Apr. 4-6
    • OCC Director Workshop, "Building Blocks for Directors: Keys to Success," Omaha NE.
  • Apr. 6
    • FDIC Community Banking Conference, "Strategies for Long-Term Success," Arlington VA.
    • FDIC Comprehensive Deposit Insurance Seminar.
  • Apr. 19
    • OCC Director Workshop, "Risk Governance – Improving Director Effectiveness," Williamsburg VA.
  • Apr. 20
    • OCC Director Workshop, "Credit Risk: Directors Can Make A Difference," Williamsburg VA.
  • May 2-4
    • OCC Director Workshop, "Building Blocks for Directors: Keys to Success," Wilmington DE.
  • May 3
    • OCC Director Workshop, "Risk Governance – Improving Director Effectiveness," Springfield IL.
  • May 4
    • OCC Director Workshop, "Compliance Risk: What Directors Need to Know," Springfield IL.
  • May 17
    • OCC Director Workshop, "Credit Risk: Directors Can Make A Difference," Corpus Christi TX.
  • May 18
    • OCC Director Workshop, "Operational Risk – Navigating Rapid Changes," Corpus Christi TX.

Regulatory Comment Deadlines

  • Feb. 19 – Federal Reserve: long-term debt rule.
  • Mar. 7 – FDIC: revised proposal on insurance assessments on established small banks.
  • Mar. 11 – Basel Committee: second consultative report on "Revisions to the Standardized Approach for Credit Risk."
  • Mar. 14 – CFPB: changes to HMDA resubmission guidelines.
  • Mar. 21 – Federal Reserve: policy statement on framework for setting countercyclical capital buffer.
  • Mar. 23 – Federal Reserve, OCC, FDIC: EGRPRA categories of rules of procedure, safety and soundness, and securities, as well as Dodd-Frank rules and capital and liquidity rules.
  • Mar. 28 – SEC: derivatives rules for BDCs and registered funds.