Agencies Announce Economic Growth and Paperwork Reduction Outreach Meetings
On February 4, 2015, in Dallas, Texas, the Office of the Comptroller of the Currency (“OCC”), Federal Reserve Board, and the Federal Deposit Insurance Corporation (“FDIC”) will hold the second in a series of outreach meetings on the agencies’ interagency effort to reduce regulatory burden as required by the Economic Growth and Regulatory Paperwork Reduction Act of 1996. The agencies will hold additional outreach meetings through 2015, currently scheduled to take place in Boston, Massachusetts on May 4; Chicago, Illinois on October 19; and Washington, D.C., on December 2. The agencies also plan to hold an outreach meeting this summer that will focus on rural banking issues. OCC Bulletin.
Higher Priced Mortgage Loans Exemption Threshold
On December 23rd, the Federal Reserve Board announced the annual adjustment of the dollar amount used to determine whether a small loan is exempt from the special appraisal requirements that apply to higherpriced mortgage loans. The exemption threshold is being adjusted to $25,500, effective January 1, 2015. Federal Reserve Board Press Release.
FDIC Consumer Newsletter
On December 23rd, the FDIC published its most recent consumer newsletter, which features a financial checklist for consumers. FDIC Press Release.
U.S. Regulators’ Statement on Basel Committee Proposal
On December 22nd, the federal banking regulators issued a statement regarding the Basel Committee on Banking Supervision’s consultative paper entitled "Revisions to the Standardized Approach for credit risk." The U.S. regulators note that the proposed revisions are intended to apply primarily to large, internationally active banking organizations and not to community banking organizations. Any change to the U.S. riskbased capital rules as a result of proposals in this or subsequent papers released by the Basel Committee will be considered in a manner consistent with the U.S. notice and comment process. Joint Agency Statement. See also BIS Press Release.
Banking Agencies Announce CRA Thresholds
On December 19th, the federal bank regulatory agencies announced the annual adjustment to the assetsize thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act regulations. "Small bank" or "small savings association" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.221 billion. "Intermediate small bank" or "intermediate small savings association" means a small institution with assets of at least $305 million as of December 31 of both of the prior two calendar years, and less than $1.221 billion as of December 31 of either of the prior two calendar years. These assetsize threshold adjustments are effective January 1, 2015. Joint Agency Press Release.
OCC Mortgage Metrics Report
On December 19th, the OCC published the Third Quarter 2014 Mortgage Metrics Report. The report found that performance of firstlien mortgages serviced by seven national banks and one federal savings association improved. OCC Press Release.
OCC Trading and Derivatives Report
On December 19th, the OCC published its Quarterly Report on Bank Trading and Derivatives Activities. Insured U.S. commercial banks and savings institutions reported trading revenue of $5.7 billion in the third quarter of 2014, down $0.7 billion, or 11 percent. The report also found that trading revenue in the quarter was $1.2 billion, or 26 percent, higher than the $4.5 billion recorded a year earlier. OCC Press Release.
OCC Bulletin on Proposed Changes to Regulatory Capital Rule
On December 18th, the OCC issued a Bulletin on proposed revisions to the regulatory capital rules proposed by the OCC, Federal Reserve Board, and FDIC. The proposed revisions only apply to banking organizations subject to the agencies’ advanced approaches riskbased capital framework.
Volcker Rule Conformance Period Extended for Legacy Covered Funds
On December 18th, the Federal Reserve Board issued an order extending to July 21, 2016, the deadline for complying with portions of the DoddFrank Act’s Volcker rule provisions. Under the order, banking entities will have until July 21, 2016 to conform investments in and relationships with covered funds and foreign funds that were in place prior to December 31, 2013 ("legacy covered funds"). The Board also announced its intention to act next year to grant banking entities an additional oneyear extension of the conformance period until July 21, 2017, to conform ownership interests in, and relationships with, legacy covered funds. The extension provides banking entities with additional time to divest or conform only legacy covered fund investments. All investments and relationships in a covered fund made after December 31, 2013, must be in conformance with Section 619 of the DoddFrank Act and the implementing rule by July 21, 2015. The extension does not apply to proprietary trading activities, and banking entities must conform proprietary trading activities to the final rule by July 21, 2015. Federal Reserve Board Press Release.
FDIC Discusses Interest Rate Risk
On December 18th, the FDIC published the Winter 2014 issue of Supervisory Insights, which studies key aspects of interest rate risk (“IRR”) management, including the implementation of effective governance processes, the development of key assumptions for analyzing IRR, the development of an inhouse independent review of IRR management systems, and what to expect during an IRR review. FDIC Press Release.
FDIC Resolution Plan Guidance
On December 17th, the FDIC issued guidance for resolution plans that insured depository institutions with assets greater than $50 billion must submit to the FDIC. The guidance explains that each covered institution should include in its discussion and analysis at least one strategy that primarily involves the separation and sale of the covered institution's deposit franchise, core business lines, and/or major assets to multiple acquirers. It should also include a second strategy that involves the liquidation of the firm, including a payout of insured deposits. FDIC Press Release.
OCC Highlights Risks Facing Banks
On December 17th, the OCC published its Semiannual Risk Perspective for Fall 2014. The report found that credit risk increased among national banks and federal savings associations during the first six months of 2014. Declining revenues and profitability in OCCsupervised institutions contributed to the increasing credit risk within the banking sector. Bank Secrecy Act and AntiMoney Laundering risks remain prevalent as moneylaundering methods evolve, and electronic bank fraud grows in sophistication and volume. Banks are expected to incorporate appropriate controls to oversee new products and services, and higherrisk customers. The report presents data in five main areas: the operating environment; bank condition; key risk issues; the range of practice in interest rate risk modeling; and regulatory actions. OCC Press Release.
OCC Issues Revised TILA Booklet
On December 16th, the Federal Reserve Board and OCC issued an interim final rule that amends the definition of “qualifying master netting agreement” under the regulatory capital rules, and the liquidity coverage ratio rule, as well as under the lending limits rule applicable to national banks and Federal savings associations. The agencies also propose an amendment to the definitions of “collateral agreement,” “eligible margin loan,” and “repostyle transaction” under the regulatory capital rules. The amendments are designed to ensure that the regulatory capital, liquidity, and lending limits treatment of certain financial contracts is not affected by implementation of special resolution regimes in foreign jurisdictions or by the International Swaps and Derivative Association Resolution Stay Protocol. The rule is effective January 1, 2015. Comments should be submitted on or before March 3, 2015. Federal Reserve Board Press Release.
OCC Survey of Credit Underwriting
On December 16th, the OCC published its 20th Annual Survey of Credit Underwriting, which shows a continued easing in underwriting standards. Examiners also noted increasing policy exceptions centered in commercial products. OCC Press Release.
Depository Institution Holding Companies with NonTraditional Capital Structures
On December 12th, the Federal Reserve Board requested comment on proposed revisions to the capital framework (Regulation Q, 12 CFR Part 217) that would illustrate how the Board would apply the common equity tier 1 capital qualification criteria to depository institution holding companies that are organized in forms other than as stock corporations. To provide sufficient time for these depository institution holding companies to review and revise their capital structures, the proposal would extend the applicable compliance date with the Board's revised capital rules from January 1, 2015 to January 1, 2016. Comments should be submitted on or before February 28, 2015. Federal Reserve Board Press Release.