Over the several days before and after Memorial Day, the banking agencies and the CFPB have been active although without much of a community bank focus.  The Chairman of the Senate Banking Committee, Sen. Richard Shelby, introduced legislation to amend Dodd-Frank and other laws in ways that may benefit community banks.  The FDIC published its Quarterly Banking Profile, which reported good results overall for community banks.  The event garnering the most publicity was the settlement of claims against several large banks in connection with the manipulation of LIBOR.

          The full set of developments over the past weeks is as follows.

The Economy

  • "The Outlook for the Economy," remarks by Federal Reserve Chair Yellen at the Providence Chamber of Commerce (May 22).
    • "Because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward-looking manner. Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy."
    • "For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy.”
    • "To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term."
    • "After we begin raising the federal funds rate, I anticipate that the pace of normalization is likely to be gradual."
    • Remarks available at http://www.federalreserve.gov/newsevents/speech/yellen20150522a.htm  
  • FOMC releases minutes of April 28-29 meeting (May 20).
    • Suggestions that "economic growth had slowed during the winter months, in part reflecting transitory factors. The pace of job gains had moderated, and the unemployment rate had remained steady, with a range of labor market indicators suggesting that underutilization of labor resources was little changed."
    • "Most participants expected that, following the slowdown in the first quarter, real economic activity would resume expansion at a moderate pace, and that labor market conditions would improve further."
    • "Inflation continued to run below the Committee’s longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remained low, while survey-based measures of longer-term inflation expectations had remained stable."
    • "Participants generally anticipated that inflation would rise gradually toward the Committee’s 2 percent objective as the labor market improved further and the transitory effects of declines in energy prices and non-energy import prices dissipated."
    • "Participants judged that recent domestic economic developments had increased uncertainty regarding the economic outlook. While participants continued to see potential downside risks resulting from foreign economic and financial developments, most still viewed the risks to the outlook for economic growth and the labor market as nearly balanced."
    • Minutes available at http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.  
  • Federal Reserve publishes Report on the Economic Well-Being of U.S. Households in 2014(May 27).
    • 65% of respondents report that their families are either “doing okay” or “living comfortably” financially, compared to 62% in 2013.
    • 49% of part-time workers and 36% of all workers would prefer to work more hours at their current wage if they were able to do so.
    • 29% of respondents expect their income to be higher in the year after the survey than in the year prior to the survey. In the 2013 survey, 21% of respondents expected their  income to increase.
    • Report available at http://www.federalreserve.gov/newsevents/press/other/20150527a.htm.

Community Banking

ACH

  • Federal Reserve requests comment on enhancements to same-day ACH service (May 21).
    • Changes correspond to recent changes in NACHA operating rules.
      • ODFIs allowed to send same-day ACH transactions to accounts held at any RDFI – i.e., all RDFIs are required to participate in same-day transactions.
      • ODFIs required to pay a fee to RDFIs for each same-day ACH forward transaction.
    • Changes to be incorporated in Operating Circular 4.
    • Request for comment available at http://www.federalreserve.gov/newsevents/press/other/20150521a.htm.
    • Comment deadline: July 2.

Applications

BSA/AML

Financial Literacy

Foreclosures

Global  Economy

LIBOR

  • Guilty pleas and regulatory consent orders announced with respect to participation of several banks in manipulating LIBOR (May 20).
    • Justice Department actions against five banks.
      • DoJ accepts guilty pleas from top-level parents of four banks on conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FS spot market.
      • Criminal fines totaling more that $2.5 billion imposed on Barclays ($650 million), Citigroup ($925 million), JPMorgan Chase ($550 million), and RBS ($395 million).
      • Barclays agrees that FX activity violated June 2012 non-prosecution agreement and pays additional fine of $60 million.
      • UBS breached December 2012 non-prosecution agreement and pleads guilty to manipulating LIBOR and other benchmark interest rates.  Criminal fine of $203 million imposed.
      • Three-year corporate prohibition overseen by court; additional reports to be filed.
      • Criminal investigations continuing against individuals.
      • Plea agreements available at http://www.justice.gov/opa/pr/five-major-banks-agree-parent-level-guilty-pleas.
    • Federal Reserve takes action against six banks.
      • Consent orders requiring improvements in policies and procedures for oversight and controls over activities in the wholesale FX and similar markets.
      • Civil money penalties totaling $1.8 billion against UBS ($342 million), Barclays ($342 million), Citigroup ($342 million), JPMorgan Chase ($342 million), RBS ($274 million), and Bank of America ($205 million).
      • Cease-and-desist and civil money penalty orders available at http://www.federalreserve.gov/newsevents/press/enforcement/20150520a.htm.
    • New York State Department of Financial Services
      • Civil money penalty against Barclays of $485 million.
      • Order available at http://www.dfs.ny.gov/about/press/pr1505201.htm.
      • Investigations into electronic systems used in trading FX and electronic trading of FX and FX-related products to continue.
    • CFTC
    • UK Financial Conduct Authority

Liquidity

  • Federal Reserve proposes that certain general obligation state and municipal bonds qualify as high-quality liquid assets for the purpose of determining a large bank's liquidity coverage ratio (May 21).

Mortgage Lending

Multifamily Rental Properties

Peer-to-Peer Lending

Regulatory Reform/EGRPRA

Removals and Prohibitions

  • Federal Reserve issues notice of removal and prohibition orders against five executives of Credit Suisse (May 11).

Servicemembers

Student Loans

Too Big to Fail

Unfair and Deceptive Acts or Practices

Bank Closings

  • None.

Congressional Activity – Upcoming

  • June 2
    • House Financial Services Committee hearing, "The National Flood Insurance Program: Oversight of Superstorm Sandy Claims."
    • Senate Banking Committee hearing, "Perspectives on the Export-Import Bank of the United States."
  • June 3
    • House Financial Services Committee hearing, "Examining the Export-Import Bank's Reauthorization Request and the Government's Role in Export Financing."
  • June 4
    • Senate Banking Committee hearing, "Oversight of the Export-Import Bank of the United States."

Congressional Activity – Recent

Upcoming Events

  • June 2
    • OCC Director Workshop, Risk Governance, Detroit, MI.  
  • Jun. 2 – 3
    • NACHA Payments Innovation, Alliance Meeting.  
  • June 3
    • OCC Director Workshop, Credit Risk, Detroit, MI.  
  • June 8-10
    • OCC Director Workshop, Building Blocks for Directors, Raleigh, NC.  
  • Jun. 14 – 17
    • ABA National Regulatory & Compliance Conference.  
  • June 16
    • OCC Director Workshop, Risk Governance, Jacksonville, FL.  
  • June 17
    • OCC Director Workshop, Compliance Risk, Jacksonville, FL.
    • FDIC Chicago Region regulatory conference call, "Intermediate Small Bank CRA: Maximizing Your Bank's Success."  
  • June 16-17
    • FOMC meeting.  
  • June 18
    • FDIC teleconference, San Francisco Region Bankers' Forum, "Tips for Transitioning to Intermediate Small Bank or Large Bank CRA Procedures."  
  • July 13-15
    • FDIC, 2015 Interagency Minority Depository Institution and CDFI Conference, Washington, DC.  
  • July 14
    • OCC Director Workshop, Risk Governance, Des Moines, IA.  
  • July 15
    • OCC Director Workshop, Compliance Risk, Des Moines, IA.  
  • Oct. 15-16
    • FDIC, 5th Annual Consumer Research Symposium, Arlington, VA.  
  • Nov. 19-20
    • National Community Investment Fund, 2015 Development Banking Conference, Chicago, IL.

Regulatory Comment Deadlines

  • June 12 – Federal Reserve: statements of interest for membership in Community Advisory Council.
  • June 23 – CSBS/AARMR: prudential regulatory standards for non-bank mortgage servicers.  
  • July 2 - Federal Reserve: same-day ACH transactions.  
  • July 13 - CFPB: student loan servicing practices.
  • July 24 – Federal Reserve: inclusion of certain general obligation state and municipal bonds in high-quality liquid assets for the purpose of the liquidity coverage ratio.
  • 90 days after publication in Federal Register – FDIC: ANPR on deposit account recordkeeping by large banks.
  • 90 days after publication in Federal Register – Federal Reserve/FDIC/OCC: EGRPRA review, phase 3.