Community banks should pay particular attention to two statements of the past week.  First, Governor Tarullo of the Federal Reserve spoke at some length and in some detail on tailoring regulation and supervision to community banks.  Second, in connection with the issuance of fact sheets on the condition of community national banks in the South, the OCC effectively advised all community banks to evaluate and stress test portfolios with exposure to oil prices and to avoid easing loan underwriting requirements.  The banking agencies completed a rule on the regulation of appraisal management companies and released revised guidance for examiners on Regulations X and Z.      

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

The Economy

  • FOMC meeting, Apr. 28-29.
    • Target interest rate range remains at zero to ¼ percent.
    • Highlights:
      • "Although growth in output and employment slowed during the first quarter, the Committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate."
      • "Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate."
      • "The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."
    • Meeting minutes available at http://www.federalreserve.gov/newsevents/press/monetary/20150429a.htm.

Community Banking

  • "Tailoring Community Bank Regulation and Supervision," remarks by Federal Reserve Governor Tarullo at the Independent Community Bankers of America 2015 Washington Policy Summit (Apr. 30).
    • "The two most important characteristics of community banks for purposes of establishing regulatory objectives and supervisory practices are their size and their business model."
    • One aim of supervision is to "help protect the availability of credit in geographic areas or to particular classes of borrowers unlikely to be served by larger banks."
    • "We do not regard the supervision of community banks (or, for that matter, smaller regional banks) as a diluted version of large bank supervision, but as an entirely separate undertaking."
    • Federal Reserve supervision of community banks is not centralized. "The examiners in the 12 Federal Reserve Banks carry out that program in accordance with local conditions and based on the varying situations of community banks."
    • Remarks available at http://www.federalreserve.gov/newsevents/speech/tarullo20150430a.htm.
  • OCC issues fact sheets on condition of community national banks and federal savings associations in OCC's Southern District (Apr. 30).
    • "The OCC is closely monitoring oil price changes and expects national banks and federal savings associations with direct and indirect exposure [to oil prices] to frequently evaluate and stress test portfolios.”
    • "The OCC cautions the institutions it regulates about increasing credit risk. Loan underwriting standards are easing through extending repayment terms, fewer and less restrictive loan covenants, and releasing borrowers from personal liability on business and real estate development lending."
    • Fact sheets and announcement available at http://www.occ.gov/news-issuances/news-releases/2015/nr-occ-2015-63.html.
  • Federal Reserve Bank of New York releases interactive maps of consumer credit behavior on county-by-county basis throughout the United States (May 4).

Applications

Appraisals

  • Banking agencies issue final rule on minimum requirements for appraisal management companies (Apr. 30).
    • Minimum requirements for state regulatory regimes for asset management companies.
      • Asset management company must register with and be supervised by a state appraiser certifying and licensing agency.
      • Asset management company must verify that it uses only state-certified or state-licensed appraisers for federally related transactions.
      • Asset management company must require that appraisals comply with USPAP.
      • Asset management company must require that appraisals are conducted in accordance with statutory valuation independence standards under TILA and Regulation Z.
    • States not required to register or supervise asset management companies, but after 36 months, any non-federally regulated asset management company is barred by section 1124 of Dodd-Frank from providing appraisal management services for federally related transactions.
    • Asset management companies that are subsidiaries of insured depository institutions must meet same substantive minimum requirements.
    • Final rule available at http://www.occ.gov/news-issuances/news-releases/2015/nr-ia-2015-64.html.

Cybersecurity

Financial Literacy

Insurance Regulation

  • House Financial Services and Senate Banking Committees hold hearings on insurance regulation (Apr. 28, 29, and 30).
    • International regulation hearings on April 28 and 29: three common witnesses from federal and state regulators.
    • Designation of insurance companies as systemically important covered in Senate Banking Committee hearing on April 30.

Monetary Policy

  • FOMC meeting, Apr. 28-29.  See The Economy above.

Mortgage Lending

Mortgage Servicing

Overdrafts

Privacy/Mobile Devices

Real Estate Development/ILSA

Regulatory Reform/EGRPRA

RESPA

Congressional Activity

Congressional Activity – Upcoming

  • No Senate Banking Committee or House Financial Services Committee hearings scheduled.

Upcoming Events

  • 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.  
  • May 21
    • FDIC teleconference on implementation of CFPB mortgage rules.  
  • 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.  
  • July 13-15
    • 2015 Interagency Minority Depository Institution and CDFI Conference, Washington, DC.  
  • June 16
    • OCC Director Workshop, Risk Governance, Jacksonville, FL.  
  • June 17
    • OCC Director Workshop, Compliance Risk, Jacksonville, FL.  
  • June 16-17
    • FOMC meeting.  
  • 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

  • May 4 – SEC:  Regulation SBSR, reports by platforms to registered swap data repositories.  
  • May 11 – CFTC: Supplementation of rulemaking on eight swaps-related rules, per D.C. Circuit decision in SIFMA v. CFTC.  
  • May 14 – Federal Reserve/OCC/FDIC: EGRPRA review of regulations covering banking operations, capital, and CRA.  
  • May 25 – FTC: proposed settlement with Nomi Technologies in connection with consumer tracking.  
  • 30 days after publication in Federal Register – Federal Reserve: technical amendments to Regulation D.  
  • 60 days after publication in Federal Register – Federal Reserve: inclusion of legal entity identifiers in certain FR Y reports.  
  • 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.  
  • 90 days after publication in Federal Register – FDIC: ANPR on deposit account recordkeeping by large banks.