Agencies Issue Updated Leveraged Lending Guidance
On March 21, the Fed, FDIC and OCC released updated supervisory guidance on leveraged lending which covers transactions characterized by a borrower with a degree of financial leverage that significantly exceeds industry norms. The guidance applies to financial institutions supervised by the agencies that engage in leveraged lending activities and focuses on: (i) establishing a sound risk-management framework; (ii) underwriting standards; (iii) valuation standards; (iv) pipeline management; (v) reporting and analytics; (vi) risk rating leveraged loans; (vii) participants; and (viii) stress testing. Joint Release.
CFTC No-Action Relief from Required Clearing for Some Partial Swap Novations and Terminations
On March 20, the CFTC issued a no-action letter providing relief from required clearing for a limited set of "stub swaps" that remain after the partial novation or partial termination of an original swap that was not required to be cleared because it was executed prior to an applicable compliance date for required clearing. Some of the conditions to the relief are: (i) the original swap must not have been cleared; (ii) the original swap was executed prior to an applicable compliance date for required clearing; (iii) the partial novation or termination may reduce only the notional amount of the original swap, with all other terms of the stub swap remaining unchanged; and (iv) the records relating to the original swap are amended solely to reflect the reduced notional amount of the swap. CFTC Release.
FHFA Update on GSE Conservatorships
On March 19, Edward J. DeMarco, acting director of the FHFA, gave an update on the GSE conservatorships before the U.S. House Committee on Financial Services. Mr. Demarco discussed: (i) the goals of the FHFA as conservator; (ii) the FHFA's approach to preparing for increased private market participation in housing finance; and (iii) the activities that the FHFA has undertaken during the past year to further its conservatorship goals. FHFA Update.
Proposed Revisions to Interagency Q&As on Community Reinvestment
On March 18, the Fed, FDIC and OCC requested comment on proposed revisions to "Interagency Questions and Answers Regarding Community Reinvestment." The Q&As provide guidance on the Community Reinvestment Act regulations. The proposed amendments would: (i) clarify how the agencies consider activities that benefit a statewide or regional area that includes an institution's assessment area; (ii) provide guidance on investments in nationwide funds; (iii) clarify the consideration of certain community development services; (iv) address the treatment of qualified investments to organizations that use only a portion of the investment to support a community development purpose; and (v) clarify that community development lending should be evaluated so that it has a positive, neutral or negative effect on the large institution lending test rating. Comments are due within 60 days after publication in the Federal Register. Interagency Release.
OCC Proposed Stress Test Reporting Requirements for Institutions with $10 Billion to $50 Billion in Assets
On March 15, the OCC published a notice of proposed information collection seeking comment on annual stress test reporting for covered institutions with consolidated assets of $10 billion to $50 billion. Comments are due by May 10. OCC Release.
The Fed Announces Results of Comprehensive Capital Analysis and Review
On March 14, the Fed announced that it has approved the capital plans of 14 financial institutions in the Comprehensive Capital Analysis and Review. The Fed gave two institutions conditional approval and rejected the plans of two firms. Fed Release.
CFPB Proposed Rule for Nonbank Student Loan Servicers
On March 14, the CFPB proposed a rule that would allow it to federally supervise certain nonbank student loan servicers. The CFPB currently oversees student loan servicing at larger banks. The rule would define certain nonbank student loan servicers as "larger participants" and would allow the Bureau to oversee their activity for compliance with federal consumer financial laws. CFPB Release.