The Economy

  • Jackson Hole economic symposium, Aug. 23-25. Agenda and certain presentations available here.
  • Federal Open Market Committee minutes for meeting on July 30-31 released and available here.
    • Target federal funds rate of 0-¼% to continue as long as unemployment rate exceeds 6.5%, medium term inflation projected to be 2.5% or less, and longer-term inflation expectations are well anchored.
    • Monthly purchases of $45 billion in longer term Treasury securities and $40 billion in agency MBS to continue "until the outlook for the labor market has improved substantially in a context of price stability."
    • Kansas City Fed President Esther George dissented.


  • Proposed rule on "Enhanced Supplementary Leverage Ratio Standards for Certain Bank Holding Companies and Their Subsidiary Insured Depository Institutions" published on Aug. 20 and available here.
    • Would apply only to bank holding companies with at least $700 BB in total consolidated assets or at least $10 trillion in assets under custody.

Commercial Real Estate Lending

  • OCC Bulletin 2013, releasing "Commercial Real Estate Lending" booklet as part of Comptroller's Handbook, available here.
    • Replaces 1995 "Commercial Real Estate and Construction Lending" booklet and sections 210 and 213 of OTS Examination Handbook.
    • Rescinds OCC Bulletin 2012-27, "Investor-Owned One- to Four-Family Residential Properties: Supervisory Guidance on Risk Management and Reporting Requirements," and OCC Advisory Letter 2003-7, "Guidelines for Real Estate Lending Policies."
    • Expands guidance on ADC lending and income-producing real estate lending.
    • Provides new or expanded guidance on supervisory LTV, project feasibility, investor-owned residential real estate, amortization, debt yield, owner-occupied real estate, environmental risk management, and various underwriting considerations.


  • CFPB finds several mortgage servicing problems at banks and nonbanks. See Supervisory Highlights (Summer 2013), available here.
    • Issues across all servicers include "sloppy" account transfers, "poor" payment processing, and loss mitigation mistakes.
    • Nonbank servicers also said to lack comprehensive consumer compliance programs, formal policies and procedures, and independent consumer compliance audits.


  • Second proposal on 5% credit risk retention rule to be forthcoming.
    • FDIC meeting scheduled for Aug. 28.
    • Second proposal likely to contain provisions to:
      • Align exemption for "qualified residential mortgages" with CFPB definition of "qualified mortgage" under ability-to-repay rule.
      • Address concerns about 20% down payment requirement.
    • Original proposal available here.

Too Big to Fail

  • Stress tests: Federal Reserve releases paper, "Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice," available here.
    • Weaknesses in testing and capital planning include inability to show how risks were accounted for, use of stress scenarios and modeling techniques that did not reflect bank's particular vulnerabilities, financial projections that were not robust, transparent, and/or repeatable, lack of clarity on capital goals and responses to changes in economic circumstances, and less-than-robust governance or controls over the capital planning process.

Bank Closings

  • Community South Bank, Parsons, TN (Aug. 23).
    • P&A agreement with CB&S Bank, Inc., Russellville, AL.
  • Sunrise Bank of Arizona, Phoenix, AZ.
    • P&A agreement with First Fidelity Bank, National Association, Oklahoma City, OK.

Congressional Activity

  • House and Senate not in session; both to return Sept. 9, 2013.

Upcoming Events

  • Aug. 28: FDIC board meeting
    • Credit risk retention rule
  • Sept. 17-18: Federal Open Market Committee meeting.

Regulatory Comment Deadlines

  • Aug. 27 – Federal Reserve: data collection requirements for certain money market instruments.  
  • Sept. 9 – CFTC, other agencies: Exemptions from appraisal requirements for certain high-priced mortgage loans.  
  • Sept. 16 – CFTC: standards for compliance with compliance with core principles of derivatives clearing organizations by systemically important derivatives clearing organizations.  
  • Sept. 17 – SEC: Money market reforms.  
  • Sept. 25 – Federal Reserve, FDIC, OCC: Stress Test Guidance for Medium-Sized Firms.  
  • Sept. 27 – BCBS: Capital treatment of bank exposures to central counterparties; non-internal model method for capitalising counterparty credit risk exposures.  
  • Sept. 30 – FSB: Principles for an Effective Risk Appetite Framework.  
  • Oct. 4 – BCBS: Capital requirements for banks' equity investments in funds.  
  • Oct. 11 – BCBS: Discussion paper, "Balancing risk sensitivity, simplicity and comparability."  
  • Oct. 21 – Federal Reserve, OCC, FEIC: Supplementary Leverage Ratio.  
  • 60 days after publication – FRB, FDIC, OCC: Market risk capital rules.