Leverage Ratio Rules
On May 1st, the Federal Deposit Insurance Corporation (“FDIC”), Federal Reserve Board, and Office of the Comptroller of the Currency (“OCC”) published new final and proposed rules aimed at strengthening the leverage ratio standards for the largest, most interconnected U.S. banking organizations. The final rule applies to U.S. top-tier bank holding companies and requires them to maintain at least a 6 percent supplementary leverage ratio to be considered “well capitalized.” The final rule, which is effective January 1, 2018, currently applies to eight large U.S. banking organizations. The banking agencies also issued a notice of proposed rulemaking (“NPR”) that would modify the denominator calculation for the supplementary leverage ratio in a manner consistent with recent changes agreed to by the Basel Committee on Banking Supervision. The revisions in the NPR would apply to all internationally active banking organizations, including those subject to the enhanced supplementary leverage ratio final rule. The agencies believe the denominator changes in the NPR would more appropriately measure leverage capital requirements and would, in aggregate, increase the requirements across these institutions. Finally, the banking agencies issued a proposed technical correction to the definition of “eligible guarantee” in the agencies’ risk-based capital rules. Comments on either of the proposals should be submitted on or before June 13, 2014. See also OCC Bulletin on Final Rule; OCC Bulletin on Proposed Change to Supplementary Leverage Ratio; OCC Bulletin on Eligible Guarantee
Banks Encouraged to Work with Those Affected by Extreme Weather
On April 29th, the OCC reminded national banks and federal savings associations of guidance to assist financial institutions and customers affected by extreme weather, such as the recent tornadoes in the south central and central United States. OCC Press Release.
OCC Proposes to Raise Assessments
On April 28th, the OCC published a proposal that would raise assessments on national banks and federal savings associations with total assets over $40 billion. Under the proposal, the marginal assessment rate for national banks and federal savings associations with more than $40 billion in assets would increase by 14.5 percent beginning September 30, 2014. Comments should be submitted on or before June 12, 2014. OCC Press Release.
OCC Bulletin on Cybersecurity Risk
On April 25th, the OCC advised that the Federal Financial Institutions Examination Council has issued an alert to notify financial institutions of a material security vulnerability in OpenSSL, a widely used encryption tool. The alert outlined the risks associated with this vulnerability (also known as Heartbleed) and the risk mitigation steps that financial institutions are expected to take to address those risks. OCC Bulletin.
The OCC will host a workshop in Nashville, Tennessee on June 2-4, 2014 for directors of national community banks and federal savings associations. “Mastering the Basics: A Director’s Challenge” is a three-day workshop designed exclusively for directors of institutions supervised by the OCC and provides practical information on the roles and responsibilities of a community bank director. OCC Press Release.