Federal Reserve Board Reports on Household Perceptions
On August 7th, the Federal Reserve Board published its new “Report on the Economic Well-Being of U.S. Households.” The report provides a snapshot of the self-perceived financial and economic well-being of U.S. households and the issues they face, based on responses to the Board's 2013 Survey of Household Economics and Decisionmaking. The report looks at housing and living arrangements; credit access and behavior; education and student loan debt; savings; retirement; and health expenses. Federal Reserve Board Press Release.
New York Fed Announces Mortgage Operations Counterparty Pilot
On August 5th, the Federal Reserve Bank of New York announced it is conducting a pilot program for firms that do not meet the minimum capital requirements for primary dealers to act as counterparties in agency mortgage- backed securities operations it conducts for the System Open Market Account portfolio. The New York Fed’s intent in conducting this pilot program is to explore ways to broaden access to open market operations, and to determine the extent to which firms beyond the Primary Dealer community can augment the New York Fed’s operational capacity and resiliency in its monetary policy operations. New York Fed Announcement.
Agencies Provide Feedback on Banks’ Living Wills
On August 5th, the Federal Reserve Board and Federal Deposit Insurance Corporation (FDIC) announced the completion of reviews of the second round of resolution plans submitted by 11 large, complex banking organizations in 2013. The agencies have issued letters to each of these banking organizations. While the reviews noted some improvements from the original plans submitted in 2012, the agencies jointly identified specific shortcomings with the 2013 resolution plans that will need to be addressed in the 2015 submissions. The letters to each first-wave filer detail the specific shortcomings of each firm's plan and the expectations of the agencies for the 2015 submission. Common features of the plans' shortcomings include: (i) assumptions that the agencies regard as unrealistic or inadequately supported, such as assumptions about the likely behavior of customers, counterparties, investors, central clearing facilities, and regulators, and (ii) the failure to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for orderly resolution. Joint Press Release.
OCC Bulletin on Risk-Based Capital Rules
On August 5th, the Office of the Comptroller of the Currency (OCC) published a Bulletin on the final rules the federal banking regulators published that revise the advanced approaches risk-based capital rules by removing the requirement that only guarantees provided by certain counterparties are eligible for recognition as credit risk mitigants. The final rule modifies the definition of “eligible guarantee” for purposes of the advanced approaches risk-based capital rules by removing the requirement that an eligible guarantee be provided by an “eligible guarantor” for all exposures other than securitization exposures.
OCC Risk Management Guidance
On August 4th, the OCC published a Bulletin providing guidance to national banks and federal savings associations on the application of consumer protection requirements and safe and sound banking practices. The guidance related to consumer debt-sale arrangements with third parties that intend to pursue collection of the underlying obligations. The bulletin is a statement of policy intended to advise banks about the OCC’s supervisory expectations for structuring debt-sale arrangements in a manner that is consistent with safety and soundness and promotes fair treatment of customers.