For many community banks, Christmas came two weeks early on Thursday, December 11, when the Senate voted to lift the ceiling in the Federal Reserve's Small Bank Holding Company Policy Statement from $500 million to $1 billion.  The House had passed the legislation, H.R. 3329, some months ago. The President is expected to sign the bill.  Among other things, bank holding companies with consolidated assets between $500 million and $1 billion will be exempt from risk-based and leverage capital requirements, may operate with higher levels of debt and will have fewer reporting requirements.  On a day-to-day basis, the effect is somewhat muted because all insured depository institutions remain subject to all of the capital rules and their own reporting requirements.

Nearly equally important for all banks, the Senate appears ready to approve the "CR Omnibus" spending bill that the House passed last week and thereby to avert a federal government shutdown and the many adverse economic consequences that would flow from such an event.

On the compliance front, all community banks should review the substantially revised Bank Secrecy Act/Anti-Money Laundering Examination Handbook that FFIEC released on December 2.  As to cybersecurity, the NY Department of Financial Services published new guidance on its examination of banks' efforts to maintain security.  We can expect the guidance to serve as a model for or exemplar of the federal approach, and accordingly the guidance warrants the attention of all banks, not just those chartered in New York.

The full set of developments over Thanksgiving week and the following weeks is as follows: 

The Economy

  • House passes H.R. 83, Consolidated and Further Continuing Appropriations Act, 2015 (Dec. 11.)
  • Senate expected to approve bill later on Dec. 15.

Monetary Policy

  • Federal Open Market Committee meeting scheduled for December 17-18.  
  • "The Federal Reserve's Financial Stability Agenda," remarks of Federal Reserve Governor Brainard at the Hutchins Center on Fiscal and Monetary Policy, Washington, DC (Dec. 3).

Affordable Housing

Bank Accounting



  • Federal Reserve publishes proposal on application of common equity tier 1 capital qualification criteria to depository institution holding companies organized in forms other than stock corporations (Dec. 12).
  • Definition of "qualified master netting agreement" part of discussion agenda at FDIC board meeting scheduled for Dec. 16.
  • Federal Reserve proposes methodology for determining whether U.S. bank holding company is a global systemically important banking organization (GSIB) and amount of capital surcharge to capital conservation buffer (Dec. 9).  See Too Big to Fail below.

Change in Bank Control

Credit Reporting

  • CFPB report on credit reporting issues in connection with medical debt collections (Dec. 11).  See Medical Debt below.


  • NY Department of Financial Services issues advisory on bank examinations of cybersecurity issues (Dec. 10).
    • Examinations to cover new questions and topics, including
      • Management of cyber security issues, including the interaction between information security and core business functions, written information security policies and procedures, and the periodic reevaluation of such policies and procedures in light of changing risks;
      • Resources devoted to information security and overall risk management;
      • The risks posed by shared infrastructure;
      • Protections against intrusion including multi-factor or adaptive authentication and server and database configurations;
      • Information security testing and monitoring, including penetration testing;
      • Incident detection and response processes, including monitoring;
      • Training of information security professionals as well as all other personnel;
      • Management of third-party service providers;
      • Integration of information security into business continuity and disaster recovery policies and procedures; and
      • Cyber security insurance coverage and other third-party protections.
    • Guidance letter available at
  • Senate Banking Committee hearing on cybersecurity (Dec. ).  See Congressional Hearings – Last Two Weeks below.

Debt Settlement

Financial Literacy

Foreign Banks

Medical Debt

Mortgage Servicing

Payment Systems

  •  Federal Reserve announces revisions to part II of the Federal Reserve Policy on Payment System Risk (Dec. 1).
    • Changes relate to procedures for measuring balances intraday in institutions' accounts at the Federal Reserve Banks.
    • Principles for establishing future posting procedures for the Reserve Banks' same-day ACH service.
    • Clarification of Reserve Banks' administration of the Payment System Risk Policy for U.S. branches and agencies of FBOs.
    • Technical changes to posting procedures to reflect certain deposit deadlines.
    • Revised Policy available at
  • Federal Reserve announces companion amendments to Regulation J (collection of checks and other items (Dec. 1).  Amendments would permit Federal Reserve Banks to:
    • Require paying banks that receive presentment checks from the Reserve Banks to make the proceeds of settlement for those checks available to the Reserve Banks as soon as one half-hour after receipt of the checks.
    • Obtain settlement from paying banks by as early as 8:30 a.m. eastern time for checks that the Reserve Banks present.
    • Revisions available at

Regulatory Relief/EGRPRA

Small Bank Holding Company Policy Statement

  • Senate votes to raise ceiling from $500 million to $1 billion for eligibility for treatment under the Federal Reserve's Small Bank Holding Company Policy Statement (Dec. 11).

Student Loans

Swaps and Derivatives

  • Section 630 of omnibus spending bill (see The Economy above) includes partial repeal of the Lincoln Amendment, the swaps push-out provision in the Dodd-Frank Act (Dec. 11).
    • Lincoln Amendment (section 716 of Dodd-Frank) effectively barred banks from engaging in swaps activities other than hedging directly related to bank's activities and acting as swaps entity for swaps involving rates or reference assets that are permissible for a national bank.
    • Section 630 generally permits swap activities other than certain structured finance swaps.
    • H.R. 83, Rules Committee Print 113-59 available at

Too Big to Fail

  • FSOC to meet on Dec. 18.
    • Executive session to consider nonbank financial company designations, presumably including determination following oral hearing to consider challenge to designation of MetLife.
      • Oral hearing held Nov. 3.  Final designation, if any, required by Jan. 2, 2015.  
    • Open session to include update on 2014 annual report recommendations, presentation by the Office of Financial Research on annual report and updates to Financial Stability Monitor, and discussion of ongoing work on asset management.
    • Announcement available at
  • Federal Reserve proposes methodology for determining whether U.S. bank holding company is a GSIB and amount of capital surcharge to capital conservation buffer (Dec. 9).
    • Federal Reserve to consider size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity.
    • Under proposed methodology, 8 U.S. bank holding companies would be identified as GSIBs.
    • Amount of surcharge to be determined by the higher of two risk scores based on factors above and use of wholesale funding.
    • Largely follows international efforts on capital surcharges for GSIBs.
    • Proposal available at
    • Comment deadline: Feb. 28.
  • Federal Reserve proposes enhanced prudential standards tailored to General Electric Capital Corporation (Nov. 25).
  • Federal Reserve and FDIC provide feedback on second resolution plan filed by Wells Fargo (Nov. 25).
  • FDIC Advisory Committee on Systemic Resolution meets Dec. 10.

Congressional Hearings – Last Two Weeks

Congressional Hearings – Upcoming

  • None scheduled.

Upcoming Events.

  • Dec. 16
    • FDIC board meeting to approve definition of "qualified master netting agreement" under capital rules and 2015 corporate operating budget.
  • Dec. 16-17
    • Federal Open Market Committee meeting.
  • Dec. 17
    • FDIC Chicago Region Regulatory Conference Call, "Identifying and Mitigating UDAP Risk."
  • Dec. 18
    • FSOC meeting in open and executive sessions.
  • Jan. 13, 2015
    • Treasury Department public forum on money services businesses and banking access.
  • Mar. 3, 2015
    • FDIC New York Region Regulatory Conference Call, "BSA Today – Regulatory Tips, Trends, and Hot Topics."

Regulatory Comment Deadlines

  • Dec. 23 – FDIC: restrictions on sales of assets by FDIC under part 340.  
  • Dec. 29 – Federal Reserve/FDIC/OCC/NCUA/Farm Credit Administration: revisions to flood insurance regulations.  
  • Jan. 12, 2015 – FHFA: FHLB membership to require 1% of assets in home mortgage loans.  
  • Jan. 22, 2015 – CFTC: position limits on exempt and agricultural commodity futures, options, and economically equivalent physical commodity swaps.  
  • Jan. 26, 2015 – FDIC: filing requirements and processing procedures for Change in Bank Control Act notices.  
  • Feb. 2, 2015 – Federal Reserve: enhanced prudential standards for GE Capital.  
  • 60 days from publication in Federal Register – Federal Reserve/OCC/FDIC: revisions to capital rules for advanced approaches banks.  
  • Feb. 28, 2015 – Federal Reserve: methodology for determining capital surcharge on U.S. GSIBs.  
  • Mar. 16, 2015 – CFPB: revisions to Regulations E and Z covering prepaid cards.