The most important announcements last week have a long fuse. Community banks should give special attention to a speech by Federal Reserve Governor Daniel Tarullo tiering supervision of smaller banks and the need for a statutory amendment in order to extend the Small Bank Holding Company Policy Statement to bank holding companies with up to $1 billion in assets. Also noteworthy are the related effort of the banking agencies to revisit potentially outmoded regulations, and the OCC concerns about cybersecurity at smaller banks.

The full set of developments over the past week is as follows:

Central Banking

Community Banks

  • "A Tiered Approach to Regulation and Supervision of Community Banks," remarks of Federal Reserve Governor Tarullo at the Community Bankers Symposium (Chicago IL, Nov. 7).
    • Recommends revision to Collins Amendment to permit Federal Reserve to extend Small Bank Holding Company Policy Statement to bank holding companies with less than $1 billion in assets.  Current threshold is $500 million.
    • Immediate technical effect would be to allow such companies to issue increased amounts of debt, but other regulations – and exemptions from them – are tied to small bank holding company status.
    • Necessary changes already contained in proposed regulatory relief legislation.
    • "The characteristics and business model of community banks must be reflected in the supervisory program."
    • "Supervision must not inadvertently undo the decision made through regulatory tiering."
    • "The relatively straightforward business model of community banks, along with their relatively small scale and number of branches, provides the opportunity to increase the use of off-site supervisory oversight, in accordance with informing principles of risk-based supervision."
    • Text of remarks available at  
  • Federal banking agencies to begin outreach meetings for comment on outdated, unnecessary, or unduly burdensome regulations, per agencies' statutory duty to review regulations every 10 years.  See Regulatory Relief below.
    • First meeting scheduled for Dec. 2 at Los Angeles branch of Federal Reserve Bank of San Francisco.
  • FFIEC releases observations on survey of over 500 community financial institutions to assess preparedness to mitigate cyber risks (Nov. 3).  See Cybersecurity below.


  • Open Commission meeting scheduled for Nov. 3.
    • Meeting to consider residual interest deadline, records of commodity interest and related cash or forward transactions, and forward contracts with embedded volumetric optionality.
    • Announcement available at

Credit Risk/Leveraged Lending

  • Banking agencies release Shared National Credits Program 2014 Review (Nov. 7).
    • Credit quality of large loan commitments owned by U.S. banking organizations, FBOs, and nonbanks generally unchanged from 2013.
    • Criticized assets remain elevated at approximately 10.1% of total commitments – much of that attributable to leveraged loans.
    • Agencies to intensify examination of such loans.
    • Review and FAQs available at


  • Remarks by OCC Comptroller Curry on cybersecurity at community banks (Nov. 7).
  • FFIEC releases Cybersecurity Assessment General Observations (Nov. 3).
    • Based on summer 2014 survey of over 500 community financial institutions to assess preparedness to mitigate cyber risks.
    • Per OCC, banks need to understand their inherent cybersecurity risks and consider current practices and overall preparedness, focusing on the following:
      • Risk management and oversight.
      • Threat intelligence and collaboration.
      • Cybersecurity controls.
      • External dependency management.
      • Cyber incident management and resilience.
    • Information sharing is an important element of a bank’s risk management processes and its ability to identify, respond to, and mitigate cyber threats and incidents.
    • Banks are expected to:
      • Monitor and maintain sufficient awareness of cyber threats and vulnerability information.
      • Establish procedures for how to evaluate and apply information.
    • Participation in Financial Services Information Sharing and Analysis Center is recommended.  Recommendation available at
    • Observations available at
    • OCC Bulletin 2014-53 available at

Debt Collection

Financial Literacy

Financial Stability Oversight Council

  • Meeting on Nov. 3.
    • Company (reportedly MetLife) presented case against designation as a systemically important financial institution at oral hearing before the meeting.
      • Final FSOC determination due by Jan. 2, 2015.
    • At meeting, FSOC voted not to rescind designation of Prudential Financial.
    • Readout of meeting available at  

Mortgage Lending

Regulatory Relief

  • Federal banking agencies to begin regulatory review outreach meetings.
    • Meetings designed to implement agencies' statutory duty to conduct review of regulations every 10 years to identify unneeded, outdated or overly burdensome rules.  Review required by the Economic Growth and Regulatory Paperwork Reduction Act.
    • Process began with June 2014 request for comment on three rulemaking categories – applications and reporting, powers and activities, and international operations.
      • Request available at 79 Fed. Reg. 32172 (June 4, 2014) and
      • Comment period ended Sept. 2, 2014.
      • Nine additional categories to be covered in three future comment cycles: banking operations; capital; CRA; consumer protection; directors, officers, and employees; money laundering; rules of procedure; safety and soundness; and securities.
    • First meeting scheduled for Dec. 2, 2014, at Los Angeles branch of Federal Reserve Bank of San Francisco.
      • 2015 hearings planned in Boston, Chicago, Dallas, and Washington, D.C., but dates and times not released.
    • Full review process expected to take 2 years.
    • Announcement available at
    • Further details available at dedicated website for EGRPRA review at

Swaps and Derivatives

  • "A Financial System Perspective on Central Clearing of Derivatives," remarks of Federal Reserve Governor Powell at the "The New International Financial System: Analyzing the Cumulative Impact of Regulatory Reform," 17th Annual International Banking Conference (Chicago IL, Nov. 6).

Too Big to Fail

Virtual Currency

Bank Closings


  • Returns for lame duck session on November 11.
  • Pending legislation that could become law during lame duck session.
    • S. 1369
      • Exempting depository institutions primarily engaged in business of insurance from capital requirements of Collins Amendment.  
    • H.R. 5461, passed House Sept. 16, 2014.
      • Amending Collins Amendment to allow Federal Reserve to apply insurance-based (rather than bank-based) capital standards to systemically important insurance companies.
      • Amending Volcker Rule to exempt collateralized loan obligations.
      • Amending Title VII to exempt end-users from margin requirements under the swaps rules.
      • Amending CFPB qualified mortgage rule with respect to the calculation of certain points and fees.
    • Renewal of Terrorism Risk Insurance Act.  Note that absent legislation TRIA will expire on Dec. 31, 2014.  Senate and House bills differ.
      • S. 2244 passed Senate on July 17.
  • H.R. 4871 reported out of House Financial Services Committee on July 16.
  • Senate Banking Committee
    • Sen. Richard Shelby (R-AL) to become Chairman of Senate Banking Committee in 2015.  Term limited to 2 years under party rules.
    • Committee agenda to be determined.
    • Ranking Member from among the Democrats to be determined.

Congressional Hearings – Upcoming

  • Senate Banking Committee
    • Nominations hearing, Nov. 13, for HUD and Transportation Department officials.
    • New York Times DealBook and American Banker report that Senate Banking Committee will hold hearing Nov. 21 to examine relationship between federal banking regulators and banking industry.  Not yet listed on Senate Banking Committee website.

Upcoming Events.

  • Nov. 13
    • Senate Banking Committee nominations hearing.
  • Nov. 18-19
    • OCC director workshops, Compliance Risk and Credit Risk: A Director's Focus, in Newton, MA.
  • Nov. 20
    • FDIC San Francisco Region Bankers' Forum, Consumer Protection and Hot Topics.
  • Nov. 21
    • Reported Senate Banking Committee hearing on federal bank regulators and banking industry.
  • Dec. 1-3
    • OCC director workshop, Mastering the Basics: A Director's Challenge in Phoenix, AZ.
  • Dec. 2
    • Regulatory review outreach meeting at Los Angeles branch of Federal Reserve Bank of San Francisco.

Regulatory Comment Deadlines

  • Nov. 10 – Federal Reserve/OCC/FDIC: additions to CRA Q&As.  
  • Nov. 10 – HUD: streamlined discussion of refinancing in FHA handbook on single family loans.  
  • Nov. 10 – SEC: circulation of price quotes of security-based swaps that may be purchased only by eligible contract participants not deemed an offer to sell.  
  • Nov. 10 – CFPB: amendments to 2013 Integrated Mortgage Disclosures Rule.  
  • Nov. 24 – Federal Reserve/OCC/FDIC/FHFA/Farm Credit Administration: margin requirements for uncleared swaps.  
  • Dec. 2 – CFTC: margin requirements for uncleared swaps for swap dealers and major swap participants.  
  • Dec. 8 – CFPB: definition of "larger participant" in nonbank auto lending market.  
  • 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.