Agencies Propose Flood Insurance Rules
On October 24th, the Federal Reserve Board, Farm Credit Administration, Federal Deposit Insurance Corporation (“FDIC”), National Credit Union Administration (“NCUA”), and the Office of the Comptroller of the Currency (“OCC”) published for comment a joint notice of proposed rulemaking to amend regulations pertaining to loans secured by property located in special flood hazard areas. The proposed rule would implement provisions of the Homeowner Flood Insurance Affordability Act of 2014 relating to escrowing flood insurance payments and the exemption of certain detached structures from the mandatory flood insurance purchase requirement. HFIAA amends the escrow provisions of the Biggert-Waters Flood Insurance Reform Act of 2012. Comments should be submitted within 60 days after publication in the Federal Register, which is expected shortly. Joint Agency Press Release.
Restrictions on Sales of Assets by the FDIC
On October 24th, the FDIC published for comment proposed amendments to the rules implementing Section 11(p) of the Federal Deposit Insurance Act. That section prohibits individuals and entities whose acts or omissions have, or may have, contributed to the failure of an insured depository institution from buying the assets of that failed insured depository institution from the FDIC. The proposed revisions would clarify the purpose, scope, and application of the implementing rule to make it more consistent with the FDIC’s Orderly Liquidation Authority rules by placing restrictions on sales of assets of a covered financial company by the FDIC. Comments should be submitted on or before December 23, 2014. 79 FR 63580.
On October 24th, the FDIC published for comment a proposed a rule that would implement Section 210(a)(16)(D) of the Dodd-Frank Act, which requires the promulgation of a regulation establishing schedules for the retention by the FDIC of the records of a covered financial company, a financial company for which the FDIC has been appointed receiver pursuant to Title II of the Dodd-Frank Act, as well as the records generated by the FDIC in the exercise of its Title II orderly liquidation authority. Comments should be submitted on or before December 23, 2014. 79 FR 63585.
Stress Test Scenarios
On October 23rd, the FDIC and OCC each released the economic scenarios that will be used by certain financial institutions with total consolidated assets of more than $10 billion for stress tests required under the Dodd-Frank Act. The baseline, adverse, and severely adverse scenarios include key variables that reflect economic activity, including unemployment, exchange rates, prices, income, interest rates, and other salient aspects of the economy and financial markets. FDIC Press Release; OCC Press Release. The Federal Reserve Board issued the supervisory scenarios that will be used in the 2015 capital planning and stress testing program it oversees. The program includes the Comprehensive Capital Analysis and Review of 31 bank holding companies with $50 billion or more of total consolidated assets. Federal Reserve Board Press Release.
Amendments to the Capital Plan and Stress Test Rules
On October 17th, the Federal Reserve Board issued modifications to the regulations for capital planning and stress testing and released instructions for the 2015 capital planning cycle. The new final rule adjusts the due date for bank holding companies (“BHCs”) with total consolidated assets of $50 billion or more to submit their capital plans and stress test results. For the 2015 capital plan cycle, these BHCs are required to submit capital plans on or before January 5, 2015. Beginning in 2016, participating BHCs will be required to submit their capital plans and stress testing results to the Federal Reserve on or before April 5. In addition to the timing change, the final rule includes modifications and clarifications to the existing capital plans and stress test rules. In particular, the final rule adopts the limitation on a BHC’s ability to make capital distributions to the extent that the BHC’s actual capital issuances are less than the amount indicated in its capital plan. The instructions for the 2015 Comprehensive Capital Analysis and Review (“CCAR”) provide details regarding submission requirements, supervisory expectations for a capital adequacy process, and the supervisory assessments and disclosure. The instructions include a discussion of common strengths and shortcomings seen in the submissions by the participating BHCs in the prior year. Federal Reserve Board Press Release.
OCC Bulletin on Liquidity Coverage Ratio Rule
On October 17th, the OCC issued a Bulletin on the new liquidity coverage ratio final rule. The new rule is designed to strengthen the liquidity risk management of banks, savings associations, and bank holding companies and is effective January 1, 2015.