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Friday, March 24, 2017

Week of March 26 - April 1

  • Comments Due SBA: Secondary Participation Guaranty Agreement (PRA)
    Read more.
  • Effective Date FRB: Federal Reserve Bank Capital Stock
    Read more.
  • 9AM Meeting FDIC: FDIC Advisory Committee on Community Banking; Notice of Meeting
    Read more.
  • Comments Due SBA: Small Business Size Standards: Waiver of the Nonmanufacturer Rule
    Read more.
  • Effective Date FFIEC: Uniform Interagency Consumer Compliance Rating System
    Read more.

  • Effective Date EBSA: Recordkeeping for Timely Deposit Insurance Determination; Final Rule
    Read more.
  • Effective Date FRB: Liquidity Coverage Ratio: Public Disclosure Requirements; Extension of Compliance Period for Certain Companies To Meet the Liquidity Coverage Ratio Requirements
    Read more.
  • Effective Date OCC: Economic Growth and Regulatory Paperwork Reduction Act of 1996 Amendments; Final Rule (PRA)
    Read more.
  • Effective Date OCC: Industrial and Commercial Metals
    Read more.

All times in Eastern Standard Time. See future events on the  Dodd-Frank Calendar.

Free Article Details Impact on Banks of Trump Executive Actions

Since taking office, President Trump has issued six executive orders or memoranda with significance for bank regulation. A new free ABA Banking Journal article helps banks understand the impact of Trump’s actions.

In the article, ABA’s Wayne Abernathy and Shaun Kern outline in detail the projected impacts of Trump’s orders setting a regulatory budget, requiring regulatory reform task forces and setting core principles for financial regulation, as well as his memos calling for regulatory and hiring freezes and a review of the fiduciary rule. They also spotlight ABA actions analyzing and responding to these actions.

Abernathy and Kern write:
President Trump’s early executive actions are a welcome set of initial moves in the direction of reducing regulatory overreach, duplication, and overgrowth. The hard work of getting into the details remains. The banking industry must play a significant part in that effort, as no one knows as well as bankers do which rules and regulations and provisions of law are inhibiting banks’ ability to serve the financial needs of their customers.

Read the article.

Commercial banks reported total trading revenue of $6 billion in the final quarter of 2016, down 6.8% from the third quarter but up 40% from the fourth quarter of 2015, according to the OCC’s Quarterly Report on Bank Trading and Derivatives Activities. The quarter-on-quarter decline reflects a persistent seasonal trend.

The net current credit exposure dropped by $79.6 billion, or 16.5%, in the fourth quarter, the report said. The notional amount of derivatives banks held fell by 6.9% to $165.2 trillion.

Read the report.

Thursday, March 23, 2017

Hensarling: Choice Act to ‘Remove Bureaucrats from the Boardroom’

If passed, the Financial Choice Act will serve as a “deregulatory life preserver” for community banking institutions, said the bill’s architect, House Financial Services Committee Chairman Jeb Hensarling (R-Texas), in remarks at the ABA Government Relations Summit. Hensarling, who has been an outspoken champion for regulatory reform, said that his bill is targeted toward “replacing mind-numbing complexity with simplicity.”

“There’s something fundamentally wrong in America when you have to lay off a loan officer to hire a compliance officer,” Hensarling said, acknowledging the significant compliance burden that Dodd-Frank Act’s 25,000 pages of final and proposed regulations have imposed on bankers since 2010. The goal of the Choice Act is to ensure that “a well-capitalized, qualifying bank will be empowered to remove government bureaucrats from its boardroom, and lend and invest freely,” he said.

With the Trump administration placing government regulations under the microscope, Hensarling was optimistic about what can be accomplished to bring relief to the financial industry, encouraging bankers to “keep hope alive” as the bill moves through the House and especially the Senate, where previous reform efforts have fallen short.

“Provisions of the Choice Act will be able to survive” review by the Senate, he said, but added that “there’s a great deal the administration can do. Much of Dodd-Frank was constructed by pen and phone, so it can be deconstructed by pen and phone.” Part of the lift the administration can provide involves staffing the federal regulatory agencies, Hensarling said, adding that he is “highly encouraged” by President Trump’s approach to personnel.

Rep. Scalise: Regulatory Reform Expected to Move after Health, Tax Reform

Regulatory reform legislation is expected to move in the U.S. House after healthcare reform and tax reform bills are completed, House Majority Whip Steve Scalise (R-La.) told attendees at the ABA Summit. After votes on Affordable Care Act “repeal and replace,”, Scalise said the House will turn to tax reform.

All three priorities are part of congressional Republicans’ and President Trump’s jobs agenda, Scalise explained. “You want to talk about something that will have dramatic impacts on the economy?” he said. “The biggest inhibitor to job creation and growth in the economy that we’ve been hearing about for years is the regulations coming out from Washington,” including compliance with the Affordable Care Act and complex corporate structures required to minimize taxes.

As a preview of additional regulatory reform legislation to come, Scalise touted the REINS Act, passed by the House in January, which would help rein in the growth of the administrative state by requiring up-or-down votes by Congress on major regulatory proposals before they take effect. If passed by the Senate and signed by Trump, as expected, the bill would “realign the balance of power” and “bring sanity to the regulatory state,” Scalise said.

Wednesday, March 22, 2017

Burgess: Regulatory Overload Hinders New Bank Startups

Excessive regulation discourages investors from launching de novo banks, thus reducing capacity for economic growth and financial choices for consumers and businesses across the country, ABA Chairman-Elect Ken Burgess said in congressional testimony yesterday. Burgess – chairman and co-founder of FirstCapital Bank of Texas in Midland – was the only banking industry representative to speak before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.

While the interest rate environment and post-financial crisis economic conditions have played a partial role in the drought of de novo charters, Burgess laid out evidence that “excessive regulation” is the driving factor. Since the Dodd-Frank Act passed in 2010, only six new banks have been chartered, while nearly 2,000 banks have closed, sold or failed.

When Burgess co-founded FirstCapital Bank in 1998, the new bank raised $6.5 million in capital, a small fraction of amounts raised for the handful of de novos today. Were he to start a bank today with such high levels of capital – as much as $30 million – “I would have to grow the bank so quickly to put the capital to work that it would pose undue risk on our shareholders,” Burgess explained. “Starting a new bank in a small community would be extremely difficult.”

Meanwhile, regulatory requirements have put pressure on earning assets and sources of deposits, as well as on directors, artificially limiting interest in new banks. “It’s time to think differently to encourage new banks – by requiring less capital, reducing regulatory burden, permitting greater flexibility in business plans, and lifting funding restrictions,” Burgess said.

Read the testimony.