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Friday, February 24, 2017

The Week Ahead: Feb. 27 - Mar. 3

  • Comments Due CFTC: Rules Relating to the Operations and Activities of Commodity Pool Operators and Commodity Trading Advisors and to Monthly Reporting by Futures Commission Merchants (PRA)
    Read more.
  • Comments Due FDIC: Recordkeeping Requirements for Qualified Financial Contracts
    Read more.
  • Comments Due FRB: Rules Regarding Availability of Information
    Read more.
  • Comments Due FRB: Rules Regarding Availability of Information
    Read more.
  • Comments Due OCC: Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery (PRA)
    Read more.

  • Comments Due CFTC: Position Limits for Derivatives; Proposed Rule
    Read more.

  • 10:30 AM Meeting CFPB: Consumer Advisory Board Meeting
    Read more.

  • Comments Due HUD: 30-Day Notice of Proposed Information Collection: FHA-Insured Mortgage Loan Servicing of Payments, Prepayments, Terminations, Assumptions and Transfers (PRA)
    Read more.

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

Fed Makes Annual Adjustment to Asset Threshold for Dividend Cut

The Federal Reserve has made an annual inflation adjustment to the asset threshold in Regulation I that determines the dividend rate that certain member banks earn on Federal Reserve Bank stock, as required by the 2015 transportation spending bill. The threshold for 2017 is now set at $10.122 billion in assets.

The controversial bill chopped the dividend paid to banks with more than $10 billion in assets from an annual rate of 6% to the latest high yield on 10-year Treasurys. Dividends for banks with assets of less than $10 billion were not affected.

ABA and Seattle-based Washington Federal are currently challenging the dividend cut in the Court of Federal Claims, seeking relief for the government's actions to violate contracts with Federal Reserve member banks. The complaint asserts breach of contract and taking of private property without just compensation in violation of the Fifth Amendment to the U.S. Constitution, and seeks reimbursement for these improper reductions of the dividend payment. In 2016, banks lost $1.14 billion to this taking, and the amount is expected to balloon to $17 billion over 10 years.

Read more.

Fed, OCC Issue Transition Period Guidance on Variation Margin

The Federal Reserve and the OCC have issued guidance on how examiners will review compliance with the requirement for when swap dealers and major swap participants must exchange variation margin for swaps not cleared through a central counterparty. While the requirement takes effect March 1, ABASA and other groups have sought a transition period to facilitate compliance.

The Fed and the OCC said that priority in compliance efforts should be given “based on the size of and risk inherent in the credit and market risk exposures presented by each counterparty,” with full compliance by March 1 for counterparties “that present significant exposures.” For other counterparties, examiners will “focus on a covered swap entity's good faith efforts to comply with the variation margin requirements of the final rule as soon as possible, and in no case later than Sept. 1, 2017.”

“The scope and scale of changes necessary for each covered swap entity to achieve effective compliance for each of its non-cleared swap transactions is recognized,” the Fed said. During initial examinations, examiners will evaluate covered entities’ compliance management systems and programs, governance processes and training programs.

Although the FDIC, Farm Credit Administration and Federal Housing Finance Agency also administer the final rule on variation margins, they supervise no entities affected by the guidance. They issued supportive statements.

Read the Fed guidance.
Read the OCC guidance.
Read the ABASA letter.

Wednesday, February 22, 2017

ABA Makes Recommendations to Protect Customer Data When Shared

In a comment letter to the CFPB, ABA offered several recommendations for protecting consumers’ financial information when it is being voluntarily shared with third party data aggregators. The CFPB launched an inquiry amid the ongoing debate about “screen scraping,” a process by which consumers provide their online banking credentials to a third-party app or tool.

Currently, consumers face significant fraud, security and compliance risks when turning over their personal financial data or account credentials to a third party. ABA pointed out that in many cases, consumers are not provided sufficient information on how their data is being used, by whom, and for how long. In addition, consumers may not be fully aware of the differences in data protection standards between banks and non-bank entities, ABA added. Third-party financial aggregators often limit their own liability for loss, putting that risk on the consumer.

The letter said:
ABA believes that innovations in financial services can provide consumers with tremendous value. By addressing both the opportunities and risks, we have the ability to give consumers innovative services that they can trust. We believe that the specific steps outlined… provide the base upon which to build to provide the security, transparency and control for consumers so they can unlock the true potential of fintech and take charge of their financial future.

Specifically, the association recommended that the CFPB ensure that consumer data be subject to the protections provided by the Gramm-Leach-Bliley Act regardless of whether it is held by a bank or third party; require third parties to provide clear, detailed disclosures about how data will be used; and give consumers the ability to control the information being shared.

ABA further urged the bureau to take steps to close existing regulatory gaps and ensure consumer protection, such as clarifying that requirements of the GLBA and the Electronic Funds Transfer Act apply to data aggregators, ensuring that data aggregators are held to the same data protection and notification standards as banks, and identifying and supervising “large participants” within the financial data aggregation market.

Read the comment letter.

Tuesday, February 21, 2017

Tipton Reintroduces ABA, Alliance-Backed Tailored Regulation Bill

Rep. Scott Tipton (R-Colo.) and eight GOP co-sponsors have reintroduced the House version of the TAILOR Act (H.R. 1116), which would require financial regulators to consider bank risk profiles and business models when taking regulatory actions. The bill has for years been strongly advocated by ABA and the state bankers associations.

In addition to requiring a tailored approach for future rulemakings, the TAILOR Act would require a review of regulations issued in the past seven years and a report on how they might be better tailored. Regulators would be required to state in notices of proposed rulemaking how they applied the TAILOR Act.

ABA EVP James Ballentine applauded the legislation. He said,
This important bill would help address the huge flow of new regulations that have made it more difficult for banks to meet the needs of consumers and small businesses as well as local and regional economies. Regulators should be empowered – and directed – to make sure that rules, regulations and compliance burdens only apply to segments of the industry where warranted.

Co-sponsors on the measure are Reps. Andy Barr (R-Ky.), Barry Loudermilk (R-Ga.), Mia Love (R-Utah), Robert Pittenger (R-N.C.), Bill Posey (R-Fla.), Ed Royce (R-Calif.), David Trott (R-Mich.) and Roger Williams (R-Texas). In the 114th Congress, Tipton’s bipartisan TAILOR Act cleared the House Financial Services Committee by a strong margin. Sen. Mike Rounds (R-S.D.) has introduced a companion measure in the Senate.

Friday, February 17, 2017

The Week Ahead: Feb. 19 - 24

  • Comments Due SBA: Small Business Investment Companies: Passive Business Expansion and Technical Clarifications
    Read more.
  • Comments Due CFPB: Request for Information Regarding Consumer Access to Financial Records
    Read more.
  • Comments Due OCC: Record and Disclosure Requirements--Consumer Financial Protection Bureau Regulations B, C, E, M, Z, and DD and Board of Governors of the Federal Reserve System Regulation CC (PRA)
    Read more.
All times in Eastern Standard Time. See future events on the  Dodd-Frank Calendar.