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Monday, February 27, 2017

Nichols Talks Fed Dividend Litigation, Dodd-Frank on CNBC

ABA President and CEO Rob Nichols appeared on CNBC to discuss the Federal Reserve dividend litigation and the ABA Blueprint for Growth.

He emphasized to host Rick Santelli that ABA pursued litigation only after exhausting all other legislative and regulatory options. “It’s an important principle, because we believe it was an illegal taking,” he said. ABA and Seattle-based Washington Federal are currently challenging the 2015 dividend cut in the Court of Federal Claims. In 2016, banks with more than $10 billion in assets lost $1.14 billion to this taking, and the amount is expected to balloon to $17 billion over 10 years.

Nichols also discussed the industry’s efforts to relieve regulatory burdens and generate stronger growth. He said,
There are a number of changes – regulatory and legislative in the form of fixes to Dodd-Frank – that we believe can help the economy grow at a faster clip.

Watch the interview.

GAO: Fed Officials, Bankers Concerned About Dividend Cut

A Government Accountability Office report has found that although the change in the Federal Reserve dividend rate has had little short-term effect on Federal Reserve membership and bank operations, concerns arise for the future.

The GAO said:
Commercial banks and Federal Reserve officials we interviewed expressed some concerns about the dividend rate modification. Certain Federal Reserve officials with whom we spoke were concerned about increased membership attrition as a result of the dividend rate modification.

Fed member banks with less than $10 billion in assets were worried that the 2015 bill reducing the dividend would set a precedent for “future transfers from the Reserve Banks, and that they would reconsider Federal Reserve membership if the dividend rate threshold were reduced to include banks in their asset range,” the GAO noted.

Read the report.

Trump Orders Regulatory Reform Efforts at Agencies

President Trump has issued an executive order as part of his administration’s efforts to reduce regulatory burdens. The order requires agencies to appoint regulatory reform task forces led by regulatory reform officers, with a mandate to identify regulations that eliminate jobs or inhibit job creation; are outdated, unnecessary or ineffective; have costs that outweigh their benefits; are inconsistent with regulatory reform initiatives; or derive from since-rescinded executive orders. Initial reports are due within 90 days.

Read the order.

Friday, February 24, 2017

The Week Ahead: Feb. 27 - Mar. 3

Monday
  • 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.

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

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

Friday
  • 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

Sunday
  • Comments Due SBA: Small Business Investment Companies: Passive Business Expansion and Technical Clarifications
    Read more.
Tuesday
  • 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.

Full Circuit Court to Hear Appeal of CFPB Structure Case

The full D.C. Circuit Court of Appeals has agreed to hear the appeal in PHH Mortgage v. Consumer Financial Protection Bureau, a closely watched case over whether the CFPB’s leadership structure – a single powerful director who cannot be removed at will by the president – is constitutional.

The order also vacated an October 2016 ruling by a three-judge D.C. Circuit panel finding the structure unconstitutional and allowing the director’s removal not just “for cause” but at the president’s discretion – thus preventing President Trump from removing current director Richard Cordray before his term ends in 2018.

Oral arguments in the “en banc” review of the case will be heard by the D.C. Circuit on May 24. The case arose in 2015, when Cordray overruled an administrative law judge’s recommendation for a $6.5 million fine against mortgage lender PHH for allegedly requiring unlawful kickbacks from mortgage insurers in violation of the Real Estate Settlement Procedures Act. ABA will continue to monitor the case as it progresses.

Read the order.

FDIC Watchdog Highlights Gaps in Banks’ Vendor Contracts

Few banks’ contracts with technology service providers (TSPs) provide sufficient detail about the providers’ business continuity and incident response capabilities and duties, according to a report issued by the FDIC’s independent inspector general. The report also found shortfalls in banks’ assessments of how providers could affect the banks’ own ability to plan for business continuity and incident response.

In response, the FDIC said it would work with other FFIEC agencies to update guidance on business continuity planning and incident response and that it would continue examinations and off-site monitoring of vendor management. Anecdotal reports from banks indicate that examiners are increasingly focusing on technology provider risk management. The report expressed concern that some banks “may not be sufficiently knowledgeable about or engaged in contract management” and would thus “attempt to transfer their inherent responsibility for [bank] continuity and information security to TSPs,” which the IG said will require examiners’ continued focus.

The report, issued after a review of 48 technology vendor contracts, found that nearly half included no discussion of business continuity. Forty-two percent included a “detailed” discussion, and 10% included only a “high-level” discussion. The report found
Contract provisions that more specifically detail key business continuity issues could provide [banks] greater assurance that critical systems, services, and operations will be recovered and resumed timely and effectively when operations have been unexpectedly disrupted.

In terms of incident response, 65% of contracts included a detailed discussion of security and confidentiality, but only 23% covered performance standards in detail. The report also found that key terms in contracts lack specific definitions. The report found
[Banks] may not be sufficiently engaged in writing and negotiating contracts to ensure their rights and TSP responsibilities are clearly defined. TSPs appear to be drafting the contracts and ensuring that their rights are protected more than the [banks].

Regulators continue to focus on vendor risk management, including through an interagency rulemaking on enhanced cyber risk management standards for which comments are due today. ABA staff will continue to monitor agency activities and communicate with all agencies as guidance and expectations evolve.

Read the report.

DOJ Releases ADA Website Accessibility Tools

The Department of Justice recently published an “ADA Best Practices Tool Kit,” which includes website accessibility guidance and a checklist that can be used to verify compliance with the Americans with Disabilities Act.

While the tool kit is primarily geared toward state and local governments, which are governed by Title II of the ADA, it will be helpful to banks working on improving website accessibility. The DOJ has indicated that the Title II rulemaking will significantly impact the website accessibility standards ultimately promulgated under the Title III regulations, which are expected to be issued in 2018.

The guidance identifies common website accessibility problems and proposes solutions and other considerations that are useful in developing ADA compliant websites. It also includes a detailed action plan for making existing web content accessible. The checklist is intended to guide preliminary assessments of website accessibility, and policies and procedures for maintaining website accessibility.

View the website accessibility guidance.
View the checklist.

OCC Updates Comptroller’s Licensing Manual

The OCC has updated the “Changes in Directors and Senior Executive Officers” booklet of its Comptroller’s Licensing Manual. The revised booklet reflects changes made since the Office of Thrift Supervision merged into the OCC, and incorporates revised regulatory requirements for changes in directors or senior executive officers, distinguishing between requirements for national banks and federal savings associations.

View the booklet.

Thursday, February 16, 2017

CFPB RFI: Impact of Alternative Data on Credit Access

The CFPB has launched an inquiry into ways to expand access to credit for consumers who are credit invisible or who lack enough credit history to obtain a credit score. The Bureau is seeking public feedback on the benefits and risks of tapping alternative data sources such as bills for mobile phones and rent payments to make lending decisions about consumers whose lack of credit history might otherwise block opportunities. Specifically, the bureau will explore whether alternative data could improve access to credit, increase the complexity of the process, have an impact on costs and services, have privacy or security implications or unfairly impact a specific group.

Traditional credit history includes a borrower’s payment of debts such as mortgages, credit cards, and other loans. It is used by lenders to decide who can get credit and what it will cost. The bureau estimates that 26 million Americans are credit invisible, which means they have no credit history with a nationwide consumer reporting agency. An additional 19 million lack sufficient credit history to produce a credit score under most scoring models.

Read more.

FDIC Issues Annual Report

The FDIC has issued its 2016 annual report. The document provides an overview of key FDIC initiatives, performance results and financial information on the Deposit Insurance Fund and other aspects of FDIC operations, among other topics.

Read the annual report.

ABA, Groups Seek Forbearance on Variation Margin Rule

With a March 1 compliance deadline for when swap dealers and major swap participants must exchange variation margin for swaps not cleared through a central counterparty, ABA and several other trade groups have urged regulators to provide a transition period to facilitate compliance.

The groups said:
While the systemic risk implications of granting forbearance are low, it is clear to the associations that the documentation and operational challenges that are necessary to comply with the VM regulations by March 1 are high, despite concerted and continuing effort by our members and other market participants.

They warned that without a transition period, many market participants might have to significantly curtail their derivatives trading activities – resulting in disruption and market fragmentation. They said:
[R]egulatory forbearance with respect to the VM regulations strikes an appropriate balance between upholding the integrity of the regulations while preserving an open and stable derivatives market.
Read the letter.

Wednesday, February 15, 2017

Rounds Reintroduces ABA, Alliance-Backed Tailored Regulation Bill

Sen. Mike Rounds (R-S.D.) has reintroduced the Senate version of the TAILOR Act (S. 366), which would require financial regulators to consider bank risk profiles and business models when taking regulatory actions. The bill has been strongly advocated by ABA and the alliance of state bankers associations.

In addition to requiring a tailored approach for future rulemakings, Rounds’ bill 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.

Championed by Rounds and Rep. Scott Tipton (R-Colo.) in the 114th Congress, the bipartisan TAILOR Act cleared the House Financial Services Committee earlier this year. A new House version of the bill is expected to be introduced soon.

Curt Everson, president and CEO of the South Dakota Bankers Association, said:
South Dakota is home to some of the smallest and the largest banks in the world, with wide variations in their business models. Bankers from those institutions agree that today’s one-size-fits-all regulatory scheme doesn’t make sense. We applaud Sen. Rounds for introducing the TAILOR Act to start the conversation about matching bank regulation to risk.
Read more.

Linda McMahon Confirmed to Lead SBA

The Senate has voted 81 to 19 to confirm Linda McMahon as administrator of the Small Business Administration, a Cabinet-rank post. A two-time U.S. Senate candidate, McMahon was a co-founder and former CEO of World Wrestling Entertainment.

ABA President and CEO Rob Nichols congratulated McMahon, noting that he “looks forward to working with her and the SBA to provide credit that helps grow jobs across the country.” Nichols added that
[B]anks are strong supporters of the SBA Advantage and SBA Grow loan programs and back increased funding to ensure small businesses have access to affordable credit. Small businesses are essential for communities to thrive, and we’re eager to build upon the growth-oriented cooperation between SBA and the banking industry.

Tuesday, February 14, 2017

CFPB Releases 2015 HMDA Final Rule Webinar

The CFPB has made available on its website a webinar on the 2015 HMDA final rule that discusses identifiers, as well as other data points including those related to applicants and borrowers. In addition, the bureau has made available on its website a chart to illustrate the options a financial insitutiton has for collecting and reporting ethnicity and race information under current Regulatuon C, Regulation C effective Jan. 1, 2018 and the bureau’s Official Approval Notice.

Access the webinar.

Senate Confirms Mnuchin as Treasury Secretary

The Senate last night voted 53-47 to confirm Steven Mnuchin as secretary of the treasury. ABA’s Rob Nichols applauded the confirmation of the former regional bank CEO, adding that ABA is eager to work with Mnuchin to “strengthen financial recovery and economic progress.”

Nichols emphasized that as treasury secretary,
[Mnuchin] has a critical role in promoting economic growth and encouraging financial regulators to coordinate their work to ensure strong, prudential development of the economy. [He] has outlined an agenda to address regulatory issues so banks can better serve their customers, and we look forward to working with the Treasury under his new direction.

Monday, February 13, 2017

Fed Governor Tarullo Announces Resignation

Federal Reserve Governor Daniel Tarullo has announced that he will resign as a member of the board, effective April 2017. Tarullo was appointed by former President Obama in 2009 for a term that was set to expire Jan. 31, 2022. During his tenure at the Federal Reserve, Tarullo was a key architect of financial regulatory policy following the financial crisis, including the stress testing framework for the nation’s largest banks.

With Tarullo’s retirement, President Trump will now have the opportunity to make three appointments to the Federal Reserve Board during his term, including the vice chair of supervision, a role created by the Dodd-Frank Act but never filled during the Obama administration.

Read more.

Toomey: Time to Rethink CCAR

In a letter to Federal Reserve Chair Janet Yellen, Sen. Pat Toomey (R-Pa.) called for the Fed to do away with its Comprehensive Capital Analysis Review process for banks with $10 billion or more in assets. Toomey argued that the requirement has added unnecessary compliance costs, restricted lending to homebuyers and small business owners and has ultimately increased systemic risk to the financial system.

Toomey noted that unlike the Dodd-Frank Act stress testing regime, the CCAR process is not required by law, but continues to cost banks millions of dollars in regulatory expenses each year. He added that CCAR “has the perverse effect of increasing systemic risk,” pointing to research suggesting that banks subject to the CCAR tests have started “underweighting their balance sheets in residential mortgages and small business loans,” leading to curtailed lending and a correlation of the risk profiles among the nation’s largest banks.

Toomey urged the board to end the CCAR process altogether and focus instead on supervising the stress tests conducted internally by individual banks and using the legally required Dodd-Frank Act stress test results to draw conclusions about the health of banks across the industry.

Read the letter.

Fed Makes Revision to Stress Test Scenarios

The Federal Reserve has issued revised macroeconomic scenarios for its 2017 stress testing program to correct a data series error.

View the updated scenarios.

Friday, February 10, 2017

The Week Ahead: Feb. 13 - 17

Monday
  • Comments Due FRB: Application of the RFI/C(D) Rating System to Savings and Loan Holding Companies
    Read more.
  • Effective Date HUD: Revision of Freedom of Information Act Regulation
    Read more.

Tuesday
  • Comments Due FRB: Banking Organization Systemic Risk Report (FR Y-15)
    Read more.
  • Comments Due SBA: Small Business Investment Companies--Administrative Fees
    Read more.
  • Effective Date CFTC: Aggregation of Positions; Final Rule
    Read more.

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

ABA, Washington Federal Sue Over Federal Reserve Dividend Cut

ABA and Seattle-based Washington Federal have filed suit in the Court of Federal Claims seeking relief for government actions that violate contracts with Federal Reserve member banks by reducing dividends paid to those institutions. The cut to the long-established dividend contract was part of the 2015 highway spending bill, which reduced the annual dividend for Fed member banks with more than $10 billion in assets from 6% to approximately 2%.

ABA President and CEO Rob Nichols in a press release announcing the lawsuit emphasized the effect of the policy, which as originally proposed would have applied to Fed member banks with more than $1 billion in assets. He said:
The change to the statutory dividend rate upended Federal Reserve System policy that has been in place for more than 100 years… [The highway bill] set a troubling precedent to target specific segments of the business community to meet broad public obligations like highway infrastructure. Every industry in this country is vulnerable if this is allowed to stand.

The litigation seeks to reimburse banks for these improper reductions of the dividend payment. The complaint asserts breach of contract and taking of private property without just compensation in violation of the Fifth Amendment to the Constitution. In 2016, banks lost $1.1 billion to this taking, an amount estimated to balloon to $17 billion over 10 years.

In a Wall Street Journal op-ed announcing the lawsuit, Nichols and Washington Federal Chairman and CEO Roy Whitehead explained their reasoning, defending the 6% dividend as a key factor in the nation’s financial stability. They wrote,
The monetary loss is certainly significant for the industry, especially for smaller banks that will have greater difficulty replacing the lost income. But the bigger concern is the stability of the banking industry’s regulatory architecture and the principle of an honest contract.

Read the op-ed.
Read the lawsuit.
Read FAQs on the litigation.

Nichols Talks Dodd-Frank, Reg Reform, Fed Lawsuit on Bloomberg

In an appearance on “Bloomberg Markets,” ABA President and CEO Rob Nichols said that while a full repeal of the Dodd-Frank Act is unlikely, “there’s a whole host of areas that require focus and attention to help the financial markets get the economy going.”

He discussed efforts to improve the environment for rapidly consolidating community banks. Nichols said
A lot of the policy response intended for the larger banks has trickled down and impacted community banks. They are really hurting. We are worried about community banks that don’t have the scale to absorb a number of the regulatory body blows.

Nichols also addressed the Federal Reserve dividend lawsuit, filed just minutes before his appearance on Bloomberg. He noted that litigation is “always a last resort” but that other efforts to address the policy had failed, leaving the industry with no option but to “take it to the courts so they can sort it out.”

Watch the interview.

Thursday, February 9, 2017

OCC Hosts Oklahoma Workshop for Bank Directors

The OCC will host a workshop in Tulsa, Okla., March 27-29, for directors of national community banks and federal savings associations supervised by the OCC. The Building Blocks for Directors workshop combines lectures, discussion and exercises to provide practical information on the roles and responsibilities of board participation for both new and experienced directors. Taught by seasoned OCC supervision staff, the workshop focuses on directors’ duties and core responsibilities, discusses major laws and regulations and increases familiarity with the examination process.

The workshop fee is $99. Participants receive a pre-workshop reading package and course materials, assorted supervisory publications, and a Dictionary of Banking Terms. The workshop is limited to the first 35 registrants. The workshops are taught by experienced OCC staff and are offered nationwide to enhance and expand the skills of national community bank and federal savings association directors.

Learn more.

CFPB: Debt Collection Tops Consumer Complaints for December

Consumers complained most frequently about debt collection in December, according to the CFPB’s monthly complaint snapshot. The bureau received approximately 23,000 complaints during the month, of which 7,100 involved debt collection. Other common complaints included credit reporting and mortgages.

Included in the report was a spotlight on mortgage-related complaints. The majority of complaints (80%) filed by mortgage borrowers were related to servicing; specifically, consumers complained of problems with making payments or issues that arose when they were unable to meet their payment. Other servicing-related complaints included the misapplication of funds and difficulties communicating with servicers when attempting to resolve loan issues.

The report also examined complaints that came specifically from consumers in Tennessee. Tennesseans complained most frequently about debt collection, while mortgage-related complaints were below the national average.

Read the report.

Fed General Counsel to Retire

The Federal Reserve has announced that Scott Alvarez, the influential general counsel at the Board of Governors, will retire later this year after a 36-year career with the Fed. He has been general counsel and head of the Fed’s Legal Division since 2004, serving under three Fed chairmen.

Read more.

Tuesday, February 7, 2017

FDIC Releases 2017 Stress Test Scenarios

Joining the Federal Reserve and OCC, the FDIC has released stress-test instructions and scenarios for 2017 applicable to banks with more than $10 billion in assets.

Access the FDIC’s instructions and scenarios.

OCC Warns About Scam

The OCC has warned about a scam in which calls or text messages solicit individuals to provide personal information in order to have funds from the OCC purportedly transferred to their accounts. The OCC provided information about phone numbers and names associated with the scam and information on how to report it.

Read more.

Monday, February 6, 2017

Trump Orders Review of Dodd-Frank, Fiduciary Rule

President Trump has issued orders to reevaluate several provisions of the Dodd-Frank Act and the Department of Labor’s controversial fiduciary rule. An executive order outlines seven core principles for regulation of the financial system: promoting independent consumer choices, preventing bailouts, fostering economic growth, promoting international competitiveness, advancing U.S. interests in international negotiations, tailoring regulations and ensuring regulatory accountability.

It directs the treasury secretary to meet with the heads of the member agencies of the Financial Stability Oversight Council to conduct a thorough review of how existing regulations and policies support or inhibit these core principles, with a report on the findings due to the president in 120 days.

A separate memorandum targets the fiduciary rule, which expanded the definition of “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code. The memo calls for the secretary of labor to review thoroughly the rule to examine its effect on Americans’ ability to access financial advice.

The rule is scheduled to take effect in April, but the acting secretary said DOL “will now consider its legal options to delay the applicability date as we comply with the president’s memorandum.” ABA has strongly advocated for changes to the fiduciary rule, as well as a longer implementation period to give banks of all sizes time to comply.

ABA President and CEO Rob Nichols welcomed Trump’s action to bring much-needed regulatory relief for banks, helping them to better serve their customers and communities. Nichols said:
We appreciate the administration’s support for pro-growth policies so banks can go even further in helping their communities and our economy thrive. A sensible and careful review of Dodd-Frank and other financial regulations can and should strengthen those goals while unleashing the power of the banking industry — from small towns and communities to our nation’s financial centers — to fuel the increase in economic prosperity that we all seek.

Read the Dodd-Frank order.
Read the fiduciary rule memorandum.

Fed, OCC Release 2017 Stress Test Scenarios

The Federal Reserve has released the three economic and financial market scenarios that it will use in the next round of the Comprehensive Capital Analysis and Review process for 34 of the nation’s largest financial institutions, including one participating in CCAR for the first time. This year, pursuant to a rule finalized last week, 21 of these firms with less complex operations will only be subject to the quantitative portion of CCAR, relieving them from the qualitative evaluation of their capital planning processes.

The three scenarios — baseline, adverse and severely adverse — include 28 variables such as unemployment, exchange rates, prices and interest rates. Under the baseline scenario, the economy would experience moderate expansion. That would include, among other things, real gross domestic product increasing at about 2.25% a year, unemployment falling to 4.25% by the end of 2018, normalization of Treasury yields and steadily growing housing prices.

Under the severely adverse scenario, the world would plunge into a severe recession. That would include U.S. real GDP declining 6.5% from its pre-recession peak by the second quarter of 2018 and equity prices falling 50% by the end of 2017, unemployment peaking at 10% in 2018 and housing prices plummeting 25% during the scenario period.

Of the 34 participating banks, six with large trading operations will participate in an additional test of reactions to a global market shock, and eight banks will be required to incorporate a counterparty default scenario. Capital plans are due to the Fed by April 5.

The OCC also released stress-test instructions on Friday applicable to banks with more than $10 billion in assets. Using the provided scenarios, banks with $10-50 billion in assets will be required to submit the results of their company-run stress tests to their federal regulator by July 31 and to publish the results between Oct. 15 and 31.

Access the Fed’s instructions.
Access the Fed’s scenarios.
Access the OCC’s instructions and scenarios.

Friday, February 3, 2017

The Week Ahead: Feb. 6 - 10

Wednesday
  • Comments Due FDIC: Consolidated Reports of Condition and Income (PRA)
    Read more.
Thursday
  • Comments Due CFPB: Supplemental Standards of Ethical Conduct for Employees of the Bureau of Consumer Financial Protection
    Read more.
  • Comments Due CFTC: Practice by Former Members and Employees of the Commission (PRA)
    Read more.
Friday
  • Comments Due FDIC: Agency Information Collection Activities: Submission for OMB Review; Comment Request (3064-0018 & -0137) (PRA)
    Read more.
  • Comments Due FDIC: Application Pursuant to Section 19 of the Federal Deposit Insurance Act
    Read more.
  • Comments Due FDIC: Interagency Guidance on Asset Securitization Activities
    Read more.
  • Comments Due FHFA: Proposed Collection; Comment Request (PRA)
    Read more.
  • 10 AM Meeting FFIEC: Appraisal Subcommittee; Notice of Meeting
    Read more.
All times in Eastern Standard Time. See future events on the  Dodd-Frank Calendar.

CFPB Updates Compliance Guide on Remittances

The CFPB issued a fourth edition of its small entity compliance guide on remittance transfers. The new version encompasses updates related to the bureau’s final rule on prepaid accounts.

Download the guide.

Thursday, February 2, 2017

CFPB Issues Compliance Guide on Prepaid Rule

The CFPB has issued a small entity compliance guide for its final rule on prepaid accounts. The rule brings prepaid accounts under Regulation E while also bringing certain credit-like features of some prepaid accounts under Regulation Z. The rule takes effect on Oct. 1, 2017.

The guide covers definitions of various prepaid accounts, exclusions in the rule, entities subject to the rule, required disclosures at various points, change-in-terms notices, periodic statements and alternatives, error resolution, limitations on liability, receipts at electronic terminals, access devices, compulsory use, account agreements, overdraft credit features, remittances and record retention, among other topics.

Download the compliance guide.

Mnuchin, McMahon, Sessions Nominations Advance

The Senate Finance Committee has voted to advance Steven Mnuchin’s nomination as secretary of the treasury. The move came as Democrats boycotted the vote, with all Republicans voting in favor of Mnuchin.

ABA welcomed the news. ABA President and CEO Rob Nichols said,
The Treasury Secretary has a critical role in promoting the overall strength of the economy and examining regulatory programs to ensure they do their part to support economic growth. Mr. Mnuchin has outlined an agenda to address regulatory issues so banks can make more loans and help fuel our nation’s economic growth. We look forward to working with him and the new administration on policies that will reinforce financial recovery and economic progress.

In a bipartisan 18-1 vote, the Senate Small Business Committee on Tuesday voted to confirm Linda McMahon as administrator of the Small Business Administration. The Senate Judiciary Committee also approved Sen. Jeff Sessions’ nomination as attorney general by a party-line vote yesterday. All three nominees must now be approved by majority votes in the full Senate.