Industry Developments

FHFA Announces $5.5 Billion Settlement With Royal Bank of Scotland

 

On July 12, 2017, the Federal Housing Finance Agency (“FHFA“), as conservator of Fannie Mae and Freddie Mac, announced it had reached a settlement with Royal Bank of Scotland Group plc, related companies and specifically named individuals (collectively, “RBS“) for $5.5 billion. The settlement resolves all claims in the lawsuit FHFA v. The Royal Bank of Scotland Group plc et al., Case No. 3:11-cv-1383, in the United States District Court for the District of Connecticut. FHFA alleged violations of federal and state securities laws in connection with private-label residential mortgage-backed securities (PLS) trusts purchased by Fannie Mae and Freddie Mac between 2005 and 2007. Under the terms of the agreement, Royal Bank of Scotland will pay approximately $4.525 billion to Freddie Mac and approximately $975 million to Fannie Mae and certain claims against RBS related to the securities involved will be released. Release. Settlement Agreement.

Rating Agency Developments

 

On July 10, 2017, DBRS issued a report entitled Rating Canadian Split Share Companies and Trusts. Report.

On July 7, 2017, DBRS issued a report entitled Derivatives Criteria for Canadian Structured Finance. Report.

On July 7, 2017, DBRS issued a report entitled Legal Criteria for Canadian Structured Finance. Report.

On July 7, 2017, DBRS issued a report entitled Legal Criteria for U.S. Structured Finance. Report.

On July 7, 2017, DBRS issued a report entitled Rating Canadian ABCP and Related Enhancement Features. Report.

On July 7, 2017, Fitch issued a report entitled CLOs and Corporate CDOs Rating Criteria. Report.

On July 7, 2017, Fitch issued a report entitled French Residential Loans EDF Engie Bespoke Rating Criteria. Report.

On July 7, 2017, Fitch issued a report entitled U.S. State Housing Finance Agencies: Mortgage Insurance or Guarantee Fund Program Rating Criteria. Report.

On July 6, 2017, Fitch issued a report entitled Third-Party Partial Credit Guarantees Rating Criteria. Report.

On July 6, 2017, Fitch issued a report entitled U.S. Public Finance Solid Waste Revenue Bond Rating Criteria. Report.

Federal Reserve and FDIC Post Resolution Plans for Eight Major Financial Firms

 

On July 5, 2017, the Federal Reserve Board (the “Board“) and the Federal Deposit Insurance Corporation (“FDIC“) posted the public portions of the annual resolution plans, commonly known as living wills, for eight of the largest financial firms in the US. Although the eight firms this—is Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup Inc., The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation and Wells Fargo & Company—were required to submit their plans on July 1, 2017, the Board and FDIC also announced that they were extending the deadline for American International Group, Inc. (AIG) and Prudential Financial, Inc. to submit their next resolution plans from December 17, 2017 to December 18, 2017. Report. Press Release.

SEC to Allow Issuers to File Draft Initial Registration Statements on a Nonpublic Basis

 

On June 29, 2017, the Securities and Exchange Commission (“SEC“) announced that it would begin to allow issuers to file draft initial registration statements under the Securities Act of 1933 (the “Securities Act“) on a nonpublic basis. Any company, foreign or domestic, will be allowed to submit registration statements for nonpublic review, similar to the benefit granted to emerging growth companies under the Jumpstart Our Business Startups Act (JOBS) as long as it confirms in a cover letter that it will publicly file its registration statement at least 15 days prior to any road show or, in the absence thereof, at least 15 days prior to the requested effective date of its registration statement. The SEC also announced that it would begin to accept draft registration statements submitted prior to the end of the 12th month following the effective date of an issuer’s initial Securities Act registration statement, or its registration statement under Section 12(b) of the Securities and Exchange Act of 1934, for nonpublic review so long as the issuer confirms in a cover letter that it will publicly file its registration statement and nonpublic draft submission on EDGAR at least 48 hours prior to any requested effective time and date. Report. Press Release.

Federal Reserve Releases Results of CCAR

 

On June 28, 2017, the Federal Reserve Board announced that it has completed its annual review of the capital planning processes and capital adequacy of the largest U.S.-based bank holding companies and did not object to the capital plans of all 34 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). However, the Federal Reserve Board is requiring one firm to address weaknesses in its capital planning process and resubmit its capital plan by the end of 2017. Report. Press Release.

Federal Reserve Board Releases Results of Supervisory Bank Stress Tests

 

On June 22, 2017, the Federal Reserve Board released the results of its annual supervisory stress tests conducted on 34 bank holding companies. According to the results, the nation’s largest bank holding companies have strong capital levels and retain their ability to lend to households and businesses during a severe recession. The supervisory stress tests are carried out pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and is one component of the Federal Reserve’s analysis during the Comprehensive Capital Analysis and Review (CCAR), which is an annual exercise to evaluate the capital planning processes and capital adequacy of large bank holding companies. Report. Press Release.

CFTC Unanimously Approves Revisions to Delegated Authorities and Technical Amendments

 

On June 20, 2017, the U.S. Commodity Futures Trading Commission (“Commission“) unanimously approved a Final Rule on Revisions to Commission Delegated Authority Provisions and Technical Amendments (“Final Rule“). As a result of the recent Commission restructuring, the Final Rule amends certain Commission organizational and procedural provisions to facilitate the movement of the Division of Market Oversight Surveillance Branch to the Division of Enforcement. Specifically, the Final Rule establishes new, and amends certain existing, delegations of authority to Commission staff and makes a limited number of conforming technical corrections to certain Commission regulations. The Final Rule is effective upon publication in the Federal Register. Release.

Rating Agency Developments

 

On June 21, 2017, Moody’s published its ratings methodology assessing rated issuers in the pharmaceutical industry. Report

On June 21, 2017, Moody’s published its ratings methodology assessing rated issuers in the automobile manufacturer industry. Report.

On June 21, 2017, Moody’s issued a report entitled Global Mass Transit Enterprises Methodology. Report.

On June 20, 2017, Fitch issued a report entitled Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria. Report.

On June 15, 2017, Moody’s published its ratings methodology assessing rated issuers in the media industry. Report.

Treasury Department Report: Decreasing Regulatory Burdens, Increasing Regulatory Accountability and Fostering Economic Growth

 

On June 12, 2017, the U.S. Treasury Department released its report to the President, “A Financial System That Creates Economic Opportunities – Banks and Credit Unions,” authored by Steven Mnuchin, Secretary, and Craig Phillips, Counselor to the Secretary. The report sets forth the Treasury Department’s analysis and recommendations on a wide range of bank and credit union regulatory reform proposals, including the following with regard to certain lending and financing matters, which are set forth in a section of the report titled “Providing Credit to Fund Consumer and Commercial Needs to Drive Economic Growth.” Read the full article here.

Rating Agency Developments

 

On June 14, 2017, Moody’s released a report entitled Global Passenger Railway Companies. Report.

On June 14, 2017, Moody’s released a report entitled Global Manufacturing Companies. Report.

On June 14, 2017, Moody’s released a report entitled Medical Product and Device Industry. Report.

On June 13, 2017, Fitch issued a report entitled Fitch Updates Future Flow Securitisation Criteria; No Rating Impact. Release.

On June 13, 2017, Fitch issued a report entitled Fitch Revises Distressed Debt Exchange Rating Criteria. Release.

On June 13, 2017, Moody’s released a report entitled Regional and Local Governments. Report.

On June 13, 2017, Moody’s released a report entitled Financial Statement Adjustments in the Analysis of Financial Institutions. Report.

On June 9, 2017, Fitch issued a report entitled Fitch Updates RMBS Lender’s Mortgage Insurance Rating Criteria; No Rating Impact. Release.

On June 8, 2017, Moody’s released a report entitled Moody’s Approach to Rating Structured Finance Interest-Only (IO) Securities. Report.

On June 8, 2017, Fitch issued a report entitled Fitch Releases Updated Thermal Power Project Rating Criteria. Release.