Final Guidance for Medium-Sized Firms on Dodd-Frank Stress Tests

On March 5, the Fed, the FDIC, and the OCC issued final guidance which describes supervisory expectations for stress tests to be conducted by financial companies with between $10 and $50 billion in total assets.  The guidance confirms that these companies are not subject to the Fed’s capital plan rule, the Fed’s annual Comprehensive Capital Analysis and Review, Dodd-Frank Act supervisory stress tests, or related data collections, which apply to bank holding companies with assets of at least $50 billion.  Joint Release.  Final Supervisory Guidance.

Volcker Rule Exclusion for TruPS CDOs

On January 14, the Fed, CFTC, FDIC, OCC and SEC issued an interim final rule which will permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) if the following conditions are met: (i) the TruPS CDO was established and the interest was issued before May 19, 2010; (ii) the banking entity reasonably believes that the offering proceeds received by the TruPS CDO were invested primarily in Qualifying TruPS Collateral (as defined by the rule); and (iii) the banking entity’s interest in the TruPS CDO was acquired on or before December 10, 2013, the date the agencies issued final rules implementing section 619 of the Dodd-Frank Act (the Volcker Rule).  The agencies also released a non-exclusive list of issuers which meet the requirements of the interim final rule.  Comments must be submitted within 30 days of publication in the Federal Register.  Joint ReleaseJoint Interim Final RuleList of Excluded CDO Issuers.

J.P. Morgan Brings $1 Billion Claim Against FDIC for WaMu RMBS Indemnification

On December 17, J.P. Morgan Chase Bank filed a complaint in the United States District Court for the District of Columbia against the Federal Deposit Insurance Corporation (FDIC) seeking $1 billion in indemnification for settlements made by J.P. Morgan on behalf of Washington Mutual in RMBS actions.  J.P. Morgan alleges that the FDIC is contractually obligated to indemnify J.P. Morgan for certain claims against WaMu in consideration for J.P. Morgan’s purchase of WaMu out of FDIC receivership and assumption of its liabilities.  J.P. Morgan seeks indemnification for settlements of twenty different RMBS cases; the complaint does not identify the amounts of the individual settlements.  Complaint.

Three Agencies Seek Comment on Joint Supplemental Guidance on Income Tax Allocation Agreements

On December 19, Fed, FDIC and OCC issued a statement seeking comment on supplemental guidance on income tax allocation agreements involving holding companies and insured depository institutions.  The proposed guidance will clarify ownership of any tax refundsReleaseProposed Addendum.

Three Agencies Issue FAQ Regarding CDOs Backed by Trust Preferred Securities Under the Volcker Rule

On December 19, Fed, FDIC and OCC issued Frequently Asked Questions to clarify rules applicable to investments in covered funds and whether collateralized debt obligations backed by trust preferred securities (TruPS CDOs) could be determined to be covered funds under the Volcker Rule.  The FAQs clarify that banking entities that have holdings in TruPS CDOs may use the conformance period to determine if they can be brought into conformance by July 21, 2015ReleaseFAQ.

Three Agencies Release Annual CRA Asset-Size Threshold Adjustments for Small and Intermediate Small Institutions

On December 19, the Fed, FDIC and OCC announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank and intermediate small savings association under the Community Reinvestment ActRelease.

FDIC and CFPB Settle with American Express Centurion Bank Charges of Unfair and Deceptive Practices

On December 24, the FDIC and CFPB announced a settlement with American Express Centurion Bank concerning charges of unfair and deceptive marketing practices related to credit card “add-on products” in violation of Section 5 of the Federal Trade Commission (FTC) Act.  Together, the FDIC and CFPB will require restitution of no less than $40.9 million.  The OCC and CFPB also announced actions against other American Express affiliated institutions for the same unfair and deceptive practices.  ReleaseOrder.

Agencies are Reviewing Treatment of CDOs Backed by Trust Preferred Securities Under the Volcker Rule

On December 27, the Fed, FDIC, OCC and the SEC stated that they are in the process of reviewing whether it would be appropriate to subject collateralized debt obligations backed by trust preferred securities to the Volcker rule.  The agencies intend to address the matter no later than January 15, 2014Statement.