Federal Deposit Insurance Corporation (“FDIC”)

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.

Agencies Extend Comment Period for Advance Notice of Proposed Rulemaking on Enhanced Cyber Risk Management Standards

 

On January 13, 2017, the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation changed, from January 17, 2017 to February 17, 2017, the deadline for comments “for the advance notice of proposed rulemaking on enhanced cyber risk management standards for large and interconnected entities under their supervision and those entities’ service providers.” Cyber standards are being contemplated in five areas: “cyber risk governance; cyber risk management; internal dependency management; external dependency management; and incident response, cyber resilience, and situational awareness.” Federal Reserve Release. OCC Release. FDIC Release.

OCC Publishes Final Rule on Expanding Examination Cycle Eligibility

 

On January 6, 2017, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation published a final rule amending the regulations governing eligibility for the 18‑month on‑site examination cycle, which broadened the eligibility requirements to include certain qualifying banks with less than $1 billion in total assets. The final rule adopted, without change, each of the provisions of the interim final rule published on February 29, 2016. Release.

Annual Asset-Size Threshold Adjustments for Small and Intermediate Small Banks

 

On December 29, 2016, the Office of the Comptroller of the Currency, the Federal Reserve System and the Federal Deposit Insurance Corporation amended their Community Reinvestment Act (CRA) regulations to adjust the asset-size thresholds used to define “small bank” or “small savings association” and “intermediate small bank” or “intermediate small savings association.” The adjustment is based on an annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers. As a result of the 0.84 percent increase for the period ending in November 2016, “small bank” or “small savings association” means “an institution that, as of December 31, 2016, of either of the prior two calendar years, had assets of less than $1.226 billion,” and “intermediate small bank” or “intermediate small savings association” means “a small institution with assets of at least $307 million as of December 31 of both of the prior two calendar years and less than $1.226 billion as of December 31, 2016, of either of the prior two calendar years.” Press Release. Rule.

The FDIC Rescinds De Novo Time Period Extension

On April 6, 2016, the Federal Deposit Insurance Corporation (the “FDIC”) rescinded Financial Institution Letter (FIL) 50-2009, Enhanced Supervisory Procedures for Newly Insured FDIC-Supervised Depository Institutions.  The Financial Institution Letter extended the de novo period from three to seven years for newly organized, state nonmember institutions for examinations, capital maintenance and other requirements.  Release.

Final Rule Issued to Establish Minimum Margin Requirements for Non-Cleared Swaps and Non-Cleared Security-Based Swaps

On December 3, 2015, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Farm Credit Administration, and the Federal Housing Finance Agency (collectively, “Agencies”) issued a final rule establishing capital requirements, as well as minimum requirements for the exchange of initial and variation margin, for covered swap entities with respect to non-cleared swaps and non-cleared security-based swaps. The purpose of the requirements is to offset the greater risk to such entities, and thus, the amount of margin required will vary based on relative risk. The final rule implements sections 731 and 764 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 and will take effect on April 1, 2016 – however, the minimum margin requirements will not phase-in until September 1, 2016. All swap counterparties must comply with the variation margin requirements by March 1, 2017, while swap counterparties with more than $3 trillion in outstanding swap activity must comply with both the initial and variation margin requirements by September 1, 2016. Press Release. Final Rule.

FDIC Updates Brokered Deposit FAQs, Seeks Comment on Revised Document

On November 13, 2015, the Federal Deposit Insurance Corporation updated its Frequently Asked Questions regarding the identifying, accepting and reporting of brokered deposits.  This resource can be used to help ensure compliance with Section 29 of the Federal Deposit Insurance Act.  Release.

5th Circuit Revives FDIC’s Suit Against Goldman, Deutsche Bank, and Royal Bank of Scotland

On August 10, 2015, the Fifth Circuit revived a securities fraud suit brought by the Federal Deposit Insurance Corporation (“FDIC”) as receiver for Guaranty Bank against Goldman Sachs & Co., Deutsche Bank AG, and the Royal Bank of Scotland PLC. The FDIC brought claims under the federal Securities Act and the Texas Securities Act, alleging that the defendants made false and misleading statements in selling and underwriting $2.1 billion in RMBS to Guaranty Bank. The suit was filed within the limitations period in the FDIC Extender Statute, 12 U.S.C. § 1821(d)(14), but outside of the limitations period in the Texas Securities Act. The district court held that state law statutes of repose are not pre-empted by the FDIC Extender Statute, and it therefore dismissed the case as untimely. The Fifth Circuit reversed and remanded. The appellate court held that the FDIC Extender Statute preempts all state limitations periods, whether characterized as statutes of limitations or as statutes of repose. The court distinguished the Supreme Court’s decision in CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014), which held that a similar extender provision in CERCLA did not preempt state statutes of repose. The Fifth Circuit characterized the similarities between the two provisions as “superficial,” and cited legislative history as supporting Congress’s intent to preempt state statutes of repose.  Opinion.