FDIC

Agencies Publish Rule Excluding Community Banks from Volcker Rule

 

On July 9, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, the Commodity Futures Trading Commission (CFTC), the Office of the Comptroller of the Currency (OCC) and the Securities and Exchange Commission (SEC) adopted a final rule that excludes community banks from the Volcker Rule, which restricts banking entities from engaging in proprietary trading and from owning, sponsoring or having certain relationships with hedge funds or private equity funds. Under the final rule that was adopted, community banks with $10 billion or less in total consolidated assets, and which have total trading assets and liabilities that are 5% or less than such community bank’s total consolidated assets, will be excluded from the Volcker Rule.

 

FDIC to Centralize Key Aspects of Its Large, Complex Financial Institution Activities

 

On July 8, the Federal Deposit Insurance Corporation (FDIC) announced its intentions to centralize the supervision and resolution activities for the largest banks and complex financial institutions in a new division to be named the Division of Complex Institution Supervision and Resolution (CISR). The new division will be responsible for the Agency’s supervision and monitoring of banks with assets greater than $100 billion for which the FDIC is not the primary federal regulator. On the resolution side, the new division will be responsible for planning for and executing the FDIC’s resolution mandates for these institutions, as well as for other financial companies if called upon to protect U.S. financial stability. Release.

OCC, Federal Reserve and FDIC Propose Revised Capital and Liquidity Framework for Foreign Banking Organizations

 

On May 24, the OCC, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) published a notice of proposed rulemaking that would establish a revised framework for determining capital and liquidity requirements for large foreign banking organizations. Comments on the proposal must be submitted by June 21. Notice of Proposed Rulemaking.

SDNY Dismisses FDIC Claims for Lack of Standing Again

 

The Federal Deposit Insurance Corporation (FDIC) as receiver for Guaranty Bank brought claims against The Bank of New York Mellon, U.S. National Bank Association, and Citibank, N.A. alleging breach of contract, violation of the Streit Act, and violation of the Trust Indenture Act for allegedly failing to carry out their duties as trustees. Judge Carter dismissed the same claims in September of 2016 for lack of subject matter jurisdiction, holding that the FDIC lacked standing to sue because the FDIC had sold its ownership of the certificates at issue in 2010 to Wilmington Trust Co., as owner trustee, with Citibank acting in as indenture trustee. The Court had held that after that sale, the plaintiff’s claims had travelled with the securities to the resecuritized trust and thus the plaintiff no longer had standing to bring the claims it asserted. The Court had granted leave to amend the complaint to permit FDIC to resolve the standing issues by seeking ratification of the claims by the trust pursuant to FRCP 17(a)(3). After the 2016 dismissal, Wilmington Trust ratified the claims, but Citibank refused to ratify the claims without indemnity from FDIC. As a result, the standing issues remained unresolved, and the court dismissed the claims once again for lack of subject matter jurisdiction without prejudice. Decision.

FDIC-Insured Institutions Report Net Income of $59.1 Billion in Fourth Quarter 2018

 

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $59.1 billion in the fourth quarter of 2018, up $33.8 billion (133.4 percent) from a year ago. The improvement in net income was led by higher net operating revenue and lower income tax expenses. Financial results for the fourth quarter of 2018 are included in the FDIC’s latest Quarterly Banking Profile released February 21. Release.

FDIC Extends Comment Period Related to Its Request for Information on the Deposit Insurance Application Process

 

On February 12, the Federal Deposit Insurance Corporation (“FDIC“) extended the comment period related to the Request for Information (“RFI“) on the Deposit Insurance Application Process until March 31. The RFI is part of the FDIC’s ongoing efforts to enhance transparency, efficiency, and accountability. Release.

Agencies Approve Amendments to Swap Margin Rule

 

On September 21, the Farm Credit Administration, the FDIC, the Federal Housing Finance Agency, the Federal Reserve and the OCC approved final amendments to swap margin requirements to conform with recent rule changes that impose new restrictions on certain qualified financial contracts of systemically important banking organizations. These amendments established minimum margin requirements for swaps and security-based swaps that are not cleared through a clearinghouse. The margin requirements are designed to help ensure the safety and soundness of swap entities and reduce risks to the stability of the financial system associated with non-cleared swaps activity. Rule.

Agencies Issue Interim Final Rules Expanding Examination Cycles for Qualifying Small Banks and U.S. Branches and Agencies of Foreign Banks

 

On August 23, 2018, the Board of Governors of the Federal Reserve System (“Federal Reserve Board“), the Federal Deposit Insurance Corporation (“FDIC“) and the Office of the Comptroller of the Currency (“OCC“) “issued interim final rules to expand the number of insured depository institutions and U.S. branches and agencies of foreign banks eligible for an 18-month on-site examination cycle.” Once the interim final rules are published in the Federal Register, there will be 60 days available to provide comments. Federal Reserve Board Press Release. FDIC Press Release. OCC Press Release.

Agencies Issue Final Rulemaking to Shorten Settlement Cycle

 

On June 1, 2018, the Office of the Comptroller of the Currency (the “OCC“) and the Federal Deposit Insurance Corporation (the “FDIC“) issued a final rule to shorten the standard settlement cycle for securities purchased or sold by OCC-supervised and FDIC-supervised institutions from T+3 to T+2. This change is consistent with the industry’s transition to T+2 – banks are already complying with a two business day settlement standard. The effective date of the final rule is October 1, 2018. FDIC Press Release. OCC Press Release (dated June 7). Rule.