OCC

OCC, Board of the Federal Reserve and FDIC Publish Final Rule Implementing Net Stable Funding Ratio

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On February 24, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) published a final rule in the Federal Register implementing the net stable funding ratio. The rule implements a minimum stable funding requirement for covered institutions, with the intention of reducing the likelihood that disruptions to a covered institution’s regular sources of funding would affect such institution’s liquidity position in a way that could lead to systemic stress. The covered institutions include U.S. depository institution holding companies, depository institutions or U.S. intermediate holding companies of a foreign banking organization with more than $100 billion in total consolidated assets that meet certain asset size and risk factor requirements. Bulletin.

 

OCC Approves Final Rule Regarding Effect of Supervisory Guidance

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On February 16, the OCC approved a final rule that confirms that supervisory guidance, unlike statutes or regulations, does not create binding legal obligations for the public. The final rule reaffirms that the OCC does not take enforcement actions on the basis of non-compliance with supervisory guidance. The proposed rule was published on November 5 and was adopted without material change. The final rule becomes effective on March 15. Bulletin.

OCC Halts Publication of Fair Access Rule

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On January 28, the Office of the Comptroller of the Currency (OCC) announced that it would halt publication of its “fair access” rule, which would have prevented national banks from denying services to any individual customer unless justified by that customer’s documented failure to meet quantitative, impartial risk-based standards established by the bank. The rule, which was finalized by the OCC on January 14 and would have gone into effect on April 1, will be set aside for review by the next confirmed Comptroller of the Currency under the current administration. Release.

OCC, FDIC and CFPB Issue Final Rule on Role of Supervisory Guidance

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On January 19, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) published a final rule regarding the role of supervisory guidance for regulated institutions. The final rule provides that unlike a law or regulation, supervisory guidance does not have the force and effect of law, and that the Agencies will not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. The final rule provides that the proper role of supervisory guidance is to outline supervisory expectations and priorities, or articulate views regarding appropriate practices for a given subject area. FDIC Release. OCC Release. Final Rule.

OCC Issues Final Rule Regarding Regulatory Capital Treatment of Total Loss-Absorbing Capacity Investments

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On January 6, the OCC issued a final rule that applies to Category I and II banking organizations (advanced approaches banks), which include banking organizations and their subsidiary banks that have at least $700 billion in total consolidation assets, or $100 billion or more in total consolidated assets and $75 billion or more in cross-jurisdictional activities. The final rule requires deduction from advanced approaches banks’ regulatory capital for investments in certain unsecured debt instruments issued by bank holding companies subject to the Federal Reserve Board’s total loss-absorbing capacity and long-term debt requirements. Bulletin.

OCC Reports Decline in Mortgage Performance

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On December 16, the Office of the Comptroller of the Currency (OCC) reported that the performance of first-lien mortgages in the federal banking system declined during the third quarter of 2020, which accounts for 27% of all residential mortgage debt outstanding in the United States. The percentage of seriously delinquent mortgages was 5.8% in the third quarter of 2020, compared to 6.8% in the prior quarter and 1.5% a year ago. In the third quarter of 2020, servicers initiated 48.2% more foreclosures than in the previous quarter and completed 14,097 mortgage modifications. Release.

Agencies Announce Threshold for Smaller Loan Exemption from Appraisal Requirements for Higher-Priced Mortgage Loans

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On November 18, the Consumer Financial Protection Bureau (CFPB), the Federal Reserve Board (FRB), and the Office of the Comptroller of the Currency (OCC) (collectively, the “Agencies”) announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2021 will remain at $27,200, as it was in 2020. Release.

OCC Submitted Final Rule Clarifying When Bank is a “True Lender”

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On October 27, the Office of the Comptroller of the Currency (OCC) submitted a final rule for publication to determine when a national bank or federal savings association makes a loan to a third party and is the “true lender.” The rule clarifies that a bank is a “true lender” if, as of the date of origination, the bank (1) is named as the lender in the loan agreement or (2) funds the loan. OCC Bulletin.

Federal Banking Agencies Exempt Premium Finance Lending from BSA/AML Customer Identification Program Requirements

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On October 9, the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration (NCUA), with approval from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), issued a revised order exempting premium finance loans (loans made to facilitate a borrower’s purchase of property and casualty insurance policies) from the customer identification program requirements applicable to a lender’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program. Order.

Banking Regulatory Agencies Finalize Rules on Real Estate Appraisals and Regulatory Treatment of Emergency Capital Facilities

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On September 29, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC), together with the OCC and the Federal Reserve (the “Agencies”), published final rules temporarily deferring real estate appraisal requirements for financial institutions and mitigating the regulatory capital and liquidity effects for banks that participate in certain COVID-related Federal Reserve liquidity facilities. The final rules are identical or substantially similar to interim final rules currently in effect that were issued earlier this year. The final rule on real estate appraisals temporarily allows financial institutions to defer completion of appraisals and evaluations on certain residential and commercial real estate transactions for up to 120 days after closing. The final rule on the Federal Reserve liquidity facilities provides that banking organizations that participate in the Federal Reserve’s Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility are permitted to exclude exposures acquired through their participation in such programs when determining their compliance with the Agencies’ regulatory capital rule and/or liquidity coverage ratio rule. OCC Release. Federal Reserve Release. FDIC Release.