FDIC

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.

Agencies Issue Corrections to Standardized Approach for Counterparty Credit Risk; Final Rule

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On September 17, the OCC along with the Board of Governors of the Federal Reserve System and the FDIC published a final rule that makes technical corrections to certain provisions of the capital rule related to the standardized approach for counterparty credit risk (SA-CCR), which is used for calculating the exposure amount of derivative contracts. Final Rule.

Regulatory Agencies Finalize Changes to Covered Fund Provisions of the Volcker Rule

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On July 31, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), the U.S. CFTC, the Federal Deposit Insurance Corporation (FDIC), and the U.S. Securities and Exchange Commission (SEC) published a final rule amending the regulations that implement Section 13 of the Bank Holding Company Act (the “BHC Act”), commonly known as the Volcker Rule. The final rule, which goes into effect on October 1, is intended to improve and streamline the covered fund provisions of Section 13 of the BHC Act. The final rule aims to accomplish this by, among other things, permitting the following activities: qualifying foreign excluded funds; revising the exclusions from the definition of “covered fund” for foreign public funds, loan securitizations, public welfare investments, and small business investment companies; creating new exclusions from the definition of covered fund for credit funds, qualifying venture capital funds, family wealth management vehicles, and customer facilitation vehicles; modifying the definition of “ownership interest”; and providing that certain investments made in parallel with a covered fund, as well as certain restricted profit interests held by an employee or director, need not be included in a banking entity’s calculation of its ownership interest in the covered fund. OCC Bulletin. Federal Register Final Rule.

FDIC Issues Proposed Rule to Address Deposit Insurance Assessment Effect on Participation in the PPP, PPP Lending Facility and MMF Liquidity Facility

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On May 12, the FDIC issued a proposed rule to mitigate the deposit insurance assessment effects of participating in the PPP and the PPP and Money Market Fund Liquidity Facilities. The proposed rule would remove certain FDIC assessment impacts on banks as a result of their participation in the PPP and the lending facilities. Release.

Federal Agencies Make Joint Release Announcing Actions to Support Lending to Households and Businesses

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On March 27, the Federal Reserve Board, the FDIC and the OCC announced two actions to support continued lending by banking organizations to households and businesses. The first action is early adoption of the standardized approach for measuring counterparty credit risks finalized in November 2019, with a new effective date of April 1, 2020. The second action is an interim final rule that allows banking organizations that would otherwise be required to adopt the new current expected credit loss accounting standard this year, to have the option of delaying adopting the new standard for up to two years. Federal Reserve Release. FDIC Release. OCC Release.

Joint Agency Statement Issued Regarding Residential Mortgage Loan Modifications and Troubled Debt Restructuring

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On March 22, the Board of Governors of the FRB, FDIC, the National Credit Union Administration, OCC, CFPB and the State Banking Regulators issued an interagency statement encouraging financial institution cooperation with borrowers during the COVID-19 pandemic. The statement provided guidance on the troubled debt restructurings and related accounting requirements. Release.

Federal Deposit Insurance Corporation Releases Economic Scenarios for 2020 Stress Testing

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On February 14, the Federal Deposit Insurance Corporation (FDIC) released the hypothetical economic scenarios for use in the upcoming stress tests for covered institutions with total consolidated assets of more than $250 billion. Required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the economic stress test scenarios include 28 variables – such as gross domestic product, the unemployment rate, stock market prices, and interest rates – covering domestic and international activity designed to assess the strength and resilience of financial institutions. Release.

Federal Bank Regulatory Agencies Issue Final Rule on Treatment of High Volatility Commercial Real Estate

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On November 19, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board (FRB) implemented a final rule addressing high volatility commercial real estate (HVCRE).  The rule aims to clarify the definition of HVCRE exposure and the treatment of credit facilities financing one- to four-family residential properties and land development. Banking institutions will have the option to maintain their current capital treatment for acquisition, development or construction loans originated between January 1, 2015 and the effective date of the final rule on April 1, 2020. FDIC Release. FRB Release. OCC Release.

Agencies Finalize Changes to Supplementary Leverage Ratio as Required by EGRRCPA

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On November 19, the OCC, the FDIC and the FRB finalized changes that affect a capital requirement for banking organizations performing custodial activities under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The EGRRCPA allows banking organizations performing custodial activities to exclude qualifying deposits at certain central banks from their supplementary leverage ratio, with the primary aim to fortify financial stability within the banking system. The rule will be effective on April 1, 2020. FDIC Release. FRB Release. OCC Release.

 

 

Federal Bank Regulatory Agencies Finalize Rule to Update Calculation of Counterparty Credit Risk for Derivative Contracts

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On November 19, the OCC, the FDIC and the FRB published a final rule that implements a “standardized approach for measuring counterparty credit risk,” that banking organizations must follow with respect to derivative contracts. This methodology is intended to better reflect the current derivatives market. The final rule will be effective on April 1, 2020. FDIC Release. FRB Release. OCC Release.