On November 19, the Fed, the OCC and the FDIC released an estimation tool to help community banks understand the potential effects on their capital ratios of the regulatory capital reforms imposed by Basel III and the Dodd-Frank Act. Joint Release. Estimation Tool.
Fed
Fed Policy State on Stress Testing
On November 7, the Fed issued a final policy statement on the processes that it will use to develop scenarios for future capital planning and stress testing exercises. The policy statement is effective on January 1, 2014. Fed Release. Fed Policy Statement.
Fed Announcement of Supervisory Scenarios for Capital Planning and Stress Testing
On November 1, the Fed issued supervisory scenarios to be used for the 2014 capital planning and stress testing program, which includes the Comprehensive Capital Analysis and Review of 30 bank holding companies with $50 billion or more of total consolidated assets. Fed Release. Fed Comprehensive Capital Analysis.
OCC and FDIC Propose New Rule on Liquidity Risk Management
On October 30, the OCC and FDIC proposed substantively the same liquidity rule as the proposal approved by the Fed on October 24. That proposal developed by the three agencies applies to: (i) banking organizations with $250 billion consolidated assets; (ii) banking organizations with $10 billion in on-balance sheet foreign exposure; (iii) systemically important, non-bank financial institutions that do not have substantial insurance subsidiaries or substantial insurance operations; and (iv) bank and savings association subsidiaries thereof that have total consolidated assets of $10 billion (covered institutions). The proposed rule does not apply to community banks.
Covered institutions would be required to maintain a specified level of high-quality liquid assets such as central bank reserves, government and Government Sponsored Enterprise securities and corporate debt securities that can be converted easily into cash. Under the proposal, a covered institution would be required to hold such high-quality liquid assets on each business day in an amount equal to or greater than its projected cash outflows less its projected cash inflows over a 30-day period. The proposed rule is consistent with the Basel Committee’s LCR standard, but is more stringent in terms of the range of assets that will qualify and the assumed rate of outflows of certain types of funding. Release. Proposed Rule.
Fed Proposed Rule on Liquidity Positions
On October 24, the Fed issued a proposed rule which would create a standardized minimum liquidity requirement for large and internationally active banking organizations and systemically important non-bank financial companies designed by FSOC. Comments on the proposed rule must be submitted by January 32, 2014. Fed Release. Proposed Rule.
Joint Release on QM Fair Lending Risks
On October 22, the Fed, CFPB, FDIC, NCUA and OCC issued a joint statement to address industry questions on fair lending risks associated with offering only qualified mortgages. Joint Release. Joint Statement.
Joint Release on Borrowers Affected by Government Shutdown
On October 9, the Fed, CFPB, FDIC, NCUA and OCC issued a release encouraging financial institutions to work with borrowers affected by the government shutdown to provide workout arrangements. Joint Release.
JPMorgan Chase to Pay Penalties for Oversight Deficiencies
On September 19, JPMorgan Chase entered into a consent Order of Assessment of a Civil Money Penalty with the Fed, the OCC, the SEC and the Financial Conduct Authority of the United Kingdom. The penalties issued by the agencies total approximately $920 million. The fine resulted from the deficiencies identified by the regulators in JPMorgan Chase’s risk management oversight, model validation, internal financial reporting and internal audit, and failure to elevate certain issues to the attention of the board of directors. In a separate action, the OCC and CFPB ordered JPMorgan Chase to refund $309 million for illegal credit card practices and to pay $80 million in civil penalties. Fed Release. CFPB Release. Fed Consent Order. OCC Consent Order.
Agency Template for Tailored Resolution Plans
On September 3, the FDIC and the Fed released an optional model template for tailored resolution plans required to be submitted by the Dodd-Frank Act. Joint Release. Model Template.
Joint Proposal on Risk Retention
On August 28, the FDIC, Fed, FHFA, OCC, SEC and HUD issued a notice of revised proposed rulemaking relating to required risk retention by sponsors in securitization transactions. The proposed rule would define “qualified residential mortgage” (QRM) in the same way that the CFPB has defined qualified mortgages (QMs) and would exempt securitizations of QRMs from the risk retention requirements. Comments on the revised proposed rule must be submitted by October 30. Joint Release. Proposed Rule.