Notice of Proposed Rulemaking

CFPB Proposes New Category of Qualified Mortgages

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On August 18, the Consumer Financial Protection Bureau (CFPB) issued a Notice of Proposed Rulemaking (NPRM) to create a new category of qualified mortgage (QM) loans exempt from Regulation Z’s ability-to-repay requirements. The new “Seasoned QM” category would include certain fixed rate, first lien loans that the creditor has held in portfolio for a seasoning period of 36 months and that meet certain performance requirements at the end of such period. The proposal would also permit loans in temporary forbearance as a result of disaster or pandemic-related emergencies to qualify for Seasoned QM status if certain conditions are met. Comments on the proposal will be due 30 days after publication in the Federal Register. Release. NPRM.

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

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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.

CFTC No-Action on Aggregation Requirements for Futures and Swaps

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On July 24, the CFTC announced temporary no-action relief to facilitate its coordination of the May 30 Notice of Proposed Rulemaking on aggregation with the implementation of positions limits under Part 151 of the Commodity Exchange Act. The relief provides two methods for compliance: (i) as if the positions limits rule were amended to include the provisions proposed in the aggregation notice and (ii) in conformity with the disaggregation criteria specified in the no-action relief. The relief is time-limited to no later than December 31. CFTC Release.

Fed Notice of Proposed Rulemaking on Retail Foreign Exchange Transactions

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On July 28, pursuant to Section 742(c)(2) of the Dodd-Frank Act, the Fed issued a notice of proposed rulemaking and request for comment on a regulation to permit banking organizations under its supervision to engage in off-exchange transactions in foreign currency with retail customers. The proposed regulation sets forth certain disclosure, recordkeeping, and business conduct requirements, with which banking organizations must comply in order to conduct these transactions. Comments on the NPR must be submitted by October 11. Fed Release. Fed NPR.

Fed Proposed Rule on Supervision of Financial Market Utilities

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On March 30, the Fed issued a notice of proposed rulemaking implementing Sections 805 and 806 of the Dodd-Frank Act. The proposed rule establishes risk-management standards for Financial Markets Utilities (FMUs) designated as systemically important by the Financial Stability Oversight Council. The rule also sets forth advanced notice requirements for a designated FMU seeking to change rules, procedures, or operations that could materially affect the risks presented by the designated FMU. Comments must be submitted within 45 days after publication in the Federal Register. Fed Release. Proposed Rule.

FDIC Proposed Rule for Orderly Liquidation Authority

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On March 15, the FDIC approved a Notice of Proposed Rulemaking to clarify application of the orderly liquidation authority mandated by the Dodd-Frank Act. The NPR: (i) builds on the interim rule of January 18, which clarified certain issues under the OLA; (ii) establishes a framework for the priority payment of creditors and for the procedures for filing a claim with a receiver and, if dissatisfied, pursuing a claim in court; (iii) clarifies how compensation will be recouped from senior executives and directors who are substantially responsible for the failure of the firm; and (iv) clarifies the meaning of “financial company”. Comments must be submitted within 60 days after publication in the Federal Register. FDIC Release. FDIC Proposed Rule.

FDIC Interim Final Rule on Orderly Liquidation Authority

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On January 18, the FDIC approved an interim final rule clarifying how it will treat certain creditor claims under the new orderly liquidation authority established under the Dodd-Frank Act. This interim final rule differs from the related Notice of Proposed Rulemaking by clarifying the standard for collateral valuations and the treatment of contingent claims. FDIC Release. FDIC Rule.

FDIC Safe Harbor for Securitizations

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On May 11, the FDIC approved a Notice of Proposed Rulemaking proposing a rule which would govern the treatment by the FDIC, as conservator or receiver of a failed bank, of financial assets previously transferred by the bank in a securitization. The proposed rule would create a safe harbor to confirm legal isolation of these financial assets if certain conditions are satisfied. Orrick Client Alert. Orrick Guide to NPR. FDIC Release. NPR.