Office of the Comptroller of the Currency

Agencies Publish Rule Excluding Community Banks from Volcker Rule

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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.

 

OCC Extends Dodd-Frank Act Stress Test Requirements Through November 25

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The Office of the Comptroller of the Currency (OCC) announced that the deadline to comply with Dodd-Frank Act Stress Test (DFAST) requirements will be extended to November 25, and thereafter will be discontinued. The OCC believes that sufficient stress testing programs have been adopted and integrated into the risk management policies of banks and federal savings institutions to which the DFAST rules apply. Press Release.

Shared National Credit Review Finds Some Improvement in Credit Quality, While Risk Remains Elevated in Leveraged Loans

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On January 25, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency released a report reviewing Shared National Credit Loans, which found that risk associated with large syndicated loans has declined, while the risk associated with leveraged lending has not improved. The report encourages banks to update credit risk management policies according to the current risk climate. Release.

Capital: Notice of Proposed Rulemaking

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On December 17, three entities – the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – “published a notice of proposed rulemaking [] to provide an updated framework for measuring derivative counterparty credit exposure.” Release.

Agencies Propose Rule to Update Calculation of Derivative Contract Exposure Amounts Under Regulatory Capital Rules

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On October 30, the Federal Reserve Board, the Federal Depository Insurance Corporation and the Office of the Comptroller of the Currency (collectively, the “Agencies“) proposed changes to their standards for how large federal institutions measure counterparty credit risk posed by derivatives contracts under the Agencies’ regulatory capital rules. The proposal would provide the “standardized approach for measuring counterparty credit risk” as an alternative approach to the Agencies’ current exposure methodology for calculating derivative exposure. Release.

Federal Agencies Issue a Joint Statement on Banks and Credit Unions Sharing Resources to Improve Efficiency and Effectiveness of Bank Secrecy Act Compliance

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On October 3, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network issued a statement to address instances in which certain banks and credit unions may decide to enter into collaborative arrangements to share resources to manage their Bank Secrecy Act and anti-money laundering obligations more efficiently and effectively. Joint Statement.

Federal Banking Agencies Issue Final Rule to Exempt Commercial Real Estate Transactions of $500,000 or Less from Appraisal Requirements:

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On April 2, 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a final rule that increases the threshold for commercial real estate transactions requiring an appraisal from $250,000 to $500,000. Press Release. Rule.

New York Regulator’s Fintech-Charter Lawsuit Dismissed

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On December 12, 2017, a federal judge in Manhattan dismissed a state regulator’s lawsuit challenging the Office of the Comptroller of the Currency’s (“OCC“) federal-fintech-charter effort, finding that legal challenges to the initiative were premature. In an order filed Tuesday, the judge found that the lawsuit filed in May by New York’s Superintendent for Financial Services Maria Vullo lacked merit, because the OCC’s initiative hasn’t been implemented yet. To view the full article, click here.

Federal Banking Agencies Finalize an 18-Month Examination Cycle for Small Banking Institutions

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On December 12, 2016, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) finalized rules that generally allow well-capitalized and well-managed banks and savings associations with less than $1 billion in total assets to benefit from an 18-month examination cycle rather than a 12-month cycle.  Prior to the adoption of the interim final rules, only firms with total assets of less than $500 million were eligible to benefit from the extended 18-month cycle.  The final rules are meant, among other things, to reduce regulatory compliance costs for smaller institutions. Press Release. Final Rule.