On September 10, the Office of the Comptroller of the Currency (“OCC”) published proposed revisions to its information collecting regulations related to the Dodd-Frank Act’s “stress test” for large national banks and federal savings associations.
Section 165(i)(2) of the Act requires certain financial institutions, including national banks and federal savings associations that have at least $10 billion in total consolidated assets (“covered institutions”), to conduct annual “stress tests” and report the findings to the Federal Reserve System and the institution’s primary governing regulatory agency. In July, the Fed proposed changes to its stress test rules, including revisions to almost twenty schedules that must be completed by covered institutions with over $50 billion in total consolidated assets, and changes to the institutions’ filing deadlines. The OCC’s proposed revisions would bring its reporting requirements in line with the Fed’s proposed requirements. READ MORE
On Tuesday, December 10, five federal regulatory agencies, the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller and the Commodity Futures Trading Commission, jointly released the long awaited and hotly contested “Final Rules Implementing the Volcker Rule.” The Rules and supplement, together more than 900 pages long, are already generating comment and controversy for their complexity and severity—or lack thereof, depending on who you ask. The Rules become effective on April 1, 2014 with final conformance expected by July 21, 2015.
A Product of Hard Times
Paul Volcker, an economist, former Federal Reserve Chairman and former chairman of the Economic Recovery Advisory Board, initially proposed a (seemingly) simple rule restricting certain risk-taking activity by American banks in a 3-page letter to President Obama in 2009. Speculative activity, for example, proprietary trading, was believed to have contributed to the “too big to fail” position that the nation’s largest banks found themselves in at the height of the Financial Crisis in 2008 and 2009. The Volcker rule thus proposed prohibiting banks from engaging in short-term proprietary trading on their own account. It also proposed limiting the relationships that banks could have with hedge funds and other private equity entities. Not long after its proposal, the rule was made into law in Section 619 of the 2010 Dodd-Frank Wall Street Reform Act, to take effect upon the issuance of implementing regulations. READ MORE