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  • Federal Banking Agencies Issue Request for Comment on Proposed Combined Dodd-Frank Stress Test Report

    Agency Rule-Making & Guidance

    On October 6, the Federal Reserve Board (Fed), the FDIC, and the OCC (agencies)—all members of the Federal Financial Institutions Examination Council (FFIEC)—issued a joint notice and request for comment on a proposal to combine the agencies’ three separate, identical stress test report forms into a single new FFIEC report (FFIEC 016) under the Dodd-Frank Act. In addition to replacing the Fed’s FR Y–16, the FDIC’s DFAST 10–50, and the OCC’s DFAST 10–50B, a limited number of revisions would be made to align FFIEC 016 with “recent burden-reducing changes to the FFIEC 031 and FFIEC 041 Consolidated Reports of Condition and Income and the Fed’s FR Y–9C Consolidated Financial Statements for Holding Companies.” Under the proposal, institutions who have a Legal Entity Identifier will also be asked to include it on the report form.

    FFIEC 016 respondents are depository institutions and holding companies with at least $10 billion but less than $50 billion in total consolidated assets. The proposed FFIEC 016 will impact stress test reports with an as-of date of December 31, 2017, and have a submission deadline of July 31, 2018. Comments on the joint notice and request for comment must be received by December 5, 2017.

    Agency Rule-Making & Guidance FFIEC Federal Reserve OCC FDIC Dodd-Frank Stress Test

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  • Federal Banking Regulatory Agencies Issue Proposed Rulemaking to Simplify Regulatory Capital Rule

    Agency Rule-Making & Guidance

    On September 27, the Federal Reserve Board, the FDIC, and the OCC (agencies) issued a joint notice of proposed rulemaking to simplify capital rule compliance requirements and reduce the regulatory burden in accordance with the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). Among other things, the proposed rule will “apply a simpler regulatory capital treatment” for mortgage servicing assets, certain deferred tax assets, investments in unconsolidated financial institutions, and capital issued by a consolidated subsidiary of a banking organization and held by third parties, or minority interest. To assist banks in evaluating the potential impact of the proposal, the agencies provided an estimation tool template and summary of the proposal. As previously discussed in InfoBytes, the agencies—all members of the Federal Financial Institutions Examination Council (FFIEC)—issued a report in March following an EGRPRA review, in which the agencies outlined initiatives designed to reduce regulatory burdens, particularly on community banks and savings associations. In a statement issued by FDIC Chairman Martin J. Gruenberg, commenters are encouraged to also consider methods for simplifying existing regulatory capital rules impacting community banks. Comments on the joint proposed rule are due 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Bank Regulatory Capital Requirements Federal Reserve FDIC OCC EGRPRA FFIEC Federal Register

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  • FDIC Releases Revised Supervisory Appeals Guidelines, Updates FAQs on New Accounting Standards, and Announces FFIEC Industry Outreach Website

    Agency Rule-Making & Guidance

    On September 6, the FDIC released revised guidelines (FIL-42-2017) for appeals of certain material supervisory determinations to expand the circumstances under which banks may submit an appeal with the Division Directors and the Supervision Appeals Review Committee. The guidelines apply to all FDIC-supervised depository institutions. As previously reported in InfoBytes, the guidelines will provide consistency with the appeals processes of other federal banking agencies and will, among other things, (i) permit the appeal of the level of compliance with an existing formal enforcement action; (ii) provide that formal enforcement-related actions or decisions do not affect a pending appeal; (iii) allow for additional opportunities for appeal rights available under the guidelines with respect to material supervisory determinations in certain circumstances; (iv) annually publish the Division Directors’ material supervisory determinations decisions and (v) draw up other limited technical and conforming amendments. With the issuance of these guidelines, the FDIC is rescinding FIL-52-2016 (“FDIC Seeks Comment on Bank Appeals Guidelines”) and FIL-113-2004 (“FDIC Appeals Processes’).

    On the same day, the FDIC also issued FIL-41-2017, which presents updates to its “Frequently Asked Questions on the New Accounting Standard on Financial Instruments—Credit Losses” for financial intuitions and examiners. The FAQs apply to all FDIC-supervised banks, savings associations, and community institutions. The updates address topics such as “qualitative factors, data to implement [credit loss methodology], purchased credit-deteriorated assets, the evaluation of the public business entity criteria, the mechanics of adopting the standard for Call Report purposes, and collateral-dependent loans.” They also contain a reminder to institutions that credit loss methodology can be scaled base on an institution’s size, and encourage readiness and preparation plans to transition to the new accounting standard.

    Finally, the FDIC also issued FIL-40-2017 to announce the Federal Financial Institutions Examination Council’s (FFIEC) new Industry Outreach website, which was created as a way for financial institutions, trade associations, third-party providers, and consultants to access information related to supervisory guidance and regulations. The website will also provide information on FFIEC-sponsored webinars.

    Agency Rule-Making & Guidance FDIC Bank Compliance FFIEC

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  • FFIEC Releases Update to Cybersecurity Assessment Tool to Aid Institution Preparedness

    Privacy, Cyber Risk & Data Security

    On May 31, the Federal Financial Institutions Examination Council (FFIEC) announced the release of an update to the Cybersecurity Assessment Tool (CAT) developed to aid institutions in determining their risk profiles, identifying risks, and determining cybersecurity preparedness. The update details changes made to the FFIEC IT Examination Handbook and provides a revised mapping in Appendix A to the updated Information Security and Management booklets. The press release notes that “[m]anagement of financial institutions and management of third-party service providers are primarily responsible for assessing and mitigating their entities’ cybersecurity risk.  Outlined in Appendix A, the CAT is a framework designed to provide a “repeatable and measurable process” to measure cybersecurity in areas such as cyber risk management and oversight, threat intelligence and collaboration, cybersecurity controls, external dependency management, and cyber incident management and resilience. The CAT also provides “additional response options, allowing financial institution management to include supplementary or complementary behaviors, practices and processes that represent current practices of the institution in supporting its cybersecurity activity assessment.” Financial institutions access addition cybersecurity risk management information here.

    Privacy/Cyber Risk & Data Security FFIEC Vendor Management

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  • CFPB Releases Updated Supervision and Examination Materials

    Consumer Finance

    On March 31, the CFPB released updates to sections of its Supervision and Examination Manual as required by the updated Federal Financial Institutions Examination Council’s Uniform Interagency Consumer Compliance Rating System. The revised CFPB Supervision Examination Cycle Overview highlights the continuous exam cycle from pre-examination/scoping procedures to the monitoring and corrective actions stage, and provides additional details on its “prioritization” approach to examining, which considers the “large number, size, and complexity of entities falling under its supervisory authority.” Updates were also made to the Examination Process which offers further details on the exam cycle. The updated Scope Summary template provides examination background information on the entity as well as details regarding prudential and state regulators, communication plans, institution product lines to be reviewed, complaints, outstanding enforcement actions or other open matters, and risk summaries. Lastly, updates have also been made to the Examination Report Template—which provides the scope of review and consumer compliance rating based on the findings of the exam—and the Supervisory Letter Template—which references matters requiring attention or that need to be corrected based on the Bureau’s review.

    Consumer Finance CFPB FFIEC

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  • FFIEC Releases Joint Report to Congress on Reducing Regulatory Burdens

    Agency Rule-Making & Guidance

    On March 21, member agencies of the Federal Financial Institutions Examination Council (FFIEC) announced the release of their Joint Report to Congress: Economic Growth and Regulatory Paperwork Reduction Act (the Report), which details their review of rules affecting financial institutions and the effect of regulations on smaller institutions. The review—required by the Economic Growth and Regulatory Paperwork Reduction Act to be conducted at least once every ten years—included the participation of the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, and included the consideration of more than 230 written and 130 oral comments from financial institutions, trade associations, and consumer and community groups, as well as numerous comments obtained at outreach meetings.

    The members of the FFIEC described several joint initiatives, including actions taken to:

    • Simplify regulatory capital rules for community banks and savings associations;
    • Streamline reports of condition and income (Call Reports);
    • Increase the appraisal threshold for commercial real estate loans; and
    • Expand the number of institutions eligible for less frequent examination cycles.

    In addition, the Report also described actions taken by each agency to “update rules, eliminate unnecessary requirements, and streamline supervisory procedures.”

    Agency Rule-Making & Guidance Federal Issues FFIEC Congress Prudential Regulators

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  • FDIC Releases Presentation Materials Explaining New Streamlined “FFIEC 051 Call Report” for Eligible Small Institutions

    Agency Rule-Making & Guidance

    Earlier this month, the FDIC released presentation materials used during a recent webinar hosted by the Federal Financial Institutions Examination Council (FFIEC) for the purpose of explaining the new streamlined “FFIEC 051 Call Report” for eligible small institutions. As previously covered by InfoBytes, the Federal banking agencies – including the FDIC, the Fed, and the OCC – are implementing a new Call Report for financial institutions with only domestic offices and less than $1 billion in total assets (see FIL-82-2016). The proposed changes – which go into effect on March 31 – modify the existing “FFIEC 041” and “FFIEC 031” versions of the Call Report as part of an ongoing initiative to reduce the burden associated with Call Report requirements for community banks. Among other things, the streamlined Call Report reduces the existing Call Report from 85 to 61 pages, resulting from the removal of approximately 950 (or about 40 percent) of the nearly 2,400 data items in the Call Report.

    Agency Rule-Making & Guidance FDIC FFIEC Call Report

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  • OCC to Host Credit Risk and Operational Workshops for Directors of National Community Banks and Federal Savings Associations; Banking Agencies to Conduct Webinar to Introduce New FFIEC Call Report

    Agency Rule-Making & Guidance

    On March 2, the Office of the Comptroller of the Currency (OCC) announced that it will host two workshops in Phoenix on April 11-12 for directors of OCC supervised national community banks and federal associations. The Credit Risk workshop (April 11) will cover strategies to recognize trends and problems in credit risk within the loan portfolio, and the Operational Risk workshop (April 12) will discuss key components of operational risk, governance, third-party risk, vendor management, and cybersecurity.

    Also on March 2, four members of the Federal Financial Institutions Examination Council (FFIEC) (Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and the Conference of State Bank Supervisors) announced the implementation of the new streamlined FFIEC 051 Call Report, effective March 31, 2017, that will introduce burden-reducing changes to the existing versions of the Call Report and will be available to eligible small institutions. “’Eligible small institutions’ are [defined as] institutions with domestic offices only and total assets of less than $1 billion, excluding those that are advanced approaches institutions for regulatory capital purposes.” The revisions to the requirements are subject to approval by the OMB. On March 8, the FFIEC will conduct a webinar from 2:00 p.m. to 3:30 p.m. ET to introduce the new Call Report and explain the revisions.

    Agency Rule-Making & Guidance OCC FFIEC Community Banks Federal Reserve FDIC Call Report Vendor Management

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  • FDIC Releases 2016 Annual Report; Separately, FDIC’s OIG Issues Report Critical of Bank Service Provider Contracts

    Privacy, Cyber Risk & Data Security

    On February 15, the FDIC released  its 2016 Annual Report–which includes, among other things, the audited financial statements of the Deposit Insurance Fund and the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund. The report also provides an overview of key FDIC initiatives, performance results and other aspects of FDIC operations.

    Separately, on the same day, the FDIC’s Office of Inspector General (OIG) released an Audit Report (EVAL-17-004) on the adequacy of a small but random sample of contracts between FDIC-supervised institutions and their technology service providers (TSPs), in light of federal law and banking agency guidance on customer privacy-protection and how to properly manage third-party relationships. All sampled contracts had been designated as “critical” or “high” risk to the supervised institutions’ operations. The OIG specifically evaluated, and generally found insufficient, the clarity of contract provisions on TSP obligations regarding: (i) business continuity planning; and (ii) responding to and reporting on cybersecurity incidents. Despite the insufficiencies noted, the OIG acknowledged that because many contracts were negotiated before some of the relevant guidance was issued, “more time is needed to allow FDIC and FFIEC efforts to have a demonstrable” impact on contractual language.

    As a result of these findings, the OIG recommended—and FDIC management agreed—that the agency, after allowing appropriate time for current guidance to be implemented, conduct a “full horizontal review to assess” any continued presence of the contractual insufficiencies noted in the report. The FDIC will “prepare” that horizontal review in 2018.

    Privacy/Cyber Risk & Data Security FDIC FFIEC OIG Vendor Management

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  • Banking Agencies Approve Streamlined Call Report

    Federal Issues

    The Fed, FDIC, and OCC, as members of the FFIEC, recently announced that the implementation of a streamlined Call Report Form (FFIEC 051) for eligible small institutions—financial institutions with only domestic offices and less than $1 billion in total assets—which is proposed to take effect March 31, 2017. The FFIEC’s action is the result of an ongoing initiative to reduce the burden associated with Call Report requirements for community banks. Among other things, the streamlined Call Report reduces the existing Call Report from 85 to 61 pages, resulting from the removal of approximately 950 (or about 40 percent) of the nearly 2,400 data items in the Call Report. Because the OMB must approve the revisions before they can be implemented, the above-referenced banking agencies have also issued a joint notice reflecting that they have submitted the information collection to OMB for review.

    Federal Issues FDIC Banking Federal Reserve OCC FFIEC

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