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  • FDIC's FILs address Call Report burden reductions, EGRRCPA statutory amendment changes

    Agency Rule-Making & Guidance

    On July 17, the FDIC issued Financial Institution Letter FIL-40-2018 reminding FDIC-supervised banks, savings associations, and community institutions that revisions to all three versions of the Consolidated Reports of Condition and Income (Call Reports) are effective as of the June 30 reporting date. The finalized changes modified Call Reports FFIEC 031, FFIEC 041, and FFIEC 051. Starting this quarter, institutions with consolidated total assets of at least $100 billion with no foreign offices are now required to use FFIEC 031 instead of FFIEC 041. In addition, the FDIC released supplemental submission instructions for institutions (see FIL-39-2018) and also addressed two reporting requirement changes made by the enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act S.2155/P.L. 115-174 that took effect immediately: (i) acquisition, development, or construction loans considered high volatility commercial real estate loans are subject to risk weighting with certain exemptions; and (ii) qualifying institutions may exclude a capped amount of reciprocal deposits from being treated as brokered deposits. Second quarter Call Reports are due July 30.

    Agency Rule-Making & Guidance Federal Issues FDIC Call Report S. 2155

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  • Agencies publish proposed joint revisions to Volcker rule

    Agency Rule-Making & Guidance

    On July 17, the OCC, Federal Reserve Board, FDIC, SEC, and CFTC (the Agencies) published their joint notice of proposed rulemaking designed to simplify and tailor compliance with Section 13 of the Bank Holding Company Act’s restrictions on a bank’s ability to engage in proprietary trading and own certain funds (the Volcker rule). As previously covered in InfoBytes, the Agencies’ announced the proposal on May 30, noting that the amendments would reduce compliance costs for banks and tailor Volcker rule requirements to better align with a bank’s size and level of trading activity and risks. Comments on the proposal are due by September 17.

    Agency Rule-Making & Guidance FDIC Federal Reserve OCC CFTC SEC Bank Holding Company Act Volcker Rule

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  • FDIC implements updated interagency forms

    Agency Rule-Making & Guidance

    On July 11, the FDIC issued Financial Institution Letter FIL-38-2018 announcing the implementation of revisions to several interagency forms. The updates, based upon recommendations from representatives from the FDIC, Federal Reserve, and the OCC, reflect new laws, regulations, capital requirements, and accounting rules. The changes are intended to improve the clarity of the requests, delete unnecessary information requests, and add transparency for filers concerning information required to consider a proposal.

    The following revised forms may be used going forward for all applicable applications filed with the FDIC and are effective immediately:

    Agency Rule-Making & Guidance FDIC Federal Reserve OCC Bank Regulatory

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  • SEC requests comments on proposed amendments to whistleblower program

    Agency Rule-Making & Guidance

    On June 28, the SEC voted to propose for public comment several rule amendments that seek to clarify certain existing rules and make technical amendments to its whistleblower program under Section 21F of the Securities Exchange Act. Among other things, the proposed changes would (i) allow awards based on money collected under deferred prosecution agreements and non-prosecution agreements entered into by the DOJ or a state attorney general in a criminal case, or settlement agreements entered into by the SEC outside of a judicial or administrative proceeding that address securities law violations; (ii) eliminate the potential double recovery under the definition of “related action”; (iii) authorize the SEC to adjust an award’s percentage as appropriate to advance the goals of rewarding and incentivizing whistleblowers; (iv) establish a uniform definition of “whistleblower” in response to the Supreme Court's decision in Digital Realty Trust, Inc. v. Somers (as previously covered in a Buckley Sandler Special Alert); and (v) clarify anti-retaliation protection requirements. The SEC also has included interpretative guidance on the terms “unreasonable delay” and “independent analysis.” Comments will be accepted for 60 days following publication in the Federal Register.

    Agency Rule-Making & Guidance SEC Securities Whistleblower

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  • Federal Reserve issues final rules reflecting credit and interest rate increases

    Agency Rule-Making & Guidance

    On June 20, the Federal Reserve issued a final rule amending Regulation A (Extensions of Credit by Federal Reserve Banks) to reflect its June 14 approval of a one-quarter percent increase in the primary credit rate at each Federal Reserve Bank. Because the formula for the secondary credit rate references the primary rate, the secondary credit rate also increased by one-quarter percentage point.

    The same day, the Federal Reserve also issued a final rule amending Regulation D (Reserve Requirements of Depository Institutions) to reflect its June 14 approval of a one-quarter percent increase to the “rate of interest paid on balances maintained to satisfy reserve balance requirements (IORR) and the rate of interest paid on excess balances (IOER) maintained at Federal Reserve Banks by or on behalf of eligible institutions.”

    Agency Rule-Making & Guidance Federal Reserve Federal Register Regulation A Regulation D

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  • HUD publishes ANPR on Disparate Impact Regulation

    Agency Rule-Making & Guidance

    On June 20, HUD published an advance notice of proposed rulemaking (ANPR) in the Federal Register seeking comment on potential amendments to its the 2013 Disparate Impact Regulation, which implements the Fair Housing Act’s disparate impact standard, as well as the 2016 Application of the Fair Housing Act’s Discriminatory Effects Standard to Insurance (supplement). The notice requests comments on whether the 2013 regulation and the 2016 supplement are consistent with the 2015 Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.  (Covered by a Buckley Sandler Special Alert.) While HUD is seeking feedback on any potential changes to the regulation, the agency is particularly interested in, among other things, (i) whether the burden-shifting framework appropriately assigns burdens of production and persuasion; and (ii) whether the regulation should provide defenses or safe harbors to claims of liability. Comments on the notice are due by August 20. 

    Agency Rule-Making & Guidance Federal Issues HUD FHA Disparate Impact Fair Lending U.S. Supreme Court

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  • Federal Reserve Board approves final rule setting single counterparty credit limit

    Agency Rule-Making & Guidance

    On June 14, the Federal Reserve Board approved a rule to establish single-counterparty credit limits for U.S. bank holding companies with at least $250 billion in total consolidated assets, foreign banking organizations operating in the U.S. with at least $250 billion in total global consolidated assets (as well as their intermediate holding companies with $50 billion or more in total U.S. consolidated assets), and global systemically important bank holding companies (GSIBs).

    The rule, which implements section 165(e) of the Dodd-Frank Act, requires the Board to limit a bank holding company’s or foreign banking organization’s credit exposure to an unaffiliated company. Under the rule, a GSIB’s credit exposure is limited to 15 percent of its tier 1 capital to another systemically important firm.  A U.S. bank holding company and other applicable foreign institution is limited to a credit exposure of 25% of its tier 1 capital to a counterparty.

    GSIBs will be required to comply with the final rule on January 1, 2020, while other covered entities will have through July 1, 2020 to comply. The final rule will take effect 60 days after its publication in the Federal Register.

    Agency Rule-Making & Guidance Federal Reserve GSIBs Dodd-Frank

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  • OCC issues bulletin on supervisory policy and processes for CRA performance evaluations

    Agency Rule-Making & Guidance

    On June 15, the OCC issued Bulletin 2018-17, which clarifies the agency’s supervisory policies and processes regarding how examiners evaluate and communicate the performance of national banks, federal savings associations, and federal branches and agencies under the Community Reinvestment Act (CRA). The OCC issued these clarifications as part of its ongoing modernization efforts and explained that they are intended to promote the consistency and effectiveness of CRA performance evaluations. The Bulletin addresses policy clarifications for several areas of CRA evaluations, which are effective immediately, such as (i) implementation of full-scope and limited-scope reviews; (ii) consideration of activities that promote economic development; (iii) use of demographic, aggregate, and market share data; and (iv) evaluation frequency and timing. The Bulletin also provides clarifications on standard processes which became effective in May 2017, including, among other things, (i) factors considered when evaluating bank performance under small- and large-bank lending tests; and (ii) information considered and included in the written performance evaluation. The OCC noted that “[t]hese policies and processes apply to the evaluations of all OCC-supervised banks subject to the CRA, regardless of the bank’s asset size or CRA evaluation type.”

    Agency Rule-Making & Guidance OCC Bank Supervision CRA

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  • NCUA proposes additional payday loan alternative option

    Agency Rule-Making & Guidance

    On June 4, the National Credit Union Administration (NCUA) published in the Federal Register a proposal to create a new payday alternative loan product (PAL II) in addition to the current payday alternative loan product (PAL I), which has been available since 2010. According to the NCUA announcement, the goal of PAL II is to expand access to safe and affordable short-term, small-dollar loans for consumers of modest means. PAL II would include most features of PAL I, with four changes: (i) eliminating a loan minimum while setting the maximum at $2,000; (ii) setting a term maximum of 12 months; (iii) eliminating the requirement for membership minimum length; and (iv) as long as the consumer only has one outstanding loan at the time, eliminating the time restriction on the number of loans a credit union can make to the borrower in a six month period.

    The proposal also requests input on the potential features of a possible third option, PAL III, including lending restrictions, associated fees, and underwriting guidelines.

    As previously covered by InfoBytes, the OCC recently issued a bulletin encouraging banks to offer short-term, small dollar installment lending.

    Agency Rule-Making & Guidance NCUA Payday Lending Federal Register Credit Union

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  • FDIC FIL addendum: Federal banking agencies will not enforce Volcker rule for financial institutions exempt under S.2155

    Agency Rule-Making & Guidance

    On June 4, the FDIC issued FIL-31-2018, which contains an addendum describing legislative changes to Section 13 of the Bank Holding Company Act (Volcker rule) under the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155/P.L. 115-174) that are applicable to FDIC-insured depository institutions with total assets under $10 billion. (See previous InfoBytes coverage on S.2155 here.) Effective immediately, any financial institution that “‘does not have and is not controlled by a company that has (i) more than $10,000,000,000 in total consolidated assets; and (ii) total trading assets and trading liabilities as reported on the most recent applicable regulatory filing filed by the institution, that are more than 5 percent of total consolidated assets’” is exempt from the rule. As result, the federal banking agencies will no longer enforce the Volcker rule for qualifying financial institutions in a manner inconsistent with the statutory amendments to the Volcker rule, and announced plans “to address these statutory amendments outside of the current notice of proposed rulemaking.”

    The federal banking agencies responsible for developing the proposal (the Federal Reserve Board, CFTC, FDIC, OCC, and SEC) also formally announced on June 5 a joint notice and request for public comment on the proposed revisions. Comments will be accepted for 60 days following publication in the Federal Register.

    Visit here for InfoBytes coverage on the federal banking agencies’ proposed revisions to the Volcker rule announced May 30.

    Agency Rule-Making & Guidance FDIC Volcker Rule Federal Reserve CFTC OCC SEC Bank Holding Company Act

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