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  • OCC seeks comments on notice of proposed rulemaking to raise recovery planning standards threshold to $250 billion

    Agency Rule-Making & Guidance

    On September 19, the OCC issued a notice of proposed rulemaking to revise its 2016 guidelines on recovery planning standards for insured national banks, insured federal savings associations, and insured federal branches. The OCC seeks to raise the average total consolidated assets threshold from $50 billion to $250 billion, and give banks above the threshold 12 months instead of 18 months to comply with the guidelines. The proposed rule would also make technical amendments to remove outdated compliance dates. According to the OCC, a threshold increase would tailor the focus on “institutions that present greater systemic risk to the banking system.” The proposal is also consistent with the scope of the FDIC and Federal Reserve Board’s resolution planning threshold, which was raised from $50 billion to $250 billion as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

    Comments on the proposal are due by November 5.

    Agency Rule-Making & Guidance OCC EGRRCPA S. 2155

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  • FDIC issues NPRM regarding treatment of reciprocal deposits

    Agency Rule-Making & Guidance

    On September 12, the FDIC issued a notice of proposed rulemaking (NPRM) and request for comments on the treatment of certain institutions’ reciprocal deposits to implement Section 202 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). According to the accompanying Financial Institution Letter, FIL-47-2018, Section 202 of EGRRCPA amends Section 29 of the Federal Deposit Insurance Act to except a capped amount of reciprocal brokered deposits from treatment as brokered deposits for certain insured depository institutions. Under the proposal, well-capitalized and well-rated institutions are not required to treat reciprocal deposits as brokered deposits up to the lesser of 20 percent of their respective total liabilities or $5 billion. Additionally, institutions that are not well capitalized or well rated also may exclude reciprocal deposits from their brokered deposits by maintaining reciprocal deposits at or below a special cap equal to the average amount of their reciprocal deposits held at quarter-end during the last four quarters preceding the quarter that the institution fell below well capitalized or well rated. Comments are due within 30 days of publication in the Federal Register.

    Agency Rule-Making & Guidance FDIC S. 2155 EGRRCPA Federal Deposit Insurance Act Deposit Products

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  • SEC confirms staff statements create no enforceable legal obligations

    Agency Rule-Making & Guidance

    On September 13, Securities and Exchange Commission (Commission) Chairman, Jay Clayton, issued a statement confirming that staff communications, in the form of written statements, compliance guides, letters, speeches, responses to frequently asked questions, and responses to specific requests for assistance, are “nonbinding and create no enforceable legal rights or obligations of the Commission or other parties.” Clayton’s statement echoes a similar position taken in a joint statement by five federal agencies regarding supervisory guidance, released two days earlier (previously covered by InfoBytes here). Clayton emphasized that only Commission adopted rules and regulations have the force and effect of law and encouraged public engagement on staff statements in order to assist the Commission in developing future rules and regulations.

    Agency Rule-Making & Guidance SEC Supervision Enforcement Securities

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  • Federal Reserve Board approves final amendments to Regulation CC

    Agency Rule-Making & Guidance

    On September 12, the Federal Reserve Board (Board) announced the final amendments to the liability provisions of Regulation CC. The final amendments, which were proposed in June 2017, update Regulation CC’s existing liability provisions to include a presumption that a substitute or electronic check was altered in the event of disputes over whether a check has been altered or was issued with an unauthorized signature when the original check is not available. The presumption is only applicable to disputes between banks when one bank has transferred an electronic or substitute check to the other bank. The amendments are effective January 1, 2019.

    Agency Rule-Making & Guidance Federal Issues Federal Reserve Regulation CC Electronic Check

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  • OCC updates Comptroller’s Handbook booklet to address deposit-related credit

    Agency Rule-Making & Guidance

    On September 12, the OCC issued Bulletin 2018-28, which updates the “Deposit-Related Credit” booklet of the Comptroller’s Handbook previously issued March 2015. The booklet provides guidance for OCC examiners to be used in connection with the examination and supervision of national banks and federal savings associations who offer small-dollar, unsecured deposit-related credit products and services, such as check credit, overdraft protection, and deposit advance products. The booklet also includes, among other things, (i) updated guidance following the rescission of OCC Bulletin 2013-40, “Deposit Advance Products: Final Supervisory Guidance,” (previously covered by InfoBytes here) and the issuance of OCC Bulletin 2018-14, “Installment Lending: Core Lending Principles for Short-Term, Small-Dollar Installment Lending” (previously covered by InfoBytes here); (ii) information concerning limitations and requirements for consumer credit products extended to active-duty servicemembers covered by the Military Lending Act; (iii) integrated citations to third-party risk management guidance and procedures; (iv) information pertaining to new products and services, including sound due diligence practices; and (v) prohibitions against unfair, deceptive, or abusive acts or practices under Dodd-Frank.

    Agency Rule-Making & Guidance OCC Comptroller's Handbook Deposit Products Examination Supervision Military Lending Act

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  • CFPB publishes final rule relating to disclosure of confidential records and information

    Agency Rule-Making & Guidance

    On September 12, the CFPB published a final rule to modify its procedures for the disclosure of records and information. As previously covered in InfoBytes, the notice of proposed rulemaking—published August 2016—sought to amend procedures used to obtain information from the Bureau under the Freedom of Information Act (FOIA), the Privacy Act of 1974, and in legal proceedings. In response to comments on its proposal, the final rule revises the following subparts under section 1070 of title 12 of the Code of Federal Regulations: (i) Subpart A: “procedures related to the certification of authenticity of Bureau records and the service of summonses or complaints on the Bureau”; (ii) Subpart B: practices to provide requesters additional flexibility under FOIA; and (iii) Subpart C: “procedures for requests for information from the Bureau in connection with legal proceedings.” Subpart E, which implements the Privacy Act of 1974, received no comments and has been finalized without modification. The Bureau noted that the final rule does not revise Subpart D, which relates to the “confidential treatment of information obtained from persons in connection with the exercise of its authorities under federal consumer financial law.” The final rule takes effect October 12.

    Agency Rule-Making & Guidance CFPB FOIA Disclosures

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  • Agencies say supervisory guidance does not have the “force and effect” of law

    Agency Rule-Making & Guidance

    On September 11, five federal agencies (the Federal Reserve Board, CFPB, FDIC, NCUA, and OCC) issued a joint statement confirming that supervisory guidance “does not have the force and effect of law, and [that] the agencies do not take enforcement actions based on supervisory guidance.” The statement distinguishes the various types of supervisory guidance—interagency statements, advisories, bulletins, policy statements, questions and answers, and frequently asked questions—from laws or regulations and emphasizes that the intention of supervisory guidance is to outline agencies’ expectations or priorities. The statement highlights five policies and practices related to supervisory guidance: (i) limit the use of numerical thresholds or other “bright-line” requirements; (ii) examiners will not cite to “violations” of supervisory guidance; (iii) request for public comment does not mean the guidance has the force and effect of law; (iv) limit multiple issuances of guidance on the same topic; and (v) continue to emphasize the role of supervisory guidance to examiners and to supervised institutions.

    Agency Rule-Making & Guidance Federal Reserve CFPB FDIC NCUA OCC Supervision Examination Enforcement

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  • OCC seeks comments on notice of proposed rulemaking to enhance business flexibility for federal savings associations

    Agency Rule-Making & Guidance

    On September 10, the OCC issued a notice of proposed rulemaking to implement section 206 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (previously Senate bill S. 2155), which amended the Home Owners’ Loan Act to permit federal savings associations (covered savings associations) with total consolidated assets of $20 billion or less, as of December 31, 2017, to elect to operate with national bank powers. Among other things, the proposed rule would require covered savings associations to divest, conform, or discontinue nonconforming subsidiaries, assets, and activities so as not operate in a manner that would be impermissible for national banks. Covered savings associations would also be subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that would apply to a similarly located national bank without requiring a charter conversion. The OCC further noted that even if a covered savings association’s assets exceed $20 billion after it makes the election, it will continue to receive covered savings association treatment. In addition, to reduce unnecessary burdens, covered savings associations are able to using federal savings association procedures, as opposed to national bank procedures, if the application of those procedures would not result in substantively different outcomes. Comments will be accepted for 60 days following publication in the Federal Register.

    Agency Rule-Making & Guidance OCC S. 2155 Bank Charter

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  • OCC notifies banks of 18-month on-site examination qualifications

    Agency Rule-Making & Guidance

    On September 10, the OCC notified national banks, federal savings associations, and federal branches and agencies of the interim final rule issued jointly by the OCC, Federal Reserve, and FDIC allowing qualified insured depository institutions with less than $3 billion in total assets to be eligible for an 18-month on-site examination cycle. (See previous InfoBytes coverage here.) In addition to meeting the asset threshold, qualifying banks must also (i) have a rating of one or two; (ii) be well capitalized and well managed; (iii) not be subject to a federal banking agency’s formal enforcement proceeding or order; and (iv) not have experienced a change of control within the previous 12 months. The OCC further noted that it reserves the authority to maintain more frequent examinations for banks if necessary or appropriate. The interim final rule, issued pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act (previously Senate bill S. 2155), took effect August 29. Comments on the interim final rule must be received by October 29.

    Agency Rule-Making & Guidance OCC Examination S. 2155 Federal Reserve FDIC

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  • FDIC issues summer 2018 Supervisory Insights

    Agency Rule-Making & Guidance

    On September 5, the FDIC released its summer 2018 issue of Supervisory Insights (see FIL-44-2018), which contains articles discussing bank lending to the oil and gas sector and an overview of bank credit risk grading systems. Information and analysis from examiner observations is presented in the article, “Credit Risk Grading Systems: Observations from a Horizontal Assessment.” Sixteen large state nonmember banks’ credit risk grading programs are analyzed for (i) their use of expert judgment based systems and/or quantitative scorecards and models to assign credit grades; (ii) data usage and retention needs; and (iii) governance and risk management frameworks established by grade definitions. The article advises that “a bank’s credit risk grading system should align with the bank’s size and complexity to facilitate accurate risk identification, measurement, monitoring, and reporting,” and should include internal systems to allow for effective risk assessment, timely and accurate reporting, and procedures for safeguarding and managing assets. In addition, the issue includes an overview of recently released regulations and supervisory guidance in its Regulatory and Supervisory Roundup.

    Agency Rule-Making & Guidance FDIC Supervision Credit Risk Risk Management

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