Dodd-Frank News Center

Agencies provide temporary changes to supplementary leverage ratio rule

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have issued an interim final rule providing temporary changes to their supplementary leverage ratio rule. According to the agencies’ joint release, the temporary modifications will provide flexibility to certain depository institutions to expand their balance sheets in order to provide credit to households and businesses in light of the challenges arising from the coronavirus response.

Specifically, the interim final rule permits depository institutions to choose to exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the supplementary leverage ratio. The rule is effective upon publication in the Federal Register and will be in effect through March 31, 2021. Comments on the rule will be accepted for 45 days after its publication in the Federal Register.

 

Agencies modify community bank leverage ratio framework

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have issued two interim final rules to provide temporary relief to community banking organizations. According to the agencies' joint release, they are acting to implement Section 4012 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748), which requires the agencies to temporarily lower the community bank leverage ratio to 8 percent.

The two rules will modify the community bank leverage ratio framework so that: (1) beginning in the second quarter 2020 and until the end of the year, a banking organization that has a leverage ratio of 8 percent or greater and meets certain other criteria may elect to use the community bank leverage ratio framework; and (2) community banking organizations will have until Jan. 1, 2022, before the community bank leverage ratio requirement is re-established at greater than 9 percent.

The changes will be effective as of the publication of the rules in the Federal Register, and the agencies will accept comments on the interim final rules for 45 days after publication.

• Regulatory Capital Rule: Temporary Changes to the Community Bank Leverage Ratio Framework
• Regulatory Capital Rule: Transition for the Community Bank Leverage Ratio Framework

Fed announces temporary change to supplementary leverage ratio rule

This story appeared in Bank Digest.

To ease strains in the Treasury market resulting from the coronavirus and increase banking organizations' ability to provide credit to households and businesses, the Fed is implementing a temporary change to its supplementary leverage ratio rule. According to the Fed's press release, the change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies and will be in effect until March 31, 2021.

The change is effective immediately, and the public comment period will be 45 days.

Fed provides additional information on supervisory activities during coronavirus pandemic

This story appeared in Bank Digest.

The Federal Reserve Board has provided additional information to financial institutions on how its supervisory approach is adjusting in light of the coronavirus. Among other items, the Fed said that to minimize disruption and to focus on outreach and monitoring, it will temporarily reduce its examination activities, with the greatest reduction in activities occurring at the smallest banks.

In addition, the Fed said that large banks should still submit their capital plans developed as part of the Comprehensive Capital Analysis and Review (CCAR) by April 6, 2020, and that additional time will be granted for resolving non-critical existing supervisory findings.

Agencies correct capital simplification final rule

This story appeared in Bank Digest.  

 

The Office of the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation have issued a technical correction to their November 2019 final rule entitled "Regulatory Capital Rule: Capital Simplification for Qualifying Community Banking Organizations." The rule, which was effective Jan. 1, 2020, provides for a simple measure of capital adequacy for certain community banking organizations, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Fed releases hypothetical scenarios for 2020 stress tests

This story appeared in Bank Digest.

The Federal Reserve Board has released the hypothetical scenarios for its 2020 stress test exercises, which ensure that large banks have adequate capital and processes so that they can continue lending to households and businesses, even during a severe recession. The Fed's stress test framework consists of the Comprehensive Capital Analysis and Review, also known as CCAR, and the Dodd-Frank Act stress tests. The Fed said this year's stress tests will evaluate 34 large banks with more than $100 billion in total assets.

Banks are required to submit their capital plans and the results of their own stress tests to the Fed by April 6, 2020, and the Fed said it will announce the results of its supervisory stress tests by June 30, 2020.

FHFA to re-propose Enterprise Capital Rule in 2020

This story appeared in Bank Digest.                                   

The Federal Housing Finance Agency has announced plans to re-propose the entire regulation on capital requirements (Capital Rule) for Fannie Mae and Freddie Mac (the Enterprises) sometime in 2020. FHFA Director Mark Calabria said, "The 2018 Capital Rule was proposed before FHFA began the process of retaining capital at the Enterprises as a first step toward ending the conservatorships. In fairness to all interested parties, the comments submitted during the previous rulemaking were submitted under a different set of assumptions about the future of the Enterprises. During the process of the rulemaking, important issues were identified that will be addressed in the re-proposal."

Institutions notified of changed effective date for capital simplifications final rule

This story appeared in Bank Digest.                         

Federal Deposit Insurance Corporation-supervised institutions have been notified that the FDIC, Federal Reserve Board, and Office of the Comptroller of the Currency have jointly issued a final rule permitting certain insured depository institutions and depository institution holding companies to implement simplifications to the capital rule on Jan. 1, 2020, rather than the original effective date of April 1, 2020 (FIL-67-2019).

This revised effective date applies to the agencies' July 2019 final rule (see 2019 No. 2461) that simplified the regulatory capital treatment for mortgage servicing assets, certain deferred tax assets arising from temporary differences, investments in the capital of unconsolidated financial institutions, and the calculation of minority interest.

Affected banking organizations may elect to use the revised effective date of Jan. 1, 2020, or wait until the quarter beginning April 1, 2020.

FDIC-supervised institutions notified of community bank leverage ratio final rule

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation has notified institutions it supervises that the federal banking agencies have jointly issued a final rule that provides for an optional, simplified measure of capital adequacy—the community bank leverage ratio framework—for qualifying community banking organizations, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rule will be effective on Jan. 1, 2020.

Agencies finalize rules on capital and liquidity requirements, resolution plans

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have jointly adopted a final rule to revise the criteria for determining the applicability of regulatory capital and liquidity requirements for large U.S. banking organizations and the U.S. intermediate holding companies of certain foreign banking organizations. The final rule establishes four risk-based categories for determining the applicability of requirements under the agencies’ regulatory capital rule and liquidity coverage ratio rule.

Separately, the Fed and FDIC have adopted a final rule implementing the resolution planning requirements of Section 165(d) of the Dodd-Frank Act. The final rule is intended to reflect improvements identified since the agencies finalized their joint resolution plan rule in November 2011 and to address amendments to the Dodd-Frank Act made by the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rules take effect 60 days after publication in the Federal Register.