Dodd-Frank News Center

Comment period extended on proposal to loosen Volcker Rule restrictions

This story appeared in Bank Digest. 

Five federal financial regulatory agencies have extended until Oct. 17, 2018, the comment period for a proposal to simplify and tailor Volcker Rule restrictions on the ability of banking entities to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. The 30-day extension by the Federal Reserve Board, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Securities and Exchange Commission responds to requests from the public for additional time to analyze the proposal.

FBOs and nonbank get resolution plan extension

This story appeared in Bank Digest.                                    

The Federal Reserve Board and Federal Deposit Insurance Corporation have extended the next resolution plan filing deadline for a designated nonbank to Dec. 31, 2019, and the deadline for four foreign banking organizations (FBOs) to July 1, 2020. The extensions will allow additional time for the agencies to provide feedback to the firms on their last submissions and for the firms to produce their next plans. Previously, the four FBOs--Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, and UBS AG--were required to submit their next plans by July 1, 2019. Prudential Financial Inc., the designated nonbank, was required to submit its plan on Dec. 31, 2018, pursuant to a previous extension (see 2017 No. 2288). In addition, the FDIC has extended the next filing due date for all insured depository institution resolution plan submissions to no sooner than July 1, 2020. These plans are required by FDIC regulation and are designed to enable the FDIC, as receiver, to resolve the institution under the Federal Deposit Insurance Act in a way that provides depositors timely access to insured deposits, maximizes net present value return, and minimizes creditor losses.

 

Agencies amend liquidity rules as required by regulatory relief bill

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 that amends the agencies' liquidity rules to treat certain eligible municipal securities as high-quality liquid assets, as required by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018.

According to the agencies' joint release, the EGRRCPA requires the agencies to treat a municipal obligation as a high-quality liquid asset under their liquidity coverage ratio rules if that obligation is considered "liquid and readily-marketable" and "investment grade." The interim final rule takes effect upon publication in the Federal Register and has a 30-day public comment period.

Fed proposes revision of 'Capital Assessments and Stress Testing' information collection

This story appeared in Bank Digest.   

The Federal Reserve Board is proposing to revise, without extension, an existing information collection entitled "Capital Assessments and Stress Testing," which is applicable to top-tier bank holding companies with total consolidated assets of $100 billion or more and U.S. intermediate holding companies. According to the Fed's notice, this collection helps ensure that large firms have strong, firm‐wide risk measurement and management processes supporting their internal assessments of capital adequacy and that their capital resources are sufficient given their business focus, activities, and resulting risk exposures.                                   

The Fed is proposing to revise sub-schedule L.5 (Derivatives and SFT Profile) for the FR Y-14Q report by adding items that were mistakenly omitted in a prior revision. Comments on the proposed revision must be submitted by Oct. 9, 2018.

Agencies release public portions of resolution plans

This story appeared in Bank Digest.                                     

The Federal Deposit Insurance Corporation and Federal Reserve Board have released the public portions of four foreign banking organizations' resolution plans, commonly known as "living wills," which are required by the Dodd-Frank Act and must describe each company's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure. The four firms, which were required to submit plans by July 1, 2018, are Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, and UBS AG. The plans are focused on the companies' U.S. operations. 

In addition, the FDIC has received and posted on its website the public sections of separate resolution plans submitted on July 1 by 41 large insured depository institutions. These plans are required by FDIC regulation and are designed to enable the FDIC, as receiver, to resolve each institution under the Federal Deposit Insurance Act in a way that provides customers timely access to deposits, maximizes returns, and minimizes creditor losses.

 

Agencies issue statement on impact of regulatory relief act

This story appeared in Bank Digest.                                     

The Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency have issued a joint statement detailing rules and associated reporting requirements that are immediately affected by the enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act. According to the agencies' joint release, the changes affect company-run stress testing, resolution plans, the Volcker rule, high volatility commercial real estate exposures, examination cycles, municipal obligations as high-quality liquid assets, and other provisions.                                   

The statement describes interim positions the agencies will take before incorporating the changes into their regulations.

Fed calculates financial sector liabilities at more than $20 trillion

This story appeared in Bank Digest.                                     

The Federal Reserve Board has determined that, as of July 1, 2018, the aggregate consolidated liabilities of all financial companies were equal to $20,283,121,945,000. The number constitutes the average of the year-end financial sector liabilities of the preceding two years and will be the measure of aggregate consolidated liabilities for purposes of Section 622 of the Dodd-Frank Act from July 1, 2018, through June 30, 2019, according to the Fed's announcement and accompanying press release. 

Sec. 622 of the Dodd-Frank Act, implemented by the Fed's Regulation XX, prohibits any financial company from combining with another company if the resulting company's liabilities exceed 10 percent of the aggregate consolidated liabilities of all financial companies. The Fed's regulation also requires that the Fed publish the aggregate consolidated liabilities of all financial companies by July 1 of each year.

 

Fed releases CCAR results

This story appeared in Bank Digest.                           

The Federal Reserve Board has released the results of its Comprehensive Capital Analysis and Review, which evaluates the capital planning processes and capital adequacy of the largest U.S.-based bank holding companies, including the firms' planned capital actions, such as dividend payments and share buybacks. Of the 35 companies subject to the CCAR, the Fed objected to the capital plan of only one firm, DB USA Corporation, due to qualitative concerns such as material weaknesses in the firm's data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress. 

The Fed issued conditional non-objections to the capital plans of Goldman Sachs, Morgan Stanley, and State Street Corporation.

OIG says CFPB should strengthen controls over contracting processes

This story appeared in Bank Digest.   

The Office of Inspector General for the Consumer Financial Protection Bureau and the Federal Reserve Board has issued a report assessing the Bureau's compliance with applicable laws, regulations, and internal policies and procedures related to the award and management of its contract with GMMB for advertising and marketing services, which it awarded in August 2013. The OIG found that while the Bureau competitively awarded the GMMB blanket purchase agreement and performed technical and price reasonableness evaluations in compliance with the Federal Acquisition Regulation, it can improve controls to help ensure compliance with other aspects of the FAR and can improve contract management. 

The OIG issued recommendations designed to strengthen the Bureau's controls over its contracting processes. The recommendations included enhancing existing policy and associated training related to contract financing and improving contract management practices.

Fed limits credit exposure of large bank holding companies and foreign banking organizations

This story appeared in Bank Digest.                                  

The Federal Reserve Board has approved a final rule to establish single-counterparty credit limits for large U.S. bank holding companies and foreign banking organizations pursuant to Sec. 165(e) of the Dodd-Frank Act. The Fed's release said that consistent with the recently passed Economic Growth, Regulatory Reform, and Consumer Protection Act, the limits in the final rule will apply only to global systemically important bank holding companies (GSIBs) and bank holding companies with at least $250 billion in total consolidated assets. The final rule is effective 60 days after its publication in the Federal Register, but compliance will not be required until Jan. 1, 2020, for GSIBs and until July 1, 2020, for all other firms.

Under the rule, a GSIB will be limited to a credit exposure of no more than 15 percent of its tier 1 capital to another systemically important financial firm, while a bank holding company with $250 billion or more in total consolidated assets will be restricted to a credit exposure of no more than 25 percent of its tier 1 capital to a counterparty. 

Foreign banks operating in the U.S. with $250 billion or more in total global consolidated assets, and their intermediate holding companies with $50 billion or more in total U.S. consolidated assets, will be subject to limits similar to those applicable to bank holding companies with $250 billion or more in assets, the Fed said.an foreclosure.