Dodd-Frank News Center

Fed adopts proposal to extend, revise 'Complex Institution Liquidity Monitoring Report'

This story appeared in Bank Digest.                                   

The Federal Reserve Board is adopting a proposal to extend for three years, with revision, an existing information collection entitled "Complex Institution Liquidity Monitoring Report." The revisions are applicable as of March 31, 2019. According to the Fed, this collection is used to monitor the overall liquidity profile of certain institutions it supervises.

On Dec. 28, 2018, the Fed published a notice at 83 Federal Register 67285 requesting public comment for 60 days on the proposal. The comment period has expired, and the Fed did not receive any comments, so the revisions will be implemented as proposed.

Brown comments on regulatory decisions

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) has issued statements on several recent regulatory decisions involving: (1) the countercyclical capital buffer, which requires big banks to set aside extra capital to absorb potential loan losses in the event of an economic downturn; (2) a proposed rewrite of the Volcker Rule; and (3) proposed interpretive guidance from the Financial Stability Oversight Council that would change the process for designating nonbank financial companies as systemically important financial institutions.

Regarding the Federal Reserve Board's decision to keep the countercyclical capital buffer at its current level of 0 percent, Brown said he was disappointed with the decision and added, "Banks are doing well, but there are certainly growing risks in the economy. Now is exactly when the buffer should be used to make sure that the banks have enough capital for those eventual bad times."

Commenting on a potential revision of the proposed Volcker Rule rewrite, Brown said it was "no surprise that when Wall Street banks complained that the proposed rewrite of the Volcker Rule wasn't weak enough, Trump regulators went to work watering it down further."

Finally, Brown said the FSOC's new proposed guidance "ignores the damage done to our financial system during the last crisis and the risks still posed by shadow banks and other financial institutions. FSOC is no longer protecting financial stability or taxpayers."

Fed to limit CCAR 'qualitative objection'; CCAR instructions released

This story appeared in Bank Digest.                                   

The Federal Reserve Board has issued a final rule that will limit the use of the "qualitative objection" in its Comprehensive Capital Analysis and Review exercise, effective for the 2019 cycle. The Fed has also released the instructions for this year's CCAR exercise.

The Fed said that for the largest and most complex firms, CCAR includes both a quantitative evaluation of a firm's capital adequacy under stress and a qualitative evaluation of its abilities to determine its capital needs on a forward-looking basis. As applicable, a firm must pass both the quantitative and qualitative evaluation or the Fed may object and restrict the firm's shareholder distributions.

 According to the Fed, the qualitative objection has been eliminated for most firms due to improvements in capital planning made by the largest firms.

Fed issues guidance on new large financial institution rating system

This story appeared in Bank Digest.

The Federal Reserve Board has issued guidance on the new rating system for the supervision of large financial institutions (LFIs). According to the Fed, this "LFI rating system" would replace the current bank holding company rating system (referred to as the "RFI rating system") for these firms.

The LFI rating system supports the Fed's supervisory program for all LFIs, including the largest firms that pose the greatest risk to U.S. financial stability, which are supervised under the authority of the Large Institution Supervision Coordinating Committee (LISCC).

The Fed will assign initial LFI ratings to firms in the LISCC portfolio in early 2019, and for all other firms subject to the LFI rating system, the Fed will assign initial ratings in early 2020.

OIG finds ‘medium’ risk level in CFPB's travel card program

This story appeared in Bank Digest.  

The Office of Inspector General for the Consumer Financial Protection Bureau and the Federal Reserve Board has conducted a risk assessment of the Bureau's travel card program for fiscal year 2018 to determine the necessary frequency and scope of travel card audits.

The specific objective of the report was to analyze the risks of illegal, improper, or erroneous purchases and payments associated with the Bureau's travel card program in order to determine an overall risk level for the program. The scope of the report included travel card purchases from Oct. 1, 2017, through Sept. 30, 2018.

The OIG said the results of the risk assessment show that the risk of illegal, improper, or erroneous use in the Bureau's travel card program is "medium," which means that while illegal, improper, or erroneous use is likely to occur, such an occurrence would be expected to have a limited effect on current operations and long-term objectives.

Fed finalizes changes to stress testing program

This story appeared in Bank Digest.                                     

The Federal Reserve Board has finalized a set of changes intended to increase the transparency of its stress testing program for the nation's largest and most complex banks. The Fed said the changes are intended to improve public understanding of the program while maintaining its ability to independently test large banks' resilience.

According to the Fed's press release, the first change, which will begin for the 2019 stress test cycle and expand in subsequent years, will provide significantly more information about the stress testing models used in the Fed's annual Comprehensive Capital Analysis and Review. In addition, the Fed finalized a stress testing policy statement and modified its framework for the design of the annual hypothetical economic scenarios. The policy statement will take effect 30 days after its publication in the Federal Register.

Fed approves TLAC conversion trigger for IHCs

This story appeared in Bank Digest.

The Fed has sent letters to several intermediate bank holding company subsidiaries of foreign global systemically important banking organizations communicating the Fed’s approval, under Regulation YY, of a contractual provision that must be included in certain debt issued by U.S. intermediate holding companies of foreign GSIBs under the Fed’s regulation regarding total loss-absorbing capacity or TLAC Rule.

The letters were sent to UBS Americas Holding, LLC; MUFG Americas Holdings Corporation; HSBC North America Holdings, Inc.; DB USA Corporation; Credit Suisse Holdings U.S.A; BNP Paribas USA, Inc.; and Barclays US, LLC.

Fed extends 'Pillar 2 Guidance' information collection

This story appeared in Bank Digest.

The Federal Reserve Board is adopting a proposal to extend for three years, without revision, an existing information collection entitled "Basel II Interagency Pillar 2 Supervisory Guidance (Pillar 2 Guidance)." According to the Fed's notice, this collection concerns the maintenance of documentation by banks and bank holding companies in connection with their use of the advanced approaches framework.

On Oct. 22, 2018, the Fed published a notice at 83 Federal Register 53248 requesting public comment on the proposal, but it did not receive any comments.

 

Portman introduces bill to create separate inspector general for CFPB

This story appeared in Bank Digest.                                   

Senator Rob Portman (R-Ohio) has introduced legislation to create a dedicated, Senate-confirmed inspector general for the Consumer Financial Protection Bureau. Several Republican senators served as original cosponsors of the bill.

According to Portman's release, the CFPB currently shares an IG with the Federal Reserve Board, but unlike most major agency IGs, the Fed's is a "designated federal entity IG" hired by the Fed Chairman, rather than one appointed by the President with the advice and consent of the Senate.

Portman issued a statement saying, "Installing a dedicated, Senate-confirmed internal watchdog at the CFPB will provide greater transparency and accountability at the CFPB. Given the vast powers of this large bureaucracy and the CFPB's insulation from congressional oversight, it is critical that it have an independent IG to ensure robust oversight."

CFPB receives funding for second quarter of FY 2019

This story appeared in Bank Digest.

In a funding request letter to the Federal Reserve Board, Consumer Financial Protection Bureau Director Kathy Kraninger said that $122,800,000 would be necessary to carry out the authorities of the Bureau for the second quarter of fiscal year 2019. As required by law, each fiscal quarter the Fed transfers to the CFPB the amount of funds formally requested by the director.

The Fed sent a letter to the CFPB's chief financial officer stating that the requested funds had been deposited into the Bureau of Consumer Financial Protection Fund at the Federal Reserve Bank of New York.