Dodd-Frank News Center

FDIC proposed rule would mitigate deposit insurance assessment effects of participating in COVID-19 programs

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation has approved a notice of proposed rulemaking that would mitigate the deposit insurance assessment effects of participating in the Small Business Administration’s Paycheck Protection Program and the Federal Reserve Board’s Paycheck Protection Program Lending Facility and Money Market Mutual Fund Liquidity Facility. The proposed rule would ensure that banks will not be subject to significantly higher deposit insurance assessments for participating in these programs. The FDIC is proposing an effective date by June 30, 2020, and an application date of April 1, 2020. Comments on the proposed rule will be accepted for seven days after publication in the Federal Register.

Bill introduced to ensure state regulation of insurance savings and loan holding companies

This story appeared in Bank Digest.                                     

Representatives Keith Rothfus (R-Pa) and Joyce Beatty (D-Ohio) have introduced the State Insurance Regulatory Preservation Act (H.R. 5059), which is intended to ensure that insurance savings and loan holding companies that meet applicable state and federal capital standards are regulated by the states. According to Rothfus's press release, the Dodd-Frank Act brought ISLHCs, which contain thrifts, under the supervision of the Federal Reserve, creating "regulatory inefficiency and unnecessary duplication of effort." 

The release said this bill would ensure that state regulators are responsible for day-to-day supervision of ISLHCs but would allow the Fed to take a more active role if these companies fail to adhere to the bill's requirements. Under H.R. 5059, thrifts would continue to be regulated by the Office of the Comptroller of the Currency.

 

FSOC rescinds AIG nonbank financial company designation

This story appeared in Bank Digest.                                  

The Financial Stability Oversight Council announced that it has rescinded its determination that material financial distress at American International Group, Inc. (AIG) could pose a threat to U.S. financial stability and that AIG would be subject to supervision by the Board of Governors and enhanced prudential standards. The Dodd-Frank Act requires the Council to reevaluate its nonbank financial company determinations at last annually.

Duffy and Moore introduce bill to limit CFPB's authority to regulate insurance business

This story appeared in Bank Digest.                                  

Representatives Sean Duffy (R-Wis) and Gwen Moore (D-Wis) have introduced the Business of Insurance Regulatory Reform Act, which would limit the jurisdiction of the Consumer Financial Protection Bureau in regulating the insurance business. According to Duffy's press release, the CFPB is prohibited under the Consumer Financial Protection Act from regulating the "business of insurance," but the Bureau has nevertheless "demonstrated an interest in insurance products and has pushed the boundaries of its own authority by regulating products that fall under the purview of state insurance regulators."

Fed extends comment period for its insurance company capital proposal

This story appeared in Bank Digest.

The Federal Reserve Board has extended until Sept. 16, 2016, the comment period for the advanced notice of proposed rulemaking detailing conceptual frameworks for capital standards that could apply to systemically important insurance companies and to insurance companies that own a bank or thrift. Comments had previously been due by Aug. 17, 2016.

The ANPR, which was approved by the Fed at its June 3, 2016, meeting, and published in the June 14, 2016, Federal Register, seeks comments on the Building Block Approach and the Consolidated Approach that would be used to establish regulatory capital requirements for supervised insurance institutions.

In its notice extending the comment period, the Fed said that given "the range and complexity of the issues addressed in the ANPR," an extended comment period "allow[s] interested persons additional time to analyze the proposal and prepare their comments."

Fed lays foundation to regulate insurance companies

This story appeared in Bank Digest.

At its June 3, 2016, open meeting, the Federal Reserve Board approved two regulatory proposals that would lay the groundwork for the agency to apply enhanced prudential standards to systemically important insurance companies and establish tailored capital requirements for institutions engaged in significant insurance activities as required by the Dodd-Frank Act.

In an advance notice of proposed rulemaking, the Fed is seeking comments on two approaches--the Building Block Approach and the Consolidated Approach--that would be used to establish regulatory capital requirements for supervised insurance institutions. The type of approach used to establish capital requirements would be based on the type of insurance institution. Either approach would apply to nonbank financial companies significantly engaged in insurance activities that the Financial Stability Oversight Council has determined shall be supervised by the Fed (systemically important insurance companies) and to bank holding companies and savings and loan holding companies significantly engaged in insurance activities (commonly known as insurance depository institution holding companies).

The second proposal approved by the Fed would implement the requirements of Section 165 of the Dodd-Frank Act, which directs the Fed to establish enhanced prudential standards for nonbank financial institutions that the FSOC has designated to be systemically important insurance companies. If finalized, the enhanced prudential standards would apply to American International Group, Inc., and Prudential Financial, Inc. Comments on both the ANPR and proposed rule are due by Aug. 2, 2016.

• Opening Statement by Fed Chair Janet L. Yellen
• Opening Statement by Fed Governor Daniel K. Tarullo
• Board Memo: Insurance ANPR
• Enhanced Prudential Standards for Systemically Important Insurance Companies
• Board Memo: Enhanced Prudential Standards

House passes Policyholder Protection Act

This story appeared in Bank Digest. 

The House of Representatives has passed the Policyholder Protection Act (H.R. 1478), which was introduced by Reps. Bill Posey (R-Fla) and Brad Sherman (D-Calif) and is intended to ensure that personal insurance policies will not be raided in order to prop up failing financial institutions, according to Posey's press release.

The bill guarantees that state insurance regulators will have authority to protect insurance funds or assets from being used as a "source of strength" by an affiliated institution like a bank regardless of how an insurance company is structured. The release said the legislation also addresses a provision under current law by which the Federal Deposit Insurance Corporation could take a lien on the assets of an insurance company that is part of a larger financial group without concern for how policyholders would be affected. In addition, it requires the FDIC to notify state insurance regulators when it intends to take a lien on insurance company assets and to consult with the states on how this action could affect policyholders.

A Senate version of the bill (S. 798) has been introduced by Sens. David Vitter (R-La) and Jon Tester (D-Mont) and awaits action on the Senate floor.

House/Senate bills would protect insurance policy holders from being forced to bailout financial firms

This story appeared in Bank Digest.

Representatives Bill Posey (R-Fla) and Brad Sherman (D-Calif) have joined with Senators David Vitter (R-La) and Jon Tester (D-Mont) to introduce the Policyholder Protection Act (H.R. 1478, S. 798), bipartisan legislation to ensure that your personal insurance policies won't be raided to prop-up failing financial institutions. Specifically, the legislation would clarify the intended authority of state insurance regulators to wall-off insurance companies organized under thrift holding companies from being held financially responsible for an affiliated bank's failure or financial stress. Under current law, there exists an opportunity that the state regulator would be kept out of the process of an orderly liquidation, conducted by the Federal Deposit Insurance Corporation, to ensure the proper steps are taken to protect policy holders.

Capuano introduces Subsidy Reserve Act

This story appeared in Bank Digest.

Representative Mike Capuano (D-Mass) has introduced The Subsidy Reserve Act of 2015 (H.R. 888) which requires financial entities with assets over $500 billion, those perceived as "too big to fail," to maintain capital equal to the amount of the subsidy they receive from taxpayers to weather a future crisis. According to Capuano, "The idea behind the legislation is simple. If banks get a subsidy, it should be quantified and banks should hold capital sufficient to cover it. If they don't get a subsidy, the legislation won't have any impact on them."

Fed announces quantitative impact study to evaluate revised regulatory capital framework

This story appeared in Bank Digest.

The Federal Reserve Board has announced that it will begin a quantitative impact study (QIS) to evaluate the potential effects of its revised regulatory capital framework on savings and loan holding companies and nonbank financial companies supervised by the Board that are substantially engaged in insurance underwriting activity (insurance holding companies).

The QIS is being conducted to allow the Board to better understand how to design a capital framework for insurance holding companies it supervises that is compliant with the Collins Amendment. Information collected through the QIS would allow for further exploration of areas of concern raised by commenters during the proposal stage of the revised regulatory capital framework rulemaking.

The Fed has contacted the insurance holding companies it supervises requesting their participation in the QIS and asking for the information submission by Dec. 31, 2014

• Press release
• Cover letter
• Study instructions
• Reporting template
• Supplemental response