Dodd-Frank News Center

Agencies adopt standardized approach for calculating counterparty credit risk

This story appeared in Bank Digest.                                   

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have issued a joint final rule revising the standards for how firms measure counterparty credit risk posed by derivative contracts under the agencies' regulatory capital rules. The standardized approach for measuring counterparty credit risk (SA-CCR) replaces the current exposure methodology (CEM) as an alternative method for purposes of calculating advanced approaches total risk weighted assets under the capital rule.

The final rule takes effect April 1, 2020, with a mandatory compliance date of Jan. 1, 2022, for advanced approaches banking organizations.

Fed corrects comment due date for 'Assessments of Fees' proposed rule

This story appeared in Bank Digest.                                   

The Federal Reserve Board has issued a correction to its proposed rule entitled "Supervision and Regulation Assessments of Fees for Bank Holding Companies and Savings and Loan Holding Companies With Total Consolidated Assets of $100 Billion or More," which it published on Nov. 12, 2019. The proposed rule would amend the Fed's assessment rule (Regulation TT) to raise the minimum threshold for being considered an assessed company from $50 billion to $100 billion in total consolidated assets for bank holding companies and savings and loan holding companies and adjust the amount charged to assessed companies with total consolidated assets between $100 billion and $250 billion to reflect changes in supervisory and regulatory responsibilities resulting from the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The prior document provided an expired comment period end date. The Fed has issued a correction indicating that comments must be received by Jan. 9, 2020.

 

CFPB issues interpretive rule on requirements regarding loan originators with temporary authority

This story appeared in Bank Digest.

The Consumer Financial Protection Bureau has issued an interpretive rule clarifying screening and training requirements for financial institutions that employ loan originators with temporary authority to originate loans. The rule will be effective on Nov. 24, 2019.

According to the Bureau's press release, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) contemplated two categories of loan originators—those working for state-licensed mortgage companies and those working for federally regulated financial institutions. The Economic Growth, Regulatory Relief, and Consumer Protection Act established a third category—loan originators with temporary authority to originate loans, which may act as loan originators for a temporary period of time in a state while that state considers their application for a loan originator license.

 

CFPB files amicus brief in paint poisoning settlement agreement case

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau has filed an amicus brief in the case of Linton, et al. v. Consumer Protection Division. This case involves a Maryland state court's approval of a class-action settlement agreement brought by, among others, victims of lead-paint poisoning who alleged wrongdoing by a company and related persons who purchased the victims' structured settlement payments that had been awarded for their lead-related injuries.

The settlement agreement purported to release the CFPB's claims in a pending Bureau enforcement action alleging similar conduct, to enjoin class members from receiving any benefits from the Bureau's action, and to assign to the parties who caused the class members' injuries all benefits the Bureau may obtain for class members in the Bureau's action.

The CFPB argued that permitting the approval of such a settlement agreement would interfere with its authority to remediate consumer harm under the Consumer Financial Protection Act.

Kraninger speaks at CFPB symposium on ECOA data collection requirements

This story appeared in Bank Digest.                                   

Consumer Financial Protection Bureau Director Kathy Kraninger spoke at the Bureau's symposium on Section 1071 of the Dodd-Frank Act on Nov. 6, 2019, in Washington, D.C. The symposium was the third in a series announced earlier this year to explore consumer protections in the financial services marketplace. Section 1071 amended the Equal Credit Opportunity Act to add a section on small business loan data collection.

In her prepared remarks, Kraninger said Sec. 1071 "requires financial institutions to collect, report, and make public certain information concerning credit applications made by women-owned, minority-owned, and small businesses."

Kraninger noted that "the law specifically directs the Bureau to develop a rule for the collection, reporting, and publication of certain data" and said the symposium would "provide an opportunity for academics, market participants, and policy makers to discuss the hurdles and goals of an effective rule." 

CFPB receives funding for first quarter of FY 2020

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 $223.3 million would be necessary to carry out the authorities of the Bureau for the first quarter of fiscal year 2020. 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.

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 adjust exemption threshold for higher-priced mortgage loans

This story appeared in Bank Digest.                                   

The Consumer Financial Protection Bureau, Federal Reserve Board, and Office of the Comptroller of the Currency are finalizing amendments to the official interpretations for their regulations that implement Section 129H of the Truth in Lending Act, which establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies’ regulations.

These agencies, along with the Federal Deposit Insurance Corporation, National Credit Union Administration, and Federal Housing Finance Agency, issued joint final rules implementing these requirements, effective Jan. 18, 2014. These rules exempted, among other loan types, transactions of $25,000 or less and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Based on the CPI-W in effect as of June 1, 2019, the exemption threshold will increase from $26,700 to $27,200, effective Jan. 1, 2020.                          

 

Democrats urge CFPB to continue to collect all HMDA data points

This story appeared in Bank Digest.                                   

Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) and several other committee Democrats have sent a letter to Consumer Financial Protection Bureau Director Kathleen Kraninger requesting that the Bureau continue to collect all Home Mortgage Disclosure Act data points added in the CFPB's 2015 final rule.

According to the senators, "Since HMDA was enacted in 1975, Congress and regulators have repeatedly updated the HMDA statute and regulation to ensure that the data helps fulfill HMDA's stated purposes of determining whether financial institutions are serving the housing needs of their communities; assisting in distributing public-sector investment; and identifying possible discriminatory lending and enforcing antidiscrimination laws."

They went on to say, "We are deeply troubled that the CFPB announced that it would reopen the 2015 HMDA rule before the new data points had even been collected. We urge you to follow the intent of Congress and maintain collection of all data points added by the 2015 final rule."