ABA Dodd-Frank Tracker

FDIC Makes New Senior Appointments

2013-06-18T08:21:00.003-04:00

The FDIC announced two senior staff changes yesterday. Arthur Murton will become director of the office of complex financial institutions, and Diane Ellis will become director of the insurance and research division. Both appointments take effect July 28.

Read more.

Senators Emphasize Community Bank Concerns During Hearing

2013-06-14T08:49:00.000-04:00

Senators from both parties questioned whether the regulatory burden on community banks was too heavy during a Senate Banking Committee hearing yesterday on community bank performance.

“The regulatory framework that emerged out of Dodd-Frank has made it increasingly difficult for community banks to operate and maintain business presence in many communities,” said ranking member Mike Crapo (R-Idaho). "Community banks are disproportionately affected by increased regulation because they are less able to absorb additional costs."

During testimony, officials provided an overall optimistic view of community banks’ performance without significantly addressing regulatory burden.

FDIC Chief Economist Richard Brown noted that community banks continue to play a “crucial role,” representing 95% of all banking organizations, 46% of small loans to businesses and farms and a majority of deposits in rural areas and small cities.

Read more.

FDIC & CFPB Release Training for Senior Citizen Financial Education

2013-06-13T10:41:00.000-04:00

The FDIC and CFPB released an instructor-led training module designed to help senior citizens and their caregivers protect themselves from financial exploitation and make informed financial decisions. “Money Smart for Older Adults” is the latest installment in the FDIC’s “Money Smart” program.

Topics covered by the new training include scams targeting the elderly, identity theft, planning for unexpected events and disaster preparedness.

Read more and download the curriculum.

FDIC & Canadian Counterpart Sign Memo on Cross-Border Resolutions

2013-06-13T08:33:00.000-04:00

The FDIC announced it has signed a memorandum of understanding with its Canadian counterpart, the Canada Deposit Insurance Corporation (CDIC), on cross-border cooperation in resolving a large failing bank with operations in both countries.

The non-binding agreement calls for the FDIC and CDIC to enhance and increase their cooperation and information-sharing related to crisis management and contingency planning, not only during crises but also throughout normal business periods.

Read more.

Fed Clarifies Swaps Pushout Status of Foreign Banks

2013-06-06T08:17:00.002-04:00

The Federal Reserve Board issued an interim final rule clarifying that uninsured U.S. branches and agencies of foreign banks will be treated as insured depository institutions for purposes of Section 716 of the Dodd-Frank Act -- the so-called “swaps pushout” provision – which will take effect July 16.

Insured depository institutions are permitted up to a two-year period to comply with Section 716 with the possibility of an additional one year extension. The pushout provision prohibits swap dealers from accessing federal assistance, such as the discount window. The rule establishes a procedure for swap dealers that are state member banks or uninsured U.S. branches of foreign banks to request a transition period.

The rule takes effect June 5, and comments will be accepted through August 4.

Read more.

FDIC Board to Meet June 4

2013-05-30T08:14:00.004-04:00

The FDIC Board will meet on June 4 to discuss the FDIC’s final rule defining what qualifies a company as engaged predominantly in financial activities under Title II of the Dodd-Frank Act.

Read more.

ABA, Regulators Discuss Basel III Rules for S-Corp Banks

2013-05-22T08:47:00.001-04:00

Bank members and staff from ABA and the Subchapter S Bank Association met yesterday with senior officials and supervisors at the FDIC and OCC to discuss how the Basel III capital rules affect Subchapter S banks.

Among the issues addressed were the impact of the restrictions of the capital conservation buffer on the ability of Subchapter S banks to make distributions to shareholders to make tax payments, the flow through of unrealized gains and losses to capital, the proposed phase-out of trust preferred securities, mortgage risk weights, and proposed treatment of pension plans under the proposal.

More than 2,200 banks -- primarily community banks -- have chosen to organize as S corporations.

The Week Ahead: May 13 - May 17

2013-05-10T10:17:00.000-04:00

Tuesday

SEC: Roundtable on Credit Ratings Read more.

Wednesday

FDIC Teleconference: CFPB Mortgage-Related Rules Read more.
Hearing Capital Markets Committee: GSEs Read more.
Meeting: CFPBs Consumer Advisory Board Read more.
Hearing: "Who Is Too Big Too to Fail: Does Title II of the Dood-Frank Act Enshrine Taxpayer-Funded Bailouts?" Read more.

Thursday

Meeting: FDIC Advisory Committee on Economic Inclusion Read more.
Hearing HRS: SEC Oversight Read more.
Meeting: CFPBs Consumer Advisory Board Read more.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Join us at the 2013 ABIA Annual Conference
The 2013 ABIA Annual Conference is the only national event devoted exclusively to the issues and concerns of the bank-insurance industry. Our 2013 conference will offer numerous networking opportunities with industry peers and top providers.Read more and join us!

ABA, Associations Urge Fed to Reconsider Foreign Bank Rules

2013-05-01T07:44:00.000-04:00

ABA and other trade groups urged the Federal Reserve to reconsider, or at a minimum delay, new rules on the supervision of foreign banking organizations. Under the Dodd-Frank Act, the Fed has proposed to require foreign banks with significant U.S. operations to create intermediate holding companies for their U.S. subsidiaries, meet higher capital requirements and maintain stronger liquidity positions.

The groups argued that international bank regulation should be based on cooperation, and that the Fed’s “ring-fenced, balkanized approach . . . could both impair economic recovery and growth and increase, rather than decrease, systemic risk.”

They added that such ring-fencing -- especially if mandated reciprocally by other countries’ regulators -- might limit swift movement of capital in crises and create crippling layers of capital and liquidity burdens. The Fed’s proposal also jeopardizes progress on the development of international regulatory standards, they said.

Read the comment letter.

FDIC to Hold Teleconferences on Mortgage Reform Rules

2013-04-26T08:14:00.002-04:00

The FDIC will hold nationwide banker teleconferences -- focused on the CFPB’s mortgage reform regulations -- on May 2, May 15 and June 6.

The first call will focus on the ability-to-repay/QM rule, the new escrow requirements and the loan originator compensation rule. The second call will address mortgage servicing. The final call will focus on the additional aspects of the loan originator compensation rule and the HOEPA amendments.

The FDIC encourages institutions to submit questions on teleconference topics in advance of the calls.

Read more.

Regulators Issue Proposed Guidance on Deposit Advance Products

2013-04-25T10:52:00.003-04:00

The FDIC has requested comments on a proposed supervisory guidance to FDIC-supervised financial institutions that offer or may consider offering deposit advance products. The proposal is intended to ensure that banks are aware of a variety of safety and soundness, compliance, and consumer protection risks posed by deposit advance loans.

Deposit advance loans are a type of small-dollar, short-term credit product that some depository institutions offer to customers maintaining a deposit account, reloadable prepaid card, or similar deposit-related vehicle. The customer takes out a loan, which is to be repaid from the proceeds of their next direct deposit.

The FDIC recognizes the need for safe, affordable and sustainable small-dollar credit products among consumers that are underwritten with consideration of the customer's ability to repay the loan without needing to borrow repeatedly to meet necessary expenses. A number of banks are currently offering such reasonably priced small-dollar loans at reasonable terms to their customers.

The proposed guidance will be published in the Federal Register, with a 30-day comment period.

Read more.

In addition, the OCC has issued proposed supervisory guidance related to deposit advance products at federal savings associations and national banks. The proposed guidance will be published next week in the Federal Register, with a 30-day comment period.

Read more.

Fed, FDIC Issue Guidance on Resolution Plans for Large Firms

2013-04-16T13:47:00.002-04:00

The Federal Reserve and the FDIC have issued guidance and clarification for the first 11 financial firms that filed plans for their potential orderly resolution, as required by the Dodd-Frank Act.

The firms—with nonbank assets of $250 billion and up—filed their initial plans last year. The agencies’ guidance provides further information on what the firms should include in their 2013 plans, including details on potential obstacles to an orderly resolution under the Bankruptcy Code and analysis of the plans’ underlying assumptions.

The agencies also extended the 2013 filing deadline from July 1 to October 1.

Read more.

FDIC Board to Provide DIF Update

2013-04-09T07:34:00.001-04:00

The FDIC Board at its meeting Thursday will update the Deposit Insurance Fund’s projected income, losses and reserve ratios.

Read the meeting agenda.

Keating Fires Back at 'Too-Big-to-Fail' Op-Ed

2013-03-14T08:18:00.000-04:00

It's disappointing that Dallas Fed President Richard Fisher would call Dodd-Frank's too-big-to-fail solution a failure when regulators haven't even finished implementing it, ABA President and CEO Frank Keating said in a letter to the editor published in this morning's Wall Street Journal.

Keating was responding to a March 11 Journal op-ed piece by Fisher and Dallas Fed EVP Harvey Rosenblum in which they advocated restructuring large banks.

"Before we add another layer of new restrictions and corporate restructurings, it's important to consider what Dodd-Frank actually instructs regulators -- including the Fed -- to do," Keating said.

He listed several changes mandated by the reform law that target too-big-to-fail, including more stringent capital and liquidity rules, annual stress tests, living wills and creation of the Financial Stability Oversight Council.

Keating emphasized that deceptively simple solutions aren't the answer, and artificial government-mandated restructuring never works in a free-market, democratic society.

[W]e have the strongest banking sector in the world with all-size banks connected in ways that are essential to our economy.

Breaking up large institutions would destroy these synergies and drive business to foreign competitors and shadow banks, ending our country's status as a premier financial center. Let's implement the mandates Congress enacted to end too-big-to-fail and enhance our financial system -- not destroy it.

ABA Comments on Fed’s Scenario Design Framework for Stress Testing

2013-02-19T09:15:00.000-05:00

ABA and The Financial Services Roundtable submitted a comment letter on the scenario development policy statement issued by the Board of Governors of the Federal Reserve. The Dodd-Frank Act mandates banking regulatory agencies to provide at least three different sets of stressed scenarios.

The associations have concerns about several components of the policy statement and requested the Agencies:

Coordinate to provide identical stress test scenarios to depository institutions and bank holding companies;
Provide scenarios to institutions earlier to enhance institutions’ internal governance of the results;
Adopt an approach for developing supervisory stress scenarios that leads to predictable, complete, and reasonable scenarios;
Provide a more detailed written description of the adverse and severely adverse scenarios; and
Provide clarity on how the Agencies developed the international assumptions and provide additional country specific variables.

Read the full letter.

GAO: Financial Crisis Cost Economy $13 Trillion

2013-02-15T07:55:00.000-05:00

The 2008 financial crisis cost the U.S. economy as much as $13 trillion, according to a Government Accountability Office report released yesterday. The report was published as part of a Dodd-Frank Act cost-benefit analysis.

While the Dodd-Frank Act’s “reforms could enhance the stability of the U.S. financial system and provide other benefits, the extent to which such benefits materialize will depend on many factors whose effects are difficult to predict,” the report said.

According to the report, financial federal regulators reported increasing funding resources associated with implementation of the Dodd-Frank Act in 2012. The CFPB reported funding resources associated with Dodd-Frank of $432 million since 2010, while the agency has hired or redirected 831 full-time equivalent employees to positions directly related to the implementation of the Dodd-Frank Act. The Federal Reserve reported cost directly related to Dodd-Frank implementation of $163 million since 2010, while hiring or redirecting 964 full-time equivalent employees to positions directly related to the implementation.

Read the report.

FDIC Issues Proposal on Deposits in U.S. Banks' Foreign Branches

2013-02-13T08:19:00.001-05:00

The FDIC Board yesterday issued a proposed rule that would clarify that deposits in foreign branches of U.S. banks do not qualify for deposit insurance, but that they would count as deposits for purposes of preference over general creditors if the bank failed.

At issue is the U.S. "depositor preference" policy -- opposed in the United Kingdom -- that requires the FDIC to favor domestic depositors over foreign ones in the payment of failure claims above the standard U.S. deposit insurance limit.

The U.K.'s Financial Services Authority last year issued a proposal intended to ensure that U.K. depositors in foreign banks would be treated no worse than domestic depositors if the institution failed.

The FSA proposed requiring banks with such home-country depositor preference policies to convert their British branches into subsidiaries to allow U.K authorities to potentially use the failed institution's assets to pay off their citizens.

The FDIC's proposal "would allow U.S. banks with U.K. branches to exercise existing authority that would bring them into compliance with the FSA's proposal by making the deposits payable in the United States, without triggering U.S. deposit insurance coverage or the restructuring of branches in subsidiaries," FDIC Chairman Martin Gruenberg said.

ABA President and CEO Frank Keating said the association is thankful the FDIC views its proposal as the first step in a process that will include an ongoing dialogue with the industry.

"It’s critical that we avoid balkanizing our smooth and efficient international banking system by creating disparate rules that make it harder for banks to serve customers that conduct business overseas," Keating said.

"More time is needed to develop a system that addresses the FDIC and U.K. banking regulators’ concerns while posing fewer operational burdens for U.S. financial institutions,” he said.

There will be a 60-day comment period on the proposed rule after its publication in the Federal Register.

Read more.
Read an FDIC staff memo on the proposed rule.
Read the proposed rule.
Read Keating’s statement.

FDIC Board To Meet Next Tuesday

2013-02-06T09:13:00.005-05:00

The FDIC Board will meet on Feb. 12. The only item on the discussion agenda is the consideration of a proposal to clarify the definition of an insured deposit.

Read the meeting agenda.

FDIC Selects New Members for Community Bank Advisory Committee

2013-01-30T09:57:00.004-05:00

The FDIC has selected eight new members for its Advisory Committee on Community Banking.

The committee, which was established in 2009, provides the FDIC with community banks’ perspectives on such topics as bank examinations, deposit insurance assessments, insurance coverage, regulatory compliance, and credit and lending practices.

The new members will join seven other community bankers already serving on the panel.

Read more.

ABA Distributes Business-of-Banking Guide to Lawmakers

2013-01-24T08:12:00.000-05:00

ABA this week distributed to Capitol Hill offices a new resource to help lawmakers evaluate legislative proposals affecting banks. "The Business of Banking: What Every Policy Maker Needs to Know" reviews the basics of banking and provides a foundation for understanding how banking policy decisions affect communities and constituents.

“Policy issues surrounding banking can be complex, but the basic business of banking is not,” ABA President and CEO Frank Keating wrote in a cover memo to the guide. “Banks convert customer deposits and other funds to loans that help individuals, businesses and the economy grow. With growth comes jobs, and with jobs comes prosperity.”

Keating added that since banks’ fundamental mission is a vital one, policies should help rather than hinder it. “Congress, regulators and banks have a shared vested interest in the health and success of America’s banking industry,” he said.

Bankers can download the guide at aba.com/businessofbanking.

GAO: Complexity, Coordination Delaying Some Key DFA Rules

2013-01-24T08:05:00.000-05:00

The complexity and interconnected nature of some Dodd-Frank Act-mandated rules has caused regulators to fall behind in implementing them, according to a Government Accountability Office report.

As of December 2012, regulators had issued final rules on about 48% of the 236 GAO-identified Dodd-Frank provisions that require regulations, the report said. Of the remaining provisions, regulators had proposed rules for about 29%, and had not acted on about 23%.

“Regulators noted that completing rules has taken time because of the number and complexity of the issues, and because many rules are interconnected,” the GAO said. As an example, the report cited the Volcker Rule’s implementation, which requires coordination among five regulatory agencies.

Although regulators have established mechanisms to facilitate coordination and believe coordination efforts have improved the quality of the rulemakings, several regulators indicated that coordination increased the amount of time needed to finalize rulemakings.

It added that regulators have made developing responsive, appropriate rules a higher priority than meeting tight statutory deadlines. “As a result, some important rules may take the longest to develop,” said the GAO, which made no new recommendations.

Read the GAO report.

The Week Ahead: January 21 – January 25

2013-01-18T07:59:00.000-05:00

Tuesday

Comment Due SEC: Capital & Marginal Requirements on Swaps. Read more.
Comments Due FDIC: Development and Distribution of Annual Stress Test Scenarios. Read more.

Thursday

ABA Telephone Briefing: Managing 2013 Compliance Priorities. Read more and register.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Join us at the ABA Government Relations Summit
The ABA Government Relations Summit is your opportunity to educate lawmakers and regulators about the vital role banks play in the economy. It’s also a time to meet with new leadership and advocate for policy change to support the banking industry. Read more and join us this April!

The Week Ahead: January 14 – January 18

2013-01-11T07:51:00.003-05:00

Tuesday

Comments Due CFPB: Electronic Fund Transfers Implementation Delay. Read more.
Meeting FDIC: Final Rule on Higher-Risk Mortgage Appraisals. Read more.

Wednesday

Meeting OCC: Mutual Savings Association Advisory Committee. Read more.

Thursday

CFPB Field Hearing: Mortgage Policy. Read more and RSVP.

FDIC to Consider Final Rule on Higher-Risk Mortgage Appraisals

2013-01-10T07:57:00.003-05:00

The FDIC Board will hold an open meeting next Tuesday, January 15 at 10 a.m. to consider a Dodd-Frank Act-mandated final rule that will establish new appraisal requirements for “higher-risk mortgage loans.” The FDIC, along with five other federal financial regulatory agencies, issued the proposed rule last August.

Read the meeting agenda.

OCC to Grant More Time to Comply With DFA Swaps Provision

2013-01-04T08:04:00.001-05:00

The OCC has issued guidance saying that the agency will favorably consider banks’ requests for up to a two-year transition period to comply with the Dodd-Frank Act’s Section 716—the so-called “swaps pushout” provision.

The provision prohibits banks that are designated as swap entities from using the federal assistance they receive—such as federal deposit insurance or access to the discount window—to support certain swaps activities.

“Each request must be written and specify the transition period appropriate to the institution, up to a two-year transition period commencing from July 16,” the provision’s effective date, the OCC guidance said.

The transition requests, among other things, must outline how the institution plans to comply with the new restrictions, and also how a “transition period would mitigate adverse effects on mortgage lending, small business lending, job creation and capital formation.”

Banks must submit the written requests Jan. 31.

Read more.