ABA Dodd-Frank Tracker

Insurance SIFI Designations Concern Congress Members

2014-09-03T10:57:00.003-04:00

Scott Garrett (R-NJ) and six other members of congress wrote to Treasury Secretary Jacob J. Lew expressing concerns over the apparent lack of empirical analysis leading up to the designation of insurance companies as Systemically Important Financial Institutions (SIFIs). The members of congress note that there is a stark contrast between the treatment of the asset management industry and the insurance industry with regard to the research and analysis leading up to the SIFI designation. More specifically, the members of congress state that, before additional insurance companies are designated as SIFIs, Secretary Lew should:

Direct the OFR to act on the recommendation to “conduct a detailed study to determine whether and where systemic risk issues may arise in the insurance industry and how such risks are currently handled in the regulatory framework”
Hold a public conference on the insurance industry similar to the asset management conference to better understand the unique risks, challenges and business models of insurance companies
Direct the FSOC staff to undertake a more focused analysis of industry wide products and activities to assess potential risks associated with the insurance industry

CFPB and Financial Research on Hill Agenda

2014-01-27T08:56:00.003-05:00

CFPB Director Richard Cordray will deliver his semi-annual report to the House Financial Services Committee Tuesday at 10 a.m. Also, this week the Senate Banking Committee will meet on Wednesday at 3:30 to discuss the activities of the Treasury Department’s Office of Financial Research.

The Week Ahead: January 27 - January 31

2014-01-24T11:00:00.000-05:00

Tuesday

Hearing: The Semi-Annual Report of the Consumer Financial Protection Bureau Read more.

Wednesday

Telephone Briefing: Volcker Rule Read more.
Hearing OFR: Annual Report and Oversight of the OFR Read more.

Friday

Comments Due: FDIC, FRS, OCC: Liquidity Regulation WW Read more.
Final Rule FRS: Prohibiting Federal Assistance to Swap Entities Read more.

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

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Hearing Senate Banking Committee: OFR

2014-01-23T11:26:00.001-05:00

The Economic Policy Subcommittee of the Senate Banking Committee will hold a hearing on the annual report of the Treasury Department’s Office of Financial Research next Wednesday. OFR Director Richard Berner will testify.

Read more.

Spending Bill Includes Additional OFR Reporting Requirements

2014-01-14T09:57:00.004-05:00

House and Senate negotiators last night unveiled a $1.1 trillion omnibus appropriations bill that would fund the government through fiscal year 2014.

The package includes additional reporting requirements intended to "increase transparency of the activities of agencies whose funding jurisdiction fall outside annual congressional review, including the Office of Financial Stability and the Office of Financial Research," according to a House Appropriations Committee summary. The OFR, created by the Dodd-Frank Act, would be required to submit quarterly reports to four committees in Congress: the House and Senate appropriations committees, House Financial Services Committee and the Senate Banking Committee.

In addition, the bill includes $1.35 billion for the SEC, which is $29 million above the fiscal year 2013 enacted level and $324 million below the budget request and the Senate bill. The bill designates $44 million of the total for the Division of Economic and Risk Analysis to improve the use of economic analysis in the Commission’s rule-making process.

The CFTC also would receive increased funding to $215 million, $10 million above the fiscal year 2013 level, but $100 million below the Administration’s budget request. CFTC officials have said that without a budget increase along the lines of what was in the president’s request the agency will have difficulty meeting all its responsibilities under the Dodd-Frank Act.

The House and Senate are expected to consider the package this week.

Read more about the bill.

OFR Released FY 2013 Annual Report

2013-12-18T09:04:00.003-05:00

In its FY 2013 Annual Report, the OFR documented its key findings from research and analysis of the financial system, analysis of potential threats to financial stability, and the status of the Office’s efforts in accomplishing its mission. In his letter, Director Richard Berner said the state of the economy has improved since the OFR’s inception, although financial threats still persist. Berner wrote:

“The current financial environment, marked by low interest rates and low volatility, has spurred risk taking, making markets and institutions more vulnerable to a sharp increase in interest rates, volatility, or both.”

Also in the report, OFR released two new analytical tools to assess and monitor threats to financial stability, one of them being a Financial Stability Monitor provides a snapshot of several financial stability indicators.

Read the report.

FSOC to Meet December 9

2013-12-05T09:56:00.004-05:00

On Monday, December 9, 2013, Secretary Jacob J. Lew will preside over an open session of the FSOC. The Council will discuss, among other topics, cybersecurity and receive a presentation from the Office of Financial Research (OFR) on financial market developments.

Read more.

OFR Report: Asset Management and Financial Stability

2013-10-01T10:27:00.005-04:00

The Office of Financial Research (OFR) delivered a report, Asset Management and Financial Stability, to the Financial Stability Oversight Council (FSOC) on ways that activities in the asset management industry could pose risks to the financial stability of the U.S. by creating, amplifying, or transmitting stress through the financial system.

The OFR is an Office within Treasury established by Congress to serve the FSOC and its member agencies. The establishment of FSOC was mandated by the Dodd-Frank Act to monitor the stability of the nation’s financial system.

The OFR studied the activities of asset management firms and funds at the request of the FSOC.

Read the report.

Financial Stability Board Peer Review of the U.S.

2013-08-28T11:34:00.001-04:00

The FSB published a peer review of the U.S., that examines the progress made on three topics: systemic risk oversight arrangements; supervision and oversight of financial market infrastructures (FMIs); and insurance supervision.

From the FSB press release:

To a large extent, the reforms analyzed in this review focus on the need to ensure effective and efficient coordination and information sharing arrangements and to address any overlaps or gaps in the roles and responsibilities of the relevant U.S. agencies, given the complex and fragmented U.S. regulatory and supervisory structure.

Good overall progress has been made by the U.S.…

The peer review found that good progress has been made to establish systemic oversight arrangements. Some recommendations to further enhance its effectiveness included: developing a more systematic, analytical and transparent macroprudential framework for coordinating the work of its member agencies to address systemic risk; providing a more in-depth and holistic analysis of systemic risks to financial stability; and enhancing the role of the OFR.

In addition, the FSB noted the U.S. has begun to address the insurance sector. In particular, the Federal Insurance Office was established under the Dodd-Frank Act; the FSOC recently designated an insurance company as systemically important; and information sharing and coordination between state regulators and federal authorities has increased. However, significant additional work is required.

Read more.

Gruenberg on Dodd-Frank Rulemaking Progress

2013-07-11T09:21:00.000-04:00

In prepared remarks for a Senate Banking Committee hearing today Chairman Martin Gruenberg commented on the FDIC’s progress on policies and strategies to build a more effective resolution framework for large, complex financial institutions as mandated by the Dodd-Frank Act.

The FDIC is working on a Statement of Policy which would provide more clarity on the resolution process. Gruenberg noted the FDIC anticipates to release a proposal for public comment before the end of the year.

Gruenberg also commented on the banking industry’s progress in raising the quality and quantity of capital in the industry. Speaking of the new capital rules released this week, Gruenberg stated: “Going forward, the rule would have the effect of preserving and maintaining the gains in capital strength the industry has achieved in recent years.”

Read Gruenberg’s prepared testimony.

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.

OFR & FSOC 2nd Annual Conference

2012-12-06T08:03:00.005-05:00

The Office of Financial Research (OFR) and the Financial Stability Oversight Council (FSOC) are co-hosting their second annual conference today entitled “Assessing Financial Intermediation: Measurement and Analysis.”

The conference brings together thought leaders from the research and regulatory communities, public interest groups, and the financial services industry to discuss challenges to financial stability posed by evolving financial activities. This year’s conference examines recent changes in financial institutions, markets, and activities, and explores the future implications for financial stability, risk management, and policy.

Read the conference agenda.
Watch a webcast of the conference.

OFR’s Financial Research Advisory Committee

2012-11-20T11:01:00.002-05:00

The Financial Research Advisory Committee of the Treasury's Office of Financial Research (OFR) has announced it will hold its first meeting on Wednesday, December 5, 2012.

The Committee will provide advice to the OFR, bring diverse perspectives to inform the OFR’s research-and-data agendas, and help the OFR fulfill its mission by developing and employing best practices for data management, data standards, and research methodologies.

The Dodd-Frank Act established the OFR within the Treasury to serve the Financial Stability Oversight Council (FSOC), its member agencies, and the public by improving the quality, transparency, and accessibility of financial data and information; conducting and sponsoring research related to financial stability; and promoting best practices in risk management.

The Financial Research Advisory Committee is made up of 30 members include two Nobel laureates in economics; leaders in business and nonprofit fields; and prominent researchers at major universities and think tanks.

The meeting will begin at 10 a.m. and will be open to the public via live webcast here.
Read more including a full list of members.

Tarullo on Financial Stability Regulations

2012-10-11T11:08:00.001-04:00

Federal Reserve Governor Daniel Tarullo spoke at the University of Pennsylvania Law School on financial stability regulations, primarily the Dodd-Frank Act and its effect on financial stability.

Dodd-Frank creates a legal and institutional framework within which financial stability regulation is to be developed but, with a couple of notable exceptions, it does not delineate the steps that should actually be taken to promote financial stability.

The necessarily somewhat extemporized character of Dodd-Frank has had several consequences for the development of financial stability regulation.

First, many of the new authorities and requirements of Dodd-Frank require extensive elaboration through administrative rulemaking, often coordinated or agreed among three or more agencies.

Second,…the provisions of the law that use the concept of risk to financial stability as a directly applicable legal standard provide only general guidance for regulators in applying that standard.

Third, broad as Dodd-Frank is in some respects, it does not grant direct regulatory authority in some areas that academic and agency analysis suggests may pose systemic risk.

Finally, the law made important institutional changes, creating novel governmental entities specifically designed to address financial stability, and binding existing agencies more closely together in their rulemaking and supervisory activities. The relationships among existing agencies and the evolving practice of these new entities may in turn pose some novel practical and administrative law issues.

Tarullo also spoke of the money market mutual funds market, noting it was unfortunate the SEC has not begun to form new regulations and rules for the market. Tarullo noted the money market funds remain a threat to financial stability and that having the Financial Stability Oversight Council (FSOC) or the Federal Reserve step in to regulate the market would be a worse option for all involved.

FSOC could designate money market funds as systemically important and thus subject the market to the prudential requirements under the Dodd-Frank Act.

Read Tarullo’s full speech.

The Week Ahead: September 17—September 21

2012-09-14T08:23:00.001-04:00

Tuesday

Comments Due Treasury: Nonbank Assessment Fees to Fund OFR. Read more.

Thursday

Comment Due CFTC: Clearing Exemption for Interaffiliate Swaps. Read more.
Meeting GMU: Using Disparate Impact Analysis to Establish Discrimination in Lending. Read more.
Hearing HFS: Semi-Annual Report of the CFPB. Read more.

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

Countdown to Convention
The ABA Annual Convention, Oct. 14-16 in San Diego, is our time to unite, commit and connect as we examine challenging issues and think strategically about how to compete and keep the lead. Look for insightful, nationally recognized speakers and learn from pragmatic strategic solutions sessions on critical topics. A Directors’ Forum, peer roundtables and gala receptions round out the experience. The countdown to California is underway — be there!

GAO: FSOC & OFR Lack Accountability & Transparency

2012-09-13T12:17:00.000-04:00

A GAO report released today found that two powerful regulatory organizations created by the Dodd-Frank Act lack an effective level of accountability and transparency. The GAO report found the new organizations—the Financial Stability Oversight Council (FSOC) and Office of Financial Research (OFR)—face challenges in achieving their missions.

Key FSOC missions—to identify risks and respond to emerging threats to financial stability—are inherently challenging, in part, because risks to financial stability often do not arise in similar manners. In addition, collaboration among FSOC members can also be challenging, as most represent independent agencies that retained existing authorities.

The OFR faces challenges of trying to establish and build a world-class research organization while meeting shorter-term goals and responsibilities.

The GAO report concluded the FSOC and OFR could be enhanced by providing greater accountability and transparency and made ten recommendations to aid the organizations.

The report is the result of an extensive, nine-month audit by the GAO at the request of the Financial Services Committee Chairman Spencer Bachus and Oversight and Investigations Subcommittee Chairman Randy Neugebauer.

Read the full report.

Keating Offers Perspective on DFA Anniversary

2012-07-23T08:10:00.000-04:00

The Dodd-Frank Act has made the American regulatory system hard for the typical bank to digest, ABA President and CEO Frank Keating told CNN in a program that aired on Saturday, the two-year anniversary of the law’s enactment.

Keating noted that banks are subject to an “alphabet soup of regulations.” Banks are subject to rules from numerous agencies, including the FSOC, the Fed, the FDIC, the OCC and the CFPB.

You want a regulatory system you can actually chew and digest. And when you’re looking at Dodd-Frank, with 240 rules, 100 yet to be written, 8,000 pages of proposed and final rules -- how many Dostoevsky and Danielle Steele novels is that? It’s pretty hard for these small banks to digest.

Watch the interview.

OFR Releases Annual Report

2012-07-23T06:18:00.001-04:00

The Office of Financial Research released its first annual report to Congress, a 150-page document that covers its progress on four goals:

Analyzing Threats to Financial Stability: an analysis of the six basic functions of the financial system—credit allocation and leverage, maturity transformation, risk transfer, price discovery, liquidity provision, and facilitation of payments—and an assessment of how threats may disrupt their functioning.

Conducting Research on Financial Stability: an analysis of three specific priority areas identified in Dodd-Frank: To develop metrics for measuring risks to financial stability; to evaluate stress tests that can aid in financial stability analysis; and to promote best practices in financial institution risk management.

Addressing Data Gaps: a description of how the OFR is working to identify and address data needs and data gaps among regulators and to define best practices that can be leveraged across FSOC member agencies.

Promoting Data Standards: an outline of the OFR’s goals for data standards
include the need for data integrity and quality control, data security, datasharing protocols, and data management.

Read the full report.

The Week Ahead: July 16 - July 20

2012-07-13T11:49:00.001-04:00

Monday

Final Rule Effective: FDIC's Swaps Pushout Effective. Read the Agencies' guidance.

Thursday

Comments Due CFPB: Consumer Complaint Data. Read more.
Hearing HFS: DFA Impact on Families, Communities, & Small Businesses. Read more.
Hearing HFS: DFA Impact on Consumer Choice, Access to Credit. Read more.

Friday

Final Rule Effective: Treasury's Assessment Fees to Fund OFR. Read more.
Interim Final Rule Effective: Treasury's Nonbank Assessment Fees to Fund OFR. Read more.
FDIC Info Session Dallas: Basel III for Community Banks. Read more.

Saturday

Interim Final Rule Effective: OCC's Lending Limit Rule. Read more.
Prohibition of Federal Assistance to Swaps Entities. Read ABA's summary.
Removal of Statutory References and Use of Credit Ratings. Read ABA's summary of credit rating changes.
Restrictions on Lending to Insiders. Read ABA's summary.

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

ABA Fair Lending Toolbox The ABA Toolbox on Fair Lending will help bankers review the systems they have in place to continue their strong record of compliance with fair lending laws and regulations. This set of tools provides a framework for developing your Systems, Monitoring, Assessment, Accountability, Response, and Training needed. The concepts and tools discussed in this toolbox will help banks and their boards realize just how SMAART their programs are—and how little they need to do to adapt to current regulatory expectations. Read More.

SEC & CFTC Implementing Derivatives Reform

2012-05-22T11:02:00.001-04:00

The Senate Banking Committee will hold an open hearing today at 10:00 a.m. entitled “Implementing Derivatives Reform: Reducing Systemic Risk and Improving Market Oversight.” SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler will give testimony.

Title VII of the Dodd-Frank Act creates an new regulatory regime for over-the-counter (OTC) derivatives, authorizing the SEC and CFTC to write a number of new regulations.

In her prepared testimony SEC Schapiro stated, in the near term the SEC expects to complete the last of the core elements of the proposal phase, in particular, rules related to the financial responsibility of security-based swap dealers and major security-based swap participants. The SEC also expects to complete joint rulemaking on the product definitions with the CFTC in the “very near term.”

The witnesses also discussed the global impact of these reforms. CFTC Gensler outlined the CFTC’s upcoming proposal on the cross-border application of Dodd-Frank swaps market reforms for the committee. Gensler yesterday introduced the upcoming proposal at the FINRA Annual Conference.

During the Q&A session following the testimony, both Schapiro and Gensler stated it is not their agencies’ desire to remove risk from the banking industry through these regulations, remarking banks have managed risk for the markets for years and do markets a great service by managing this risk.

Watch the hearing live.
Read SEC Chairman Mary Schaprio’s testimony.
Read CFTC Chairman Gary Gensler’s testimony.

Treasury Assessment Fee Rules to Fund OFR

2012-05-22T08:13:00.000-04:00

The Treasury has issued a final rule and interim final rule to implement Section 155 of the Dodd-Frank Act which directs Treasury to establish an assessment schedule for bank holding companies with total consolidated assets of $50 billion or greater and nonbank financial companies supervised by the Federal Reserve to collect assessments equal to the total expenses of the Office of Financial Research (OFR).

Included in OFR’s expenses are expenses of the Financial Stability Oversight Council (FSOC), under Section 118, and certain expenses of the FDIC, under Section 210 of the Dodd-Frank Act.

The assessment schedule for bank holding companies is issued as a final rule. The assessments for nonbank financial companies is issued as an interim final rule.

The rules will allow Treasury to collect semiannual assessment fees from these companies beginning on July 20, 2012.

The final rule will be effective July 20, 2012.
The interim final rule will be effective July 20, 2012.
Comment relating to the nonbank interim final rule are due by September 18, 2012.

Read more.

HFS Markup Amendment: Abolish OFR

2012-04-18T15:23:00.003-04:00

The House Financial Services Committee yesterday approved by a 31-26 party-line vote a legislative package that is intended to cut the budget deficit by $35 billion.

Provisions in the package would, among other things, repeal the FDIC's Dodd-Frank Act-mandated authority to resolve large, failing financial institutions and subject the CFPB’s budget to annual congressional approval.

An amendment (no. 7) was offered by Mr. Canseco and agreed to by voice vote to abolish the Office of Financial Research (OFR).

The deficit-reduction legislation has little chance of becoming law this year because of Senate opposition.

Read a committee press release on the package.

Read more about the hearing.

Senate Banking Committee to Vote on Nominations

2012-03-29T08:14:00.000-04:00

The Senate Banking Committee today will vote on the nominations of Richard Berner to be director of Treasury’s new Office of Financial Research (OFR).

The panel also will vote on the nominations of Jeremiah Norton to be a member of the FDIC Board; Jerome Powell and Jeremy Stein to be members of the Federal Reserve’s Board of Governors; and Christy Romero to be Special Inspector General for the Troubled Asset Relief Program.

If approved, the nominations will join several others awaiting full Senate confirmation.

OFR Working Paper Released: Forging Best Practices in Risk Management

2012-03-27T08:45:00.002-04:00

The Office of Financial Research (OFR) has released the second paper in its Working Paper Series to promote best practices in financial risk management. The paper, Forging Best Practices in Risk Management, provides a broad assessment of risk management practices and how risk management can be improved.

The paper approaches risk management from three perspectives: risk measurement by individual firms, governance and incentives, and systemic concerns.

The Dodd-Frank Act established the OFR to, among other things, improve the quality of data and analysis for assessing threats to financial stability. The OFR Working Paper Series makes accessible the OFR’s in-depth work to analyze and measure such data. The OFR has invited interested parties to review and discuss the working papers with the Agency.

The OFR’s first paper in the Working Paper Series, A Survey of Systemic Risk Analytics, focused on quantitative tools for assessing threats to financial stability.

Treasury Seeking Applicants for FRAC

2012-03-23T08:59:00.000-04:00

The Treasury has issued a notice to establish the Federal Research Advisory Committee (FRAC) and is seeking applications for committee members. The FRAC will present advice and recommendations to assist the Office of Financial Research (OFR) in carrying out its functions in support of the Financial Stability Oversight Council (FSOC). The Notice includes the criteria and procedures for the selection of members.
Comments and applications are due April 16th, 2012.

Read more.