ABA Dodd-Frank Tracker

The Week Ahead: May 20 - May 24

2013-05-17T10:50:00.000-04:00

Tuesday

Hearing House Financial Services: "Qualified Mortgages: Examining the Impact of the Ability to Repay Rule" Read more.
Hearing Senate Banking Committee: "The Financial Stability Oversight Council Annual Report to Congress” Read more.

Wednesday

Hearing Full Committee: “Who is Too Big to Fail: Are Large Financial Institutions Immune from Federal Prosecution?" Read more.
Hearing Oversight and Investigations Committee: “The Annual Report of the Financial Stability Oversight Council” 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!

CFTC Commissioner: Understand Markets, Fix ‘Broken’ Rules

2013-05-15T10:05:00.003-04:00

The CFTC should fix its cross-border guidance and swaps dealer rule, said CFTC Commissioner Scott O’Malia.

He said he had noted that the CFTC’s cross-border application of Dodd-Frank rules had drawn “strong and vocal opposition” and added that the rule would likely foster regulatory uncertainty, fragment the market and make it less appealing for foreign traders.

O’Malia also noted that the CFTC “has not done its best to protect end users” in swap transactions. The rule, he said, makes it hard to determine who qualifies as a swap dealer subject to CFTC registration, and thus limits the market to -- and concentrates risks among -- large Wall Street banks.

In a letter Friday, ABA asked Congress to clarify cross-border rules and to clearly define “eligible contract participants” in over-the-counter swaps.

Read the speech.
Read ABA’s letter.

BPC Report on Title II and the Bankruptcy Code

2013-05-14T15:59:00.001-04:00

The Bipartisan Policy Center’s (BPC) Financial Regulatory Reform Initiative released a report titled Too Big to Fail: A Path Forward which analyzes whether the Bankruptcy Code and/or the Orderly Liquidation Authority (OLA) under Title II of the Dodd-Frank Act are able to provide the necessary tools to resolve large firms while avoiding contagious panic or resorting to taxpayer funded bailouts.

The report concludes that the FDIC’s proposed recapitalization strategy for failing but systemically important firms, carried out under the Dodd-Frank Act’s orderly liquidation authority or the bankruptcy code, should solve the “too big to fail” problem.

The report examined the FDIC’s proposed “single point of entry” recapitalization plan, which imposes losses on a financial firm’s shareholders and unsecured debt holders but not on taxpayers.

The report also includes recommendation on ways to improve regulation, reduce duplication and eliminate inefficiencies in resolution planning, the so-called ‘living wills’ put into place in Dodd-Frank.

Read the full report.

Federal Reserve Report on Company-Run Midyear Stress Tests

2013-05-13T15:20:00.003-04:00

The Federal Reserve has release a report announcing the results of the company-run midyear stress tests.

The Dodd-Frank Act mandates certain U.S. bank holding companies to conduct two stress tests each year. In the midyear test, which is being conducted for the first time in 2013, each firm develops its own baseline, adverse, and severely adverse scenarios to best reflect its individual operations and risks. In the annual Dodd-Frank Act test, the firms used scenarios developed by the Federal Reserve.

Read more.

Fed Finalizes Rule Defining Predominately Engaged in Financial Activity

2013-04-03T13:10:00.001-04:00

The Federal Reserve Board announced approval of a final rule that establishes the requirements for determining when a company is "predominantly engaged in financial activities." The requirements will be used by the Financial Stability Oversight Council (FSOC) when it considers the potential designation of a nonbank financial company for consolidated supervision by the Federal Reserve.

Under the Dodd-Frank Act, a nonbank financial company can be designated by the FSOC for supervision by the Federal Reserve only if it is "predominantly engaged in financial activities." A company is considered to be predominantly engaged in financial activities if 85% or more of the company's revenues or assets are related to activities that are defined as financial in nature under the Bank Holding Company Act.

Additionally, the FSOC may issue recommendations for primary financial regulatory agencies to apply new or heightened standards to a financial activity or practice conducted by companies that are predominantly engaged in financial activities.

The final rule also defines the terms "significant nonbank financial company" and "significant bank holding company."

The final rule will become effective on May 6, 2013.

Read more.

House Financial Services Committee’s Tentative Hearing Schedule

2013-03-22T07:52:00.002-04:00

House Financial Services Committee Chairman Jeb Hensarling (R-TX) announced his panel’s tentative April schedule that includes Financial Institutions Subcommittee hearings April 10 and 16 on regulatory relief for small community financial institutions.

Other scheduled hearings are:

April 11, Capital Markets Subcommittee -- review of legislation to reform Dodd-Frank Act derivatives provisions.
April 16, Oversight and Investigation Subcommittee -- the need to end “Too Big to Fail.”
April 17, full committee -- impediments to private capital in the housing finance system.

Bernanke: Regulators Will Do More on 'Too Big to Fail' If Needed

2013-03-21T08:33:00.003-04:00

Regulators would take additional steps to address "too big to fail" if current efforts fell short, Federal Reserve Chairman Ben Bernanke said at a news conference following the two-day Federal Open Market Committee meeting.

Bernanke noted that regulators have made progress addressing too big to fail, including new capital and liquidity rules for the largest institutions.

He and other regulators have emphasized that the Dodd-Frank Act's too-big-to-fail provisions should be given an opportunity to work; and explained that it's an issue that can only be resolved gradually.

House Ag Committee Approves Seven Swaps Bills

2013-03-21T08:30:00.003-04:00

The House Agriculture Committee yesterday approved seven bills that would amend the Dodd-Frank Act’s swaps provisions.

The bills include the following:

H.R. 634, the Business Risk Mitigation and Price Stabilization Act, ensures that end-users can continue to use derivatives to manage business risks without being subject to costly margin requirements.

H.R. 677, the Inter-Affiliate Swap Clarification Act, ensures that transactions between affiliates within a single corporate group are not regulated as swaps.

H.R. 742, the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013, would allow data sharing between U.S. and international regulators and swap data repositories without adding an unnecessary layer of legal bureaucracy.

H.R. 992, the Swaps Regulatory Improvement Act, amends Section 716 of the Dodd-Frank Act to limit the swap desk push-out requirement so that it only applies to certain swaps based on certain asset-backed securities.

H.R. 1003 would require the CFTC to assess the costs and benefits of its actions.

H.R. 1038, the Public Power Risk Management Act, would allow producers, utility companies, and other non-financial entities to continue entering into energy swaps with government-owned utilities without being required to register with the CFTC as a swap dealer.

H.R. 1256, the Swap Jurisdiction Certainty Act, would direct the CFTC SEC to adopt a joint rule on how they will regulate cross-border swaps transactions as part of the new requirements created in the Dodd-Frank Act.

ABA in a memo outlined its positions on five of the measures.

Read the committee’s press release.

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.

OCC Requests Comments on Company-Run Annual Stress Tests

2013-03-11T12:02:00.001-04:00

The OCC has requested comments regarding a proposed new regulatory reporting requirement for national banks and Federal savings associations titled, ``Company-Run Annual Stress Test Reporting Template and Documentation for Covered Institutions with Total Consolidated Assets of $10 Billion to $50 Billion under the Dodd-Frank Wall Street Reform and Consumer Protection Act.''

The proposal describes the scope of reporting and the proposed reporting requirements.

Comments are due by May 10, 2013.

Read more.

Large Banks Could Withstand Severe Downturn

2013-03-08T08:11:00.002-05:00

The 18 largest U.S. banks have continued to improve their ability to withstand a severe economic downturn and they’re in a much stronger capital position than before the financial crisis, according to the results of Dodd-Frank Act-mandated stress tests the Federal Reserve recently released.

“Significant increases in both the quality and quantity of bank capital during the past four years help ensure that banks can continue to lend to consumers and businesses, even in times of economic difficulty,” Fed Governor Daniel Tarullo said.

ABA President and CEO Frank Keating said the association is pleased that an overwhelming majority of institutions once again passed the stress-tests “with flying colors.”

“These results, achieved in the face of extreme assumptions and highly pessimistic scenarios, are further proof that the banking industry has rapidly regained its health and is strong enough to withstand even the most challenging economic circumstances,” he said.

Read the stress-test methodology and results.
Read Keating’s statement.

Fed’s Powell: Reforms to End ‘Too Big to Fail’ Need Time to Work

2013-03-05T08:44:00.003-05:00

Reforms to end “too big to fail” are promising and need time to work, Federal Reserve Governor Jerome Powell said yesterday at the Institute of International Bankers Conference in Washington, D.C.

“[E]fforts by U.S. and global regulators to fight too big to fail are generally on the right track. The Basel III and Dodd-Frank reforms designed to reduce the probability of failure of large banking firms are sensible and, for the most part, targeted at the causes of the crisis,” Powell said.

“They [also] are being implemented thoughtfully and effectively,” he added. “I believe that those Financial Stability Board and Dodd-Frank reforms designed to permit the resolution of systemic firms without taxpayer exposure or undue disruption are very promising.”

Powell rejected proposals to reinstate the Glass-Steagall law, which separated commercial banks from investment banks. Resurrecting Glass-Steagall “seems neither directly related to the causes of the financial crisis, nor likely to help end too big to fail,” he said.

“[L]osses at the commercial banks were more importantly a consequence of bad credit underwriting and the failure of risk management systems to keep up with innovation and the explosive growth in securitization -- developments that were not fundamentally driven by the repeal of Glass-Steagall,” Powell said.

Read Powell’s speech.

Fed Issues Proposal on Financial Market Utilities

2013-02-27T07:46:00.003-05:00

The Federal Reserve issued a proposed rule that would stipulate the conditions and requirements for Federal Reserve Banks to open accounts for and provide financial services to financial market utilities that the Financial Stability Oversight Council (FSOC) designates as systemically important.

The Dodd-Frank Act-mandated proposal also would authorize Reserve Banks to pay interest on the balances maintained by such designated financial market utilities. There will be a 60-day comment period on the proposed rule after its publication in the Federal Register.

Read more.
Read the proposed rule.

Federal Reserve Extends Comment Period on Foreign Bank Proposal

2013-02-22T12:27:00.000-05:00

The Federal Reserve Board has extended until April 30, 2013, the comment period on a proposed rule to implement the enhanced prudential standards and early remediation requirements mandated by the Dodd-Frank Act for foreign banking organizations and foreign nonbank financial companies supervised by the Board.

The enhanced prudential standards include risk-based capital and leverage requirements, liquidity standards, risk management and risk committee requirements, single-counterparty credit limits, and stress test requirements.

Originally, comments were due by March 31, 2013.

Read more.

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.

Fed to Release Big Bank Stress-Test Results on March 7

2013-01-29T08:01:00.000-05:00

The Federal Reserve on March 7 will release the results of Dodd-Frank Act-mandated stress tests on the largest banks, and on March 14 will release related results from the Fed’s Comprehensive Capital Analysis and Review capital-testing regime.

“The Dodd-Frank Act supervisory stress test results will include data such as capital ratios, revenue, and loss estimates under a severely adverse scenario and assuming a common set of capital actions that is used in the analysis of all of the firms,” the Fed said.

As part of the CCAR, the Fed “evaluates each company's plans to make capital distributions, such as dividend payments, stock repurchases, or planned acquisitions,” the agency said. CCAR “results include capital ratios under a severely adverse scenario … and reflect the capital actions the companies plan to undertake.”

Read more.

ABA Telephone Briefing: Managing 2013 Compliance Priorities

2013-01-22T08:21:00.000-05:00

ABA will host a live, two-hour telephone briefing presented by members of the ABA’s Government Relations Group on January 24, from 2-4 p.m., to provide insights on how recent regulatory developments impact what you should prepare for when managing your compliance risk and examination challenges in 2013.

The panel of ABA experts will provide you with a look-ahead to what you might expect from the regulatory agencies and Congress over the coming year as only ABA can. Learn what you can do to adapt to a changing regulatory landscape. This two-hour program is not a regulation training session, but rather a management process update intended to help you stay ahead of the evolving compliance oversight curve. Check your “To Do List” against our suggestions about what to prepare for in 2013!

Issues to be addressed include:

BSA/AML still matters—and expectations are expanding
Flood Insurance Reform—a floating target
Furnishing accurate customer information
Servicemembers Civil Relief Act and beyond
Fair lending – staying vigilant
Remittance Rule—on again, off again, on again
Inventory your mortgage compliance challenges
Third-party management risk and due diligence expectations
Consumer complaints—and other sources of feedback
Overdraft services—anticipating regulatory prospects
Add-on products: add-on risk
Telephone Consumer Protection Act—marketing, communicating and mobility

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!

SEC Gallagher: Misallocation of Resources, Opportunity Costs due to DFA

2013-01-17T11:11:00.001-05:00

SEC Commissioner Daniel Gallagher spoke before the U.S. Chamber Center for Capital Markets Competitiveness on the “misallocation of resources and opportunity costs that have arisen from the many false assumptions underlying the [Dodd-Frank] Act.”

In total, the Dodd-Frank Act contains approximately 400 specific mandates to be implemented by agency rulemaking, with approximately a hundred applying directly to the SEC. The SEC has adopted final rules implementing nearly a third of those statutory mandates and continues to devote tremendous amounts of resources to drafting additional proposals, completing required studies, and implementing the new rules.

[However,] the Commission is handling ten times its normal rulemaking volume.

As a result, the SEC, like other regulators, is now dealing with the problem of rushed, inadequate rule proposals that were pushed out in a bid to meet arbitrary congressional deadlines.

This increased pace raises two sets of concerns. The first stems from the difference between getting rules done and getting them done right.

The second set of concerns centers around the concept of opportunity cost and the misallocation of limited resources.

Read Gallagher’s full remarks.

OCC Curry Sees Congress Considering Technical Corrections to Dodd-Frank Act in 2013

2013-01-14T11:54:00.000-05:00

OCC Thomas Curry spoke to the California Bankers Association at the Annual Bank Presidents Seminar on the topic of looking ahead to some of the challenges and opportunities likely to be faced by the banking industry in 2013. Topics Curry focused on included the recovery of housing markets, the continued integration of the OTS and OCC, the regulatory and legislative landscape for 2013, and industry safety and soundness.

On the topic of Dodd-Frank, Curry stated:

As we look out over the legislative landscape, I think it is likely that Congress will consider a number of technical corrections to Dodd-Frank – and perhaps some corrections that are a bit more substantive than technical – but I doubt that the basic legislative framework will undergo significant change. So the rules we are finishing work on now are not likely to change much as a result of anything Congress might do.

Read Curry’s full remarks.

ABA Telephone Briefing: Managing 2013 Compliance Priorities

2013-01-08T08:19:00.000-05:00

BSA/AML still matters—and expectations are expanding
Flood Insurance Reform—a floating target
Furnishing accurate customer information
Servicemembers Civil Relief Act and beyond
Fair lending – staying vigilant
Remittance Rule—on again, off again, on again
Inventory your mortgage compliance challenges
Third-party management risk and due diligence expectations
Consumer complaints—and other sources of feedback
Overdraft services—anticipating regulatory prospects
Add-on products: add-on risk
Telephone Consumer Protection Act—marketing, communicating and mobility

The Week Ahead: December 31 - January 4

2012-12-28T08:14:00.001-05:00

Monday

CFTC’s Temporary DFA Swaps Provisions Relief Expires. Read more.
FDIC TAG Program Ends. Read more.
Savings Associations Report of Condition on Foreign Branch Report.

Tuesday

Final Rule CFPB/Federal Reserve: Regulation M Official Interpretation. Read more.
Final Rule Effective CFPB/Federal Reserve: Regulation Z Official Interpretation. Read more.
Final Rule FDIC: Investment Grade Definition. Read more.
Final Rule OCC: Credit Rating Alternatives. Read more.
Joint Final Rule: Market Risk Capital. Read more.

Wednesday

Final Rule Effective CFPB: Supervision of Consumer Debt Collectors. Read more.
Final Rule Effective CFTC: Incorporating Swaps. Read more.
Final Rule Effective SEC: Clearing Agency Standards. Read more.

Friday

Comments Due OCC: Mutual Savings Association Advisory Committee. Read more.

OCC Stress Testing Cycles Released

2012-12-26T10:35:00.000-05:00

The OCC has released a process overview regarding annual stress test cycles for covered institutions.

The OCC explained that covered institutions will receive stress testing scenarios from the OCC by November 15. Institutions with assets over $50 billion will be required to submit an Annual Stress Test Report to the OCC and the Federal Reserve Board by January 5. This report would be required by March 31 for institutions with assets between $10 and $50 billion.

The OCC published in the Federal Register on October 9, 2012, a final rule implementing section 165(i) of the Dodd-Frank Act that requires certain companies to conduct annual stress tests. This rule requires national banks and federal savings associations with total consolidated assets over $10 billion to conduct an annual stress test as prescribed by the rule.

Read more.

ABA Comments on Volcker Rule Implementation

2012-12-17T10:53:00.000-05:00

ABA wrote a letter to the federal regulatory agencies responsible for issuing rules that will implement the Volcker Rule.

It is important that the final rules not impair the availability of traditional banking services to bank customers, nor impose unnecessary costs on banks where there is no systemic risk or threat to the U.S. financial system.

Our members also will need to have sufficient time and opportunity to transition their affected activities to conform with the requirements of the final rules in a manner that is not disruptive to customers or to the economy.

As part of the agencies’ rulemaking review process, ABA requested they consider the following in connection with the final rule:

Include a full explanation of the agencies’ reasons for adopting provisions;
Include a Volcker rule summary compliance guide for community banks;
Allow a two-year compliance period from the final rules’ effective date;
Expressly include a “good-faith” compliance provision, whereby no enforcement action or adverse regulatory action will be taken during the two-year conformance period provided reasonable efforts are being taken.

Read the full letter.

The Week Ahead: December 10 – December 14

2012-12-07T07:44:00.000-05:00

Monday

Meeting FDIC: Systemic Resolution Advisory Committee. Read more about the Committee.

Tuesday

FDIC Board Meeting. Read the meeting agenda.

Wednesday

Hearing HFS: Challenges Implementing Title VII of Dodd-Frank. Read more.

Thursday

Financial Stability Oversight Council (FSOC) Meeting. Read more.
Hearing HFS: Impact of the Volcker Rule. Read more.
Hearing House Ag Committee: Dodd-Frank Derivatives Reform. Read more.