The five federal banking agencies (Federal Reserve, CFPB, FDIC, NCUA, and OCC – collectively Agencies) issued a proposed rule on October 20 on the role of supervisory guidance. The proposal codifies and expands upon a 2018 statement from the same agencies about which we previously reported. In November 2018, the Agencies (aside from the NCUA) received a petition for a rulemaking, as permitted under the Administrative Procedure Act, requesting that the Agencies codify the 2018 statement.

The main thrust of the 2018 statement was that supervisory guidance does not have the force and effect of law, and that the Agencies do not take enforcement actions based on supervisory guidance. The current proposal not only reaffirms and clarifies the 2018 statement but, in certain respects, goes further.

Read More

In a series of recent interviews (including with the American Bankers Association and a podcast with the ABA Banking Journal), Acting Comptroller of the Currency Brian Brooks discussed the Office of the Comptroller’s (OCC’s) plans to soon roll out another special purpose national bank (SPNB) charter specifically geared toward payments companies. This “payments charter” could be especially appealing for those companies looking for a national licensing platform for their payments business because it would provide federal preemption of state money transmitter licensing and related laws, which would eliminate the need to obtain a license to operate in each state.

Read More

The Federal Reserve Board (Fed) released on April 23 a notice of proposed rulemaking to clarify the standards and criteria under which one company “controls” another company under the Bank Holding Company Act (BHCA) and the Savings and Loan Holding Company Act (SLHCA). This long-awaited proposal, which Fed officials have stated for some time was in the works, is notable for several reasons—primarily because if adopted, it will bring much-needed clarity to an area of banking law that historically has been notoriously opaque.

Read More

The five federal banking agencies (Federal Reserve, Bureau of Consumer Financial Protection, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency – collectively Agencies) have issued a joint statement on the role of supervisory guidance.

The statement says that supervisory guidance does not have the force and effect of law, and that the Agencies do not take enforcement actions based on supervisory guidance. However, the Agencies state that supervisory guidance outlines the Agencies’ “supervisory expectations or priorities and articulates the [A]gencies’ general views regarding appropriate practices for a given area.” For example, supervisory guidance often contains examples of practices that the Agencies “generally consider consistent with safety-and-soundness standards or other applicable laws and regulations.”

Read More

Prior to the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), bank holding companies and nonbank financial companies supervised by the Federal Reserve with $50 billion or more of total consolidated assets were subject to enhanced prudential standards (SIFIs). The EGRRCPA raised that threshold to $100 billion or more of total consolidated assets, and the SIFI threshold will eventually increase to $250 billion in total consolidated assets.

Zions Bancorporation (Zions) has around $66.5 billion in total consolidated assets and, prior to EGRRCPA, was a SIFI. Post-EGRRCPA, Zions is no longer a SIFI, which one would think would be the end of the story and Zions could walk away a happy non-SIFI bank.

Read More

On July 6, the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (together, the Agencies) issued an interagency statement (Statement) regarding the impact of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act (the tongue-tying EGRRCPA), which we previously summarized. The new law amended the Dodd-Frank Act to streamline certain of its systemic regulation requirements, and provide a modest level of relief for midsized banks and community banking institutions. The Statement addressed some of the immediate impacts of EGRRCPA and the Agencies’ responses to those provisions that took effect immediately. The Federal Reserve Board also issued a separate conforming statement addressing the impact of EGRRCPA on bank holding companies subject to its supervision (FRB Statement).

Among other things, EGRRCPA increases the Dodd-Frank Act enhanced prudential supervision threshold for bank holding companies with $50 billion in total consolidated assets by exempting bank holding companies with total consolidated assets of less than $100 billion immediately upon enactment (May 24, 2018), and raising this threshold to $250 billion 18 months after the date of enactment (November 25, 2019). EGRRCPA also allows the application of any enhanced prudential standard to bank holding companies with between $100 billion and $250 billion in total consolidated assets.

Read More

It’s here. The Federal Reserve Board and the Federal Deposit Insurance Corporation have released a proposed rule (Proposed Rule) that would make important modifications to Section 13 of the Bank Holding Company Act, commonly known as “the Volcker Rule.” The Proposed Rule is intended to address the “complexity” of the Volcker Rule, which has created “compliance uncertainty” and, in the words of Fed Chairman Jerome Powell, to “allow firms to conduct appropriate activities without undue burden and without sacrificing safety and soundness.”

The remaining three agencies responsible for implementation of the Volcker Rule (Office of the Comptroller of Currency, the US Securities and Exchange Commission, and the Commodity Futures Trading Commission) are expected to release their proposals shortly. Other than agency-specific variations, the proposal released by each of the five agencies is expected to be the same. The comment period for the Proposed Rule will be 60 days from the date of publication of the proposal in the Federal Register.

Read More

Just over two months after the Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S 2155), the House voted 258-159 (with 33 Democrats voting “yea”) to pass S 2155 without amendments. S 2155 was quickly signed into law by President Donald Trump.

Until recently, S 2155 faced an uncertain future in the House. In June 2017, the House had passed its version of financial regulatory reform (HR 10, better known as the Financial CHOICE Act of 2017 (CHOICE Act). The CHOICE Act was a relatively comprehensive effort to reform the Dodd-Frank Act. Because it included a large number of provisions that would not attract broad bipartisan support, however, the CHOICE Act never was seen as having much, if any, chance of passing the Senate.

When S 2155 was passed, House Financial Services Committee Chairman Jeb Hensarling (R-TX) signaled that the House was not inclined to pass it without incorporating at least some elements of the CHOICE Act. In the interim, however, Mr. Hensarling and other Republicans were persuaded to allow a vote on S 2155 without further amendment, with the promise that additional provisions of the CHOICE Act could be brought as a separate bill or bills, which resulted in House passage of the bill.

Read More

In a rare bipartisan vote, 16 Democrats and one Independent who caucuses with the Democrats joined with 50 Republicans to pass Senate Bill 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act (Senate Bill). The Senate Bill is the most comprehensive reform to the Dodd-Frank Act that has passed the Senate, although it is more limited in scope than HR 10, better known as the Financial CHOICE Act of 2017, the Dodd-Frank Act reform bill passed by the House of Representatives in June 2017.

There are a number of notable provisions in the Senate Bill.

Read More

In pointed and detailed public remarks, Federal Reserve Board Vice Chairman for Supervision Randal Quarles said on Monday that the Volcker Rule is “an example of a complex regulation that is not working well” and proposed a number of possible changes to the Volcker Rule. Mr. Quarles emphasized that all five regulatory agencies responsible for the implementation of the Volcker Rule are actively working on changes to the Volcker Rule. Overall, the possible changes outlined by Mr. Quarles focus on reducing the burden of the Volcker Rule within the boundaries of the statutory requirements, particularly for financial institutions that do not have large trading operations, as well as limiting unintended extraterritorial effects of the Volcker Rule. Further, it is not clear whether all five regulatory agencies are in alignment with the priorities and solutions that Mr. Quarles outlined in his speech, although he stated that he thought the odds of implementing the changes are “pretty good.”

Read More