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FinCEN Proposes SAR Data Fields Revisions
FinCEN published, at 82 FR 9109 in the Federal Register, a notice and request for comment on proposed updates and revisions to the collection of information filings by financial institutions required to file such reports under the Bank Secrecy Act (“BSA”). While the notice does not propose any new regulatory requirements or changes to the requirements related to suspicious activity reporting, it suggests changes to the required data fields used when filing SARs under the BSA. The majority of the proposed changes would alter the "checklist" of violations in Part II of the filings, including the addition of several fields related to cyber events. Written comments must be received on or before April 3.
FDIC Issues Guidance to Facilitate Recovery in Areas of Louisiana Affected by Severe Weather
On February 14, the FDIC issued guidance (FIL-9-2017) intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of Louisiana affected by recent severe storms, tornadoes, high winds, and flooding. A current list of designated areas—where damage assessments are currently underway—is available at www.fema.gov. Among other things, the guidance encourages banks to “work constructively with borrowers experiencing difficulties” due to weather-related damage by considering “[e]xtending repayment terms, restructuring existing loans, or easing terms for new loans.” Such flexibility, the FDIC instructs, can both “contribute to the welfare of the local community” and also “serve the long-term interests of the lending institution.” The FDIC is also considering “regulatory relief from certain filing and publishing requirements.”
NCUA Publishes Proposed Rule Offering Alternate Capital Proposal for Credit Unions
On February 8, the National Credit Union Administration (NCUA) published a notice of proposed rulemaking to expand the types of investment capital that federally insured credit unions could use to meet certain regulatory requirements. NCUA is considering whether to allow credit unions to use investment capital (that would be uninsured capital subordinate to all other claims) to satisfy the risk-based net worth ratio requirement. Currently, only low-income designated credit unions are allowed to use secondary capital to satisfy two regulatory requirements: the net worth ratio and the risk-based net-worth ratio. Although any changes to the definition of net worth would require an act of Congress, the NCUA asserted in the proposal that it has broad authority to adjust the risk-based net worth ratio requirement and therefore may choose to allow credit unions that are not “low-income designated” to use alternative capital to meet this requirement.
President of Philadelphia Fed Makes an Argument for FinTech Regulation
In prepared remarks at the “Global Interdependence Center’s Payment Systems in the Internet Age” Conference, Philadelphia Fed President Patrick T. Harker said that regulating the evolving FinTech industry benefits not only consumers, but also the innovators. While Harker did not speculate as to whether the Fed will become involved in FinTech regulation, he stated that it is in the best interest of FinTech companies “to have an established framework in which to operate.” He cautioned, however, that “all financial systems are a matter of trust” and thus FinTech firms will “need that trust the same as any other bank or financial institution.” Harker noted that regulations will help determine which companies can survive the “down side” of a credit cycle, but implementing regulations after a “crisis. . . could mean tighter strictures and less room for innovation.”
OCC Proposes Final Revisions to Stress Test Information Collection
On February 2, the OCC requested comment on proposed revisions to an existing information collection entitled “Company-Run Annual Stress Test Reporting Template and Documentation for Covered Institutions with Total Consolidated Assets of $50 Billion or More Under the [Dodd-Frank Act].” The agency is also giving notice that it has sent the collection to the OMB for review. This information collection is related to the conduct of annual stress tests that the Dodd-Frank Act requires of certain financial companies, including national banks and federal savings associations. Comments on the current notice must be received by March 6, 2017.
FDIC Issues List of Banks Examined for CRA Compliance
On February 3, the FDIC released its February 2017 list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). As part of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Congress mandated the public disclosure of an evaluation and rating for each bank or thrift that undergoes a CRA examination on or after July 1, 1990. A monthly list of banks examined for CRA compliance dating back to 1996 can be accessed here. The February 2017 list covers evaluation ratings that the FDIC assigned to institutions in November 2016. Of the 49 banks evaluated, five were rated Outstanding, 43 received a Satisfactory rating, and one was rated Needs to Improve.
OCC, FDIC, and Fed Release Stress Test Scenarios for 2017
On February 3, the Fed announced the release of the “Supervisory Scenarios” to be used by banks and supervisors for the 2017 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test exercises and also issued instructions to firms participating in CCAR. The Fed also published three letters that provide additional information on its stress-testing program. The three letters describe: (i) the Horizontal Capital Review for large, noncomplex companies; (ii) the CCAR qualitative assessment for U.S. intermediate holding companies of foreign banks, which are submitting capital plans for the first time; and (iii) improvements to how the Fed will estimate post-stress capital ratios.
On February 3, the OCC similarly released economic and financial market scenarios for 2017 that are to be used by national banks and federal savings associations (with total consolidated assets of more than $10 billion) in their annual Dodd-Frank Act-mandated stress test. On February 6, the FDIC released its stress test scenarios, working in consultation with the Fed and OCC.
The three sets of supervisory scenarios provide each agency with forward-looking information for use in bank supervision and will assist the agencies in assessing the covered institutions’ risk profile and capital adequacy.
Fed Survey: CRE Tightening Trend Continues
On February 6, the Fed released its January 2017 senior loan officer survey, addressing changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months. The January survey results indicated that over the fourth quarter of 2016, on balance, lenders left their standards on commercial and industrial (“C&I”) loans unchanged, while tightening credit for commercial real estate (“CRE”) loans. Banks reported that they expect to ease standards on C&I loans and for the asset quality of such loans to improve somewhat this year. In contrast, banks expect to tighten standards on CRE loans, while they expect the asset quality of most CRE loan categories to remain unchanged. As to loans to households, banks reported that demand for most types of home-purchase loans weakened over the fourth quarter. On balance, banks reported that they expect to ease standards and to see asset quality improve somewhat for most residential home-purchase loans in 2017.
For additional details see:
- Table 1 – Opinion Survey on Bank Lending Practices at Selected Large Banks in the U.S.
- Table 2 – Opinion Survey on Bank Lending Practices at Selected Branches & Agencies of Foreign Banks
- Charts – Measures of Supply and Demand for Commercial & Industrial Loans
Rep. Wilson Introduces Bill to Delay Fiduciary Rule
On January 6, Rep. Joe Wilson (R-S.C.) introduced the Protecting American Families’ Retirement Advice Act, a bill that would delay by two years the effective date of the Department of Labor’s “fiduciary rule.” As discussed previously on InfoBytes, the fiduciary rule—which is presently set to take effect in April 2017—expands the definition of “investment advisor” to include a “wider array of advice relationships,” thereby imparting new standards on financial advisors and brokers handling retirement accounts. In a statement, Rep. Wilson described the Fiduciary Rule as “one of the most costly, burdensome regulations to come from the Obama Administration.” Wilson’s proposed legislation seeks to delay the rule’s implementation in order to “giv[e] Congress and President-elect Donald Trump adequate time to re-evaluate.”
Trump Announces CFPB Transition Team
On January 5, 2016, the Trump Transition team announced the names of the four individuals assigned to lead the President-elect’s CFPB “Landing Team.” Generally, each landing team is tasked with collect information on each agency—ranging from the agency's budget and policies to the status of various rulemakings and the current administration's priorities—all with the overarching purpose of facilitating an orderly transfer of power at the federal financial regulators. The CFPB Landing Team includes:
- Paul Atkins, former GOP Commissioner for the SEC and current CEO of Patomak Global Partners LLC, which provides consulting services concerning financial services industry matters, regulatory compliance, risk and crisis management, public affairs, independent reviews, litigation support, and strategy.
- Kyle Hauptman, Senior Development Manager and occasional writer about financial & political issues for the American Enterprise Institute (AEI), member of the SEC’s Advisory Committee on Small and Emerging Companies, and former chief economic adviser on the issues of Financial Markets, Housing to the Romney For President (RFP) campaign.
- Consuala “CJ” Jordan, a public relations executive and Republican political consultant who is currently CEO of The Jordan Management Group, LLC, a full service Government Relations and Public Affairs Firm, specializing in strategic business development.
- Julie B. Lindsay, Managing Director and General Counsel of Capital Markets and Corporate Reporting at Citigroup Inc., and former Counsel to Commissioner Glassman at the SEC.