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FDIC's FILs address Call Report burden reductions, EGRRCPA statutory amendment changes
On July 17, the FDIC issued Financial Institution Letter FIL-40-2018 reminding FDIC-supervised banks, savings associations, and community institutions that revisions to all three versions of the Consolidated Reports of Condition and Income (Call Reports) are effective as of the June 30 reporting date. The finalized changes modified Call Reports FFIEC 031, FFIEC 041, and FFIEC 051. Starting this quarter, institutions with consolidated total assets of at least $100 billion with no foreign offices are now required to use FFIEC 031 instead of FFIEC 041. In addition, the FDIC released supplemental submission instructions for institutions (see FIL-39-2018) and also addressed two reporting requirement changes made by the enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act S.2155/P.L. 115-174 that took effect immediately: (i) acquisition, development, or construction loans considered high volatility commercial real estate loans are subject to risk weighting with certain exemptions; and (ii) qualifying institutions may exclude a capped amount of reciprocal deposits from being treated as brokered deposits. Second quarter Call Reports are due July 30.
Agencies publish proposed joint revisions to Volcker rule
On July 17, the OCC, Federal Reserve Board, FDIC, SEC, and CFTC (the Agencies) published their joint notice of proposed rulemaking designed to simplify and tailor compliance with Section 13 of the Bank Holding Company Act’s restrictions on a bank’s ability to engage in proprietary trading and own certain funds (the Volcker rule). As previously covered in InfoBytes, the Agencies’ announced the proposal on May 30, noting that the amendments would reduce compliance costs for banks and tailor Volcker rule requirements to better align with a bank’s size and level of trading activity and risks. Comments on the proposal are due by September 17.
FDIC implements updated interagency forms
On July 11, the FDIC issued Financial Institution Letter FIL-38-2018 announcing the implementation of revisions to several interagency forms. The updates, based upon recommendations from representatives from the FDIC, Federal Reserve, and the OCC, reflect new laws, regulations, capital requirements, and accounting rules. The changes are intended to improve the clarity of the requests, delete unnecessary information requests, and add transparency for filers concerning information required to consider a proposal.
The following revised forms may be used going forward for all applicable applications filed with the FDIC and are effective immediately:
FDIC provides relief for storm-hit areas of Texas
On July 3, the FDIC issued Financial Institution Letter FIL-37-2018 to provide regulatory relief to financial institutions and facilitate recovery in areas of Texas affected by severe storms and flooding from June 19 through the present. The FDIC is encouraging institutions to consider, among other things, extending repayment terms and restructuring existing loans that may be affected by the natural disasters. Additionally, the FDIC notes that institutions may receive favorable Community Reinvestment Act (CRA) consideration for community development loans, investments, and services in support of disaster recovery.
Agencies issue statement on the impact of the Economic Growth, Regulatory Relief, and Consumer Protection Act
On July 6, the Federal Reserve Board, FDIC, and OCC issued an interagency statement regarding the impact of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), S.2155/P.L. 115-174, which was signed into law by President Trump on May 24. The joint statement describes the interim positions the federal agencies will take with regard to amendments within the Act, including, among other things, (i) extending the deadline to November 25 for all regulatory requirements related to company-run stress testing for depository institutions with less than $100 billion in total consolidated assets; (ii) enforcing the Volcker Rule consistently with the Act’s narrowed definition of banking entity; and (iii) increasing the total asset threshold for well-capitalized insured depository institutions to be eligible for an 18-month examination cycle. The agencies intend to engage in rulemakings to implement certain provisions at a later date. The accompanying OCC and the FDIC releases are available here and here.
The Federal Reserve Board also issued a separate statement describing how, in accordance with the Act, the Board will no longer subject certain smaller, less complex banking organizations to specified regulations, including stress test and liquidity coverage ratio rules. The Act raised the threshold from $50 billion to $100 billion in total consolidated assets for bank holding companies to be subject to Dodd-Frank enhanced prudential standards. The Board intends to collect assessments from all assessed companies for 2017 but will not collect assessments from newly exempt companies for 2018 and going forward. Additionally, the statement provides guidance on implementation of certain other changes in the Act, including reporting high volatility commercial real estate exposures.
FDIC issues disaster relief guidance for storm affected areas of Hawaii
On July 3, the FDIC issued Financial Institution Letter FIL-35-2018 to provide regulatory relief to financial institutions and facilitate recovery in areas of Hawaii affected by severe storms, flooding, landslides, and mudslides from April 13 through April 16. The FDIC is encouraging institutions to consider, among other things, extending repayment terms and restructuring existing loans that may be affected by the natural disasters. Additionally, the FDIC notes that institutions may receive favorable Community Reinvestment Act (CRA) consideration for certain development loans, investments, and services in support of disaster recovery.
Federal Reserve, FDIC extend resolution plan filing deadline for 14 domestic firms
On July 2, the Federal Reserve Board and the FDIC announced that the deadline to file resolution plans, also known as living wills, for 14 domestic firms has been extended to December 31, 2019. This one-year extension provides more time for the agencies to provide feedback on the firms’ last round of resolution plan submissions, as well as for the firms to produce their next resolution plans as required by the Dodd-Frank Act. The agencies also issued a reminder that due to the recent passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act, banks with less than $100 billion in total consolidated assets are no longer bound by resolution plan requirements.
FDIC releases May enforcement actions
On June 29, the FDIC announced a list of orders of administrative enforcement actions taken against banks and individuals in May 2018. The 14 orders include “five Section 19 orders; two civil money penalties; one removal and prohibition order; two terminations of consent orders; two terminations of insurance; one order for restitution; one modification of removal and prohibition order; and one modification of civil money penalty order.” The order for restitution is for violations of certain laws, regulations, and a 2016 consent order “relating to statutory lending limits and restrictions on loans to borrowers classified as ‘substandard.’” The civil money penalty orders relate to (i) unsafe or unsound practices and breaches of fiduciary duty, and (ii) a violation of Regulation O concerning the handing of certain loans from the bank to the respondent. The announcement also notes that there are no administrative hearings scheduled for July 2018.
FDIC, Federal Reserve seek comment on proposed 2019 resolution plan
On June 29, the FDIC and Federal Reserve issued (here and here) a joint request for public comment on proposed revisions to resolution plan guidance for the eight largest and most complex U.S. banks. Resolution plans, also known as living wills, outline a bank’s strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company, and help to reduce the risk that a bank’s failure will cause serious adverse effects on the financial stability of the U.S. The proposed guidance would apply beginning with the July 1, 2019 resolution plan submissions. The proposed guidance also would incorporate agency expectations for addressing derivatives, trading, payment, clearing, and settlement activities. The FDIC and Federal Reserve will accept comments on the proposed guidance for 60 days following publication in the Federal Register.
Agencies release 2018 list of distressed, underserved communities
On June 25, the OCC, together with the Federal Reserve and the FDIC, released the 2018 list of distressed or underserved communities where revitalization or stabilization efforts by financial institutions are eligible for Community Reinvestment Act (CRA) consideration. According to the joint release from the agencies, the list of distressed nonmetropolitan middle-income geographies and underserved nonmetropolitan middle-income geographies are designated by the agencies pursuant to their CRA regulations and reflect local economic conditions, including changes in unemployment, poverty, and population. For any geographies that were designated by the agencies in 2017 but not in 2018, the agencies apply a one-year lag period, so such geographies remain eligible for CRA consideration for another 12 months.
Similar announcements from the Federal Reserve and the FDIC are available here and here.