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Top Story Compliance Related

04/01/2020

More tax and reporting deadlines delayed

Treasury has announced it is delaying tax payment due dates for wine, beer, distilled spirits, tobacco products, firearms, and ammunition excise taxes, to provide flexibility for businesses that have been negatively affected by COVID-19. The postponement of due dates applies to any tax payment or operational report with an original due date falling on or after March 1, 2020, through July 1, 2020. Interest and penalties will not apply when payments are made within 90 days of the original due date. Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB) will re-evaluate the terms of this immediate relief as circumstances warrant.

04/01/2020

Fed Board delays revised control framework

The Federal Reserve Board has announced it will delay by six months the effective date for its revised control framework, to reduce operational burden and allow institutions to focus on current economic conditions.

In January, the Board finalized a revised framework (see our 1/31/2020 Top Story) that simplifies and increases the transparency of its rules for determining when one company controls another company for purposes of the Bank Holding Company Act and Home Owners' Loan Act. If a company has control over a banking organization, the company generally becomes subject to the Board's rules and regulations. The six-month delay will move the effective date to September 30, from the original date of April 1. No changes were made to the framework itself.

UPDATE: Notice published in the Federal Register for April 2, 2020.

03/31/2020

Regulators adjust calculation for credit concentration

The FDIC has issued FIL-31-2020 announcing that the FDIC, Federal Reserve, and OCC are jointly adjusting their calculation for credit concentration ratios used in the supervisory process. The adjustment is in response to changes in the capital information available after the implementation of the Community Bank Leverage Ratio (CBLR) rule.

Effective March 31, 2020, for supervisory purposes, examiners will calculate credit concentration ratios using tier 1 capital plus the appropriate allowance for loan and lease losses or the allowance for credit losses attributed to loans and leases (as applicable) for the denominator.

03/31/2020

FDIC proposes rule for parent banks of industrial banks

The FDIC has published at 85 FR 17771 in today's Federal Register a notice of proposed rulemaking and request for comment. The agency is seeking comment on a proposed rule that would require certain conditions and commitments for each deposit insurance application approval, non-objection to a change in control notice, and merger application approval that would result in an insured industrial bank or industrial loan company becoming, after the effective date of any final rule, a subsidiary of a company that is not subject to consolidated supervision by the Federal Reserve Board.

The proposed rule also would require that before any industrial bank or industrial loan company may become a subsidiary of a company that is not subject to consolidated supervision by the Federal Reserve Board, such company and the industrial bank or industrial loan company must enter into one or more written agreements with the Federal Deposit Insurance Corporation.

Comments on the proposal will be accepted through June 1, 2020.

UPDATE: On May 27, 2020, the FDIC published a notice it has extended the comment period on this proposal to end July 1, 2020.

03/30/2020

FDIC updates steps to protect banks and continue operations

FDIC FIL-29-2020, issued Friday, updates the steps announced on March 16, 2020, to protect banks and consumers and to continue operations. Highlights:

  • All FDIC employees in all FDIC facilities are now engaged in mandatory telework through at least April 12.
  • Supervisory and other FDIC activities at financial institutions will be conducted off-site for an additional two weeks through April 12, and staff has individually contacted institutions with ongoing or upcoming examination activities about their communication preferences during this period.
  • The FDIC will evaluate the necessity of continuing off-site work as we approach April 12.
  • The FDIC recognizes that institutions may have operational or staffing challenges associated with the pandemic that limit the ability of management to respond to normal supervisory requests. Institutions faced with these challenges should contact their Examiner-in-Charge or Regional Director to coordinate the timing of any response so it does not inhibit critical operations at the institution at this difficult time.
  • Despite the challenges presented by the coronavirus, the FDIC remains prepared to carry out its mission to insure deposits, promote financial stability, protect consumers, and ensure the safe and sound operation of FDIC-supervised institutions.

03/30/2020

FDIC to accept annual reports delayed by COVID-19

The FDIC has issued FIL-30-2020 to provide additional information and guidance to insured depository institutions (IDIs) subject to Part 363 of the FDIC's regulations that have been affected by COVID-19. Highlights of the statement: As noted in the statement, the FDIC:

  • Recognizes that an IDI may not be able to file its Part 363 Annual Report in a timely manner due to the effects of COVID-19.
  • Provides that the FDIC will not take supervisory action against any IDI for submitting its Part 363 Annual Report or its written notification of late filing as long as the annual report or notification of late filing is submitted within 45 days of the 90- or 120-day report filing deadline.
  • Encourages IDIs to contact the FDIC in advance of the official filing date if the IDI anticipates a delayed submission.
  • Affirms that the staff of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the state banking regulators have confirmed the FDIC's treatment of the annual report required by Part 363.

03/30/2020

Regulators' actions to support lending

On Friday, the federal bank regulatory agencies announced two actions to support the U.S. economy and allow bankign organizations to continue lending to households and businesses:

  • Allowing early adoption of a new methodology on how certain banking organizations are required to measure counterparty credit risk derivatives contracts; and
  • Providing an optional extension of the regulatory capital transition for the new credit loss accounting standard.

The "standardized approach for measuring counterparty credit risk" rule, also known as SA-CCR, was finalized by the agencies in November 2019, with an effective date of April 1. It reflects improvements made to the derivatives market since the 2007-2008 financial crisis, such as central clearing and margin requirements. To help improve current market liquidity and smooth disruptions, the agencies will permit banking organizations to early adopt SA-CCR for the reporting period ending March 31. UPDATE: Published at 85 FR 17721 on 3/31/2020 as an interim final rule, with a comment period ending 5/15/2020..

Additionally, the agencies issued an interim final rule that allows banking organizations to mitigate the effects of the "current expected credit loss," or CECL, accounting standard in their regulatory capital. Banking organizations that are required under U.S. accounting standards to adopt CECL this year can mitigate the estimated cumulative regulatory capital effects for up to two years. This is in addition to the three-year transition period already in place. Alternatively, banking organizations can follow the capital transition rule issued by the banking agencies in February 2019. UPDATE: Published at 85 FR 17723 on 3/31/2020

The changes will be effective immediately and the agencies will accept comments on the CECL interim final rule for 45 days following publication.

03/27/2020

CFPB offers flexibility to financial companies

The Consumer Financial Protection Bureau has announced that it is providing needed flexibility to enable financial companies to work with customers in need as they respond to the COVID-19 pandemic. The Bureau is postponing some data collections from industry on Bureau-related rules to allow companies to focus on responding to consumers in need and making changes to its supervisory activities to account for operational challenges at regulated entities. The Bureau will not expect quarterly information reporting by certain mortgage lenders as required under the Home Mortgage Disclosure Act (HMDA) and Regulation C. The Bureau also will not expect the reporting of certain information related to credit card and prepaid accounts under the Truth in Lending Act, Regulation Z, and Regulation E.

The Bureau is also postponing data collections for:

  • a survey of financial institutions that seeks information on the cost of compliance in connection with pending rulemaking on Section 1071 of the Dodd-Frank Act; and
  • a survey of firms providing Property Assessed Clean Energy (PACE) financing to consumers for the purposes of implementing Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

03/27/2020

FDIC issues COVID-19-related FILs

The FDIC issued four COVID-19-related Financial Institution Letters yesterday.

  • FIL-25-2020: Identification of Essential Critical Infrastructure Workers During the COVID-19 Response Efforts
  • FIL-26-2020: Statement encouraging responsible small dollar lending to consumers and small businesses in response to COVID-19
  • FIL-27-2020: Temporary alternative procedures for sending supervision-related mail and email to FDIC
  • FIL-28-2020: 30 day grace period for First Quarter Call Report

03/27/2020

Regulators encourage making small-dollar loans in response to COVID-19

Yesterday, the Federal Reserve, CFPB, FDIC, NCUA, and the OCC issued a joint statement encouraging banks, savings associations and credit unions to offer responsible small-dollar loans to consumers and small businesses in response to COVID-19. The statement of the agencies recognizes that responsible small-dollar loans can play an important role in meeting customers' credit needs because of temporary cash-flow imbalances, unexpected expenses, or income disruptions during periods of economic stress or disaster recoveries. Such loans can be offered through a variety of structures including open-end lines of credit, closed-end installment loans, or appropriately structured single payment loans.

In addition to yesterday's statement, the agencies are working on future guidance and lending principles for responsible small-dollar loans to facilitate the ability of banks, credit unions, and saving associations to more effectively meet the ongoing credit needs of their customers, members, and communities.

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