Top Story Compliance Related

The FDIC has released the economic scenarios that will be used by certain financial institutions with total consolidated assets of more than $10 billion for stress tests required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The baseline, adverse, and severely adverse scenarios include key variables that reflect economic activity, including unemployment, exchange rates, prices, income, interest rates, and other salient aspects of the economy and financial markets.

Comptroller of the Currency Joseph M. Otting issued a statement yesterday after meeting with Mick Mulvaney, Office of Management and Budget Director and Acting Director of the Consumer Financial Protection Bureau.

Editor's note: The OCC news release (NR 2018-14) reports that Comptroller Otting said that "Acting Director Mulvaney has helped reduce the burden on the banking system by delaying implementation of his agency's Home Mortgage Disclosure Act rule, committing to reconsider its payday lending rule, and deferring action on additional regulations until completing a more thorough review of those matters." There is no record of a delay in implementation of the HMDA rule. We believe Otting (or his staff) meant to refer to the delay of the Prepaid Accounts rule.

The CFPB announced Tuesday that Acting Director Mick Mulvaney has named Kirsten Sutton Mork chief of staff for the agency. Ms. Sutton Mork has been serving as staff director of the House Financial Services Committee under Chairman Jeb Hensarling.

The FDIC has released a list of 43 state non-member banks recently evaluated for compliance with the Community Reinvestment Act. Thirty-eight of those banks were rated "satisfactory"; one received an "outstanding" rating and four were rated "needs to improve."

The OCC has announced the date and location for its upcoming Innovation Office Hours and Inaugural Listening Session. Office Hours are scheduled for March 21 and 22, and the Listening Session is set for March 20, both in Chicago. Office Hours are one-on-one meetings with OCC officials to discuss financial technology, new products or services, partnering with a bank or fintech company, or other matters related to financial innovation. OCC staff will provide feedback and respond to questions.

Five federal agencies (Federal Reserve, Farm Credit Administration, FDIC, Federal Housing Finance Agency, and OCC) have issued a proposal to amend swap margin requirements to conform with recent rule changes that impose new restrictions on certain qualified financial contracts (QFCs) of systemically important banking organizations. Under the proposed amendments, legacy swaps entered into before the applicable compliance date would not become subject to the margin requirements if they are amended solely to comply with the requirements of the QFC Rules. The proposed amendments would also harmonize the definition of “Eligible Master Netting Agreement” in the Swap Margin Rule with recent changes to the definition of “Qualifying Master Netting Agreement” in the respective capital and liquidity regulations of the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) by recognizing the restrictions that were adopted by these agencies with respect to the QFC Rules.

Treasury has announced that its Office of Foreign Assets Control has sanctioned four individuals who have engaged in destabilizing activities responsible for prolonging the conflict in the Democratic Republic of Congo (DRC) and contributing to widespread poverty, chronic food insecurity, and population displacement. As a result of yesterday's actions, all of the designated persons' assets within U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. For identifying information on the designated individuals, see our OFAC Update.

The Federal Trade Commission's Bureau of Consumer Protection has published a Staff Perspective, A Closer Look At The Military Consumer Financial Workshop, which examines takeaways from a July 2017 workshop on financial issues that can affect military consumers, including servicemembers, veterans, and their families, when they are purchasing and financing a car, dealing with debt collectors, or making credit decisions, as well as their legal rights and remedies, and strategies to promote financial literacy and capability.

FIL-8-2018, issued Friday, announced that the FDIC will host in conjunction with the Financial Accounting Standards Board (FASB), the U.S. Securities and Exchange Commission (SEC), and the Conference of State Bank Supervisors (CSBS), a webinar to discuss how smaller, less complex community institutions can implement Current Expected Credit Losses Methodology (CECL). The webinar is scheduled for Tuesday, February 27, 2018, at 1:00 pm EST.

Responding to recent and widespread consumer abuses and other compliance breakdowns by Wells Fargo & Company (WFC), the Federal Reserve Board on Friday announced that it has restricted the growth of the firm until it sufficiently improves its governance and controls. Concurrently with the Board's action, Wells Fargo will replace three current board members by April and a fourth board member by the end of the year. In addition to the growth restriction, the Board's consent cease and desist order with Wells Fargo requires the firm to improve its governance and risk management processes, including strengthening the effectiveness of oversight by its board of directors. Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017. The Board required each current director to sign the cease and desist order.

• Federal Reserve letter to WFC directors
• Federal Reserve letter to Stephen Sanger, lead director at WFC, 2012–2016.
• Federal Reserve letter of John Stumpf, former chair of WFC board