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Rules and Regulations: FRS, OCC Release Final Rules Implementing Regulatory Capital Rules

Tuesday, October 1, 2013

Agencies Request Comments on the Following Proposed Rules

Several agencies propose standards for assessing diversity policies

The FRS, the CFPB, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration (NCUA) and the Securities and Exchange Commission (SEC) are jointly proposing standards for assessing the diversity policies and practices of the entities they regulate, pursuant to Section 342 of the Dodd-Frank Act. The standards relate to 1) organizational commitment to diversity and inclusion; 2) workforce profile and employment practices; and 3) procurement and business practices (supplier diversity). Comments are due by Dec. 24, 2013.

NCUA proposes stress testing and capital plan requirements for credit unions

The NCUA proposes to conduct annual stress tests of federally insured credit unions with assets of $10 billion or more and to require those credit unions to develop and maintain capital plans. Comments are due by Dec. 31, 2013.

FDIC proposes restrictions on sales of assets of a covered financial company

The Dodd-Frank Act prohibits certain sales of assets held by the FDIC in the course of liquidating a covered financial company, including sales of equity stakes in subsidiaries. This proposed rule prohibits individuals or entities that have, or may have, contributed to the failure of a "covered financial company" from buying a covered financial company's assets from the FDIC. The proposed rule establishes a self-certification process that is a prerequisite to the purchase of assets of a covered financial company from the FDIC. While similar, this proposed rule is distinct from a current FDIC rule on restrictions on the sale of assets. Comments are due by Jan. 6, 2014.

Final Rules

OCC issues final guidance on annual stress test scenarios

The OCC previously issued a final rule requiring national banks and federal savings associations with total consolidated assets of more than $10 billion to conduct annual stress tests using scenarios provided by the OCC. On Nov. 15, 2012, the OCC published interim guidance explaining how the OCC would develop stress test scenarios. The OCC is now adopting the interim guidance and the final rule articulates the principles that the OCC will apply to develop and distribute the stress test scenarios for covered institutions by November 15 of each year. This rule was effective Nov. 27, 2013.

FCA issues final rule repealing mortgage loan originator registration rules

On August 20, 2013, the Farm Credit Administration issued an interim rule repealing its regulations governing the registration of residential mortgage loan originators to avoid duplication with the S.A.F.E. Act. The FCA is now adopting the interim rule as final, effective Oct. 14, 2013.

FRS and OCC issue final rule implementing regulatory capital rules

On August 30, 2013, the FDIC, FRS and OCC issued three regulatory capital rules proposing: revisions to risk-based and leverage capital requirements consistent with Basel III, a standardized approach for calculating risk-weighted assets, and revisions to the advanced approaches and market risk capital rules. In this final rule, the OCC and FRS are consolidating and adopting the three proposed rules, with some modifications. This rule is effective Jan. 1, 2014.

CFPB issues final rule amending Regulations B, X and Z

In 2013, the CFPB issued several final rules and amendments concerning mortgage markets, found in Regulations B, X and Z. On July 2, 2013, the CFPB published a proposed rule to amend several of the mortgage market rules. This final rule adopts the proposed rule with some revisions and additional clarifications. These amendments focus primarily on (1) loss mitigation procedures, (2) amounts counted as loan originator compensation to retailers of manufactured homes and their employees for purposes of applying points and fees thresholds, (3) exemptions available to creditors that operate predominantly in “rural or underserved” areas, (4) application of the loan originator compensation rules to bank tellers and similar staff, and (5) the prohibition on creditor-financed credit insurance. The CFPB is also adjusting the effective dates for certain provisions of the loan originator compensation rules and makes technical corrections to Regulations B, X and Z. The final rule is effective Jan. 10, 2014 with some exceptions for amendments.

FHFA issues orders regarding reporting requirements for regulated entities undergoing stress testing

The Federal Housing Finance Agency (FHFA) is ordering a reporting requirement for Fannie Mae, Freddie Mac and each of the 12 Federal Home Loan Banks to submit regular or special reports to the FHFA. The order also establishes remedies and procedures for failing to make the reports required by the order. The order is accompanied by the Dodd-Frank Stress Tests Summary Instructions and Guidance. This rule was effective Oct. 28, 2013.

FHFA issues final rule implementing stress testing of regulated entities

This final rule requires Fannie Mae, Freddie Mac and each of the 12 Federal Home Loan Banks with total consolidated assets of more than $10 billion to conduct annual stress tests to determine whether the companies have the necessary capital to absorb losses as a result of adverse economic conditions. The proposed rule was published on Oct. 5, 2012 and comments were received by Dec. 4, 2012. This rule was effective Oct. 28, 2013.

FRS issues final rule implementing supervision and regulation assessments for certain BHCs and savings and loan holding companies

This final rule implements Section 318 of the Dodd-Frank Act, which requires the Federal Reserve Board (Board) to collect assessments, fees and other charges to cover the Board's incurred expenses associated with its supervisory and regulatory responsibilities. The assessments and fees are assessed against 1) BHCs and savings and loan holding companies with total consolidated assets of $50 billion or more, and 2) nonbank financial companies designed for Board supervision by the Financial Stability Oversight Council. This rule was effective Oct. 25, 2013.