Editor's Note
We would like to introduce you to a new initiative from our firm to provide a regular report of key financial services developments to our clients. There would be no charge for this service and we would email every two weeks. Also, if you have any feedback we'd be happy to incorporate it! Finally, if you have any questions regarding the developments detailed below, please feel free to reach out to your relationship contact and we'd be happy to assist. Thank you!
The following newsletter provides a roundup summarizing enforcement actions, guidance, rulemakings, and other public statements taken by a federal and/or state financial services regulatory agency, specifically focusing on: (1) the source of the development (regulator, legislative body, etc.), (2) the subject matter (consumer lending, money transmission, capital markets, etc.), and (3) the general issue covered.
Regulatory Developments
- Interagency (Federal). Regulatory Capital. Federal bank regulatory agencies published a proposed rulemaking that would substantially revise the capital requirements (BASEL III) applicable to large banking organizations and to banking organizations with significant trading activity. Concurrently, the FRB also released a proposal to amend the agency's rule that identifies and establishes risk-based capital surcharges for global systemically important bank holding companies. The deadline for comments is November 30, 2023.
- Federal Deposit Insurance Corporation. Regulatory Capital. FDIC issued the following materials along with the interagency proposed regulatory capital rulemaking: a Board Memo and statements from Chair Gruenberg, Vice Chair Hill and Board Member McKernan on the action.
- Office of the Comptroller of the Currency & Consumer Financial Protection Bureau. Regulatory Capital. OCC Acting Comptroller and CFPB Director made statements in support of the interagency proposed rulemaking on regulatory capital requirements for large banks.
- Consumer Financial Protection Bureau. Fees & Artificial Intelligence (AI). CFPB Director gave prepared remarks at an event on the White House Blueprint for a Renters Bill of Rights, including a discussion of "junk fees" and the impacts of AI on the rental process.
- Federal Financial Institutions Examination Council. Bank Secrecy Act / Anti-Money Laundering (BSA/AML) & Regulatory Examinations. FFIEC updated sections and related examination procedures in the Council's BSA/AML Examination Manual. Additionally, FDIC released a financial institution letter on the revisions.
Enforcement and Litigation
- Federal Reserve Board. Safety and Soundness & Counterparty Credit Risk. FRB announced a consent order and a $268.5 million fine to a foreign bank for alleged misconduct by a subsidiary regarding its alleged unsafe and unsound counterparty credit risk management practices with its former counterparty.
- Consumer Financial Protection Bureau. Auto Loans & Debt Collection. CFPB filed a suit in federal court against an auto loan servicer for allegedly violating 12 U.S.C. §§ 5531(a), 5536(a)(1)'s (Consumer Financial Protection Act) prohibition on unfair and deceptive practices by wrongfully disabling borrowers' vehicles, improperly repossessing vehicles, double-billing borrowers for insurance premiums, and failing to return millions of dollars in refunds to consumers.
Research and Analysis
- Federal Reserve Board. Agency Policy Report. FRB issued a report to Congress on cybersecurity and financial system resilience, including potential risks posed by generative artificial intelligence and quantum computing.
- Financial Stability Oversight Council. Climate Financial Risk. FSOC's Climate-related Financial Risk Committee published a staff progress report on a range of actions underway to support capacity building and disclosure, address data gaps, and assess climate-related financial risks. Separately, OCC Acting Comptroller, CFPB Director, and SEC Chair spoke at a meeting on the issue.
Michael Buckalew is a regulatory analyst with Davis Wright Tremaine LLP.