1- Financial Services Management

20 11, 2023


2023-11-21T10:40:15-05:00November 20th, 2023|1- Financial Services Management|

DIF Special Assessment

As the law requires and the FDIC Chairman promised after SVB and Signature Bank were declared systemic, the FDIC has finalized its proposed approach to imposing a systemic assessment to reimburse the Deposit Insurance Fund (DIF) for the resolution costs related to uninsured deposits following a systemic designation. The FDIC will do so via an assessment covering IDIs with uninsured-deposit holdings above $5 billion that have assets over $5 billion. This exempts most smaller banks, with the FDIC adopting this approach on grounds that it justly penalizes large IDIs it believes benefited the most from these systemic rescues.


15 11, 2023


2023-11-15T15:05:15-05:00November 15th, 2023|1- Financial Services Management|

Nonbank Payment Provider CFPB Supervision

Building on its director’s longstanding focus on fintech and tech-platform companies, the CFPB has proposed to extend its supervisory reach to nonbank providers of general-use digital payments services.  The Bureau’s definition of these terms is broad and thus would bring almost all covered nonbank services into its ambit with considerable potential for subsequent demands for significant operational change along with heightened legal and reputational risk.  The extent to which the Bureau pursues the ends enabled by this proposal remains to be seen, but it could set high roadblocks restricting the network-effect benefits major tech-platform companies have long enjoyed not only due to real and perceived regulatory exceptions, but also by virtue of their financial and commercial activities.


9 11, 2023


2023-11-09T13:06:42-05:00November 9th, 2023|1- Financial Services Management|

Systemic-Risk Determinations

Rejecting the Trump Administration’s hands-off approach to designating systemically-important nonbank financial institutions or activities and practices, the Biden Administration’s FSOC has finalized its bifurcated proposals to designate systemic entities and another laying out an analytical approach to identifying systemic risk that would then guide firm and activity designation as well as Council staff coordination with primary federal regulators.  This is likely to lead to new additional systemic entity-based designations, rules, product or service prohibitions/restrictions, and/or firm-specific supervisory action.  The final framework is as comprehensive as the proposal, meaning that U.S. systemic standards could extend far more widely than is now the case even if firm-specific nonbank designations are few and far between.


1 11, 2023


2023-11-01T17:55:34-04:00November 1st, 2023|1- Financial Services Management|

Large-Bank Climate-Risk Principles

The banking agencies have joined together to issue inter-agency climate-risk guidance based on proposed standards from the FDIC, OCC and FRB.  Most notably, the new standards expressly cover banking organizations over $100 billion, including FBO branches, but are indicative of the new approach to climate risk the agencies expect at any banking organization with elevated climate-risk exposure.


31 10, 2023


2023-10-31T09:26:49-04:00October 31st, 2023|1- Financial Services Management|

Debit-Card Interchange Fees

As suggested when the Fed last year finalized controversial new debit-card routing requirements, the central bank is now proposing a sharp reduction in the cap mandated on debit-card interchange fees under the Dodd-Frank Act’s Durbin Amendment for debit-card issuers with over $10 billion in assets.


26 10, 2023


2023-10-26T16:30:52-04:00October 26th, 2023|1- Financial Services Management|

Consumer Data Rights/Open Banking

Following a request for information that was a de facto advance notice of proposed rulemaking,[1] the CFPB has now proposed a preliminary, but binding framework for consumer data rights covering consumer “transaction” accounts offered by banks, credit unions, and – a departure from the initial outline – nonbanks/fintechs.  The proposal is sweeping with regard to data-rights and -sharing standards for covered accounts and providers, but still preliminary in that the Bureau has yet to turn as it plans to in in subsequent actions to loan products such as mortgages and student loans.


17 10, 2023


2023-10-17T16:14:14-04:00October 17th, 2023|1- Financial Services Management|

Transaction-Account FDIC Coverage

Bipartisan senators have introduced legislation to provide FDIC coverage for certain noninterest-bearing transaction accounts, a move designed to prevent the stress and potential systemic risk evident when Silicon Valley and Signature Banks failed in March.  However, expanding FDIC coverage could increase FDIC premiums, heightening pressure on IDIs and their holding companies in concert with the pending special assessment unless companies that opt out of added coverage do not bear additional costs for IDIs that choose to offer these insured accounts.


13 10, 2023


2023-10-13T11:55:47-04:00October 13th, 2023|1- Financial Services Management|

Account-Information Access

Using its advisory process to issue guidance that may lead to enforcement actions, the Bureau has for the first time set standards for the obligations of large banks and credit unions to respond to certain consumer inquiries.  Going forward, virtually all requests specific to a consumer’s deposit or loan account within an IDI or credit union over $10 billion in assets will require a prompt, complete response without additional fees or any other obstacles the Bureau could deem a violation.  No specific standards are set for criteria such as timeliness, making it a matter of subjective CFPB judgment that could lead to uneven enforcement and/or use of information-related penalties in the context of other Bureau actions, including those designed to penalize “repeat offenders.”


15 09, 2023


2023-09-15T15:52:05-04:00September 15th, 2023|1- Financial Services Management|

Large-IDI Resolution Plans

Although a pending FDIC/FRB proposal imposes a raft of new requirements for resolution plans from IDIs with over $100 billion in assets, the FDIC has also issued a freestanding proposal doing the same, also setting information-filing standards for IDIs below $100 billion but above $50 billion.  Aspects of the resolution-plan filing standards for large covered IDIs (CIDIs) echo and in some cases allow reliance on aspects of the joint rule with the Fed, but the FDIC notes that this rule is, as required by the Dodd-Frank Act, focused on financial stability.  Its own IDI resolution rules now and as proposed instead address how the FDIC is to meet its own statutory requirements (e.g., least-cost resolution).  The NPR mandates many new planning or filing requirements to achieve its goals, most notably adding new severability standards that may require new inter-affiliate or -branch firewalls that reduce operating efficiencies and, when it comes to broker-dealer or other entities, lead to indirect resolution requirements not mandated by functional regulators.  The proposal also tightens enforcement policy, most notably increasing the criteria by which a resolution plan will be judged “credible” and thus the extent to which a CIDI will be subject to monetary penalties or even allowed to operate as is.   


7 09, 2023


2023-09-07T16:03:26-04:00September 7th, 2023|1- Financial Services Management|

Living-Will Requirements

In conjunction with proposing a new long-term debt (LTD) requirement for categories II, III, and IV banks, the Fed and FDIC are pursuing other ways to enhance resolvability.  Among these is new guidance for large domestic and foreign banking organizations that requires U.S. banking organizations and foreign banking organization (FBO) intermediate holding companies (IHCs) along with all their insured depositories when any is over $100 billion to file resolution plans.  These are also redesigned to make the plans much closer in substance to those mandated for GSIBs.  However, in a leading indicator of what the FRB is also likely to demand of GSIBs, smaller companies would be required to ensure severability – that is, the ability to cut off a weak limb to save the rest of the banking organization or ensure ready resolution without undue cost to the FDIC or systemic risk.  However, easing one aspect of current planning, banking organizations are expressly allowed to count on use of discount-window or other Fed lending facilities to avert failure if – and this is a significant new if – the plan rests atop sound collateral valuation and data-management systems.


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