On May 3, 2021, media outlets reported that Treasury Secretary Janet Yellen will appoint Michael Hsu to serve as Acting Comptroller of the Currency.  Mr. Hsu currently serves as an Associate Director of the Division of Supervision and Regulation at the Board of Governors of the Federal Reserve System, where he heads the Large Institution Supervision Coordinating Committee (“LISCC”), which oversees the largest U.S. banking organizations.

Continue Reading Treasury Secretary Yellen to Appoint Acting Comptroller of the Currency

The Market Risk Advisory Committee (“MRAC”) of the Commodity Futures Trading Commission (“CFTC”) met last week to discuss reports from its subcommittees on the following issues: Climate-Related Market Risk, CCP Risk and Governance, Market Structure, and Interest Rate Benchmark Reform.  The meeting also featured a panel discussion on diversity and inclusion in the derivatives and related financial markets.  The discussion on Climate-Related Market Risk featured discussion of the Climate-Related Market Risk Subcommittee’s report: Managing Climate Risk in the U.S. Financial System (“Report”), which it previously released on September 9, 2020.  Subcommittee Chair Robert Litterman addressed the MRAC to discuss the Report’s findings and issue a call to action on climate change.

Continue Reading CFTC MRAC Meeting Features Discussion of Climate Risk

On January 21, 2021, CFTC Chairman Heath Tarbert stepped down as Chairman of the agency and, for the time being, stepped into a Commissioner role.  The CFTC was very active during Chairman Tarbert’s tenure as it implemented his regulatory and enforcement priorities.  In particular, the Division of Enforcement saw the highest volume of enforcement actions in the CFTC’s history.  The CFTC also finalized a number of major regulatory developments in 2020, including its long-awaited rule imposing position limits for derivatives (see our blog post summarizing this final rule).

Continue Reading CFTC Update: Leadership and Outlook

There has been a flurry of activity at the Commodity Futures Trading Commission (“CFTC”) in recent weeks.  As we reported previously, the CFTC approved three final rules, including the much-anticipated position limits rule, at its October 15 open meeting, and announced significant organizational changes to its operating divisions on November 3.  This post highlights additional significant actions by the CFTC in October and November and previews what is next for the CFTC under a Biden Administration.

Continue Reading CFTC News Roundup for October and November and a Look Ahead

On Tuesday October 2, leaders of the federal prudential regulators testified before the Senate Committee on Banking, Housing, and Urban Affairs (“Banking Committee”) on their agencies’ efforts to implement the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA” or the “Act”). All of the regulators expressed support for the goals of EGRRCPA, particularly with respect to tailoring regulations, and highlighted the steps being taken to implement the law.

The witnesses at the hearing were: Joseph Otting, Comptroller, Office of the Comptroller of the Currency (“OCC”); Randal Quarles, Vice Chairman for Supervision, Board of Governors of the Federal Reserve System (“FRB”); Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation (“FDIC”); and J. Mark McWatters, Chairman, National Credit Union Administration (“NCUA”).

This post summarizes below, as highlighted in the witnesses’ testimony:

  • some of the key steps these agencies have taken to implement the Act, which include the release of a number of proposed and interim final rules; and
  • the steps the agencies intend to take next, including tailoring enhanced prudential standards for larger bank holding companies (“BHCs”).


Continue Reading After Senate Banking Committee Testimony, Where Does Dodd-Frank Reform Stand?

On October 1, 2018, Chairman Giancarlo of the Commodity Futures Trading Commission (“CFTC” or “Commission”) released a white paper titled “Cross-Border Swaps Regulation Version 2.0: A Risk-Based Approach with Deference to Comparable Non-U.S. Regulation.” The Chairman previewed both his views on cross-border swaps reform and the paper in speeches delivered in London, Tokyo and Singapore

On September 11, 2018, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Bureau of Consumer Financial Protection (the “Bureau”, and, collectively, the “Agencies”) issued a statement “clarifying the role of supervisory guidance.” The release affirms that the Agencies “do not take enforcement actions based on supervisory guidance” and that such guidance “does not have the force and effect of law.” This statement continues a recent pattern in regulatory policy of downplaying the force of guidance documents, at least as they relate to enforcement actions.

The statement explains that, rather than create binding rules with the force and effect of law, guidance “outlines supervisory expectations or priorities” and/or provides examples of practices the Agencies consider acceptable under applicable legal standards, such as safety and soundness standards. Further, the Agencies state that guidance is often issued in part as a response to requests from supervised institutions to “provide insight to industry” and help “ensure consistency in the supervisory approach.”


Continue Reading Banking Regulators Issue Joint Policy Statement Downplaying the Role of Supervisory Guidance in Enforcement

On August 29, 2018, the U.S. Senate confirmed Dawn Stump and Dan Berkovitz as Commissioners of the Commodity Futures Trading Commissioner (“CFTC” or “Commission”). Each has extensive experience in the derivatives markets. Ms. Stump, among other things, has served as Executive Director and Senior Vice President of U.S. Policy for the Futures Industry Association. Mr. Berkovitz, among other things, served as General Counsel of the CFTC from 2009-2013. Ms. Stump and Mr. Berkovitz were sworn in last week, meaning the CFTC now has a full slate of Commissioners for the first time since 2014. Even without a full Commission, the CFTC under Chairman Giancarlo has undertaken various initiatives, including its regulatory simplification program Project KISS (which has led to several proposed and final rules), but now with a full Commission, it is likely that the CFTC will be able to move on several major rulemakings.

Continue Reading With New CFTC Commissioners Onboard, Major CFTC Rulemakings Likely to Follow this Fall

The Office of the Comptroller of the Currency (“OCC”) announced yesterday that a nondepository financial technology (“fintech”) company that engages in a core banking activity, such as paying checks or lending money, can now apply for a special purpose national bank (“SPNB”) charter. This announcement followed shortly after the release of the Treasury Department’s report on nonbank financials, fintech, and innovation, which recommended that the OCC move forward with the charter.

Comptroller of the Currency Joseph M. Otting stated that allowing fintech companies to apply for special purpose national bank charters “helps provide more choices to consumers and businesses, and creates greater opportunity for companies that want to provide banking services in America.”  Comptroller Otting concluded that “companies that provide banking services in innovative ways deserve the opportunity to pursue that business on a national scale as a federally chartered, regulated bank.”

The OCC stated that its decision is consistent with broader government efforts to promote economic opportunity and supports innovation in financial services.  The OCC has made clear that fintech companies with SPNB charters will not be authorized to accept FDIC-insured deposits.  The OCC emphasized that every application by a fintech company for a SPNB charter will be evaluated on the basis of its facts and circumstances and that fintech companies that become special purpose national banks initially will be subject to heightened supervision initially, similar to any de novo bank.

A SPNB charter would be useful in providing a more uniform regulatory framework instead of the current patchwork of state licensing and rate cap regulation that applies to many fintech companies.  The charter also may enable a fintech company to gain direct access to the payment system, subject to the Federal Reserve’s willingness to grant such access.  A company that obtains a SPNB charter also may have less of a need to enter into a partnership with a bank depending on its business model.


Continue Reading The OCC Will Move Forward to Accept Applications for Special Purpose National Bank Charters for Fintech Companies