Community Banks

Yesterday, on Sunday, March 22, 2020, U.S. Senate Republicans released the latest version of their COVID-19-related stimulus bill, the Coronavirus Aid, Relief, and Economic Security Act or CARES Act.  The bill contains several measures intended to provide relief to banks, their customers, and broader financial markets.

The latest version of the CARES Act includes the

The federal banking agencies issued a final rule today that permits banking organizations not subject to the advanced approaches capital rules to adopt simplifications to the calculation of their regulatory capital beginning January 1, 2020, rather than April 1, 2020 as was originally finalized in July 2019.

Continue Reading Federal Banking Agencies Permit First Quarter 2020 Adoption of Capital Simplifications Rule

On October 3, the Board of Governors of the Federal Reserve System (“Federal Reserve”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), the Office of the Comptroller of the Currency (“OCC”), and the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) released an Interagency Statement on Sharing Bank Secrecy Act Resources (the “Statement”). The Statement encourages banks to consider entering into collaborative arrangements to manage their Bank Secrecy Act (“BSA”) and anti-money laundering (“AML”) compliance obligations. The Statement uses the BSA’s definition of “bank,” which includes each agent, agency, branch, or office within the United States of banks, savings associations, credit unions, and foreign banks.

Continue Reading Regulators Encourage Lower-risk Banks to Join Forces for Bank Secrecy Act and AML Compliance

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 July 10, 2017, the FDIC published for comment a handbook on deposit insurance applications, Deposit Insurance Applications: Procedures Manual.  The manual covers each step in the application process: pre-filing activities, application receipt, review and acceptance, application processing, pre-opening activities and post-opening considerations.  The FDIC has two audiences and purposes in issuing the manual.  

Senators Jon Tester, D-Mont., and Jerry Moran, R-Kan., introduced a bill today (S. 1139) that would raise the threshold for a banking organization to be subject to Dodd-Frank Act Stress Tests (DFAST) to $50 billion in total consolidated assets from the current $10 billion threshold.  The bill, titled the Main Street Regulatory Fairness Act, would

On April 4, 2017, Federal Reserve Board Governor Daniel K. Tarullo gave his final speech as a governor before his departure from the Board the next day.  Governor Tarullo, widely considered the “most influential Wall Street regulator” during his term as governor, took the lead for the Federal Reserve in developing the agency’s most significant post-crisis regulations.

In his speech, Governor Tarullo defended the capital and stress testing requirements that the federal banking agencies have imposed on the largest banking organizations since the financial crisis.  Notably, he also identified certain areas where he believed Congress and/or the banking agencies could provide relief to banking organizations without jeopardizing financial stability.  Coming from one of the chief architects of the post-crisis regulatory regime, these remarks are noteworthy because they indicate areas for potential bipartisan consensus as Congress and President Trump’s appointees consider the path forward for regulatory reform.

Continue Reading Governor Tarullo Outlines Path to Regulatory Relief in Final Speech as Federal Reserve Board Member

On January 31, 2017, Senators Sherrod Brown (D-OH) and Elizabeth Warren (D-MA) sent a letter to Democratic Senators arguing that the single director structure of the Consumer Financial Protection Bureau (“CFPB”) should not be replaced with a five-member commission.  Specifically, the Senators warned that attempts to restructure the CFPB are intended “to prevent the agency from doing its job” and would “empower Republicans to strangle the agency” by blocking appointees, which could prevent the CFPB from operating.

In defending the single director structure of the CFPB, the Senators gave examples of two multi-member agencies—the National Labor Relations Board and the Export-Import Bank—where Republicans have blocked appointees and effectively hamstrung operation of the agencies.  The Senators did not mention other multi-member agencies, including the Federal Trade Commission (“FTC”), the Federal Deposit Insurance Corporation (“FDIC”), and the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) that have typically operated in a business-as-usual manner notwithstanding periodically unfilled seats. The FTC, FDIC, and the Federal Reserve Board operate under flexible quorum requirements or delegated authority to establish their own quorum requirements.  The Financial CHOICE Act of 2016, which passed the U.S. House of Representatives in the 114th Congress and would have restructured the CFPB as a five-member commission, provided that as few as two members would constitute a quorum for conducting commission business.  A revised version of the Financial CHOICE Act is expected to be introduced in the 115th Congress; the revised bill may leave the single director structure of the CFPB in place.

Continue Reading Democratic Senators Send Letter to Colleagues Arguing Against Restructuring the CFPB as a Commission

Over the past few years, banks have been forced to devote more resources to compliance and compliance personnel as the regulatory burdens on financial institutions have increased.  For large financial institutions, this generally means hiring additional compliance staff.  In 2014, The Wall Street Journal tagged compliance officers with the “the hottest job in America.”

But, many smaller banks do not have the resources or need for a full-time compliance officer.  According to Bank Director’s 2015 Risk Practices Survey, 29% of banks with less than $1 billion in assets did not have a chief risk or chief compliance officer compared to only 8% of banks with $1 billion to $5 billion in assets.  Some smaller banks have adopted or are exploring a creative solution: sharing a compliance officer.
Continue Reading Community Banks Share Compliance Officers