Federal banking regulators testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs on progress toward implementing the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Act”). As previously covered, the Act makes targeted changes to key areas of Dodd-Frank, which will primarily benefit smaller banking organizations with simpler business models. Testimony was provided by Comptroller of the Currency Joseph M. Otting; Federal Reserve Board (“FRB”) Vice Chair for Supervision Randal K. Quarles; FDIC Chair Jelena McWilliams; and National Credit Union Administration (“NCUA”) Chair J. Mark McWatters.
Mr. Otting, Mr. Quarles and Ms. McWilliams described various agency initiatives, including (i) the issuance of a notice of proposed rulemaking (“NPR”) that grants federal savings associations greater flexibility to exercise national bank powers without changing their charters, (ii) the issuance of a joint NPR to revise the statutory definition of a high-volatility commercial real estate exposure acquisition, development and construction loan, (iii) the adoption of interim final rules modifying the liquidity coverage ratio rule and (iv) the issuance of a joint agency proposal to raise the total asset threshold from $1 billion to $3 billion to allow well-capitalized insured depository institutions to be eligible for an 18-month examination cycle.
Mr. Otting noted that the Office of the Comptroller of the Currency also intends to:
- implement an exemption from appraisal requirements for certain rural real estate transactions;
- reduce the regulatory burden on banks for calculating and reporting regulatory capital;
- reduce reporting requirements on Call Reports;
- increase the required frequency of stress testing and reduce the required number of scenarios; and
- revise the leverage ratio requirements for the largest U.S. banking organizations.
Mr. Quarles stated that the FRB prioritized:
- issuing a proposed rule tailoring enhanced prudential standards for banks with assets between $100 billion and $250 billion;
- reviewing requirements for firms with assets between $250 billion and the globally systemic important bank threshold; and
- revisiting the threshold for the application of enhanced prudential standards to foreign banks.
Ms. McWilliams outlined the FDIC’s plans, which include:
- rule amendments to reflect the exemption for certain loans secured by real property;
- a proposed rule as to the community bank leverage ratio;
- updates to Call Report Instructions to reflect the reporting change from brokered to non-brokered treatment of specified reciprocal deposits; and
- reductions in reporting requirements for “covered depository institutions” with less than $5 billion total assets in the first and third quarter Call Reports.
Mr. McWatters discussed the NCUA’s recent actions and noted that the agency began to (i) update its examiner guidance and examination procedures, (ii) review credit union compliance in line with its risk-focused examination program and (iii) work with state supervisory authorities and other federal regulators to implement regulatory amendments.