BANK PRUDENTIAL REGULATION & REGULATORY CAPITAL
US Government Accountability Office Releases Report Regarding US Federal Financial Institution Regulator Compliance With the Regulatory Flexibility Act
On January 30, 2018, the US Government Accountability Office released a report that details the compliance of six US federal financial institution regulators (the US Board of Governors of the Federal Reserve System, the US Office of the Comptroller of the Currency, the US Federal Deposit Insurance Corporation, the US Securities and Exchange Commission, the US Commodity Futures Trading Commission and the US Consumer Financial Protection Bureau) with the requirements of the Regulatory Flexibility Act (RFA). Under the RFA, regulators must either consider a proposed rule or regulation's impact on smaller financial institutions and consider potential alternatives, or certify that the proposed rule or regulation will not have a significant impact on a large percentage of small financial institutions. The GAO report identified a number of weaknesses with the agencies' compliance with both aspects of the RFA, including a lack of transparency with respect to documentation supporting an agency's regulatory flexibility analysis, and missing information in certifications. The GAO report makes 10 recommendations—each tailored to respond to perceived weaknesses at specific regulators—with each of the six reviewed agencies receiving at least one recommendation. The recommendations include enhancing transparency, developing policies and procedures that better document and explain the respective agency's analysis and requiring the agencies to review existing evaluation frameworks to ensure harmonization with the requirements of the RFA.
The full text of the GAO report is available at: https://www.gao.gov/assets/690/689732.pdf.
Treasury Secretary Mnuchin Testifies Before the US Senate Committee on Banking, Housing & Urban Affairs
On January 30, 2018, Treasury Secretary Steven Mnuchin testified before the US Senate Committee on Banking, Housing & Urban Affairs at the committee's Financial Stability Oversight Council annual report to Congress hearing. In his prepared statement, Secretary Mnuchin noted that the FSOC annual report recommended that member agencies review existing rules and regulations to reduce overlap and duplication, modernize regulations that have become outdated and tailor regulations to fit the size and complexity of the financial institutions for which the regulations are applicable. Secretary Mnuchin praised Congress for the bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act, a legislative proposal that seeks to ease the regulatory burden on smaller community-based financial institutions, and urged both the US Senate and the US House of Representatives to take quick action to reduce regulatory burdens. Secretary Mnuchin also stressed that cybersecurity is a key risk identified in the FSOC annual report. While Secretary Mnuchin stated that progress has been made with regard to cybersecurity, he highlighted the danger that a large-scale cybersecurity incident could significantly disrupt the financial system, especially given the ever-increasing reliance on technology.
The full text of Secretary Mnuchin's statement is available at: https://www.banking.senate.gov/public/_cache/files/54d399f5-242f-48a3-8640-fed2fa260816/17285300C5D5C0D3E02B7CB06B070267.mnuchin-testmony-1-30-18.pdf.
US House of Representatives Passes Five Bills Affecting Financial Institutions
On January 30, 2018, the US House of Representatives passed five bills focused on regulatory reform for financial institutions. The bills passed by the House include: the Housing Opportunities Made Easier Act (H.R. 2255), which amends the Truth in Lending Act to allow mortgage appraisal services to be donated to organizations eligible to receive tax-deductible contributions; the Federal Savings Association Charter Flexibility Act of 2017 (H.R. 1426), which would give certain federal savings associations the same rights and privileges as national banks supervised by the US OCC; the Making Online Banking Initiation Legal and Easy (MOBILE) Act (H.R. 1457), which would permit financial institutions, upon an individual's request, to use a scan or other copy of an individual's identification card for identification and antifraud purposes, but also requires that the institution delete the scanned copy after the institution has completed its review; and the Financial Institution Living Will Improvement Act of 2017 (H.R. 4292), which would amend the Dodd-Frank Act to require bank holding companies to submit resolution plans to the US Board of Governors of the Federal Reserve System and the US FDIC every two years (as opposed to every year), require that the agencies provide feedback within six months after a submission is received and require increased transparency regarding the assessment framework used to evaluate the resolution plan submissions.
The full text of The Federal Savings Association Charter Flexibility Act of 2017 (H.R. 1426) is available at: https://www.congress.gov/115/bills/hr1426/BILLS-115hr1426rfs.pdf, The Making Online Banking Initiation Legal and Easy (MOBILE) Act (H.R. 1457) is available at: https://www.congress.gov/115/bills/hr1457/BILLS-115hr1457rfs.pdf, The Housing Opportunities Made Easier Act (H.R. 2255) is available at: https://www.congress.gov/115/bills/hr2255/BILLS-115hr2255rfs.pdf and The Financial Institution Living Will Improvement Act of 2017 (H.R. 4292) is available at: https://www.congress.gov/115/bills/hr4292/BILLS-115hr4292eh.pdf.
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