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Category: Banking & Consumer Reg Policy

Federal Reserve Board issues interim final rules clarifying how companies should incorporate Basel III reforms into capital and business projections

Release Date: September 24, 2013

For immediate release

The Federal Reserve Board on Tuesday issued two interim final rules that clarify how companies should incorporate the Basel III regulatory capital reforms into their capital and business projections during the next cycle of capital plan submissions and stress tests.

Rules to implement the Basel III capital reforms in the United States were finalized in July, and will be phased-in beginning in 2014 or 2015, depending on the size of the banking organization. The planning horizon for the next capital planning and stress testing cycle runs from the fourth quarter of 2013 through the fourth quarter of 2015. Thus, the next capital planning and stress testing cycle, which begins October 1, overlaps with the implementation of the Basel III capital reforms.

The Board’s first interim final rule applies to bank holding companies with $50 billion or more in total consolidated assets. The rule clarifies that in the next capital planning and stress testing cycle, these companies must incorporate the revised capital framework into their capital planning projections and into the stress tests required under the Dodd-Frank Wall Street Reform and Consumer Protection Act using the transition paths established in the Basel III final rule. This rule also clarifies that for the upcoming cycle, capital adequacy at large banking organizations would continue to be assessed against a minimum 5 percent tier 1 common ratio calculated in the same manner as under previous stress tests and capital plan submissions, ensuring consistency with those previous exercises.

The second interim final rule provides a one-year transition period for most banking organizations with between $10 billion and $50 billion in total consolidated assets. These companies this fall are conducting their first company-run stress test under the Board’s rules implementing the Dodd-Frank Act. These companies will be required to calculate their stress test projections using the Board’s current regulatory capital rules during the upcoming stress test to allow time to adjust their internal systems to the revised capital framework.

The interim final rules also clarify that companies will not be required to use the advanced approaches in the Basel III capital rules to calculate their projected risk-weighted assets in a given capital planning and stress testing cycle unless the companies have been notified by September 30 of that year, prior to the start of that capital planning and stress testing cycle.

The interim final rules are effective immediately. The Federal Reserve will accept comments on the interim final rules through November 25, 2013, and the rules could be revised later in response to comments. In addition, the Y-14 reporting instructions, which can be found at www.federalreserve.gov/apps/reportforms/default.aspx, are being updated to reflect these changes.

For media inquiries, call 202-452-2955

Federal Register notices:

Regulations Y and YY: Application of the Revised Capital Framework to the Capital Plan and Stress Test Rules 
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Annual Company-Run Stress Tests at Banking Organizations With Total Consolidated Assets of More Than $10 Billion But Less Than $50 Billion; One-Year Transition Period to Revised Regulatory Capital Framework for 2013-2014 Stress Test Cycle
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 Comments on this proposal: Submit | View

Agencies revise proposed risk retention rule

Board of Governors of the Federal Reserve SystemDepartment of Housing and Urban DevelopmentFederal Deposit Insurance CorporationFederal Housing Finance AgencyOffice of Comptroller of the CurrencySecurities and Exchange Commission

For immediate releas…

Federal Reserve announces that it has not objected to a re-submitted capital plan from BB&T Corporation

Release Date: August 23, 2013

For immediate release

The Federal Reserve on Friday announced it has not objected to a re-submitted capital plan from BB&T Corporation.  Earlier this year, the Federal Reserve objected to BB&T’s 2013 capital plan based on a qualitative assessment conducted during the annual Comprehensive Capital Analysis and Review.  BB&T was required to submit a new capital plan under the Federal Reserve’s regulation.

For media inquiries, call 202-452-2955

Federal Reserve Board releases paper on capital planning at large bank holding companies

Release Date: August 19, 2013

For immediate release

Large bank holding companies have considerably improved their capital planning processes in recent years, but have more work to do to enhance their practices for assessing the capital they need to withstand stressful economic and financial conditions, the Federal Reserve said in a paper released on Monday.  

In the paper, the Federal Reserve discussed in detail its expectations for internal capital planning at large bank holding companies and described the range of practices it has observed at these companies during the past three Comprehensive Capital Analysis and Review (CCAR) exercises.  The Federal Reserve conducts the CCAR annually to help ensure that companies have forward-looking capital planning processes that account for their unique risks and result in sufficient capital to enable the institutions to continue lending to households and businesses during times of economic and financial stress. 

The paper, Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice, is intended to promote better capital planning at bank holding companies generally, and to provide greater clarity on the standards against which those practices are evaluated as part of the CCAR exercise.  In particular, the Federal Reserve emphasized that bank holding companies, when considering their capital needs, should focus on the specific risks they could face under potentially stressful conditions.    

In its evaluation, the Federal Reserve found that firms needed to improve a number of aspects of their capital planning processes, including their accounting for risks most relevant to the specific business activities, their methods of projecting the effect of certain stresses on their capital needs, and their governance of the capital planning processes. 

The Federal Reserve will start the 2014 CCAR process in the fall.  In addition to the 18 firms that participated in 2013, 12 firms with more than $50 billion in total assets that have not previously been part of the CCAR are expected to participate. 

Capital Planning at Large Bank Holding Companies (PDF) | HTML

For media inquiries, call 202-452-2955

Federal Reserve Board issues a final rule establishing annual assessment fees for supervision and regulation of large financial companies

Release Date: August 16, 2013

For immediate release

The Federal Reserve Board on Friday issued a final rule establishing annual assessment fees for its supervision and regulation of large financial companies.

The Dodd-Frank Wall Street Reform and Consumer Protection Act directs the Board to collect assessment fees equal to the expenses it estimates are necessary or appropriate to supervise and regulate bank holding companies and savings and loan holding companies with $50 billion or more in total consolidated assets and nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Federal Reserve.

The final rule outlines how the Board determines which companies are charged, estimates the applicable expenses, determines each company’s assessment fee, and bills for and collects the assessment fees.

Under the final rule, each calendar year is an assessment period. For the 2012 assessment period, the first year for which assessment fees will be collected, the Board will notify each company of the amount of its assessment when the rule becomes effective in late October. Payments for the 2012 assessment period will be due no later than December 15, 2013. The Board estimates it will collect about $440 million from 70 companies for the 2012 assessment period.

Beginning with the 2013 assessment period, the Federal Reserve will notify each company of the amount of its assessment fee no later than June 30 of the year following the assessment period. Payments will be due by September 15. The Federal Reserve will transfer the assessment fees it collects to the U.S. Treasury.

For media inquiries, call 202-452-2955.

Federal Register notice: HTML | PDF

Board Votes

Agencies seek comment on Dodd-Frank Act stress test guidance for medium-sized firms

Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
 

For immediate release

July 30, 2013

Agencies Seek Comment on Dodd-Frank Act Stress Test Guidance for Medium-Sized Firms

Three federal bank regulatory agencies are seeking comment on proposed guidance describing supervisory expectations for stress tests conducted by financial companies with total consolidated assets between $10 billion and $50 billion.

These medium-sized companies are required to conduct annual company-run stress tests beginning this fall under rules the agencies issued in October 2012 to implement a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

To help these companies conduct stress tests appropriately scaled to their size, complexity, risk profile, business mix, and market footprint, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are proposing guidance to provide additional details tailored to these companies.

The stress test rules allow flexibility to accommodate different approaches by different companies in the $10 billion to $50 billion asset range. Consistent with this flexibility, the proposed guidance describes general supervisory expectations for Dodd-Frank Act stress tests, and, where appropriate, provides examples of practices that would be consistent with those expectations.

The public comment period on the proposed supervisory guidance will be open until September 25, 2013.

Federal Register notice: HTML | PDF

Comments on this proposal: Submit | View

Media Contacts:
Federal Reserve Eric Kollig 202-452-2955
FDIC David Barr 202-898-6992
OCC William Grassano 202-649-6870

Agencies encourage lenders to work with student loan borrowers

Federal Reserve Board of Governors

Federal Deposit Insurance Corporation 
Board of Governors of the Federal Reserve System 
Office of the Comptroller of the Currency

For immediate release

July 25, 2013

Agencies Encourage Lenders to Work with Student Loan Borrowers

The federal bank regulatory agencies today issued a statement encouraging financial institutions to work constructively with private student loan borrowers experiencing financial difficulties.  Prudent workout arrangements are consistent with safe and sound lending practices and are generally in the long-term best interest of both the financial institution and the borrower.

Student loan borrowers who are unemployed or underemployed may face hardship in making payments on their private student loan debts after separation from school or during periods of economic difficulty.  Current interagency guidance permits prudent workout and modification programs for retail loans, including student loans, .  Institutions that have private student loan workout programs should provide borrowers with information that clearly explains the programs, including eligibility criteria and the process for requesting a modification.

The statement is being issued by the Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency.

Agencies Encourage Financial Institutions to Work with Student Loan Borrowers Experiencing Financial Difficulties (17 KB PDF)

Media Contacts:
Federal Reserve Board Susan Stawick 202-452-2955
FDIC Greg Hernandez 202-898-6984
OCC Stephanie Collins 202-649-6870

Last update: July 25, 2013