Fed to Ease Capital Planning Requirements for Banks Under $250B September 27, 2016
Earlier this week, the Federal Reserve released a proposed rule that would exempt many regional banks from the complex qualitative requirements of its annual Comprehensive Capital Analysis and Review, or CCAR, process. The rule would apply starting in 2017 to banks with between $50 billion and $250 billion in assets without significant international or nonbank activity.
“We appreciate the Fed’s efforts to examine the stress test process and seek improvements,” said Rob Nichols, president and CEO of AmBA, which has for years sought reforms to the CCAR process. “We’ve long believed CCAR is a bad fit for regional banks, which include different-sized institutions with a variety of business models and unique geographic footprints.” Nichols called for further regulatory tailoring, including congressional action to remove stress tests requirements for banks with as little as $10 billion in assets.
The Fed’s proposal, announced in a speech yesterday by Fed Governor Daniel Tarullo, comes in response to arguments from ABA that the CCAR process was proving costlier to the smaller banks in its purview than the supervisory value it produced. “Officials from these banks expressed the view that the CCAR qualitative assessment was unduly burdensome because it created pressure to develop complex processes, extensive documentation, and sophisticated stress test models that mirrored those in use at the largest, most complex firms,” he said.
Tarullo also said the Fed is considering a future proposal to replace the existing 2.5 percent countercyclical capital buffer with a “stress capital buffer” as part of the CCAR process. The SCB would be at least 2.5 percent but would vary to match the maximum decline in a firm’s common equity tier 1 capital ratio under the stress test’s “severely adverse” scenario, with “significant increases” in capital anticipated for the eight U.S. institutions designated as global systemically important banks.
“We will carefully evaluate the [SCB] concept,” Nichols added, expressing concern “that it may not preserve the proper function of a capital buffer -- to absorb losses in a stressful period -- and instead could impose unnecessarily high capital requirements that would make it harder for banks to make loans that help our economy grow.” Click here to read the proposed rule. Click here to read the speech.
AmBA Supports Proposed Legislation on Brokered Deposits September 27, 2016
In advance of a congressional hearing today on consumer access to banking services, AmBA has written to leaders of the House subcommittee on financial institutions and consumer credit voicing its support for several bills that would provide increased flexibility for brokered and reciprocal deposits.
Among these were H.R. 5660 -- introduced by Rep. Roger Williams (R-Texas) -- which clarifies that traditional deposit account products involving a direct, continuing relationship between a customer and an insured depository institution should not be considered brokered deposits, and H.R. 4116 -- introduced by Rep. Gwen Moore (D-Wis.) -- which updates the definition of “deposit broker” to allow a limited exemption for reciprocal deposits. The association also recognized a bill proposed by Rep. Scott Tipton (R-Colo.) that clarifies that prepaid card deposits are not considered brokered.
“Modern banking and technology… allows banks to gather stable deposits from outside of their branch networks,” AmBA said. “Although we believe that the FDIC has the necessary flexibility under existing law to tailor its regulation and supervision of banks with respect to brokered deposits, we strongly support efforts to provide statutory clarity in this area.”
NACHA Launches Same-Day ACH September 26, 2016
NACHA on Friday launched Phase 1 of its same-day ACH initiative, which allows for the sending and receiving of ACH credit transactions. All banks are now required to accept same-day ACH transactions and will receive a per-transaction fee for doing so. While originating same-day ACH payments is optional, NACHA said it expects that many banks will opt to begin sending same-day transactions as well.
Same-day ACH credit transactions will now post at 1 p.m. and 5 p.m. ET, depending on when the ACH file is received for processing. All ACH return items will post at the next available posting time or following the settlement of the associated forward transaction. Funds associated with same-day ACH credits must be made available to the receiving customer by the receiving bank’s processing day. Transactions that are in excess of $25,000 or are cross-border International ACH Transactions are not eligible for same-day settlement.
The next phase of same-day ACH will launch in September 2017 and will introduce faster processing and settling of debit transactions in addition to credit transactions. Click here to read more. For more information, contact AmBA's Steve Kenneally.
AmBA Issues Compliance Checklist, Resource Page for MLA Changes September 26, 2016
With the compliance deadline for changes to the Department of Defense’s Military Lending Act rules just a week away, AmBA is issuing a compliance checklist for bankers and unveiling a new resource webpage combining all ABA resources on the MLA. The MLA amendments -- which extend MLA restrictions to cover credit cards, lines of credit, installment loans and deposit advances offered to service members and their dependents -- take effect Oct. 3 (though credit cards have a later compliance deadline of October 2017).
The compliance checklist offers bankers a quick guide to major compliance considerations in advance of the rule, which has far-reaching implications for lending to service members and their dependents, and a link to additional compliance information that highlights critical areas. AmBA’s resource page also includes links to members-only staff analyses, webinars and briefings, news updates, comment letters and other relevant materials to facilitate compliance.
Meanwhile, AmBA this afternoon will offer a webinar on surviving MLA compliance, covering the types of loans covered, how and when to identify covered borrowers, how to provide oral disclosures and other topics.
While the final rule was released more than a year ago, it took until August of this year for the Pentagon to issue an interpretive rule clarifying numerous points of confusion and uncertainty that have hindered compliance officers’ ability to prepare. AmBA has led the advocacy effort urging DoD to respond to bankers’ concerns and continues to seek guidance and clarification on key issues.
Download the checklist.
Access the webpage.
Register for the webinar.
Read more Bank Industry News