Search Results
We have written in prior Cabinet News & Views articles that, since the November elections, the U.S. federal banking regulators have been signaling significant changes in approach. This week, the FDIC kicked off the changes by sweeping away several significant actions taken under prior leadership. It withdrew, or revoked authority for staff to publish for comment, four important proposed rules, rescinded an important policy statement, and deferred certain compliance dates of a different rule. The withdrawn proposals were those addressing (i) brokered deposits, (ii) corporate governance, and (iii) the FDIC’s interpretation of the Change in Bank Control Act (“CBCA”). In the same Federal Register notice, the FDIC also advised that it has decided not to publish for comment a proposal called for under the 2010 Dodd-Frank Act relating to incentive-based compensation arrangements.
What is the direction of bank supervision and regulation under the Trump administration? As one would expect in these early days, the picture is evolving.
As the new administration settles in, it has begun to catalyze significant changes in the bank supervisory and regulatory environment. The FDIC is the first mover in this effort. Longtime director and sometime Chairman Martin Gruenberg resigned as a director over the week-end prior to the January 20 inauguration. He was succeeded by then Vice-Chairman, Travis Hill, who is now Acting Chairman. If one were to accept reductive descriptions of their respective policy inclinations, former Chairman Gruenberg would best be described as having favored very strong regulation and as skeptical of innovation in the banking system. Acting Chair Hill, by contrast, appears to favor substantially lighter regulation and to trust the banking system with greater scope for innovation.
The Office of the Comptroller of the Currency’s Committee on Bank Supervision sets the agency’s supervision objectives and priorities. On October 1, the Committee released the OCC’s Bank Supervision Operating Plan for fiscal year 2025.
The board of directors of the Federal Deposit Insurance Corporation recently proposed a rule change that would reassert its now-dormant authority to review changes in bank control involving bank holding companies. Under the Change-in-Bank Control Act, 12 USC 1817(j), the FDIC has statutory authority to review and approve or reject proposals that would result, directly or indirectly, in changes of bank control, as defined in the CIBCA.
On September 18, 2023, the U.S. Basel III Endgame proposal was published in the Federal Register. The comment period ended on January 16, 2024, with the banking regulators (the Federal Reserve, the OCC, and the FDIC) having received hundreds of comments on the proposal. Acknowledging the many concerns raised in the comment letters, Federal Reserve Chairman Jerome Powell indicated in his March 2024 Congressional testimony that “there will be broad material changes to the proposal.” On June 24, Bloomberg reported that the Federal Reserve has “shown other US regulators a three-page document of possible changes to their bank-capital overhaul that would significantly lighten the load on Wall Street lenders."
On March 21, the Federal Deposit Insurance Corporation published for comment a proposal to revise its Statement of Policy on Bank Merger Transactions. In a recent Client & Friends Memo authored by Andrew Karp and Chris Van Heerden, we focus on how if adopted as proposed, the proposal would modify the Statement of Policy substantially, effectively creating an entirely new policy.
Read more here.
On Tuesday, the Third Circuit, handed down a decision in a case involving the Consumer Financial Protection Bureau and the National Collegiate Master Student Loan Trust that finds that statutory trusts used to handle securitizations are considered “covered persons” for purposes of the Consumer Financial Protection Act and thus, are subject to CFPB jurisdiction.