Bank & Thrift Regulation & Enforcement

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On July 27, 2023, in an effort to bolster the resilience of the U.S. banking system in the aftermath of recent bank failures and to promote consistency with international banking capital standards, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (together, the “Agencies”) issued a notice of proposed rulemaking which would standardize the way large banks calculate risk-weighted assets and minimum capital requirements (the “NPRM”).  While the NPRM primarily applies to those banks with $100 billion or more in total consolidated assets (“Large Banks”), banks with total assets below the $100 billion threshold may still be affected if they have either (a) trading assets and trading liabilities at or above $5 billion or (b) trading assets and trading liabilities greater than or equal to ten percent (10%) of their total assets.Continue Reading Federal Regulators Issue Notice of Proposed Rulemaking Revising Capital Requirements for Large Banks and Banks with Significant Trading Activity

On June 21, 2023, the U.S. Senate Committee on Banking, Housing, and Urban Affairs (the “Senate Banking Committee”) voted the Recover Executive Compensation from Unaccountable Practices Act (the “RECOUP Act”) out of committee and into the full Senate by a vote of 21 to 2.  U.S. Sen. Sherrod Brown, Chairman of the Senate Banking Committee, described the RECOUP Act in a press release as a bipartisan response to the recent spate of bank executives pushing unsustainable business models designed to increase short-term profits and executive compensation, ignoring directives and warnings from regulators and taking risky bets at the expense of their customers.  The three key tenets of the RECOUP Act are (1) enhanced oversight authority, (2) strengthened corporate governance and (3) increased deterrence.Continue Reading THE RECOVERING EXECUTIVE COMPENSATION FROM UNACCOUNTABLE PRACTICES (RECOUP) ACT VOTED OUT OF SENATE BANKING COMMITTEE

On June 6, 2023, in an effort to promote consistency and clarity across the bank regulatory landscape, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency (together, the “Agencies”) issued joint guidance offering the Agencies’ combined approach to bolstering regulated banking organizations’ risk management practices with respect to third-party relationships (the “Guidance”). While the Guidance replaces each of the respective Agencies’ preexisting materials on this subject, many of the concepts advocated for and advanced by former guidance documents and/or FAQs have been incorporated into the final form of the Guidance.Continue Reading Federal Reserve, FDIC and OCC Issue Streamlined Guidance to Mitigate Risks Associated with Third-Party Relationships

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On May 1, 2023, the Federal Deposit Insurance Corporation (the “FDIC”) released a comprehensive discussion and analysis of potential courses of action that could be taken to reform the deposit insurance system in response to the recent string of failures of insured depository institutions.  The three options for reform are briefly described below:Continue Reading FDIC Proposes Potential Reforms to Deposit Insurance in the U.S. Banking System

The Silicon Valley Bank (“SVB”) closure was the largest bank failure since the 2008 financial crisis—and second largest in U.S. history.  While the banking industry, federal banking agencies and the market at-large continue to react to the fallout and look to determine the root causes, the industry is likely to see a number of potential changes in the shadow of this recent crisis.  Below are some thoughts on the potential consequences of the SVB failure.   Continue Reading 2023 Banking Crisis:  What Next?