Regulatory Developments
The Federal Reserve built out a post-crisis regulatory framework based on robust capital and liquidity requirements, a strong stress-testing regime, and improved resolvability of the largest firms. The Federal Reserve is now focused on assessing whether the regulatory framework is working broadly as intended and on opportunities to simplify the framework and minimize compliance burden as appropriate without sacrificing financial stability or safety-and-soundness. The Federal Reserve is continuing to tailor and reduce burden for less-systemic firms and especially community banks.
Table 1 shows proposed and final rules, as well as Federal Reserve and interagency statements, since the beginning of the year.
Table 1. 2018 Federal Reserve or interagency rulemakings/statements (proposed and final)
| Date issued | Rule/guidance |
|---|---|
| 1/4/2018 | Federal Reserve requests comments on proposed guidance that would clarify the Board's supervisory expectations related to risk management for large financial institutions. Federal Register(FR) notice: www.gpo.gov/fdsys/pkg/FR-2018-01-11/pdf/2018-00294.pdf. |
| 2/5/2018 | Agencies seek comment on proposed technical amendments to the swap margin rule. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-02-21/pdf/2018-02560.pdf. |
| 4/2/2018 | Agencies issue final rule to exempt commercial real estate transactions of $500,000 or less from appraisal requirements. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-04-09/pdf/2018-06960.pdf. |
| 4/10/2018 | Federal Reserve seeks comment on proposal to simplify capital rule for large banks while preserving strong capital levels that would maintain their ability to lend under stressful conditions. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-04-25/pdf/2018-08006.pdf. |
| 4/11/2018 | Federal Reserve and the OCC propose rule to tailor enhanced supplementary leverage ratio requirements. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-04-19/pdf/2018-08066.pdf. |
| 4/17/2018 | Agencies issue proposal to revise regulatory capital rules to address and provide an option to phase in the effects of the new accounting standard for credit losses, known as the "current expected credit loss" or CECL. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-05-14/pdf/2018-08999.pdf. |
| 6/5/2018 | Agencies ask for public comment on a proposed rule to simplify and tailor the Volcker rule. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-07-17/pdf/2018-13502.pdf. |
| 6/14/2018 | Federal Reserve approves final rule to prevent concentration of risk between large banking organizations and their counterparties from undermining financial stability. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-08-06/pdf/2018-16133.pdf. |
| 7/6/2018 | Agencies issue statement regarding the impact of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). Statement: www.federalreserve.gov/newsevents/pressreleases/files/bcreg20180706a1.pdf. |
| 7/6/2018 | Federal Reserve issues statement describing how, consistent with EGRRCPA, the Board will no longer subject primarily smaller, less complex banking organizations to certain Board regulations. Statement: www.federalreserve.gov/newsevents/pressreleases/files/bcreg20180706b1.pdf. |
| 8/22/2018 | Agencies issue interim final rule regarding the treatment of certain municipal securities as high-quality liquid assets, as required by EGRRCPA. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-08-31/pdf/2018-18610.pdf. |
| 8/23/2018 | Agencies issue interim final rule expanding examination cycles for qualifying small banks and U.S. branches and agencies of foreign banks, as required by EGRRCPA. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-08-29/pdf/2018-18685.pdf. |
| 8/28/2018 | Federal Reserve issues interim final rule expanding the applicability of the Board's Small Bank Holding Company Policy Statement, as required by EGRRCPA. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-08-30/pdf/2018-18756.pdf. |
| 9/11/18 | Agencies issue statement reaffirming the role of supervisory guidance. Statement: www.federalreserve.gov/supervisionreg/srletters/sr1805a1.pdf. |
| 9/18/2018 | Agencies issue proposed rule regarding the treatment of high-volatility commercial real estate, as required by EGRRCPA. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-09-28/pdf/2018-20875.pdf. |
| 9/21/2018 | Agencies finalize technical amendments to swap margin rule. FR notice: www.gpo.gov/fdsys/pkg/FR-2018-10-10/pdf/2018-22021.pdf. |
| 10/3/18 | Agencies issue statement on banks and credit unions sharing resources to improve efficiency and effectiveness of Bank Secrecy Act compliance. Statement: www.federalreserve.gov/newsevents/pressreleases/files/bcreg20181003a1.pdf. |
| 10/30/18 | Agencies issue proposed rule to update calculation of derivative contract exposure amounts under regulatory capital rules. FR notice: www.federalreserve.gov/newsevents/pressreleases/files/bcreg20181030a1.pdf. |
| 10/31/18 | Federal Reserve and agencies issue proposed rules that would more closely tailor the applicability of enhanced prudential standards, as required under EGRRCPA. FR notices: www.federalreserve.gov/newsevents/pressreleases/files/bcreg20181031a1.pdf and www.federalreserve.gov/newsevents/pressreleases/files/bcreg20181031a2.pdf. |
| 11/2/18 | Federal Reserve Board finalizes new supervisory rating system for large financial institutions. FR notices: www.federalreserve.gov/newsevents/pressreleases/files/bcreg20181102a1.pdf and www.federalreserve.gov/newsevents/pressreleases/files/bcreg20181102a2.pdf. |
Box 2. The Economic Growth, Regulatory Relief, and Consumer Protection Act: Reducing Regulatory Burden
The Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), enacted on May 24, 2018, changed several aspects of banking law to reduce regulatory burden on community banks and also required the federal banking agencies to further tailor their regulations to better reflect the character of the different banking firms that the agencies supervise.
On July 6, 2018, the Federal Reserve issued a statement explaining how the Board will no longer subject primarily smaller, less complex banking organizations to certain Board regulations, including those relating to stress testing and liquidity. Specifically, this statement explained how the Board would not take action to enforce certain regulations and reporting requirements for firms with less than $100 billion in total consolidated assets, such as rules implementing enhanced prudential standards and the liquidity coverage ratio requirements.
In August and September 2018, the Federal Reserve and other federal banking agencies issued three interim final rules and one proposal to implement various EGRRCPA provisions. Two of the interim final rules provide significant relief to community banking organizations.
On October 2, 2018, Vice Chairman for Supervision Randal Quarles testified before the Senate Committee on Banking, Housing, and Urban Affairs on the Federal Reserve's implementation of EGRRCPA. In his testimony, Vice Chairman Quarles noted that the Federal Reserve's implementation of EGRRCPA is underway and that progress has already been made to implement some tasks set out for the Federal Reserve in EGRRCPA. Vice Chairman Quarles highlighted that the Federal Reserve's priorities in the next few months will be to tailor regulations for firms with assets over $100 billion that are not global systemically important banks (G-SIBs) and to develop a community bank leverage ratio.
On October 31, 2018, the Federal Reserve invited public comment on two proposals (one Board-only and one jointly with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)) that would establish a framework to further tailor regulations for large banking organizations. The proposals would establish a revised framework for applying prudential standards to large U.S. banking organizations, with four categories of standards that reflect the different risks of firms in each group.
Refer to table 1 for the complete list of rulemakings and links to those documents.