Board of Governors of the Federal Reserve System

Supervision and Regulation

The Federal Reserve promotes a safe, sound, and efficient banking and financial system that supports the growth and stability of the U.S. economy. The Federal Reserve carries out its supervisory and regulatory responsibilities and supporting functions primarily by

• supervising the activities of financial institutions to promote their safety and soundness (see figure 4.1);
• developing regulatory policy (rulemakings, supervision and regulation letters, policy statements, and guidance) and acting on applications filed by banking organizations; and
• monitoring trends in the banking sector by collecting and analyzing data (see box 4.1).

Supervised and Regulated Institutions

The Federal Reserve categorizes banking organizations into portfolios by size and entity type, as described in table 4.1.

Table 4.1. Summary of supervised institutions

State Member Banks

At year-end 2022, a total of 1,420 banks (excluding non-depository trust companies and private banks) were members of the Federal Reserve System, of which 701 were state chartered. Federal Reserve System member banks operated 47,297 branches and accounted for 34 percent of all commercial banks in the United States and 68 percent of all commercial banking offices. State-chartered commercial banks that are members of the Federal Reserve, commonly referred to as state member banks, represented approximately 16 percent of all insured U.S. commercial banks and held approximately 18 percent of all insured commercial bank assets in the United States.

Bank Holding Companies

At year-end 2022, a total of 3,848 U.S. bank holding companies (BHCs) were in operation, of which 3,450 were top-tier BHCs. These organizations controlled 3,512 insured commercial banks and held approximately 93 percent of all insured commercial bank assets in the United States.

BHCs that meet certain capital, managerial, and other requirements may elect to become financial holding companies (FHCs). FHCs can generally engage in a broader range of financial activities than other BHCs. As of year-end 2022, a total of 505 domestic BHCs and 46 foreign banking organizations had FHC status. Of the domestic FHCs, 23 had consolidated assets of $100 billion or more; 56 between $10 billion and $100 billion; 193 between $1 billion and $10 billion; and 233 less than $1 billion.

Savings and Loan Holding Companies

At year-end 2022, a total of 296 savings and loan holding companies (SLHCs) were in operation, of which 152 were top-tier SLHCs. These SLHCs controlled 160 depository institutions. Approximately 93 percent of SLHCs engage primarily in depository or broker-dealer activities. These firms hold approximately 50 percent ($887.7 billion) of the total combined assets of all SLHCs. The Office of the Comptroller of the Currency (OCC) or the Federal Deposit Insurance Corporation (FDIC) is the primary federal regulator for subsidiary savings associations of SLHCs. Some SLHCs are engaged primarily in nonbanking activities, such as insurance underwriting (6 SLHCs), and commercial activities (4 SLHCs). The 25 largest SLHCs accounted for more than $1.7 trillion of total combined assets.

Depository institution holding companies significantly engaged in insurance activities. At year-end 2022, the Federal Reserve supervised six companies that own depository institutions but are significantly engaged in insurance activities. All six of these institutions were SLHCs. As of September 30, 2022, they had approximately $800 billion in total assets. Three of these firms have total assets greater than $100 billion, and for five of the six, insured depository assets represent less than half of total assets.

In 2022, the Federal Reserve proposed and finalized a supervisory framework for insurance organizations that are overseen by the Board. The supervisory framework consists of a risk-based approach to supervisory expectations and activities; a unique supervisory ratings system; and reliance, to the fullest extent possible, on the work performed by other relevant supervisors, including the state insurance regulators.

The Federal Reserve's Insurance Policy Advisory Committee (IPAC) was established by the Economic Growth, Regulatory Relief, and Consumer Protection Act to provide information, advice, and recommendations on insurance issues.¹ In 2022, the IPAC completed its study of the potential impact of the International Association of Insurance Supervisors' Insurance Capital Standard (ICS) on the U.S. life insurance industry, policyholders, and markets. The IPAC provided input on the proposed criteria for comparing the ICS to the Aggregation Method, which is being developed by the United States. The IPAC offered comments on the Federal Reserve's proposed framework for the supervision of insurance organizations and the impact of climate risk on the insurance industry.

Financial Market Utilities

Financial market utilities (FMUs) manage or operate multilateral systems for the purpose of transferring, clearing, or settling payments, securities, or other financial transactions among financial institutions or between financial institutions and the FMU. The Federal Reserve supervises FMUs that are chartered as member banks or Edge Act corporations, and coordinates with other federal banking supervisors to supervise FMUs considered bank service providers under the Bank Service Company Act.

In July 2012, the Financial Stability Oversight Council voted to designate eight FMUs as systemically important under title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). As a result of these designations, the Board assumed an expanded set of responsibilities related to these designated FMUs that includes promoting uniform risk-management standards, playing an enhanced role in the supervision of designated FMUs, reducing systemic risk, and supporting the stability of the broader financial system. For certain designated FMUs, the Board established risk-management standards and expectations that are articulated in the Board's Regulation HH.

In addition to setting minimum risk-management standards, Regulation HH establishes advance notice requirements for proposed material changes to the rules, procedures, or operations of a designated FMU for which the Board is the supervisory agency under title VIII. Finally, Regulation HH also establishes minimum conditions and requirements for a Federal Reserve Bank to establish and maintain an account for, and provide services to, a designated FMU.² Where the Board is not the title VIII supervisory agency, the Federal Reserve works closely with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission to promote robust FMU risk management and monitor systemic risks across the designated FMUs.

In 2022, the Board invited comment on proposed amendments related to operational risk management in Regulation HH.³ The proposal would update, refine, and add specificity to the operational risk-management requirements in Regulation HH to reflect changes in the operational risk, technology, and regulatory landscapes in which designated FMUs operate since the Board last amended this regulation in 2014. The proposal would also adopt specific incident-notification requirements.

International Activities

Foreign operations of U.S. banking organizations. At the end of 2022, a total of 23 member banks were operating 285 branches in foreign countries and overseas areas of the United States. Eleven national banks were operating 228 of these branches, 12 state member banks were operating 45 of these branches, and 5 nonmember banks were operating the remaining 12.

Edge Act and agreement corporations. At year-end 2022, out of 32 banking organizations chartered as Edge Act or agreement corporations, 3 operated 6 Edge Act and agreement branches. These corporations are examined annually.

U.S. activities of foreign banks. As of year-end 2022, a total of 131 foreign banks from 48 countries operated 140 state-licensed branches and agencies, of which 6 were insured by the FDIC, and 49 OCC-licensed branches and agencies, of which 4 were insured by the FDIC. These foreign banks also owned 6 Edge Act and agreement corporations. In addition, they held a controlling interest in 32 U.S. commercial banks. Altogether, the U.S. offices of these foreign banks controlled approximately 17 percent of U.S. commercial banking assets. These 131 foreign banks also operated 89 representative offices; an additional 35 foreign banks operated in the United States through a representative office.

The Federal Reserve conducted or participated with state and federal regulatory authorities in 691 examinations of foreign banks in 2022.

Supervisory Developments

Supervisory and Regulatory Initiatives

The Federal Reserve's supervision activities include examinations and inspections to ensure that financial institutions operate in a safe and sound manner and comply with laws and regulations, including consumer protection. These include an assessment of a financial institution's risk-management systems, financial conditions, governance and controls, and compliance. The Federal Reserve tailors its supervisory approach based on the size and complexity of firms. Supervisory oversight ranges from a continuous supervisory presence with dedicated teams of examiners for large firms to regular point-in-time and targeted periodic examinations for small, noncomplex firms.

Supervisory priorities are focused on both previously identified supervisory findings and emerging concerns arising from changing economic conditions. Examiners monitor and assess a supervised institution's remediation of supervisory findings in areas such as independent risk management and controls, compliance, operational and cyber resilience, and information technology.

In 2022, the Federal Reserve conducted 289 examinations of state member banks, 2,590 inspections of bank holding companies, and 124 inspections of savings and loan holding companies. Tables 4.2 and 4.3 provide information on examinations and inspections conducted by the Federal Reserve during the past five years.

Table 4.2. Savings and loan holding companies, 2018–22

Table 4.3. State member banks and bank holding companies, 2018–22

Specialized Examinations

The Federal Reserve conducts specialized examinations of supervised financial institutions in the areas of capital planning and stress testing, information technology, fiduciary activities, transfer agent activities, government and municipal securities dealing and brokering, and cybersecurity and critical infrastructure. The Federal Reserve also conducts specialized examinations of certain nonbank entities that extend credit subject to the Board's margin regulations.

Capital Planning and Stress Testing

Since the 2007–09 financial crisis, the Federal Reserve has instituted supervisory stress testing to strengthen capital positions of the largest banking organizations. In March 2020, the Board integrated the supervisory stress test with its non-stress capital requirements through the stress capital buffer to form one forward-looking and risk-sensitive capital framework.

In June 2022, the Federal Reserve conducted its annual stress test, which showed that the large banking firms tested had sufficient levels of capital and could continue lending to households and businesses during a severe recession. In August 2022, the Federal Reserve announced the individual capital requirements for large banks, which include the stress capital buffer requirement based on the results of the 2022 stress test. These requirements became effective as of October 1, 2022. For stress testing publications released in 2022, see box 4.2.

Fiduciary Activities

In 2022, Federal Reserve examiners conducted 83 fiduciary examinations of state member banks and non-depository trust companies.

Transfer Agents

During 2022, the Federal Reserve conducted transfer agent examinations at three state member banks and three BHCs that were registered as transfer agents.

Government and Municipal Securities Dealers and Brokers

The Federal Reserve is responsible for examining state member banks and foreign banks for compliance with the Government Securities Act of 1986 and with the U.S. Treasury regulations governing dealing and brokering in government securities. During 2022, the Federal Reserve conducted five examinations of government securities activities at these organizations.

The Federal Reserve is also responsible for ensuring that state member banks and BHCs that act as municipal securities dealers comply with the Securities Act Amendments of 1975. Municipal securities dealers are examined, pursuant to the Municipal Securities Rulemaking Board's rule G-16, at least once every two calendar years. During 2022, the Federal Reserve examined four entities that dealt in municipal securities.

Securities Credit Lenders

Under the Securities Exchange Act of 1934, the Board is responsible for regulating credit in certain transactions involving the purchasing or carrying of securities. As part of its general examination program, the Federal Reserve examines the banks under its jurisdiction for compliance with the Board's Regulation U. In addition, the Federal Reserve maintains a registry of persons other than banks, brokers, and dealers who extend credit subject to Regulation U. Throughout the year, Federal Reserve examiners conducted specialized examinations of these lenders if they are not already subject to supervision by the Farm Credit Administration or the National Credit Union Administration (NCUA).

Operational Resilience, Information Technology, and Cybersecurity

Effective operational risk management and resilience are vital to the safety and soundness of financial institutions and the stability of the U.S. financial system.⁴ The Federal Reserve provides tools and educational resources to assist supervised institutions in managing such risks.

• In April 2022, the Board's, the FDIC's, and the OCC's computer-security incident notification rule took effect.⁵ The federal banking agencies jointly hosted an "Ask the Regulator" session on the rule for the industry.
• The Federal Reserve, together with the other members of the Federal Financial Institutions Examination Council (FFIEC), published an updated Cybersecurity Resource Guide for Financial Institutions in October 2022 to help financial institutions respond to cyber incidents.⁶

The Federal Reserve examined and monitored supervised institutions for operational risks as part of its safety and soundness supervision.

• In 2022, Federal Reserve examiners, in close coordination with the other federal banking agencies, conducted examinations of IT activities (inclusive of cyber risk-management activities) and targeted cybersecurity assessments of the large financial institutions, and service providers.
• Federal Reserve examiners also conducted tailored cybersecurity assessments at community and regional banking organizations.
• Under the authority of the Bank Service Company Act, the federal banking agencies examined technology service providers that provide services for specific regulated financial institutions.

The Federal Reserve, as part of the FFIEC, also published interagency statements and guidance to assist examiners with risk-management assessments at supervised entities.

• The FFIEC issued a "Statement of Principles on Examination Information Requests," which outlines best practices for requesting examination information from supervised entities, and a common authentication solution for secure access to the FFIEC members' supervision systems.
• In August 2022, the FFIEC IT Subcommittee sponsored its annual IT Conference virtually for examiners, highlighting current and emerging technology issues affecting supervised institutions.

The Federal Reserve collaborated with other financial regulators, private industry, and international partners to promote effective safeguards against operational and cyber risks to the financial services sector and its critical infrastructure. This includes participation in the FFIEC's Cybersecurity and Critical Infrastructure Subcommittee, the Financial and Banking Information Infrastructure Committee, the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency Cyber Incident Reporting Council, and the Cybersecurity Forum for Independent and Executive Branch Regulators.

The Board led or contributed to cybersecurity activities undertaken by various international groups.

• In 2022, the Federal Reserve, as part of a the G7 Cyber Expert Group, contributed to the publication of two reports addressing fundamental elements of ransomware and third-party risk within the financial sector.⁷
• The Board also continued to participate in the work of the Financial Stability Board (FSB), which resulted in the publication of a consultive document, "Achieving Greater Convergence in Cyber Incident Reporting."⁸

Crypto-Related Activities

Crypto-assets present opportunities to banking organizations, their customers, and the overall financial system, but also pose multiple IT and operations risks as well as anti-money-laundering, consumer protection and compliance, and financial stability risks.⁹ Therefore, in 2022, the Federal Reserve issued SR letter 22-6/CA letter 22-6, "Engagement in Crypto-Asset-Related Activities by Federal Reserve-Supervised Banking Organizations" to address Federal Reserve-supervised banking organizations' engagement in crypto-asset-related activities.¹⁰ The letter establishes the expectation that supervised banking organizations determine the legality of engaging in crypto-related activities. Notify the Federal Reserve prior to engaging in any crypto-asset-related activity.

Climate-Related Financial Risks

The Federal Reserve Board is working to build the resilience of large financial institutions to the financial risks of climate change. In 2022, the Board identified two, near-term supervisory priorities around climate-related financial risks. On September 29, 2022, the Board announced that six of the nation's largest banks will participate in a pilot climate scenario analysis exercise designed to enhance the ability of supervisors and firms to measure and manage climate-related financial risks. On December 2, 2022, the Board invited comment on proposed guidance for the management of climate-related financial risks for banks with more than $100 billion in total consolidated assets. The Board intends to work with the OCC and FDIC in issuing any final guidance after reviewing comments received.

Enforcement Actions

The Federal Reserve has enforcement authority over the financial institutions it supervises and their affiliated parties. Enforcement actions may be taken to address unsafe or unsound practices and violations of law or regulation. Formal enforcement actions include cease and desist orders, written agreements, prompt corrective action directives, removal and prohibition orders, civil money penalties, and letters sent pursuant to 12 U.S.C. § 1829, known as Section 19 letters.

In 2022, the Federal Reserve completed 41 formal enforcement actions. Civil money penalties totaling $30,450,400 were assessed. As directed by statute, all civil money penalties are remitted to either the U.S. Treasury or the Federal Emergency Management Agency. The Reserve Banks completed 43 informal enforcement actions. Informal enforcement actions include memoranda of understanding, commitment letters, supervisory letters, and board of directors' resolutions.

Enforcement orders and prompt corrective action directives, which are issued by the Board, and written agreements, which are executed by the Reserve Banks, are made public and are posted on the Board's website (https://www.federalreserve.gov/apps/enforcementactions/search.aspx).

Other Laws and Regulation Enforcement Activity/Actions

The Federal Reserve's enforcement responsibilities also extend to the disclosure of financial information by state member banks and the use of credit to purchase and carry securities.

Financial Disclosures by State Member Banks

Under the Securities Exchange Act of 1934 and the Federal Reserve's Regulation H, certain state member banks are required to make financial disclosures to the Federal Reserve using the same reporting forms that are normally used by publicly held entities to submit information to the SEC.¹¹

In 2022, one state member bank was required to submit data to the Federal Reserve. The information submitted by this one state member bank is available to the public upon request and is primarily used for disclosure to the bank's shareholders and public investors.

Internal Appeals of Material Supervisory Determinations

The Board is committed to maintaining an independent, intra-agency process to review appeals of material supervisory determinations (MSD) that complies with section 309 of the Riegle Community Development and Regulatory Improvement Act of 1994.¹² The appeals process includes two levels of review. A panel for Reserve Bank staff who are not employed by the Reserve Bank with supervisory responsibility of the financial institution that issued the appealed MSD conducts the initial review. This panel determines whether the appealed MSD is consistent with applicable laws, regulations, and policy, and is supported by a preponderance of the evidence in the record. If the appealing institution is dissatisfied with the initial review panel's decision, the institution may request a final review of the MSD. A panel of senior Board staff conducts the final review. The final review panel determines whether the decision of the initial review panel is reasonable. Additional information is available regarding the Federal Reserve Board's appeals process (https://www.federalreserve.gov/supervisionreg/srletters/SR2028.htm) and Ombuds policy (https://www.federalreserve.gov/aboutthefed/ombpolicy.htm).

In 2022, the Board received one MSD appeal from a state member community banking organization that later withdrew the appeal, as the matter was resolved informally with assistance from the Ombuds Office.

Assessments for Supervision and Regulation

BHCs and SLHCs with total consolidated assets of $100 billion or more as well as any nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Board, are subject to assessments for the cost of the Board's supervision and regulation. As a collecting entity, the Board does not recognize the supervision and regulation assessments as revenue nor does the Board use the collections to fund Board expenses; the funds are transferred to the U.S. Treasury. The Board collected and transferred $686.2 million in 2022 for the 2021 supervision and regulation assessment.

Training and Technical Assistance

The Federal Reserve provides training and technical assistance to foreign supervisors and minority-owned depository institutions as well as engages in industry outreach in connection with supervisory objectives.

Current Expected Credit Losses Implementation

The Financial Accounting Standards Board issued an accounting standard in 2016 that overhauls the accounting for credit losses with a new impairment model based on the Current Expected Credit Losses (CECL) methodology. Approximately 200 banking organizations adopted the CECL methodology in 2020. Remaining banking organizations will adopt throughout 2023. CECL's implementation affects a broad range of supervisory activities, including regulatory reports, examinations, and examiner training.

In 2022, the Federal Reserve released a second tool to help community banks implement the CECL accounting standard. Known as the Expected Losses Estimator, or ELE, the spreadsheet-based tool utilizes a financial institution's loan-level data and management assumptions to aid community financial institutions in calculating their CECL allowances. The launch of the ELE tool builds on the Federal Reserve's previous release of the Scaled CECL Allowance for Losses Estimator, or SCALE, tool to also help community financial institutions implement the CECL accounting standard. Together, the ELE and SCALE tools provide two simplified approaches to CECL calculations for smaller community financial institutions.

International Training and Technical Assistance

In 2022, the Federal Reserve continued to provide training and technical assistance on supervisory matters to foreign central banks and supervisory authorities. Technical assistance normally involves visits by Federal Reserve staff members to foreign authorities as well as consultations with foreign supervisors who visit the Board of Governors or the Reserve Banks. Due to pandemic restrictions, the Federal Reserve offered its training programs only virtually during the first half of the year and resumed in-person training during the second half of the year for the benefit of foreign supervisory authorities. Approximately 1,900 bank supervisors from foreign central banks and supervisory agencies attended these virtual and in-person training events during 2022.

Federal Reserve staff also took part in organizing with the International Monetary Fund and the World Bank a total of two training events for senior supervisory officials, one a virtual conference and the other an in-person training seminar. Other training partners that collaborated with the Federal Reserve during 2022 to organize a total of 23 regional virtual and in-person training events included the Association of Bank Supervisors of the Americas, the National Banking and Securities Commission of Mexico, and Banco de Portugal.

Efforts to Support Minority-Owned Depository Institutions

The Federal Reserve System implements its responsibilities under section 367 of the Dodd-Frank Act primarily through its Partnership for Progress (PFP) program.¹³ Established in 2008, this program promotes the viability of minority depository institutions (MDIs) by facilitating activities designed to strengthen their business strategies, maximize their resources, and increase their awareness and understanding of supervisory expectations. The Federal Reserve has also taken MDIs into consideration when developing crisis response facilities. For example, Federal Reserve staff reached out to MDIs to learn more about the impact of the COVID event on the communities they serve as well as to gather input on how crisis response facilities could be most helpful to these institutions and their customers.

In addition, the Federal Reserve continues to maintain the PFP website, which supports MDIs by providing them with technical information and links to useful resources (https://www.fedpartnership.gov). Representatives from each of the 12 Federal Reserve Districts, along with staff from the Divisions of Supervision & Regulation and Consumer & Community Affairs at the Board of Governors, continue to offer technical assistance tailored to MDIs by providing targeted supervisory guidance, identifying additional resources, and fostering mutually beneficial partnerships between MDIs and community organizations. As of year-end 2022, the Federal Reserve's MDI portfolio consisted of 13 state member banks.

Throughout 2022, the System supported MDIs and conducted a number of outreach initiatives, webinars, and conferences specific to MDIs, including the following:

• Interagency listening sessions: In the fall of 2022, the Board, FDIC, and OCC jointly hosted an interagency listening sessions series titled, "Bridging the Gap: Assessing the Evolving Needs of Mission-Driven Banks." All MDIs and CDFI banks were invited to provide insights on current challenges and opportunities in their industry, and suggestions as to how the regulators can provide support.
• Minorities in Banking Forum: In September 2022, the Federal Reserve System sponsored the seventh annual Banking and the Economy: A Forum for Minorities in Banking at the Federal Reserve Bank of Atlanta and virtually. The forum gathered minority professionals in middle to senior management in the banking and financial services sectors nationwide.
• Designation of a new state member MDI: In December 2022, the Board and Federal Reserve Bank of Atlanta recognized a new MDI, Anchor Bank in Palm Beach Gardens, Florida. This increases the number of Federal Reserve-regulated MDIs to 14.

• Conference speeches: In the fall of 2022, two Federal Reserve governors attended MDI conferences and gave public remarks:

  • Governor Lisa Cook attended the National Bankers Association annual meeting in October 2022 in Washington, D.C.
  • Governor Michelle Bowman attended "The Future of Minority Depository Institutions: MDI Connectech Initiative" in November 2022 in Washington, D.C.
• Research: PFP staff coordinated with Reserve Bank staff to encourage new research on MDIs and the communities they serve.
• Outreach: Throughout 2022, PFP staff discussed formation of de novo banks with several different investor groups.
• Emergency Capital Investment Program (ECIP): PFP staff coordinated with Reserve Bank staff to provide consultation to the U.S. Treasury on Federal Reserve-supervised ECIP applicants.

International Engagement

As a member of the FSB and several international financial standard-setting bodies, the Federal Reserve actively participates in efforts to share information and advance sound supervisory policies for internationally active financial organizations and to enhance the strength, stability, and resilience of the international financial system.

Financial Stability Board

In 2022, the Federal Reserve continued its participation in a variety of activities of the FSB, an organization whose mission is to promote international financial stability. The FSB helps coordinate the work of national financial authorities and international standard-setting bodies and shares information on supervisory and regulatory practices. Priority areas for the year included developing principles for regulating and supervising crypto-assets and stablecoins, enhancing the resilience of nonbank financial intermediation, aligning practices regarding cyber incident reporting, and monitoring the transition of financial benchmarks away from LIBOR. The full range of the Federal Reserve's FSB activities is discussed in section 3, "Financial Stability."

The FSB also produces a variety of publications, including progress reports, monitoring reports, guidance, consultative documents, and compendia of better practice. Examples issued in 2022 include

• Assessment of Risks to Financial Stability from Crypto-Assets (issued in February and available at https://www.fsb.org/2022/02/assessment-of-risks-to-financial-stability-from-crypto-assets/)
• FSB Roadmap for Addressing Financial Risks from Climate Change: 2022 Progress Report (issued in July and available at https://www.fsb.org/2022/07/fsb-roadmap-for-addressing-financial-risks-from-climate-change-2022-progress-report/)
• Review of the FSB High-Level Recommendations of the Regulation, Supervision and Oversight of "Global Stablecoin" Arrangements: Consultative Report (issued in October and available at https://www.fsb.org/2022/10/review-of-the-fsb-high-level-recommendations-of-the-regulation-supervision-and-oversight-of-global-stablecoin-arrangements-consultative-report/)
• International Regulation of Crypto-Asset Activities: A Proposed Framework – Questions for Consultation (issued in October and available at https://www.fsb.org/2022/10/international-regulation-of-crypto-asset-activities-a-proposed-framework-questions-for-consultation/)
• Supervisory and Regulatory Approaches to Climate-Related Risks: Final Report (issued in October and available at https://www.fsb.org/2022/10/supervisory-and-regulatory-approaches-to-climate-related-risks-final-report/)
• Progress Report on Climate-Related Disclosures (issued in October and available at https://www.fsb.org/2022/10/progress-report-on-climate-related-disclosures/)
• Achieving Greater Convergence in Cyber Incident Reporting – Consultative Document (issued in October and available at https://www.fsb.org/2022/10/achieving-greater-convergence-in-cyber-incident-reporting-consultative-document/)
• Climate Scenario Analysis by Jurisdictions: Initial Findings and Lessons (issued in November and available at https://www.fsb.org/2022/11/climate-scenario-analysis-by-jurisdictions-initial-findings-and-lessons/)
• Progress Report on LIBOR and Other Benchmarks Transition Issues: Reaching the Finishing Line of LIBOR Transition and Securing Robust Reference Rates for the Future (issued in December and available at https://www.fsb.org/2022/12/progress-report-on-libor-and-other-benchmarks-transition-issues-2022/)

A comprehensive list of FSB publications is available at https://www.fsb.org/publications.

Basel Committee on Banking Supervision

During 2022, the Federal Reserve contributed to Basel Committee on Banking Supervision (BCBS) supervisory policy recommendations, reports, papers, and consultations designed to improve the supervision of banking organizations' practices and to address specific issues that emerged during the 2007–09 financial crisis and, more recently, the COVID event.¹⁴ In 2022, the BCBS was particularly focused on crypto-assets and crypto markets (this included issuing a final consultation on the prudential treatment of crypto-assets), an evaluation of the effectiveness of Basel III reforms, capital buffers, climate-related financial risks, credit risk, margining practices, COVID-19, and operational risk and resilience.

Examples of final BCBS documents issued in 2022 include

• Newsletter on Covid-19 Related Credit Risk Issues (issued in March and available at https://www.bis.org/publ/bcbs_nl26.htm)
• Newsletter on Artificial Intelligence and Machine Learning (issued in March and available at https://www.bis.org/publ/bcbs_nl27.htm)
• Newsletter on Third- and Fourth-Party Risk Management and Concentration Risk (issued in March and available at https://www.bis.org/publ/bcbs_nl28.htm)
• Newsletter on Credit Risk: Real Estate and Leveraged Lending (issued in August and available at https://www.bis.org/publ/bcbs_nl29.htm)
• Review of Margining Practices (issued in September and available at https://www.bis.org/bcbs/publ/d537.htm)
• Basel III Monitoring Report (issued in September and available at https://www.bis.org/bcbs/publ/d541.htm)
• Buffer Usability and Cyclicality in the Basel Framework (issued in October and available at https://www.bis.org/bcbs/publ/d542.htm)
• Newsletter on Positive Cycle-Neutral Countercyclical Capital Buffer Rates (issued in October and available at https://www.bis.org/publ/bcbs_nl30.htm)
• Newsletter on Bank Exposures to Non-Bank Financial Intermediaries (issued in November and available at https://www.bis.org/publ/bcbs_nl31.htm)
• Frequently Asked Questions on Climate-Related Financial Risks (issued in December and available at https://www.bis.org/bcbs/publ/d543.htm)
• Evaluation of the Impact and Efficacy of the Basel III Reforms (issued in December and available at https://www.bis.org/bcbs/publ/d544.htm)

Examples of consultative BCBS documents issued in 2022 include

• Principles for the Effective Management and Supervision of Climate-Related Financial Risks (issued in June and available at https://www.bis.org/bcbs/publ/d532.htm)
• High-Level Considerations on Proportionality (issued in July and available at https://www.bis.org/bcbs/publ/d534.htm)
• Prudential Treatment of Cryptoasset Exposures (final consultation issued in December and available at https://www.bis.org/bcbs/publ/d545.htm)

A comprehensive list of BCBS publications is available at https://www.bis.org/bcbs/publications.htm.

Committee on Payments and Market Infrastructures

In 2022, the Federal Reserve continued its active participation in the activities of the Committee on Payment and Market Infrastructures (CPMI), a forum in which central banks promote the safety and efficiency of payment, clearing and settlement activities, and related arrangements.

The CPMI continued to coordinate with the FSB to advance the G-20 priority to enhance global cross-border payments. In particular, the CPMI published analytical papers, frameworks, and self-assessment tools for several building blocks as set out in the FSB roadmap.

In addition, in conducting its work on financial market infrastructure and market-related reforms, the CPMI often coordinated with the International Organization of Securities Commissions (IOSCO). Over the course of 2022, CPMI-IOSCO advanced work on financial resources for central counterparty (CCP) recovery and resolution, practices for addressing non-default losses at CCPs, margining practices, stablecoin arrangements, client clearing at central counterparties, and fast payments. In addition, CPMI-IOSCO continued to monitor implementation of the Principles for Financial Market Infrastructures, including expectations for cyber resilience.

Some examples of 2022 CPMI publications include

• Central Counterparty Financial Resources for Recovery and Resolution (published by CPMI-IOSCO and the FSB in March and available at https://www.bis.org/publ/othp46.pdf)
• Improving Access to Payment Systems for Cross-Border Payments: Best Practices for Self-Assessments (published by CPMI in May and available at https://www.bis.org/cpmi/publ/d202.pdf)
• Extending and Aligning Payment System Operating Hours for Cross-Border Payments (published by CPMI in May and available at https://www.bis.org/cpmi/publ/d203.pdf)
• Interlinking Payment Systems and the Role of Application Programming Interfaces: A Framework for Cross-Border Payments (published by CPMI in July and available at https://www.bis.org/cpmi/publ/d205.pdf)
• Application of the Principles for Financial Market Infrastructures to Stablecoin Arrangements (published by CPMI-IOSCO in July and available at https://www.bis.org/cpmi/publ/d206.pdf)
• A Discussion Paper on Central Counterparty Practices to Address Non-Default Losses (published by CPMI-IOSCO in August and available at https://www.bis.org/cpmi/publ/d208.pdf)
• Review of Margining Practices (published by CPMI-IOSCO and BCBS in September and available at https://www.bis.org/bcbs/publ/d537.pdf)
• A Discussion Paper on Client Clearing: Access and Portability (published by CPMI-IOSCO in September and available at https://www.bis.org/cpmi/publ/d200.pdf)
• Implementation Monitoring of the PFMI: Level 3 Assessment on Financial Market Infrastructures' Cyber Resilience (published by CPMI-IOSCO in November and available at https://www.bis.org/cpmi/publ/d212.pdf)

A comprehensive list of CPMI publications is available at https://www.bis.org/cpmi_publs/.

International Association of Insurance Supervisors

The Federal Reserve continued its participation in 2022 in the development of international supervisory standards for the insurance industry. The Federal Reserve participates actively in standard-setting at the International Association of Insurance Supervisors (IAIS) in consultation and collaboration with state insurance regulators, the National Association of Insurance Commissioners, and the Federal Insurance Office. The Federal Reserve's participation focuses on those aspects most relevant to financial stability and consolidated supervision.

In 2022, the IAIS made progress on several initiatives. The IAIS proposed criteria for assessing whether the Aggregation Method provides comparable outcomes to the ICS. The IAIS also completed its review of the implementation of the Holistic Framework. This led to the IAIS recommending to the FSB that it discontinue the designation of global systemically important insurers while retaining the option to reinstate these designations if deemed necessary.

Examples of IAIS documents issued in 2022 include

• 2022–2023 Roadmap (issued in January and available at https://www.iaisweb.org/uploads/2022/03/2022-2023-Roadmap.pdf)
• Public Consultation on Draft Criteria that Will Be Used to Assess Whether the Aggregation Method Provides Comparable Outcomes to the Insurance Capital Standard (issued in June and available at https://www.iaisweb.org/2022/06/public-consultation-on-draft-criteria-that-will-be-used-to-assess-whether-the-aggregation-method-provides-comparable-outcomes-to-the-insurance-capital-standard/)
• Register of Internationally Active Insurance Groups Based on Information Publicly Disclosed by Groupwide Supervisors (issued in July and available at https://www.iaisweb.org/uploads/2022/08/Register-of-Internationally-Active-Insurance-Groups-IAIGs.pdf)
• Issues Paper on Insurance Sector Operational Resilience, Draft for Public Consultation (issued in October and available at https://www.iaisweb.org/uploads/2022/10/Issues-Paper-on-Insurance-Sector-Operational-Resilience.pdf)
• Public Consultation on the Review of the Individual Insurer Monitoring (IIM) Assessment Methodology (issued in December and available at https://www.iaisweb.org/uploads/2022/12/221209-Public-consultation-on-the-review-of-the-IIM-assessment-methodology.pdf)
• Global Insurance Market Report (GIMAR), December 2022 (available at https://www.iaisweb.org/uploads/2022/12/GIMAR-2022.pdf)
• Application Paper on the Supervision of Climate-Related Risks in the Insurance Sector (issued in May and available at https://www.iaisweb.org/uploads/2022/01/210525-Application-Paper-on-the-Supervision-of-Climate-related-Risks-in-the-Insurance-Sector.pdf)

A comprehensive list of IAIS publications is available at https://www.iaisweb.org/publications.

Shared National Credit Program

The Shared National Credit (SNC) program is an interagency review and assessment of risk in the largest and most complex credits shared by multiple regulated financial institutions. The SNC program is governed by an interagency agreement among the Board, FDIC, and OCC. SNC reviews are completed in the first and third quarters of the calendar year. Large agent banks receive two reviews each year, while most other agent banks receive a single review each year.

More information on the 2021 Shared National Credit review is available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20220214a.htm.

Bank Secrecy Act and Anti-Money-Laundering Compliance

The Federal Reserve is responsible for examining institutions for compliance with the Bank Secrecy Act (BSA) and applicable anti-money-laundering (AML) laws and regulations and conducts such examinations in accordance with the FFIEC's Bank Secrecy Act/Anti-Money-Laundering Examination Manual.

The Federal Reserve is currently participating in an ongoing interagency effort to update this manual. Many of the revisions are designed to emphasize and enhance the risk-focused approach to BSA/AML supervision and to continue to provide transparency into the BSA/AML examination process.

The Anti-Money-Laundering Act of 2020 (the Act) amended the Bank Secrecy Act, resulting in the most significant revision of the United States' framework for anti-money laundering and countering the financing of terrorism (AML/CFT) since 2001. The purpose of the Act is to improve coordination and information sharing; modernize AML/CFT laws; encourage technological innovations and the adoption of new technology; reinforce the risk-based approach to compliance; and establish uniform beneficial ownership information reporting requirements with a secure, nonpublic database for beneficial ownership information. The Federal Reserve continues to work with the U.S. Treasury, federal banking, and other agencies to implement the relevant sections of that Act.

The Federal Reserve also participates in the U.S. Treasury-led BSA Advisory Group, which includes representatives of regulatory agencies, law enforcement, and the financial services industry.

International Coordination on Sanctions, Anti-Money-Laundering, and Counter-Terrorism Financing

The Federal Reserve participated in a number of international coordination initiatives related to sanctions, money laundering, and terrorism financing. The Federal Reserve continued to monitor and share information with relevant groups regarding the changing sanctions landscape and, in particular, the ongoing global sanctions resulting from Russia's invasion of Ukraine.

Additionally, the Federal Reserve has a long-standing role in the U.S. delegation to the intergovernmental Financial Action Task Force and its working groups, contributing a banking supervisory perspective to the formulation of international standards. The Federal Reserve also continued to participate in the work of the FSB that resulted in the publication of the July 2022 FSB report¹⁵ exploring options regarding broader adoption of the Legal Entity Identifier in cross-border payments and the October 2022 publication of the G–20 Roadmap for Enhancing Cross-border Payments Consolidated progress report for 2022.¹⁶

The Federal Reserve also continued to participate in committees and subcommittees through the Bank for International Settlements. Specifically, the Federal Reserve actively participated in the AML Experts Group under the BCBS that focuses on AML and CFT issues. In addition, the Federal Reserve participated in meetings and roundtables during the year to discuss BSA/AML issues with delegations from countries and regions, such as Mexico, Australia, Central America, Canada, Africa, and the United Kingdom. These dialogues are designed to promote information sharing and understanding of BSA/AML issues between U.S. and country-specific financial sectors.

Regulatory Reports

The Federal Reserve, along with the other member FFIEC agencies, requires banking organizations to periodically submit reports that provide information about their financial condition and structure.

Federal Reserve Regulatory Reports

The Federal Reserve requires that U.S. holding companies periodically submit reports that provide information about their financial condition and structure.¹⁷ This information is essential to formulating and conducting financial institution regulation and supervision. It is also used to respond to information requests by Congress and the public about holding companies and their nonbank subsidiaries. Foreign banking organizations and other entities are also required to submit reports periodically to the Federal Reserve. For more information on the various reporting forms, see https://www.federalreserve.gov/apps/reportforms/

Effective during 2022, the following regulatory reporting forms had substantive revisions:

• Consolidated Financial Statements for Holding Companies (FR Y-9C)—The Board revised the FR Y-9C to be consistent with changes to U.S. generally accepted accounting principles related to last-of-layer hedging. The revisions, which were effective as of the September 30, 2022, report date, are consistent with changes to the FFIEC Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031, 041, and 051).¹⁸ There were no changes to the FR Y-9LP, FR Y-9SP, FR Y-9ES, or FR Y-9CS.
• Structure Reporting and Recordkeeping Requirements for Domestic and Foreign Banking Organizations (FR Y-6, FR Y-7, FR Y-10, and FR Y-10E)—The Board revised the FR Y-6, FR Y-7, and FR Y-10 to reduce reporting burden, standardize how certain data are reported, and update the terminology used in the reports. The most significant revisions included (1) adding "Yes/No" checkboxes on the FR Y-6 to capture whether the firm had changes to any reportable items from the prior year's submission; (2) adding an automated tool that will allow for the reconciliation of a respondent's organizational chart in a secure electronic system; (3) adding a standardized template for reporting securities holders and insiders on the FR Y-6; and (4) updating the definition of control in the glossary section of the FR Y-10. The revisions to the definition of control are effective March 31, 2023. The new standard template for securities holders and insiders on the FR Y-6 and for reporting the organizational chart and tiered structure information on the FR Y-6 and FR Y-7 will be effective December 31, 2024. All other revisions were effective December 31, 2022.¹⁹
• Capital Assessments and Stress Testing Information Collection Reports (FR Y-14)—The Board revised the FR Y-14 to better identify risks not currently captured in the supervisory stress test, facilitate data reconciliation, and mitigate ambiguity within the instructions. Additionally, revisions were made to clarify the instructions that were, in part, prompted by questions received from reporting institutions. For the FR Y-14Q, certain revisions were effective for the September 30, 2022, as-of date, while other revisions were effective for the June 30, 2023, as-of date. For the FR Y-14M, the revisions were effective for the September 30, 2022, as-of date, and for the FR Y-14A, the revisions were effective for the December 31, 2022, as-of date.²⁰
• Complex Institution Liquidity Monitoring Report (FR 2052a)—The FR 2052a was revised to implement the net stable funding ratio rule and other enhancements in December 2021.²¹ The changes were effective on May 1, 2022, for firms subject to Category I standards and on October 1, 2022, for firms subject to Category II-IV standards. The revisions to the collection were significant and marked a major advancement in the Board's capability to monitor and supervise the liquidity risk profiles of large firms.
• Transfer Agent Registration and Amendment Form and Transfer Agent Deregistration (Form TA-1 and Form TA-W)—The Board implemented the new Form TA-W to simplify the process for respondents to deregister as transfer agents and obviate the need to use the SEC deregistration form or submit a separate letter. Form TA-W became effective as of December 23, 2022.²²

FFIEC Regulatory Reports

The Federal Reserve, along with the other FFIEC member agencies, requires financial institutions to submit various uniform regulatory reports.²³ This information is essential to formulating and conducting supervision and regulation and for the ongoing assessment of the overall soundness of the nation's financial system. For more information on FFIEC reporting forms, see https://www.ffiec.gov/ffiec_report_forms.htm.

During 2022, the FFIEC member agencies completed a statutorily mandated review of the FFIEC Call Reports and revised other reports that improve the monitoring of certain hedging activity and country exposures.

• Consolidated Reports of Condition and Income (FFIEC 031, 041, 051)—Every five years, section 604 of the Financial Services Regulatory Relief Act of 2006 requires the banking agencies to conduct a review of the information and schedules that are required to be filed by an insured depository institution in the Call Reports. Under the auspices of the FFIEC, the banking agencies completed the statutorily mandated review in 2022. The FFIEC Task Force on Reports (TFOR) conducted surveys of Call Report data users, representing diverse groups within the banking agencies, the CFPB, and state supervisory authorities. The data users identified the purposes for which they use each reported data item, the extent of usage for each item, and the frequency with which each item is needed. The TFOR evaluated the survey results and provided a report to the FFIEC principals in December 2022. Separately, the FFIEC member agencies revised the Call Reports²⁴ to conform with the Accounting Standards Update 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method," (ASU 2022-01²⁵ ), which was issued by Financial Accounting Standards Board in March 2022.
• Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002)—The FFIEC member agencies revised the FFIEC 002 to be consistent with changes made to the Call Reports for institutions that have adopted ASU 2022-01. These changes were effective as of June 30, 2022.²⁶
• Country Exposure Report (FFIEC 009) and Country Exposure Information Report (FFIEC 009a)—The FFIEC member agencies revised the FFIEC 009 by clarifying that the redistribution of immediate-counterparty claims previously referred to as "Ultimate Risk Basis" should be renamed as "Guarantor Basis." As part of this revision, the agencies added two new columns to the newly renamed "Claims on a Guarantor Basis and Memorandum Items" section of Schedule C to provide the agencies with a more complete view of the origin of collateral and its value as a risk mitigant. Additionally, the agencies revised the FFIEC 009a to consolidate the collection of more granular information for each foreign country where the exposure exceeds the lesser of 0.75 percent of total assets or 15 percent of total capital (the previous Part B threshold). The agencies also added six new columns to the FFIEC 009a to collect information on immediate-counterparty claims. These revisions were effective as of the December 31, 2022, report date.²⁷

Staff Development Programs

The Federal Reserve's staff development program supports the ongoing development of nearly 4,000 professional supervisory staff, ensuring that they have the requisite skills necessary to meet their evolving supervisory responsibilities. The Federal Reserve also provides course offerings to staff at state banking agencies. Training activities in 2022 are summarized in table 4.4.

Table 4.4. Training for supervision and regulation, 2022

Examiner Commissioning Program

An overview of the Federal Reserve System's Examiner Commissioning Program for assistant examiners is set forth in SR letter 17-6/CA letter 17-1, "Overview of the Federal Reserve's Supervisory Education Programs."²⁸ Three examiner commissioning tracks are available: (1) community banking organization, (2) consumer compliance, and (3) large financial institutions (LFI). On average, individuals move through a combination of in-person training, self-paced learning, virtual instruction, and on-the-job training over a period of about three to four years. Achievement is measured by completing the required course content, demonstrating on-the-job knowledge, and passing a professionally validated proficiency examination.

In 2022, 81 examiners passed the proficiency examination (37 in CBO, 14 in consumer compliance, and 30 in LFI). To ensure minimal disruption to assistant examiners, virtual delivery of content continued throughout 2022, with some in-person courses beginning again in the fourth quarter of 2022.

Continuing Professional Development

The Federal Reserve provides supervisory staff (and, in many cases, state examiners through existing partnerships with the Conference of State Banking Supervisors and FFIEC) with opportunities to maintain job knowledge after commissioning, learn about emerging concepts and practices, and expand knowledge into highly specialized supervisory topics. A number of learning and communication solutions are developed or curated, including Rapid Response webinars, podcasts, self-guided learning plans on specialty topics, and other content produced for just-in-time communication to supervisory staff about emerging issues and regulatory policy.

Regulatory Developments

The Federal Reserve carries out its regulatory responsibilities by developing regulatory policy (rulemakings, supervision and regulation letters, policy statements, and guidance) and reviewing and acting on a variety of applications filed by banking organizations.

Rulemakings and Guidance

The Federal Reserve issues new regulations or revises existing regulations in response to laws enacted by Congress or because of evolving conditions in the financial marketplace. Over 2022, the Federal Reserve, working with the other federal banking agencies, announced a variety of policy actions to promote the safety and soundness, transparency, and efficiency of the financial system. The Federal Reserve issued the following rules and statements in 2022 (see table 4.5).

Table 4.5. Federal Reserve or interagency rulemakings/statements/guidance (proposed and final), 2022

Banking Applications

The Federal Reserve reviews applications submitted by BHCs, state member banks, SLHCs, foreign banking organizations, and other entities for approval to undertake various transactions and to engage in new activities. In 2022, the Federal Reserve acted on 938 applications filed under the six relevant statutes.

The Federal Reserve publishes the Semiannual Report on Banking Applications Activity, which provides aggregate information on proposals filed by banking organizations and reviewed by the Federal Reserve. The current report as well as historical reports are available at https://www.federalreserve.gov/publications/semiannual-report-on-banking-applications-activity.htm.

Public Notice of Federal Reserve Decisions and Filings Received

The Board's website provides information on orders and announcements (https://www.federalreserve.gov/newsevents/pressreleases.htm) as well as a guide for U.S. and foreign banking organizations that wish to submit applications (https://www.federalreserve.gov/bankinforeg/afi/afi.htm).

Footnotes