Regulatory Developments
The Federal Reserve has taken several policy actions since the publication of the May 2024 Supervision and Regulation Report. Significant actions are detailed in table 1. All Supervision and Regulation (SR) and Consumer Affairs (CA) letters are available on the Federal Reserve Board's public website.11
Table 1. Federal Reserve or interagency rulemakings/statements (proposed and final)
| From 5/4/2024–10/31/2024 | |
|---|---|
| Date issued | Rule/guidance |
| 5/9/2024 | Federal Reserve Board releases summary of the exploratory pilot Climate Scenario Analysis exercise that it conducted with six of the nation's largest banks. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/other20240509a.htm |
| 6/21/2024 | Agencies announce results of resolution plan review for largest and most complex banks. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240621a.htm |
| 7/17/2024 | Agencies issue final rule to help ensure credibility and integrity of automated valuation models. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240717a.htm |
| 7/18/2024 | Agencies finalize interagency guidance on reconsiderations of value for residential real estate valuations. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240718a.htm |
| 7/19/2024 | Agencies request comment on anti-money laundering/countering the financing of terrorism proposed rule. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240719a.htm |
| 7/25/2024 | Federal bank regulatory agencies seek comment on interagency effort to reduce regulatory burden. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240725a.htm |
| 7/25/2024 | Agencies remind banks of potential risks associated with third-party deposit arrangements and request additional information on bank–fintech arrangements. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240725c.htm |
| 8/5/2024 | Federal Reserve Board issues final joint guidance to help certain large banks further develop their resolution plans. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240805a.htm |
| 8/28/2024 | Federal Reserve Board announces final individual capital requirements for all large banks, effective on October 1. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20240828a.htm |
Resolution Plan Guidance for Certain Large Banks
In August 2024, the Federal Reserve Board and the FDIC issued final joint guidance to help certain large banks further develop their resolution plans. These resolution plans, also known as living wills, describe a bank's strategy for orderly resolution under bankruptcy in the event of material financial distress or failure. The guidance generally applies to domestic and foreign banks with more than $250 billion in total assets that are not the largest and most complex banks, for which guidance is already in place. The guidance is organized around key areas of potential risk to resolvability, such as capital, liquidity, and operational capabilities that could be needed in resolution.
Automated Valuation Model Final Rule
In July 2024, federal regulatory agencies issued both a final rule and separate final guidance related to real estate valuation. The final rule is designed to help ensure the credibility and integrity of models used in valuations for certain mortgages secured by a consumer's principal dwelling. In particular, the rule will implement quality control standards for automated valuation models used by mortgage originators and secondary market issuers in valuing those homes.
Box 1. The Novel Activities Supervision Program and Third-Party Fintech Relationships
The Novel Activities Supervision Program continues to help foster responsible innovation at banking organizations supervised by the Federal Reserve and to help ensure associated risks are appropriately addressed.1 One area of novel activities relates to arrangements between banks and financial technology companies (fintechs), where fintechs provide consumers and businesses access to banking products and services. While these arrangements can provide benefits, supervisory experience has identified a range of safety and soundness, compliance, and consumer-related concerns with the management of these arrangements. Supervisors are engaging with institutions to assess such arrangements, their associated benefits and risks, and the effectiveness of controls to manage these risks. In addition, supervisors are engaging with a range of stakeholders to deepen the Federal Reserve's understanding of such arrangements and to inform the enhancement of the regulatory and supervisory frameworks to support responsible innovation. Furthermore, supervisors are also sharing information on risks and effective risk-management practices.
For example, in July 2024, the Federal Reserve Board, along with the Office of the Comptroller of the Currency and the FDIC, issued a joint statement on arrangements between banks and fintechs to deliver deposit products and services. The joint statement seeks to further responsible innovation by highlighting the key risks the agencies have seen with these arrangements, suggesting effective risk-management practices, and reminding banks of applicable rules and guidance.
Contemporaneously, the agencies published a request for information on bank-fintech arrangements more broadly. The request for information seeks to confirm and augment the agencies' understanding of arrangements involving deposits, payments, and loans. The request for information also asks commenters to describe how banks manage various risks of these arrangements.
The Novel Activities Supervision Program will continue to promote responsible innovation that benefits the communities and businesses banks serve, while prioritizing safety and soundness and consumer protections.
1. Federal Reserve Board, "Novel Activities Supervision Program," https://www.federalreserve.gov/supervisionreg/novel-activities-supervision-program.htm. Return to text
References
11. The Federal Reserve publishes SR and CA letters to address significant policy and procedural matters related to the Federal Reserve System's safety-and-soundness and consumer compliance supervisory responsibilities, respectively. SR letters are available on the Board's public website at https://www.federalreserve.gov/supervisionreg/srletters/srletters.htm, and CA letters are available on the Board's public website at https://www.federalreserve.gov/supervisionreg/caletters/caletters.htm. Return to text