US Agencies released their respective semi-annual regulatory flexibility agenda under the Fall 2021 Unified Agenda of the planned Regulatory and Deregulatory Actions. The Unified Agenda lists planned short- and long-term regulatory actions of administrative agencies, including the Board of Governors of the Federal Reserve System (FED), the Bureau of Consumer Financial Protection (CFPB), and the Securities and Exchange Commission (SEC). In this iteration, the key planned regulatory actions are focused on climate risk disclosures, regulatory capital rule, real estate lending standards, operational resilience standards, and enhanced cyber risk management standards. FED also announced its approval of the application of the Old National Bancorp in Evansville, Indiana, to acquire First Midwest Bancorp, Inc and indirectly acquire its subsidiary bank First Midwest Bank, both located in Chicago, Illinois. The Federal Deposit Insurance Corporation (FDIC) and FED also published Federal Register notices on simplification of deposit insurance rules and the proposed framework for the supervision of insurance organizations, respectively.
The FDIC amendments on simplification of deposit insurance rules establish a “trust accounts” category that governs coverage of deposits of both revocable trusts and irrevocable trusts using a common calculation. The amendments also provide consistent deposit insurance treatment for all mortgage-servicing account balances held to satisfy principal and interest obligations to a lender. The amendments provide depositors and bankers with a rule for trust account coverage that is easy to understand and facilitate the prompt payment of deposit insurance, in accordance with the Federal Deposit Insurance Act. The rule goes into effect on April 01, 2024.
The FED proposal on supervision of insurance organizations sets out the new supervisory framework for depository institution holding companies significantly engaged in insurance activities (or supervised insurance organizations). The proposed framework would provide a supervisory approach that is designed specifically to reflect the differences between banking and insurance. Within the framework, the application of supervisory guidance and the assignment of supervisory resources would be based explicitly on a supervised insurance organization’s complexity and individual risk profile. The proposed framework would formalize the ratings applicable to these firms with rating definitions that reflect specific supervisory requirements and expectations. It would also emphasize the FED policy to rely to the fullest extent possible on work done by other relevant supervisors, describing, in particular, the way it will rely more fully on reports and other supervisory information provided by state insurance regulators to minimize the burden associated with supervisory duplication. Comments will be accepted until April 05, 2022.
- Federal Register Notice on Unified Agenda
- Fall 2021 Unified Agenda
- Federal Register Notice on Deposit Insurance Rules
- Press Release on Proposed Supervisory Framework
- Board Memo on Proposed Supervisory Framework (PDF)
- Federal Register Notice on Proposed Supervisory Framework
- Press Release on Bank Acquisition
Keywords: Americas, US, Banking, Insurance, Climate Change Risk, ESG, Unified Agenda, Deposit Insurance, Cyber Risk, US Agencies, Old National Bancorp, First Midwest Bank, Lending, Basel, Operational Resilience, FED, FDIC
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
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The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.