US Agencies Highlight Crypto-Related Risks, Issue Other Updates
The US Agencies jointly issued a report that analyzes risks associated with syndicated loans and a statement on liquidity risks associated with funding from crypto-asset-related entities; these agencies include the Board of Governors of the Federal Reserve System (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). Additionally, FDIC issued a financial institution letter on the Home Mortgage Disclosure Act (HMDA) reporting threshold for closed-end mortgage loans.
With respect to the HMDA reporting threshold for closed-end mortgage data, FDIC plans to implement a supervisory approach for FDIC-supervised institutions consistent with the approach of the Consumer Financial Protection Bureau (CFPB). For FDIC-supervised institutions that are subject to the other coverage requirements of Regulation C and originated at least 25 closed-end mortgage loans in each of the two preceding calendar years, but fewer than 100 closed-end mortgage loans in either or both of the two preceding calendar years, FDIC does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data for 2022, 2021, or 2020. While any FDIC-supervised institution may elect to report data voluntarily for those years, FDIC does not expect those institutions to collect and report data retroactively for closed-end mortgage loans covered by the Court’s order vacating the CFPB 2020 HMDA Final Rule. Institutions affected by the Court’s order, and that meet the reporting thresholds of 25 closed-end mortgage loans in each of the two preceding calendar years as of 2023, should start collecting data in 2023 and reporting data in 2024.
Coming back to the 2022 Shared National Credit (SNC) review report, data show that credit quality of large syndicated bank loans improved in 2022 and that credit risks for syndicated loans were moderate. It also highlights that risks to borrowers impacted by COVID-19 have declined, though these risks remain high for leveraged loans as well as the entertainment, recreation, and transportation services industries. Finally, the statement on crypto-asset risks notes the importance of understanding drivers of potential behavior of deposits from crypto-asset-related entities, assessing potential concentration or interconnectedness across deposits, incorporating liquidity risks or funding volatility associated with crypto-asset related deposits into contingency funding planning, and performing robust due diligence or monitoring of crypto-asset-related entities that establish deposit accounts.
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Keywords: Americas, US, Banking, Lending, Credit Risk, Crypto-Assets, Liquidity Risk, Basel, HMDA, Mortgage Lending, US Agencies
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