Financial Services Spotlight

January 2017 Developments

Posted by Roy Andersen on Jan 31, 2017 12:00:00 PM

Overview

A Donald Trump effect was apparent with the January 26th Federal Register-- it was one of the shortest Federal Register volumes seen in some time—even the pre-holiday Registers sport more pages.  The CFPB published a rule requiring incentive programs for sales of consumer products be subject to extraordinary controls adapted to such sales campaigns.  These would be in addition to and perhaps duplicative of the requirements of primary federal regulators. 

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Topics: OFAC, CFPB, CFTC, Sudan Sanctions, Incentive Sales Programs, Loss Absorbing Capacity

December 2016 Developments

Posted by Roy Andersen on Jan 5, 2017 12:00:00 PM

Overview

The banking agencies did not appear to be participating in the supposed frenzy of rulemaking that has been prompted by the Trump election. In one of the few instances in history where powers of banks were actually reduced, banks were restricted in their dealings with industrial metals.  The CFTC proposed and adopted a variety of year-end regulations including related to position limits and aggregation of positions.  Big banks are bearing the brunt of regulatory focus including new final  rules on deposit account recordkeeping and disclosure of liquidity coverage. 

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Topics: Iran, Foreign Securities, National Banks, Qualified Financial Contracts, Small Banks, NCUA

Comptroller of the Currency Finalizes Regulation Prohibiting Purchasing Industrial or Commercial Metals

Posted by Roy Andersen on Dec 29, 2016 12:00:00 PM

On December 28, 2016, the OCC posted its final rule to prohibit national banks from dealing in or investing in industrial or commercial metals.[1]  This rule was proposed by the OCC in September 2016, and was approved in substantially the same form as the proposal.

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Topics: Commercial Metals, Purchasing, Banking, Industrial Metals, Copper, National Banks, OCC

Action Required Under the Volcker Rule by January 22, 2017

Posted by Roy Andersen on Dec 14, 2016 12:00:00 PM

Action Required Under the Volcker Rule by January 22, 2017.

Late Monday afternoon, the Fed announced that banks may seek an extension of time (up to five years) to hold and presumably arrange to sell their investments in or holdings of so-called “illiquid funds” that were made impermissible under the Volcker Rule.  Under the most recent relief before Monday, these investments had to be “conformed” or sold by July 21, 2017.  Many banks and banking interest groups had complained to the Fed that a variety of hedge funds and private equity funds were sold and operated to invest in “illiquid” assets and that forced sales of such investments before maturity would be a financial burden.

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Topics: Dodd-Frank, Banking, Illiquid Funds, Investment, Volcker Rule

November 2016 Developments

Posted by Roy Andersen on Dec 12, 2016 12:00:00 PM

Overview

The CFPB issued another mega-rule on prepaid accounts—subjecting the industry to hundreds of pages of new rules.  Flood insurance rules were changed to accept private flood insurance coverage.  North Korea was named as a country of primary money laundering concern and this triggers certain actions for banks.

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Topics: Sudan, North Korea, Iran, CFTC, Liberia, Regulation I, Consumer Compliance Rating System

October 2016 Developments

Posted by Roy Andersen on Nov 6, 2016 12:00:00 PM

Overview

The SEC adopted proposed and final rules regarding the activities of and definitions of clearing agencies.  Relations with Burma and Cuba continue to be eased.  The CFTC has promulgated proposed rules on implementing its cross border rules on corporate practices.  The banking agencies published proposed rules on cyber security.

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Topics: SEC, Cuba, Qualifying Master Netting Agreements, RESPA, Burma, Covered Clearing Agencies

September 2016 Developments

Posted by Roy Andersen on Oct 4, 2016 12:00:00 PM

Overview

Two developments signal for the first time in my memory a cut back in bank powers.  The Fed is restricting physical commodities activities and merchant banking activities in its proposed rule just below.  In the same vein, the OCC is restricting national bank activities in industrial metals—i.e., copper.  These proposals are reversing decisions made many years ago and have seemingly operated without any appreciable losses to the banking industry.  The Fed is exempting certain banks from the full range of capital requirements and stress test is a proposed rule.

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Topics: OCC, Derivatives Clearing Organizations, Bank Holding Company Act, Japan, Regulation Q

August 2016 Second Half Developments

Posted by Roy Andersen on Sep 8, 2016 12:00:00 PM

Overview

The OCC published a proposed rule dealing with qualified financial contracts and their effect on the U.S. financial system.   The proposal is similar to a rule proposed by the Federal Reserve earlier this year.  In essence, QFCs will be required to contain provisions that restrict acceleration and contain contractual stay provisions.  FinCEN is proposing to expand its requirements for AML programs to banks that are not currently subject to federal supervision.

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Topics: Whistleblowers, OCC, CFTC, Federal Housing Finance Agency, AML Program

July 2016 Second Half Developments

Posted by Roy Andersen on Jul 27, 2016 12:00:00 PM

Overview

The CFPB has issued its proposed regulations to regulate payday loans and other similar high cost extensions of credit. An extensive study of these types of loans revealed that there were some unfair and deceptive practices and a lack of focus on whether the consumers had the wherewithal to repay these loans on schedule without continuing to renew such credits.

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Topics: CFPB, Daylight Overdrafts, Payday Loans, Home Mortgage Data, Transnational Criminal Organizations

July 2016 First Half Developments

Posted by Roy Andersen on Jul 18, 2016 12:00:00 PM

Overview

The CFPB has issued its regulations to implement one of the few legislative changes to ease the compliance burden on banks.  The privacy rules have produced one of the least helpful disclosure requirements on how banks treat your confidential information.  Most consumers received rafts of these confusing disclosures to no useful end, except to trip up banks at examination time.  These were so burdensome that Congress actually provided some relief.  The CFPB rule demonstrates how confusing and overlapping rules are since the bulk of the rule is to ease interactions with other disclosure rules that intersect with the privacy notices.  The CFPB also published a special report on the mortgage servicing business highlighting the compliance problems in that business and suggesting that a crackdown was coming.

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Topics: OFAC, CFPB, Penalty Calculations, Mortage Servicing, Regulation P

About the Spotlight


The Financial Services Spotlight examines the regulatory and technology developments impacting banks, asset managers and other financial services providers—where challenges meet opportunities.

 

Meet the Authors


Roy C. Andersen, of counsel in Sullivan & Worcester's New York office, is a member of the Corporate Department. Mr. Andersen focuses on bank regulatory and compliance matters, including international banks and their branches and agencies in New York.

Joel Telpner, partner in the firm's New York office, is a seasoned advisor, strategist and problem solver. Mr. Telpner brings more than 30 years of legal experience in a career that includes time as an AmLaw 100 partner, the former U.S. general counsel of a global financial institution, and a venture capitalist. He is recognized for his ability to deftly manage complex financial transactions, especially those involving sophisticated structured finance and derivatives matters and has an extensive and unique combination of transactional and regulatory experience.

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