Washington Report 360 | November 2, 2018

Key highlights

• The Federal bank regulators proposed two new rules for large banking organizations that would introduce a new framework and tailor prudential standards, including capital and liquidity, based on multiple factors.
• The Federal banking regulators proposed a rule to introduce SA-CCR, a new approach to calculating the exposure amount of derivatives contracts under the agencies’ regulatory capital rule.
• The CFPB intends to issue a proposed rule in January 2019 to reconsider the ability-to-repay provisions of its Payday Lending rule as well as the compliance date.

Financial services legislative and regulatory news

The Federal Reserve, FDIC, and OCC proposed two notices of proposed rulemaking that would establish a revised framework to tailor the application of prudential standards and capital and liquidity rules to large U.S. banking organizations (more than $100 billion in total consolidated assets) based on their risk profiles; the framework includes four categories of standards based on factors, including asset size, cross-jurisdictional activity, reliance on short-term wholesale funding, nonbank assets, and off-balance sheet exposure.

The Federal Reserve, FDIC, and OCC proposed a new approach, the "standardized approach for measuring counterparty credit risk," or SA-CCR, as an alternative for calculating the exposure amount of derivatives contracts under the regulatory capital rule; “advanced approaches” banking organizations would be required to use SA-CCR for calculating the standardized total risk-weighted assets and the supplementary leverage ratio.

The CPFB announced it will issue a proposed rule in January 2019 to reconsider the ability-to-repay provisions of its Payday Lending rule as well as the compliance date.

The SEC adopted amendments to modernize the property disclosure requirements and related guidance for mining registrants.

The FTC proposed a rule pursuant to EGRRCPA that would require the nationwide consumer reporting agencies to provide free electronic credit monitoring services for active duty military consumers.

Financial services policy news

The BCBS issued its Fifteenth progress report on adoption of the Basel regulatory framework, which reported progress on the leverage ratio, large exposures framework, and standard on interest rate risk in the banking book. The report cited limited progress on the Net Stable Funding Ratio (NSFR).

The SEC:

• Proposed rule changes to allow variable annuities and variable life insurance contracts to use a summary prospectus to provide disclosures to investors.
• Stated that it will not pursue enforcement action, for a limited time period, for certain actions related to Security-Based Swap Dealers and Major Security-Based Swap Participants.
• Updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors.

A CFTC commissioner discussed FinTech regulation, stating that market regulators serve a role to ensure that innovators are "socialized into a culture of regulation and compliance."

The FTC released questions pertinent to its hearing on competition and consumer protection issues associated with the use of algorithms, artificial intelligence, and predictive analytics in business decisions and conduct.