Washington Report 360 | June 28, 2019
Washington Report 360 | June 28, 2019
Insight

Washington Report 360 | June 28, 2019

DFAST/CCAR stress tests; virtual assets standards; Regulation Best Interest; Council on Eliminating Reg Barriers to Affordable Housing

Key highlights

  • All large banks subject to the DFAST and CCAR stress tests met supervisory expectations; this is only the second time all banks have passed CCAR.
  • The FATF adopted guidance that sets standards for virtual assets and virtual asset providers regarding anti-money laundering and counter-terrorist financing obligations. 
  • The House of Representatives passed an appropriations bill with a provision prohibiting the SEC from implementing and enforcing Regulation Best Interest; the bill now moves to the Senate where there is speculation the provision may not pass.
  • The President signed an Executive Order creating a White House Council on Eliminating Regulatory Barriers to Affordable Housing.

Financial services legislative and regulatory news

The President signed an Executive Order creating a White House Council on Eliminating Regulatory Barriers to Affordable Housing, which will be chaired by the HUD Secretary and include members of eight additional federal agencies.

The House of Representatives passed an appropriations bill containing provisions to prohibit the SEC from implementing and enforcing Regulation Best Interest; the bill now moves to the Senate. (CNBC)

In addition to requests for a hearing, the House Financial Services Committee Chair requested Facebook agree to a moratorium on developing its cryptocurrency until Congress and regulators examine and take action on cryptocurrency-related risks of privacy and national security, cybersecurity, and trading.

All of the large banks subject to the Federal Reserve’s DFAST and CCAR stress tests were found to “pass” the tests, though one bank received a “conditional non-objection” under CCAR and must address certain identified weaknesses. The banks may now move forward with planned capital actions, including dividend payouts and share buybacks.

The OCC published risk management guidance for higher-loan-to-value lending activities in communities targeted for revitalization, highlighting core lending principles.

The CFTC approved a proposed rule amending its regulations governing the offer and sale of foreign futures and options to customers in the United States.

FINRA proposed rule changes that would eliminate the “quiet period” restrictions for publishing research reports on covered investment funds. 

The CFPB extended the comment period for its advance notice of proposed rulemaking on HMDA data points.

Industry alliances are being formed in opposition to a pilot program proposed by FINRA to study changes to corporate bond block trade reporting. (WSJ)

Financial services policy news

The FATF adopted guidance on Virtual Assets and Virtual Asset Providers setting standards for the anti-money laundering and counter-terrorist financing obligations of virtual asset service providers, including cryptocurrency providers. 

The FSB Chair highlighted leveraged lending risks, increasing non-bank financial intermediation, rapid technological innovations (including cyber resilience and crypto assets), and a future focus on “too-big-to-fail” reforms.

The Basel Committee published two revisions to the leverage ratio addressing client-cleared derivatives and disclosure requirements.

The FDIC will centralize its supervision and resolution activities for the largest banks and complex financial institutions in a new Division of Complex Institution Supervision and Resolution (CISR).