Board gives nod to seven additional actions – including removing old rules, proposing new ones

Three final rules, two proposed rules, one set of technical amendments and a policy statement were approved by the Federal Deposit Insurance Corp. (FDIC) Board at its quarterly meeting Tuesday in Washington.

All seven actions were taken as part of the board’s summary agenda; no discussion about any of the actions was taken during the board’s open meeting.

Under the final rules, the board approved:

  • Removing remove certain superseded capital regulations in FDIC’s rules (superseded capital rules) which are no longer effective for FDIC-supervised institutions following the early 2015 implementation of new capital regulations (“revised capital rules”). The final rule would also make conforming changes to the FDIC’s codified rules that refer to the superseded capital rules.
  • Rescinding and removing rules of the former Office of Thrift Supervision (OTS) concerning “Consumer Protection in Sales of Insurance” and making technical and conforming changes. According to FDIC staff, the former OTS rule and the existing FDIC rule are substantively the same, addressing retail sales practices, solicitations, advertising, or offers of insurance products by depository institutions or persons engaged in these activities at an office of the institution or on behalf of the institution.
  • Rescinding and removing another former OTS rule (and making technical and conforming amendments to its primary counterpart in the FDIC’s rules) concerning minimum security procedures, to include state-chartered savings associations (state savings associations). The old OTS rules, and the current FDIC rules, are substantively the same (with minor differences).

Under the proposals, the board approved:

  • “Annual Stress Test Applicability Transition for Covered Banks with $50 Billion or More in Assets; Technical and Conforming Changes,” which is consistent with changes already made by the Federal Reserve and the Office of the Comptroller of the Currency (OCC). The proposal would change the transition process for covered banks that pass the threshold of $50 billion or more in assets. Specifically, state nonmember banks that become more-than-$50-billion covered banks in the first three quarters of a calendar year would not be subject to the covered-bank requirements until the second calendar year after satisfying the threshold. Those that become more-than-$50-billion covered banks in the fourth quarter of a calendar year would not become subject to such requirements until the third calendar year. The proposed rule would also change the range of possible “as-of” dates used in the trading and counterparty position data stress-testing component. Lastly, the proposed rule would make certain technical changes and eliminate obsolete provisions.
  • “Transferred OTS Regulations Regarding Fiduciary Powers of State Savings Associations and Consent Requirements for the Exercise of Trust Powers,” which would remove one of the rules transferred from OTS to FDIC when the OTS was merged into the deposit insurer in 2010. The proposal also would provide clarification regarding the exercise of trust powers by state nonmember banks and require state savings associations to receive the FDIC’s consent before exercising trust powers; generally, a single set of regulations would apply to both for these purposes. Specifically, the proposed rule would rescind and remove the section, entitled “Fiduciary Powers of State Savings Associations.”

The technical amendments approved by the board affect the agency’s deposit insurance assessment rules. The first part of the amendments would correct a drafting error regarding when small banks (generally, those with less than $10 billion in assets) will be able to use the assessment credits that they are currently accruing for the portion of their deposit insurance assessments that contribute to the increase in the Deposit Insurance Fund (DIF) reserve ratio from 1.15% to 1.35%.

According to the FDIC, the preamble to the rule implementing this provision (from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) provided that credits will be applied to a small bank’s assessments for assessment periods in which the DIF reserve ratio is at least 1.38% – that is, at or above 1.38%. The regulatory text that was adopted, FDIC said, incorrectly states that the agency will apply the assessment credits to a small bank’s deposit insurance assessments for assessment periods in which the reserve ratio of the DIF exceeds 1.38%.

The second part of the amendments would remove Loans to Foreign Governments from the calculation of the deposit insurance assessment rate for established small banks. (Generally, FDIC said, an established small bank is one that has been federally insured for at least five years.)

Finally, the policy statement adopted by the board concerned the sharing of information related to formal enforcement actions of interest to more than one of the federal banking agencies (FBAs). “This interagency policy statement would encourage notification to one or both of the other FBAs at the earliest practicable date and promote coordination among the FBAs as appropriate,” FDIC said. “This new policy would also encourage coordination between FBAs and state bank regulatory authorities without affecting state-specific Memorandums of Understanding (MOUs).”