Posts Tagged ‘OCC’

Risk Governance: Banks Back to School

Posted by Kobi Kastiel, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday September 14, 2014 at 9:00 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Dan Ryan, Leader of the Financial Services Advisory Practice at PricewaterhouseCoopers LLP, and is based on a PwC publication.

On September 2, 2014, the Office of the Comptroller of the Currency (“OCC”) finalized its risk governance framework for large banks and thrifts (“Guidelines”) that was proposed in January 2014. [1] The Guidelines formalize the heightened risk management standards that the OCC has been communicating through the supervisory process for several years, but do so somewhat more flexibly than the January proposal (“proposal”) did. Although many firms have been working to enhance their risk management programs to meet the proposal and supervisory communications, most still have work to do in order to meet the Guidelines’ requirements.

The Guidelines maintain the proposal’s emphasis on risk governance at the bank level to ensure safety and soundness, and affords the OCC greater flexibility (prescribed under regulations) to take enforcement actions in response to a bank’s compliance failure. The responsibility to oversee risk management remains with the Board of Directors which retains its ultimate risk governance oversight role; however, the Guidelines clarify that the Board need not take on responsibility for day-to-day managerial duties as the proposal had suggested.

…continue reading: Risk Governance: Banks Back to School

Dodd-Frank At 4: Where Do We Go From Here?

Editor’s Note: David M. Lynn is a partner and co-chair of the Corporate Finance practice at Morrison & Foerster LLP. The following post is based on a Morrison & Foerster publication; the complete text, including appendix, is available here.

Where do we go from here? As we mark another milestone in regulatory reform with the fourth anniversary of the enactment of the Dodd-Frank Act, it strikes us that although most studies required to be undertaken by the Act have been released and final rules have been promulgated addressing many of the most important regulatory measures, we are still living with a great deal of regulatory uncertainty and extraordinary regulatory complexity.

…continue reading: Dodd-Frank At 4: Where Do We Go From Here?

Banking Agencies Release Limited Volcker Rule Guidance

Editor’s Note: The following post comes to us from Sullivan & Cromwell LLP, and is based on a Sullivan & Cromwell publication by Robert W. Reeder III, Camille L. Orme, Whitney A. Chatterjee, and C. Andrew Gerlach. The complete publication, including appendix, is available here.

On June 10, 2014, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (collectively, the “Banking Agencies”) and the Securities and Exchange Commission (the “SEC”) released substantially identical Frequently Asked Questions (“FAQs”) addressing six topics regarding the implementation of section 13 of the Bank Holding Company Act of 1956, as amended, commonly known as the “Volcker Rule.”

…continue reading: Banking Agencies Release Limited Volcker Rule Guidance

Volcker Rule: Observations on Interagency FAQs, OCC Interim Examination Guidelines

Editor’s Note: Margaret E. Tahyar is a partner in the Financial Institutions Group at Davis Polk & Wardwell LLP. The following post is based on a Davis Polk client memorandum.

More than six months after the release of final Volcker Rule regulations, banking organizations continue to grapple with a long list of interpretive questions and an opaque process for seeking clarity from the Volcker agencies. Regulatory silence broke for a brief moment this past week in the form of a short interagency FAQ and, from the OCC, interim examination guidelines for assessing banking entities’ progress toward Volcker Rule compliance during the conformance period.

Neither document is a significant source of new guidance or interpretive gloss. Nonetheless, the OCC guidelines evidence the staff’s intention to begin detailed inquiries into banks’ conformance efforts to date and suggest a higher standard for interim compliance than many may have expected. It remains to be seen whether the other Volcker agencies take the same approach.

…continue reading: Volcker Rule: Observations on Interagency FAQs, OCC Interim Examination Guidelines

Interim Final Rule Exempts Some CDOs from Volker Rule Restrictions

Editor’s Note: H. Rodgin Cohen is a partner and senior chairman of Sullivan & Cromwell LLP focusing on acquisition, corporate governance, regulatory and securities law matters. This post is based on a Sullivan & Cromwell publication by Mr. Cohen, Mitchell S. Eitel, Eric M. Diamond, and Joseph A. Hearn.

Earlier this evening [January 14, 2014], the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency (the “OCC”), Federal Deposit Insurance Corporation (such three agencies together, the “Banking Agencies”), Securities and Exchange Commission, and Commodity Futures Trading Commission (the “CFTC” and, collectively, the “Agencies”) issued an interim final rule (the “Interim Final Rule”) regarding the treatment of certain collateralized debt obligations backed by trust preferred securities (“TruPS-backed CDOs”) under the final rule (the “Final Rule”) implementing Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), commonly known as the “Volcker Rule.” The Volcker Rule imposes broad restrictions on proprietary trading and investing in and sponsoring private equity and hedge funds (“covered funds”) by banking organizations and their affiliates.

…continue reading: Interim Final Rule Exempts Some CDOs from Volker Rule Restrictions

Key Trends in Financial Institutions M&A and Governance

Editor’s Note: Edward Herlihy is a partner and co-chairman of the Executive Committee at Wachtell, Lipton, Rosen & Katz. The following post is based on a Wachtell Lipton memorandum by Mr. Herlihy, Richard K. Kim, Lawrence S. Makow, Nicholas G. Demmo, and David E. Shapiro.

2013 was a year of continuing challenges and opportunities for U.S. banks. The low-interest rate environment continued to challenge the ability of banks to lend profitably. Already burdensome regulatory demands grew weightier with expanded Dodd-Frank stress testing and the finalization of the Volcker Rule, among other things. More than ever before, the responsibility of directors of financial institutions for regulatory compliance and bank safety and soundness is broadening, highlighted most recently by the OCC’s steps to formalize its program of supervisory “heightened expectations” for larger banks and their directors. Against this backdrop, the banking industry saw steady and creative deal activity, with a pronounced concentration among community banks.

…continue reading: Key Trends in Financial Institutions M&A and Governance

Volcker Rule Final Regulations: Funds Flowcharts

Posted by Annette L. Nazareth, Davis Polk & Wardwell LLP, on Tuesday January 7, 2014 at 9:09 am
  • Print
  • email
  • Twitter
Editor’s Note: Annette Nazareth is a partner in the Financial Institutions Group at Davis Polk & Wardwell LLP, and a former commissioner at the U.S. Securities and Exchange Commission. The following post is based on the overview of a Davis Polk client memorandum; the complete publication, including flowcharts, diagrams, tables, and timelines to illustrate key aspects of the Volcker Rule, is available here.

These Davis Polk flowcharts are designed to assist banking entities in identifying permissible and impermissible covered fund activities, investments and relationships under the final regulations implementing the Volcker Rule, issued by the Federal Reserve, FDIC, OCC, SEC and CFTC on December 10, 2013.

The flowcharts graphically map the key elements of the covered fund provisions in the final regulations. An introduction to the new covered funds compliance requirements will also be available soon as a standalone module and in a single combined document.

…continue reading: Volcker Rule Final Regulations: Funds Flowcharts

Volcker Rule Final Regulations: Proprietary Trading Overview

Posted by Annette L. Nazareth, Davis Polk & Wardwell LLP, on Tuesday January 7, 2014 at 9:09 am
  • Print
  • email
  • Twitter
Editor’s Note: Annette Nazareth is a partner in the Financial Institutions Group at Davis Polk & Wardwell LLP, and a former commissioner at the U.S. Securities and Exchange Commission. The following post is based on the overview of a Davis Polk client memorandum; the complete publication, including flowcharts, diagrams, tables, and timelines to illustrate key aspects of the Volcker Rule, is available here.

These Davis Polk flowcharts are designed to assist banking entities in identifying permissible and impermissible proprietary trading activities under the final regulations implementing the Volcker Rule, issued by the Federal Reserve, FDIC, OCC, SEC and CFTC on December 10, 2013. An introduction to the new compliance requirements is also included.

To make our summary and analysis of the final rules more user-friendly, these flowcharts graphically map the key restrictions on covered trading activities in lieu of a traditional law firm memo.

…continue reading: Volcker Rule Final Regulations: Proprietary Trading Overview

OCC Updates Guidance on Third-Party Risk Management

Posted by Lee A. Meyerson, Simpson Thacher & Bartlett LLP, on Sunday December 1, 2013 at 9:15 am
  • Print
  • email
  • Twitter
Editor’s Note: Lee A. Meyerson is a Partner who heads the M&A Group and Financial Institutions Practice at Simpson Thacher & Bartlett LLP. This post is based on a Simpson Thacher memorandum.

On October 30, 2013, the Office of the Comptroller of the Currency (the “OCC”) issued updated guidance to national banks and federal savings associations on assessing and managing risks associated with third-party relationships, which include all business arrangements between a bank and another entity (by contract or otherwise). [1] The new guidance introduces a “life cycle” approach to third-party risk management, requiring comprehensive oversight throughout each phase of a bank’s business arrangement with consultants, joint ventures, affiliates, subsidiaries, payment processors, computer network and security providers, and other third parties. Rather than mandating a uniform set of rules, however, the guidance instructs banks to adopt risk management processes commensurate with the level of risk and complexity of its third-party relationships. Accordingly, the OCC expects especially rigorous oversight of third-party relationships that involve certain “critical activities.”

The revamped guidance reflects the OCC’s concern that the increasing risk and complexity of third-party relationships is outpacing the quality of banks’ risk management over these outsourcing arrangements. The guidance cautions that a bank’s failure to implement appropriate third-party risk management processes may constitute an unsafe and unsound banking practice, and could prompt formal enforcement actions or a downgrade in a bank’s CAMELS management rating to less than satisfactory. The severity of these consequences suggests that third-party risk management practices are becoming an increasingly important focus of OCC supervisory efforts.

…continue reading: OCC Updates Guidance on Third-Party Risk Management

Regulatory Agencies Re-Propose Risk-Retention Rules for Securitizations

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday November 15, 2013 at 9:08 am
  • Print
  • email
  • Twitter
Editor’s Note: The following post comes to us from Anthony R.G. Nolan, partner in the Finance practice at K&L Gates LLP, and is based on a K&L Gates publication by Mr. Nolan, Sean P. Mahoney, and Drew A. Malakoff.

On August 28, 2013, a consortium of U.S. banking, housing and securities regulators (the “Agencies”) [1] re-proposed the joint regulations (the “Re-Proposed Rules”), to implement Section 15G of the Securities Exchange Act of 1934. Section 15G requires the Agencies to prescribe joint regulations to require “any securitizer to retain an economic interest in a portion of the credit risk for any asset that the securitizer, through the issuance of an asset-backed security, transfers, sells or conveys to a third party.” [2] This has popularly been referred to as a “skin in the game” requirement intended to align the interests of those originating or aggregating loans with the interests of investors in securitizations of those loans. The Re-Proposed Rules are the Agencies’ second attempt at rulemaking under Section 15G, the first coming with proposed joint regulations released on April 14, 2011 (the “Initial Proposed Rules”). [3]

Both the Initial Proposed Rules and the Re-Proposed Rules would generally require a “securitizer” to retain at least 5 percent of the credit risk associated with the assets backing a securitization transaction, subject to various exemptions and offsets. The Initial Proposed Rules prescribed some basic forms of risk-retention that could be used in any type of securitization, as well as some forms of risk-retention that would apply only to specific types of securitizations (such as those involving revolving asset master trusts, which are common to credit-card and automobile floorplan securitization, CMBS transactions, certain federal agency securities issuances, and ABCP conduits). [4] The Re-Proposed Rules appear to be dramatically simpler than the Initial Proposed Rules and address many of the more significant issues presented by the Initial Proposed Rules. Nevertheless, the Re-Proposed Rules present a number of issues of their own.

…continue reading: Regulatory Agencies Re-Propose Risk-Retention Rules for Securitizations

Next Page »
 
  •  » A "Web Winner" by The Philadelphia Inquirer
  •  » A "Top Blog" by LexisNexis
  •  » A "10 out of 10" by the American Association of Law Librarians Blog
  •  » A source for "insight into the latest developments" by Directorship Magazine