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Entries in OCC (5)


New Basel III Rules for Loans to High Volatility Commercial Real Estate Projects

The 2016 Winter Business Edition of Best Lawyers includes an article entitled "Basel III and New Challenges for Lending to Commercial Development." The article, which is available here, was co-authored by Verrill Dana lawyers Mark Googins and Doug Britton. The article provides a brief overview of one component of the new Basel III rules, which the article describes as “a voluntary global regulatory framework” implemented in the US by the OCC, Federal Reserve Board, and the FDIC.

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Federal Bank Regulators Seek Comments on "Enhanced" Cybersecurity Rules

Just one day after the Federal Financial Institutions Examination Council issued FAQs to help financial institutions utilize FFIEC’s Cybersecurity Assessment Tool, three federal banking regulators issued an Advance Notice of Proposed Rulemaking regarding “Enhanced Cyber Risk Management Standards.”

The rulemaking notice was issued on October 19, 201 by the Federal Reserve Board, the FDIC, and the OCC.  A copy of the notice can be found here

As proposed, the enhanced cybersecurity rules would not apply to community banks, but would apply to any of the following institutions as well as third parties who provide services to these institutions:  (1) depository institution and depository institution holding companies with assets of $50 billion or more; (2) US operations of foreign banking organizations with US assets of $50 billion or more; and (3) financial market infrastructure companies and nonbank financial companies supervised by the Federal Reserve Board.  These institutions were identified to the extent they provide “key functionality to the financial sector.”

The enhanced rules are being considered based on the reality that technology dependence is growing and the US financial sector is becoming more interdependent. As such, a cybersecurity induced failure of one major institution could impact the safety and soundness of other institutions.

The enhanced rules would fall within five different categories: (1) cyber risk governance; (2) cyber risk management; (3) internal dependency management; (4) external dependency management; and (5) incident response, cyber resilience, and situational awareness.  The proposed rulemaking includes 36 questions across the foregoing categories for which comments are being sought.

Comments are due January 17, 2017.


OCC Issues Guidance for Community Bank Stress Testing

On October 18, 2012, the Office of the Comptroller of the Currency (OCC) issued stress testing guidance for national banks and federal savings associations with total assets of $10 billion or less (community banks). Stress testing is essentially the process of analyzing and determining the possible effects that events (such as a sudden economic downturn) might have on a bank, its loan portfolio, and its earnings and capital. Dodd-Frank required that banks with assets greater than $10 billion engage in comprehensive stress testing at least annually pursuant to regulatory guidance issued earlier this year. The Guidance makes clear that the OCC expects community banks to follow suit, although under somewhat less rigorous standards.

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CFPB Issues Guidance On Add-On Products In Connection With Its First Enforcement Action

The Consumer Financial Protection Bureau entered into a Consent Order with Capital One Bank on July 18, 2012. The order is the CFPB’s first ever enforcement action and was coordinated with the Office of the Comptroller of the Currency. The enforcement action resulted from an examination of allegedly deceptive marketing practices by call-centers (third-party vendors) that sold credit card add-on products such as credit protection and credit monitoring services on behalf of Capital One. One important aspect of the Consent Order is that it resulted from the practices of a third-party vendor, and not actions directly by Capital One itself. Also on July 18th, the CFPB issued a compliance bulletin providing guidance on the marketing of credit card add-on products. The Bulletin states that institutions should also consider the guidance when offering add-on products in connection with other credit and deposit services.

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OCC Outlines Its Plans for Integrating National Banks and Federal Thrifts

The OCC recently outlined the process it will follow to integrate OTS policy guidance for federal savings associations (federal thrifts) with its own policy guidance for national banks. Under Dodd-Frank, all functions of OTS related to federal thrifts (including regulation, rule-making authority, and examinations) were transferred to the OCC, effective July 21, 2011. Existing OTS regulation remains in effect until modified, revised, rescinded, or superseded by the OCC, a court, or operation of law. The OCC is currently in the process of integrating prior OTS regulation, with a goal of integrating national banks and federal thrifts under a consistent supervisory approach, while recognizing differences anchored in their respective statutes.

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