Selected Highlights from the Latest Unified Regulatory Agenda
Spring in July
Last Friday the Office of Information and Regulatory Affairs released the Biden Administration’s Spring 2024 Unified Agenda of Regulatory and Deregulatory Actions. This post takes a brief, hardly comprehensive look at a few notable items on the agendas of some of the federal financial regulators.
Note that though released last week, the deadline for agencies to submit their materials for inclusion in the agenda was March 22, 2024.1 So as always it is important not to take any of this too seriously, particularly when it comes to the dates for further action included below.
Basel Endgame. The FDIC’s agenda lists September 2024 as the target date for a final Basel Endgame rule. The corresponding agenda items from the Federal Reserve Board and OCC, in contrast, list the date for final action as To Be Determined.
Long-Term Debt. The agendas of both the FDIC and the OCC list July 2024 as the target date for a final long-term debt rule. The Board’s agenda lists the date for the next action as To Be Determined.
OCC Bank Merger Policy Statement. The OCC’s agenda lists September 2024 as the target date for finalizing its proposed policy statement on bank merger transactions. The FDIC’s agenda does not provide an update on its intentions for its own proposal on bank merger policy.
Durbin Interchange Amendments. The Board’s agenda lists January 2025 as the target date for finalizing the amendments to Regulation II proposed last year.
FDIC Corporate Governance Rules. The FDIC’s agenda lists December 2024 as the target date for finalizing the corporate governance rules it previously proposed for FDIC-supervised banks with $10 billion or more in total assets.
Credit Card Late Fees. It is not totally clear what to make of this, but the CFPB has included on its long-term agenda an item that reads as follows (emphasis added).
In March 2024, the CFPB amended Regulation Z to address late fees charged by card issuers that together with their affiliates have one million or more open credit card accounts (referred to as Larger Card Issuers). For Larger Card Issuers, the final rule (1) repealed the safe harbor for late fees, (2) adopted a different late fee safe harbor of $8 and eliminated a higher safe harbor dollar amount for late fees for subsequent violations of the same type; and (3) provided that the annual inflation adjustments do not apply to this $8 amount. The above changes did not apply to late fees charged by smaller card issuers. That March 2024 rule has been subject to legal challenge.
In the future, and considering the status of the March 2024 Rule and market conditions, the CFPB will assess the efficacy of the regulatory landscape and whether the regulatory safe harbor is outdated and should be eliminated.
Other FDIC Initiatives
The FDIC’s agenda also lists a few other planned regulatory actions that, though not as headline grabbing as some of the items discussed above, still might be pretty interesting. Particularly because in some cases from the description it is not clear exactly what the FDIC has in mind.
Crypto and Other Activities Leveraging “Technological Innovations”. The FDIC says it intends to seek comment on “proposed amendments to its regulations to establish filing requirements for FDIC-supervised institutions that seek to engage in certain covered activities, including permissible crypto-related activities and plans to leverage technological innovations to augment and transform the delivery channels through which they provide banking services.”
Third-Party Service Providers. Working jointly with other regulators, the FDIC would adopt rules under the Bank Service Company Act to “implement the statutory requirements for FDIC, FRB, and OCC-regulated institutions to provide notification of certain third-party service relationships. The proposal would also “create an ongoing requirement to periodically update the information those institutions provide the FBAs.”
Industrial Banks. The FDIC, “to reflect supervisory experience,” intends to amend the scope of its regulation governing the parent companies of industrial banks. “The proposed amendments would revise the scope of the regulation, clarify the role of written commitments, and set forth additional criteria that the FDIC would consider when reviewing filings.”
All these actions have been included in some form on previous FDIC agendas, but because the FDIC lists a July 2024 planned action date for each of them, it may be that the proposals are close to being ready to release. (Or, just as likely, it could mean nothing at all.)
Reform of the Federal Home Loan Banks
The Federal Housing Finance Agency includes on its agenda several items it says are based, at least in part, on its FHLBank System at 100 report from last November. These include, among others:
A proposal to “update the description of the FHLBanks’ mission, update the expectations for demonstrating mission achievement and the list of activities that constitute mission activities, and require each FHLBank to develop policies under which it would provide added benefits to members with a strong and demonstrable connection to the FHLBanks’ mission.”2
A proposal to “state clearly that each FHLBank’s primary method of credit risk mitigation must be robust credit underwriting, as opposed to over-reliance on collateral.” In connection with this proposal, FHFA would issue “updated guidance related to ongoing evaluations of member credit with the goal of the FHLBanks working with their members and their members’ primary regulators to identify concerns before they precipitate impairment of a member’s ability to receive advances.”
A proposal to revise the FHFA’s regulations on FHLB membership to, among other things, “improve fairness and consistency of treatment of different member types under the regulation; prevent circumvention of the membership eligibility requirements; [and] clarify FHFA’s expectations of the FHLBanks regarding their applicant review and due diligence duties to improve safety and soundness.”
A proposal to amend FHFA’s regulations on boards of directors and executive management of FHLBs.
The agency previously issued an RFI on this same topic in May.