The Washington Report for the week ended March 2, 2018 | KPMG | US
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Washington Report 360 | March 2, 2018

The Washington Report for the week ended March 2, 2018

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Key Highlights

  • Federal Reserve Chairman Jerome Powell expressed support for raising the SIFI threshold to $250 billion in assets from the current $50 billion, a provision that is part of a regulatory relief bill under consideration in the Senate.
  • The House of Representatives passed H.R. 4296, which would place limits on regulators' approach to imposing operational-risk capital requirements. The bill has been referred to the Senate for consideration. 
  • The Basel Committee is seeking comment on a consultative document that would update its framework for Pillar 3 regulatory disclosure requirements.

Financial services policy news

During testimony before the House Financial Services Committee and the Senate Banking Committee, Federal Reserve Chairman Jerome Powell expressed support for a provision in the regulatory reform bill moving through the Senate that would raise the SIFI threshold to $250 billion from the current $50 billion. He separately expressed support for recalibrating the supplementary leverage ratio.

In a recent speech, Federal Reserve Vice Chairman for Supervision Randal K. Quarles stated that Federal Reserve staff continue to review post-crisis regulations with an eye toward effectiveness as well as costs and benefits; he also identified cybersecurity as a “high priority” supervisory issue and indicated the Federal Reserve is focused on aligning expectations with existing best practices.

SEC Commissioner Robert Jackson suggested the SEC should go through a public rulemaking process to evaluate the addition of mandatory arbitration clauses in IPOs; separately, Rick Fleming, the SEC’s investor advocate, recently criticized mandatory arbitration clauses that force public company shareholders to seek recovery through arbitration rather than through class action lawsuits.

Financial services legislative and regulatory news

The House of Representatives passed H.R. 4296, which would modify the calculation of operational-risk capital requirements to be based largely on a bank’s current activities and business model and no longer incorporate historical experience. The bill was originally part of the Financial CHOICE Act of 2017; it has now been referred to the Senate for consideration.

The Basel Committee published a consultative document that would update its framework for Pillar 3 regulatory disclosure requirements with regard to: credit risk, operational risk, the leverage ratio and credit valuation adjustment; benchmarking risk-weighted assets; and an overview of risk management, key prudential metrics, and RWA. The Basel Committee separately published an overview of its revised credit risk framework.

The OCC finalized technical changes to its annual stress test rule, including changing the range of possible “as-of” dates and extending the transition process for certain banks and savings associations that cross the $50 billion asset threshold.

FINRA announced that it is seeking comment on a proposed new rule to address the outside business activities of registered persons and replace FINRA Rules 3270 and 3280.

The FTC reached a settlement with an online payment processor over allegations that included misleading consumer disclosures and violations of the Gramm-Leach-Bliley Act’s Safeguards and Privacy Rules.

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