Washington Report 360 | April 20, 2018 | KPMG | US
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Washington Report 360 | April 20, 2018

Washington Report 360 | April 20, 2018

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Key Highlights

  • The federal banking agencies proposed revisions to their regulatory capital rules to provide an option to phase-in the “day 1” impact of the new Current Expected Credit Losses (CECL) accounting standard on regulatory capital ratios.
  • The SEC issued a number of proposed rules and interpretations addressing standards of conduct for investment advisers and broker-dealers when working with retail investors; the package of rules could impact potential changes to the Department of Labor's fiduciary rule.
  • The Senate passed a resolution under the Congressional Review Act to repeal the CFPB’s 2013 indirect auto lending guidance. The House is expected to pass the same resolution.
  • The House of Representatives passed H.R. 4790, the Volcker Rule Regulatory Harmonization Act, which would exempt smaller banks from the rule and give the Federal Reserve sole rulemaking authority for the rule. The bill goes to the Senate for consideration.
     

Financial services policy news

In testimony before the House Financial Services Committee, Federal Reserve Vice Chairman for Supervision Randal Quarles supported several regulatory reforms, including those related to liquidity, living wills, and stress test scenarios.

Federal Reserve Governor Lael Brainard expressed support for modernizing the Community Reinvestment Act.

New York Attorney General Eric T. Schneiderman announced the launch of the Virtual Markets Integrity Initiative, an inquiry into the policies and practices of cryptocurrency platforms.

Financial services legislative and regulatory news

The federal banking agencies proposed to revise their regulatory capital rules to provide an optional three-year phase-in for the “day 1” regulatory capital effects brought about when adopting the new Current Expected Credit Losses (CECL) accounting standard. The rule would apply to all Federal Reserve-, OCC-, and FDIC-supervised depository institutions and depository institution holding companies.

The SEC issued a number of proposed rules and interpretations related to protections for retail investors:

  • A rule, Regulation Best Interest, that would require broker-dealers to act in the best interest of a retail customer when recommending securities transactions or investment strategies involving securities;
  • An interpretation of the fiduciary obligations of investment advisers as well as three potential enhancements to their legal obligations;
  • A rule that would require investment advisers and broker-dealers to provide retail investors with additional disclosures, including a CRS Relationship Summary.

The Senate passed a resolution under the Congressional Review Act by a 51-47 vote to repeal the CFPB’s 2013 indirect auto lending guidance, which addresses dealer markups for third-party financing. The House is expected to pass the same measure. In December, the GAO found the guidance was a "general statement of policy" and a rule subject to congressional review.

The House of Representatives passed H.R. 4790, the Volcker Rule Regulatory Harmonization Act, which would exempt banks with $10 billion or less in total assets and 5 percent or less of trading assets and liabilities from the Volcker Rule; the bill would also give the Federal Reserve exclusive rulemaking authority for the Volcker Rule. The bill now goes to the Senate for consideration.

FINRA proposed to amend FINRA Rule 6730 (Transaction Reporting) to extend the temporary exception to permit alternative trading systems and subscribers to report aggregate trade information to TRACE for certain transactions in U.S. Treasury Securities.

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