FEDERAL GOVERNMENT RELATIONS
Submit comments on EGRPRA review by next week
The deadline to offer comment in the fourth and final round of EGRPRA review is next week. The Economic Growth and Regulatory Paperwork Reduction Act requires the Federal Financial Institutions Examination Council and bank regulators to review their regulations every 10 years to identify any outdated or otherwise unnecessary regulatory requirements for their supervised institutions. This final round of public comments covers banking operations, capital, and the Community Reinvestment Act. Written comments are due no later than next Thursday, Oct. 23.
Read the publication in the Federal Register
Agencies withdraw principles for climate-related financial risk management
The federal banking agencies announced the withdrawal of interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions. The October 2023 principles were intended for financial institutions with more than $100 billion in assets, though the Independent Community Bankers of America expressed concern with their potential impact on community banks given language in the principles describing all financial institutions. The Office of the Comptroller of the Currency withdrew its participation in the principles earlier this year.
In withdrawing the principles, the agencies said:
- They do not believe principles for managing climate-related financial risk are necessary because the existing safety and soundness standards require all supervised institutions to have effective risk management commensurate with their size, complexity and activities.
- All supervised institutions are expected to consider and appropriately address all material financial risks and should be resilient to a range of risks, including emerging risks.
The Securities and Exchange Commission also announced earlier this year that it is ending the defense of its rule requiring public companies to issue climate-related disclosures.
Senate votes down industry-opposed ban on interest on reserves
The Senate last week voted against adding an industry opposed ban on interest on reserves to the National Defense Authorization Act. Senators voted 83-14 against an amendment sponsored by Sen. Rand Paul, R-Ky., that would have banned the Federal Reserve from paying interest on reserves and the overnight reverse repo program. Indiana Senators Todd Young and Jim Banks both voted against the amendment. Industry groups released a position paper that says eliminating interest on reserves would likely cost the government money and significantly harm the economy by pushing up long-term interest rates, boosting the federal deficit and curtailing the flow of credit to households and businesses.
Fed’s Barr: Regulation needed to fill ‘gaps’ in stablecoin law
A new law establishing a regulatory framework for stablecoins has “gaps” that could pose risks to financial stability and consumer protection if federal and state regulators don’t establish safeguards for individuals and businesses, Federal Reserve Governor Michael Barr said.
FDIC’s Hill: Agency to expand nonbank participation in bidding on failed banks
The Federal Deposit Insurance Corp. will allow private equity firms and other nonbanks to bid on failed banks to soften the blow to the Deposit Insurance Fund after an institution’s closure. The agency is also drafting a proposal to revise its large bank resolution planning rule.
Lawmakers defend CDFI Fund after staff layoffs
The Office of Management and Budget reportedly sent reduction-in-force notices to Community Development Financial Institutions Fund staff informing them that their positions are being terminated as the program’s mission is inconsistent with President Trump’s priorities. A federal judge issued a temporary restraining order preventing the layoffs, which were part of a broader firing of more than 4,000 federal workers during the government shutdown.
Banking regulators address ‘pain points’ in suspicious activity reporting
Banking regulators reiterated that there is no supervisory or Bank Secrecy Act requirement that financial institutions conduct a review of a customer or account after the institution has filed a suspicious activity report.