Posted November, 12 2015Federal Reserve Board Proposes New Rule Re: Global Systemically Important Banks (GSIBs)
On Oct. 30, 2015, The Federal Reserve Board announced a new rule proposal intended to help create a buffer between taxpayer money and losses incurred by the potential collapse of financial institutions considered “too big to fail.” Domestic firms as well as foreign banks’ U.S. operations considered to be global systemically important banks (GSIBs) would have to adhere to new requirements regarding both long-term debt and "total loss-absorbing capacity," (TLAC.) The requirements are designed to provide covered firms a cushion of funds to be able to work through potential financial stress and failure with limited risk to taxpayers, ultimately increasing overall financial stability.
"The proposal, combined with our other work to improve the resolvability of systemic banking firms, would substantially reduce the risk to taxpayers and the threat to financial stability stemming from the failure of these firms," stated Janet Yellen, Federal Reserve Board Chair.
Under the new rule, the eight largest banks headquartered in the U.S. would need to be compliant with the majority of the new requirements by Jan. 2019 and would then operate within a transitional period expected to end in early 2022.
The Federal Reserve will accept public comments regarding this proposal until Feb. 1, 2016.
U.S. and UK Financial Cyber-security Testing this Month
On Nov. 2, 2015, a spokesperson for Britain’s cyber-security agency (CERT-UK) stated that a joint exercise to test how finance center regulators in both New York and London would respond to a large-scale cyber-attack would be executed this month. The agreement to carry out the coordinated exercise was announced in January of this year as part of several bilateral commitments decided upon by President Barack Obama and British Prime Minister David Cameron to improve cyber-security efforts in both the U.S. and UK.
"It is testing how we would react to 'x' scenario, how would our colleagues in the U.S. react to the same, (and) how would we then coordinate communications with each other, to the sector and within the sector," the CERT-UK spokesperson said. "While this exercise involves leading global financial institutions, it is not intended to test those institutions' own responses."
Systemic Risk Designation Improvement Act of 2015 Passes in Committee
On Nov. 4, 2015, The House Financial Service Committee announced that it had passed the Systemic Risk Designation Improvement Act of 2015 in a bipartisan vote (39-16.) The bill which was reintroduced by Rep. Blaine Luetkemeyer (R-MO) in March of this year, would amend Dodd-Frank “to authorize the Financial Stability Oversight Council to subject a bank holding company to enhanced supervision and prudential standards by the Board of Governors of the Federal Reserve System, if the Council makes a final determination that either material financial distress at the bank holding company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities, could threaten the financial stability of the United States.” Earlier this year, Rep. Luetkemeyer (who will be speaking at NACHA’s Board of Directors meeting this week), stated “[t]his legislation supports economic growth in the country because not only does it allow our community and regional banks to lend without certain burdens of lending, but it more closely bases the regulation of financial institutions on risk rather than arbitrary asset size.”
- H.R. 1309: Systemic Risk Designation Improvement Act of 2015
- Press Release from Rep. Luetkemeyer’s Site
U.S. Department of the Treasury Launches myRA
On Nov. 4, 2015, the U.S. Department of the Treasury announced its launch of the myRA (my Retirement Account) program, “a simple, safe and affordable new savings option for those who don’t have access to a retirement savings plan at work.”
The government-backed savings program, which was announced in President Obama’s 2014 State of the Union Address and has completed a pilot phase initiated late last year, will become an option for tens of millions of working Americans who are not able to obtain retirement savings plans through their employers.
U.S. Treasury Secretary Jacob J. Lew stated “myRA is designed to remove common barriers to saving, and give people an easy way to get started.” It “has no fees, no risk of losing money and no minimum balance or contribution requirements. To make saving easier than ever, you can now put savings into my myRA directly from your bank account.”
- Press Release: “U.S. Treasury Launches myRA (my Retirement Account) to Help Bridge America’s Retirement Savings Gap”
- Feb. 11, 2014 – “myRA: Helping Millions of Americans Save for Retirement”
Federal Reserve to Conduct Sixth Triennial Study Re: U.S. Payments Usage
On Nov. 5, 2015, The Federal Reserve announced that it would organize its “sixth triennial study to determine the current aggregate volume and composition of electronic and check payments in the United States”, building upon data gathered by the Federal Reserve in 2001 aimed at providing both the public and the payments industry with estimates and information about evolving trends in the country's payments system.
Mary Kepler, Senior Vice President at the Federal Reserve Bank of Atlanta and executive sponsor of the study said that during the research’s 15-year lifecycle “the survey instruments have been adapted and updated to keep pace with the dynamic change in the U.S. payments system." She stated, "Not surprisingly, the 2016 study will incorporate a number of significant enhancements, including an expansion of fraud-related information and an increase in the number of depository and financial institutions sampled. These improvements will strengthen the value of the trend information and insights to be presented with the study's findings."
The 2016 Federal Reserve Payments Study is comprised of three separate surveys designed to estimate the total count, monetary value and composition of U.S. retail noncash payments made in 2015, the results of which will be used to gauge trends in how U.S. consumers and businesses use various payment instruments. It is expected that an initial public report will be published by December 2016.
New York State Considering Cyber Regs for Banks, Insurers
Nov. 10, 2015 – The New York State Department of Financial Services is considering new cyber-security regulations, including requiring banks and insurers to "immediately notify" it of any cyber incidents, the department said today.
The regulations would also require banks and insurers to vouch for the security of their outside suppliers, which are a regular inroad for hackers, and to conduct annual penetration testing and quarterly vulnerability assessments of those systems, the department said.
The proposals are outlined in a letter to federal and state regulators that might be eyeing additional cyber rules. The department's goal is to coordinate with other regulators "to develop a comprehensive cyber security framework ... while still preserving the flexibility to address New York-specific concerns," the letter says.
Letter recipients, including the U.S. Treasury Department, the Securities and Exchange Commission and the Federal Deposit Insurance Corp., are all members of the Financial and Banking Information Infrastructure Committee.
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