FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Ch. III

Semiannual Agenda of Regulations

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Semiannual regulatory agenda.

SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is hereby publishing items for the Spring 2018 Unified Agenda of Federal Regulatory and Deregulatory Actions. The agenda contains information about FDIC's current and projected rulemakings, existing regulations under review, and completed rulemakings.

FOR FURTHER INFORMATION CONTACT: Robert E. Feldman, Executive Secretary, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION: Twice each year, the FDIC publishes an agenda of regulations to inform the public of its regulatory actions and to enhance public participation in the rulemaking process. Publication of the agenda is in accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The FDIC amends its regulations under the general rulemaking authority prescribed in section 9 of the Federal Deposit Insurance Act (12 U.S.C. 1819) and under specific authority granted by the Act and other statutes.

Proposed Rule Stage:

Transferred Office of Thrift Supervision Regulations Regarding Fiduciary Powers of State Savings Associations and Consent Requirements for Exercise of Trust Powers (3064-AE23)

The Federal Deposit Insurance Corporation (FDIC) proposes to rescind and remove from the Code of Federal Regulations the part entitled Fiduciary Powers of State Savings Associations and to amend current FDIC regulations regarding consent to exercise trust powers to reflect the applicability of these parts to both State savings associations and State nonmember banks.

*Implementation and Transition of the Current Expected Credit Losses Standard for Allowances and Related Adjustments to the Regulatory Capital Rule and Conforming Adjustments to Other Regulations (3064-AE72)

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (collectively, the Agencies) are seeking comment on a joint proposal that would amend the agencies' capital rules (capital rule) to reflect the upcoming adoption by banking organizations of the current expected credit loss methodology (CECL) contained in the Financial Accounting Standards Board's Accounting Standards Update No. 2016-13, Topic 326, Financial Instruments Credit Losses. Specifically, the proposal would, upon the adoption of CECL, replace the definition of allowance for loan and lease losses with a new allowance definition that reflects allowances for all financial assets that will be subject to CECL. The proposal would also include in the capital rule an optional three-year transition provision to mitigate the potential initial impact on regulatory capital upon CECL adoption. In addition, for certain banking organizations that are subject to additional disclosure requirements, the proposed rule would make conforming changes to banking organizations' required disclosures under the capital rule, including regulatory capital ratios, total risk-weighted assets reconciliation of regulatory capital elements as they relate to audited financial statements. In conjunction with the adoption of ASC Topic 326, the Financial Accounting Standards Board also provides a new credit loss methodology for available-for-sale (AFS) debt securities. The proposed rule would update the treatment of AFS debt securities under the capital rule to reflect this new credit loss methodology. The proposal would also make conforming changes to other Board regulations, including Regulation H, Regulation K, Regulation O, Regulation Y, and Regulation YY, to reflect the upcoming adoption by banking organizations of CECL.

*Annual Stress Test-Applicability Transition For Covered Banks With $50 Billion Or More In Assets; Technical And Conforming Changes (3064-AE73)

The Federal Deposit Insurance Corporation (FDIC) proposes to make several revisions to its stress testing regulation. Consistent with changes already made by the Board of Governors of the Federal Reserve System (Board) and the Office of the Comptroller of the Currency (OCC) to their respective stress testing regulations, the proposed rule would change the transition process for covered banks that become over $50 billion covered banks. Under the proposed rule, a covered bank that becomes an over $50 billion covered bank on or before September 30 would become subject to the requirements applicable to an over $50 billion covered bank beginning on January 1 of the second calendar year after the covered bank becomes an over $50 billion covered bank. A covered bank that becomes an over $50 billion covered bank after September 30 would become subject to the requirements applicable to an over $50 billion covered bank beginning on January 1 of the third calendar year after the covered bank becomes an over $50 billion covered bank. The proposed rule would also change the range of possible "as-of" dates used in the trading and counterparty position data stress testing component. Lastly, the proposed rule would make certain technical changes to clarify the requirements of the FDIC's stress testing regulation, and to eliminate obsolete provisions.

Final Rule Stage:

Net Stable Funding Ratio: Liquidity Risk Measurement Standards and Disclosure Requirements (3064-AE44)

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation invited comment on a proposed rule that would implement a stable funding requirement, the net stable funding ratio (NSFR), for large and internationally active banking organizations. The NSFR requirement is designed to reduce the likelihood that disruptions to a banking organization's regular sources of funding will compromise its liquidity position, as well as to promote improvements in the measurement and management of liquidity risk. The rule also amended certain definitions in the liquidity coverage ratio rule that are also applicable to the NSFR. The NSFR requirement would apply beginning on January 1, 2018, to bank holding companies, certain savings and loan holding companies, and depository institutions that, in each case, have $250 billion or more in total consolidated assets or $10 billion or more in total on-balance sheet foreign exposure, and to their consolidated subsidiaries that are depository institutions with $10 billion or more in total consolidated assets. In addition, the Board proposed a modified NSFR requirement for bank holding companies and certain savings and loan holding companies that, in each case, have $50 billion or more, but less than $250 billion, in total consolidated assets and less than $10 billion in total on-balance sheet foreign exposure. Neither the proposed NSFR requirement nor the proposed modified NSFR requirement would apply to banking organizations with consolidated assets of less than $50 billion and total on-balance sheet foreign exposure of less than $10 billion. A bank holding company or savings and loan holding company subject to the proposed NSFR requirement or modified NSFR requirement would be required to publicly disclose the company's NSFR and the components of its NSFR each calendar quarter.

Loans in Areas Having Special Flood Hazards--Private Flood Insurance (3064-AE50)

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Farm Credit Administration, and the National Credit Union Administration have issued a new proposal to amend their regulations regarding loans in areas having special flood hazards to implement the private flood insurance provisions of the Biggert-Waters Flood insurance Reform Act of 2012. Specifically, the rule would require regulated lending institutions to accept policies that meet the statutory definition of private flood insurance in the Biggert-Waters Act and permit regulated lending institutions to accept flood insurance provided by private insurers that does not meet the statutory definition of private flood insurance on a discretionary basis, subject to certain restrictions.

Regulatory Capital Rules: To Rescind the FDIC's Capital Rules That are no Longer Effective Following the Implementation of Capital Rules Consistent With Basel III (3064-AE51)

This final rule will rescind the capital regulations in part 325 and subparts Y and Z of part 390 of the FDIC's codified rules (the superseded capital rules) that were no longer effective following the January 1, 2015, implementation of the capital rules consistent with the Basel III initiatives. The final rule also makes conforming changes to sections in the FDIC's codified rules that refer to the superseded capital rules. The FDIC has concluded that good cause exists to publish this rule as final without a period of notice and comment and with an effective date as of the date of its publication in the Federal Register because this rule rescinds the superseded capital rules and other sections of the FDIC's codified rules that refer to the superseded capital rules and imposes no new requirement on FDIC-supervised institutions.

Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) (3064-AE59)

In March 2017, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the Agencies) submitted a report to Congress pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996, in which they committed to meaningfully reduce regulatory burden, especially on community banking organizations. Consistent with that commitment, the Agencies invited public comment on a notice of proposed rulemaking that would simplify compliance with certain aspects of the capital rule. A majority of the proposed simplifications would apply solely to banking organizations that are not subject to the advanced approaches capital rule (non-advanced approaches banking organizations). Specifically, the Agencies proposed that non-advanced approaches banking organizations apply a simpler regulatory capital treatment for: (i) mortgage servicing assets; (ii) certain deferred tax assets arising from temporary differences; (iii) investments in the capital of unconsolidated financial institutions; and (iv) capital issued by a consolidated subsidiary of a banking organization and held by third parties (minority interest). More generally, the proposal also includes revisions to the treatment of certain acquisition, development, or construction exposures that are designed to address comments regarding the current definition of high volatility commercial real estate under the capital rule's standardized approach. The proposed revisions to the treatment of acquisition, development, or construction exposures would not apply to those exposures that are outstanding or committed prior to the proposed rule's effective date. In addition to the proposed simplifications, the Agencies also proposed various additional clarifications and technical amendments to the agencies' capital rule, which would apply to both non-advanced approaches banking organizations and advanced approaches banking organizations.

Securities Transaction Settlement Cycle (3064-AE64)

The OCC and the FDIC (the Agencies) proposed to shorten the standard settlement cycle for securities purchased or sold by national banks, federal savings associations, and FDIC-supervised institutions. The Agencies' proposal is consistent with an industry-wide transition to a two business-day settlement cycle, which is designed to reduce settlement exposure and align settlement practices across all market participants.

*Margin and Capital Requirements for Covered Swap Entities (3064-AE70)

The Board, OCC, FDIC, FCA, and FHFA (each an Agency and, collectively, the Agencies) sought comment on proposed amendments to the minimum margin requirements for registered swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants for which one of the Agencies is the prudential regulator (Swap Margin Rule). The Agencies proposed these amendments in light of the rules recently adopted by the Board, the OCC, and the FDIC that impose restrictions on certain non-cleared swaps and non-cleared security-based swaps and other financial contracts (Covered QFCs) (the QFC Rules). The QFC Rules amend the definition of Qualifying Master Netting Agreement in the Federal banking agencies' regulatory capital and liquidity rules to ensure that a Covered QFC is not prevented from being part of a Qualifying Master Netting Agreement solely because the Covered QFC conforms to the new requirements in the QFC Rules. The FCA proposed amendments to its capital rules, including potential revisions to its regulatory definition of Qualifying Master Netter Agreement, which is expected to be identical to the definition used in the Federal banking agencies' regulatory capital and liquidity rules. The Agencies proposed to amend the definition of Eligible Master Netting Agreement in the Swap Margin Rule so that it remains harmonized with the amended definition of Qualifying Master Netting Agreement" in the Federal banking agencies' regulatory capital and liquidity rules, and amendments to the capital rules that the FCA separately plans to propose. This rule ensures that netting agreements of firms subject to the Swap Margin Rule are not excluded from the definition of Eligible Master Netting Agreement based solely on their compliance with the QFC Rules. The Agencies also proposed that any legacy non-cleared swap or non-cleared security-based swap (i.e., a non-cleared swap or non-cleared security-based swap entered into before the applicable compliance date) that is not subject to the margin requirements of the Swap Margin Rule would not become subject to the provisions of the Swap Margin Rule if the non-cleared swap or non-cleared security-based swap is amended solely to comply with the requirements of the QFC Rules.

Long-Term Actions:

Incentive-Based Compensation Arrangements (3064-AD86)

The OCC, Board, FDIC, FHFA, NCUA, and SEC (the Agencies) sought comment on a joint proposed rule to revise the proposed rule the Agencies published in the Federal Register on April 14, 2011, and to implement section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 956 generally requires that the Agencies jointly issue regulations or guidelines: (1) Prohibiting incentive-based payment arrangements that the Agencies determine encourage inappropriate risks by certain financial institutions by providing excessive compensation or that could lead to material financial loss; and (2) requiring those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate Federal regulator.

Removal of Transferred Office of Thrift Supervision Regulations Regarding Lending and Investment and Amendments to FDIC Rules and Regulations (3064-AE22)

In this rulemaking, the Federal Deposit Insurance Corporation (FDIC) will be proposing to rescind and remove from the Code of Federal Regulations 12 CFR part 390, subpart P, entitled Lending and Investment (part 390, subpart P). This subpart was included in the regulations that were transferred to the FDIC from the Office of Thrift Supervision on July 21, 2011, in connection with the implementation of applicable provisions of title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Upon removal of part 390, subpart P, all insured depository institutions for which the FDIC is the appropriate Federal banking agency will follow the safety and soundness standards contained in 12 CFR part 364 of the FDIC's Rules and Regulations and the real-estate lending standards found in 12 CFR part 365 of the FDIC's Rules.

Covered Broker-Dealer Provisions Under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (3064-AE39)

The Federal Deposit Insurance Corporation and the Securities and Exchange Commission, in accordance with section 205(h) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, jointly proposed a rule to implement provisions applicable to the orderly liquidation of covered brokers and dealers under title II of the Dodd-Frank Act.

Enhanced Cyber Risk Management Standards (3064-AE45)

On October 26, 2016, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation published in the Federal Register an advanced notice of proposed rulemaking (ANPR) regarding enhanced cyber risk management standards for large and interconnected entities under their supervision and those entities' service providers. The ANPR addresses five categories of cyber standards: cyber risk governance; cyber risk management; internal dependency management; external dependency management; and incident response, cyber resilience, and situational awareness. Due to the range and complexity of the issues addressed in the ANPR, the public comment period was extended until February 17, 2017. This action allowed interested persons additional time to analyze the proposal and prepare their comments.

Management Official Interlocks (3064-AE57)

The OCC, Board, and the FDIC are seeking comment on a joint proposed rule to revise their respective regulations that implement the Depository Institution Management Interlocks Act (DIMIA). The proposed rule would adjust asset thresholds for the DIMIA major asset prohibition, which prohibits management officials for depository institutions with assets in excess of specified levels from engaging in management interlocks (an individual may not serve as an official of two unaffiliated depository institutions with assets in excess of the specified levels). The levels are currently set at $2.5 billion and $1.5 billion. Based on inflation or market changes, current inflation adjusted thresholds would be $3.6 billion and $2.16 billion.

Source of Strength (3064-AE61)

The OCC, Board, and FDIC (the appropriate Federal banking agencies) are developing a joint Notice of Proposed Rulemaking which will be published in the Federal Register. The rule, when finalized, will implement section 616(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). That section of the Dodd-Frank Act requires the appropriate Federal banking agencies to jointly issue final rules that ensure that parent companies of subsidiary insured depository institutions serve as a source of financial strength for such institutions.

Disclosure of Financial and Other Information By FDIC-Insured State Nonmember Banks (3064-AE65)

The Federal Deposit Insurance Corporation (FDIC) proposes to rescind and remove 12 CFR part 350 entitled Disclosure of Financial and Other Information By FDIC-Insured State Nonmember Banks. Upon the removal of part 350, all insured state nonmember banks and insured state-licensed branches of foreign banks (collectively, banks) will no longer be subject to the disclosure requirements found in part 350. The financial and other information that has been subject to disclosure by individual banks pursuant to part 350, is publicly available through the FDIC's website.

Proprietary Trading and Certain Interests in an Relationships With Covered Funds (Volcker Rule) (3064-AE67)

The OCC, Board, FDIC, SEC, and CFTC (the Agencies) will publish a notice of proposed rulemaking to revise the interagency final rule's prohibitions and restrictions on proprietary trading and certain interests in, and relationships with, hedge funds and private equity funds.

The FDIC is adopting a final rule (final rule) to amend its international banking regulations consistent with section 939A (section 939A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the FDIC's authority under section 5(c) of the Federal Deposit Insurance Act (FDI Act) . The final rule adopts without change the revisions and amendments that the FDIC proposed in a June 2016 notice of proposed rulemaking (NPR or proposed rule). These revisions and amendments include: Replacing references to credit rating in the regulation's definition of investment grade with an alternative standard of creditworthiness; and making changes to the eligibility criteria for the types of assets that insured branches of foreign banks may pledge for the benefit of the FDIC.

Removal of Transferred OTS Regulations Regarding Minimum Security Procedures Amendments to FDIC Regulations (3064-AE47)

The Federal Deposit Insurance Corporation is adopting a final rule to rescind and remove a part from the Code of Federal Regulations entitled Security Procedures and to amend FDIC regulations to make the removed Office of Thrift Supervision regulations applicable to State savings associations.

Automated Valuation Models (3064-AE68)

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Federal Housing Finance Agency, and the Consumer Financial Protection Bureau are developing a rule to implement section 1473 of the Dodd-Frank Act concerning quality control standards for automated valuation models.

Customer Due Diligence (3064-AE69)

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration (collectively, the Agencies) are considering a proposal to amend the Agencies' Bank Secrecy Act compliance program rules applicable to banks, Federal and state savings associations, and credit unions. The Agencies plan to issue interim final rules related to recent amendments to the Financial Crimes Enforcement Network (FinCEN) customer due diligence rules for financial institutions under their supervision. As part of that rulemaking, FinCEN amended the elements of the anti-money laundering program financial institutions must implement and maintain in order satisfy program requirements under 31 U.S.C. 5318(h)(1). The Agencies are amending their anti-money laundering program rules to maintain consistency with the FinCEN Rule.

Completed Actions:

Alternatives to References to Credit Ratings With Respect to Permissible Activities for Foreign Branches of Insured State Nonmember Banks and Pledge of Assets by Insured Domestic Branches of Foreign Banks (3064-AE36)

The FDIC is adopting a final rule (final rule) to amend its international banking regulations consistent with section 939A (section 939A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the FDIC's authority under section 5(c) of the Federal Deposit Insurance Act (FDI Act). The final rule adopts without change the revisions and amendments that the FDIC proposed in a June 2016 notice of proposed rulemaking (NPR or proposed rule). These revisions and amendments include: Replacing references to credit ratings in the regulation's definition of investment grade with an alternative standard of creditworthiness; and making changes to the eligibility criteria for the types of assets that insured branches of foreign banks may pledge for the benefit of the FDIC.

Removal of Transferred OTS Regulations Regarding Minimum Security Procedures Amendments to FDIC Regulations (3064-AE47)

The Federal Deposit Insurance Corporation is adopting a final rule to rescind and remove a part from the Code of Federal Regulations entitled Security Procedures and to amend FDIC regulations to make the removed Office of Thrift Supervision regulations applicable to State savings associations.

Removal of Transferred OTS Regulations Regarding Consumer Protection in Sales of Insurance (3064-AE49)

The Federal Deposit Insurance Corporation is adopting a final rule to rescind and remove from the Code of Federal Regulations the part entitled Consumer Protection in Sales of Insurance and to amend current FDIC regulations to make them applicable to state savings associations.

Real Estate Appraisals (3064-AE56)

The OCC, Board, and FDIC (collectively, the Agencies) are adopting a final rule to amend the agencies' regulations requiring appraisals of real estate for certain transactions. The final rule increases the threshold level at or below which appraisals are not required for commercial real estate transactions from $250,000 to $500,000. The final rule defines commercial real estate transaction as a real estate-related financial transaction that is not secured by a single 1-to-4 family residential property. It excludes all transactions secured by a single 1-to-4 family residential property, and thus construction loans secured by a single 1-to-4 family residential property are excluded. For commercial real estate transactions exempted from the appraisal requirement as a result of the revised threshold, regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices

Community Reinvestment Act Regulations (3064-AE58)

The OCC, the Board, and the FDIC amended their Community Reinvestment Act (CRA) regulations to adjust the asset-size thresholds used to define small bank or small savings association and intermediate small bank or intermediate small savings association. As required by the CRA regulations, the adjustment to the threshold amount is based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers. The FDIC also amended its definition of consumer loan to correct a typographical error included in a CRA final rule issued on November 24, 2017.

Regulatory Capital Rules: Retention of Certain Existing Transition Provisions for Banking Organizations That Are Not Subject to the Advanced Approaches Capital Rules (3064-AE63)

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation adopted a final rule to extend the regulatory capital treatment applicable during 2017 under the regulatory capital rules for certain items. These items include regulatory capital deductions, risk weights, and certain minority interest limitations. The relief provided under the final rule applies to banking organizations that are not subject to the capital rules' advanced approaches (non-advanced approaches banking organizations). Specifically, for these banking organizations, the final rule extends the current regulatory capital treatment of mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, significant investments in the capital of unconsolidated financial institutions in the form of common stock, non-significant investments in the capital of unconsolidated financial institutions, significant investments in the capital of unconsolidated financial institutions that are not in the form of common stock, and common equity tier 1 minority interest, tier 1 minority interest, and total capital minority interest exceeding the capital rules' minority interest limitations. Under the final rule, advanced approaches banking organizations continue to be subject to the transition provisions established by the capital rules for the above capital items. Therefore, for advanced approaches banking organizations, their transition schedule is unchanged, and advanced approaches banking organizations are required to apply the capital rules' fully phased-in treatment for these capital items beginning January 1, 2018.

*Rules of Practice and Procedure (3064-AE71)

The Federal Deposit Insurance Corporation adjusted the maximum amount of each civil money penalty within its jurisdiction to account for inflation. This action is required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

Federal Deposit Insurance Corporation.

NAME: Valerie Best,

Assistant Executive Secretary.