Regulation

Climate risk ahead? How your bank can prepare

Climate risk, or the risk that climate-related changes pose to financial institutions, is demanding more and more attention from researchers, regulators and boards of directors. What are the federal regulatory agencies saying about climate risk? And what are the key areas your board and senior management should begin thinking about? [Continue]

Shaping strategy in a post-pandemic era

For many banks 2020 and 2021 had surprising results. Liquidity and capital were strong, loan growth escalated from pent up demand, and income levels were favorable. These positive trends could lead many management teams to sit back and ride the wave, living in the “here and now.” However, complacency can lead to risk. In its 2022 Bank Supervision Operating Plan, the Office of the Comptroller of the Currency lists guarding against complacency as a top priority for examiners. [Continue]

Regulators propose CRA reform

Last month, the bank regulatory agencies issued a joint notice of proposed rulemaking to update the Community Reinvestment Act. Enacted in 1977, the law was last updated in 1995. Comments on the proposal, which is nearly 700 pages long, are due August 5. I encourage you to wade through the document and either comment directly or work with your trade group to make your voice heard. [Continue]

ESG frameworks: Why bankers should care

Environmental, social and governance policies have increasingly become a focus of bank investors, regulators and customers. Bank boards must work collaboratively with management to create a framework to implement these policies, including board committee composition, risk identification, goal-setting, performance measurement and disclosure of sustainability practices.  [Continue]

​​Innovation must be built on foundation of trust

The financial services industry has experienced rapid technological change [which] continues to encourage new ways of interacting with and serving customers. Such innovation creates important opportunities for banks of all sizes. When banks can be agile in developing relationships with third-party providers to meet unique customer needs, they can find their own paths to innovation. [Continue]

CECL: It’s Time (Again)

The pandemic has most likely sidetracked adoption and implementation plans and you may feel like you are back to square one. Given mass adoption is 14 months away, CECL fervor will pick up in the coming months. Before the CECL conversation goes mainstream, allow me to dispel a few CECL myths, offer insight gleaned from the more than 150 publicly traded banks that have already adopted the standard, and offer a sensible solution to consider for your CECL problem. [Continue]

Navigating the perils of Reg O

Most community bankers are familiar with Regulation O, the Federal Reserve’s set of rules intended to prevent abuse of bank credit by bank presidents, directors and other “insiders.” Reg O has been around for 40 years, and the terrain of compliance is well trodden. But familiarity doesn’t necessarily shield bankers and bank owners from the risks of running afoul of this key regulation. Its stipulations and restrictions are complicated, and pitfalls await those who fail to pay attention to the details. [Continue]

Preparing a response to a looming crisis

The banking industry is no stranger to crisis. From the Great Depression’s collapse of the financial system to the ag crisis of the 1980s to the housing crisis of 2008/2009… each era has brought about major — and permanent — changes to banking regulations. [Continue]

Cascading effects of climate change increasingly a Fed concern

Lael Brainard

Climate change is already imposing substantial economic costs and is projected to have a profound effect on the economy … and could have important implications for the Federal Reserve in carrying out its responsibilities. The Federal Reserve created a new Supervision Climate Committee to strengthen our capacity to identify and assess financial risks from climate change and to develop an appropriate program to ensure the resilience of our supervised firms to those risks. [Continue]

Faster, more comprehensive breach notification requirements proposed

The proposed rule would, among other things, require banks to notify their primary regulators of a triggering incident as soon as possible, and no later than 36 hours after learning that the incident occurred, and would require banking service providers to notify affected bank customers immediately after experiencing a security incident that disrupts or impairs services for four hours or more. The proposed rule would fundamentally change a bank’s current notification obligations. [Continue]