FDIC Rulemaking Agenda Expands as It Rolls Back Dodd-Frank (1)

By Jeff Bater

The FDIC’s regulatory agenda has expanded four-fold as the agency implements Dodd-Frank Act changes for small and midsize banks that became law in May.

The 13 items on agency’s semiannual regulatory agenda released Oct. 17 include a joint rulemaking with the Federal Reserve and the Office of the Comptroller of the Currency on relaxing stress testing requirements for banks with between $100 billion and $250 billion in assets.

The FDIC’s Spring 2018 regulatory agenda had just three items. While the dockets tend to be aspirational, the December target date on the stress test rule is in line with remarks by Federal Reserve Governor Randal Quarles during a Senate Banking Committee appearance this month.

The FDIC’s rulemaking agenda also includes a joint proposal on the amount of financial condition data, or call reports, that banks must supply periodically to regulators. Comptroller of the Currency Joseph Otting told senators at the Oct. 2 hearing that the rule will be ready by early November.

The FDIC is also working on a proposal to revise existing capital rules to include a community bank leverage ratio, which was another provision of the Dodd-Frank rollback law. Small lenders that meet the ratio would be considered in compliance with certain capital and liquidity requirements.

Some of the rules implementing the Dodd-Frank changes are nearing the final stage. Under a joint interim rule issued for comment in August, about 420 community banks with assets between $1 billion and $3 billion could have their annual supervisory exams extended to an 18-month examination cycle.

The FDIC and other banking agencies also released an interim rule in August implementing a municipal bond provision in the rollback law. Munis will be treated as liquid assets to fund operations of banks with assets above $250 billion in case of severe financial stress. Previously, only cash, Treasury securities, and some corporate debt could be used in the liquid asset buffer.