FRB

Federal bank regulatory agencies announced the comment period for their proposed rule on long-term debt has been extended until Jan. 16, 2024. The proposal is intended to improve the resolvability of large banks and enhance financial stability and was created with input from the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.

The Federal Reserve recently announced its approval of NB Bancorp, Inc.’s application to become a bank holding company by absorbing NB Financial, Inc., and thereby also acquiring Needham Bank of Needham, Mass.

In a conversion plan released in June, NB Bancorp explained the business purpose for converting into a bank holding company.

The collapse of Silicon Valley Bank and Signature Bank in March shed light on a statutory mechanism meant to shield “uninsured” depositors from harm when their bank fails. The mechanism is called the Systemic Risk Exception and it is the subject of a new final rule recently approved by the Federal Deposit Insurance Corp.

The rule requires covered entities to pay a special quarterly assessment based on their estimated uninsured deposits to recoup losses from the recent bank failures.

The Federal Reserve recently published its November 2023 Supervision and Regulation Report, detailing key policy actions and supervisory developments, as well updating the overall health of the stability of the financial system.

Although banks remain largely well capitalized, Fed examiners remain intent on monitoring the impact of high interest rates and other factors which could negatively impact liquidity over time.

Federal regulatory agencies recently announced annual threshold adjustments for determining appraisal requirements for “higher-priced” mortgage loans. Such mortgages are deemed to be associated with higher risks than others by the Truth in Lending Act and Regulation Z.

The Consumer Financial Protection Bureau, the Federal Reserve and the Office of the Comptroller of the Currency included details about the adjustments in a joint press release.

The Biden-Harris administration recently issued an executive order intended to address both the potential benefits and risks associated with artificial intelligence (AI), including those applicable to federal agencies and competition within the business community.

The aim of the executive order is to position the U.S. as a frontrunner in harnessing the potential of and mitigating the risks associated with AI.

To shed light on the process for determining the level of risk a financial entity may pose to the U.S. economy, the Financial Stability Oversight Council (FSOC) unanimously approved final versions of a new analytic framework for making such determinations, as well as updated guidance on the council’s determination process tailored for nonbank financial entities.   

The FSOC Analytic Framework details the vulnerabilities and transmission channels which most frequently contribute to financial stability risks, whether these activities stem from widely conducted activities or individual firms.