- On September 29, the Fed issued an enforcement action to One American Financial Corporation of Sioux Falls, South Dakota to maintain the soundness of One American Bank. Among the provisions of the agreement were prohibitions from declaring or paying dividends, engage in share repurchases, or making any other capital distributions or incurring, increasing, or guaranteeing any debt without approval of the Federal Reserve Bank. One American must also make quarterly progress reports detailing the how it is complying with the agreement. The agreement was the result of a Consent Order issued against One American on August 3, 2023, by the FDIC for unsafe and unsound banking practices following an examination in February 2023.
- On October 2, Fed governor Michelle Bowman made a speech at a CEO Executive Management Conference about the economy and bank regulations. Highlights of her comments relative to regulation included:
- The recent bank failures made it clear that “federal banking agencies need to address supervisory shortcomings and potentially consider revision of some failure-related bank regulations.”
- Alluding to previously released Fed reports regarding causes of the bank failures that we discuss (Fed Inspector General Office Report and FDIC Review of SVB), she indicated the reports had some overlap, but did not reach “entirely consistent conclusions” and advocated for an independent third party review.
- Any regulatory changes should be focused on remediating identified issues, informed by data analysis and genuine debate among agencies, and developed through a transparent and open process.
- Confirming that agencies are focusing on quarterly call report data and considering whether bank ratings remain appropriate, she opined that such reviews should include meaningful dialogue between the regulators and bank management.
- Pointing to recently proposed regulatory reforms, she indicated that, “The scope of some of these reforms will be extensive and could reshape the contours of the bank regulatory framework in important ways, including for community banks.” She encouraged bankers to share their perspectives on these proposed reforms with the regulators.
- On October 2, the FDIC announced proposed revisions to the Consolidated Reports of Condition and Income (Call Reports) and the FFIEC 002 Report that relate to the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”. Once finalized, the proposed changes are currently scheduled to become effective on March 31, 2024.
- On October 6, the Fed finalized a rule establishing risk-based minimum capital and reporting requirements for depository institution holding companies that significantly engaged in insurance activities. The rule applies to holding companies where the top-tier depository institution is an insurance underwriting company or holds 25 percent or more of its assets in insurance underwriting companies. The final rule sets the minimum ratio of enterprise-wide available capital to required capital at 250 percent and a 150 percent capital conservation buffer. The final rule requires covered institutions to annually report basic information, such as total assets and liabilities, for inventory companies whose parents represent more than one percent of the group’s assets on form FR SQ-1.
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