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From Banking and Finance Law Daily, July 15, 2014

FDIC proposes insurance assessment changes; cleans up OTS regulations

By John M. Pachkowski, J.D.

At its July 15, 2014, meeting the Federal Deposit Insurance Corporation’s board of directors summarily approved a number of final and proposed rulemakings.

“Eligible guarantee” correction. The FDIC approved a final rule that will revise the definition of “eligible guarantee” as incorporated into its 2013 revised capital rules. The FDIC, along with the Office of the Comptroller of the Currency and Federal Reserve Board, issued a proposed rulemaking in April 2014 since they inadvertently limited the recognition of guarantees of wholesale exposures under the advanced approaches risk-based capital rule as incorporated into subpart E of their 2013 capital rules. To address this matter, the final rule removes the requirement that an eligible guarantee be made by an eligible guarantor for purposes of calculating the risk-weighted assets of an exposure, other than a securitization exposure, under the advanced approaches. According the FDIC, the change to the definition of eligible guarantee applies to two state nonmember banks that are subject to the advanced approaches. The agency also noted that no “small state savings associations were under the advanced approaches.” The final rule becomes effective Oct. 1, 2014.

Transferred OTS regulations. The FDIC’s board also approved two final rules which rescinded and removed portions of 12 C.F.R. Part 390, which are regulations that were transferred from the former Office of Thrift Supervision. The effect of this action will streamline the FDIC’s rules and eliminate redundancy and unnecessary regulations. The portions of 12 C.F.R. Part 390 that were removed included: Subpart A—Restrictions on Post-Employment Activities of Senior Examiners and Subpart H—Disclosure and Reporting of CRA-Related Agreements.

As part of its review of transferred OTS regulations, the FDIC also issued a series of proposed rulemakings that would rescind and remove other portions of Part 390. The proposed rulemakings would cover:

Deposit insurance assessments. During the discussion phase of its meeting, the FDIC board approved a notice of proposed rulemaking that would revise the FDIC's risk-based deposit insurance assessment system to reflect changes in the regulatory capital rules that go into effect in 2015 and 2018. Specifically, the proposal would: revise the ratios and ratio thresholds relating to capital evaluations; revise the assessment base calculation for custodial banks; and require that all highly complex institutions measure counterparty exposure for assessment purposes using the standardized approach in the regulatory capital rules.

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