Editor's Note

The following newsletter provides a roundup summarizing enforcement actions, guidance, rulemakings, and other public statements taken by a federal and/or state financial services regulatory agency, specifically focusing on: (1) the source of the development (regulator, legislative body, etc.), (2) the subject matter (consumer lending, money transmission, capital markets, etc.), and (3) the general issue covered.

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Regulatory Developments

  • Office of the Comptroller of the Currency. Dodd-Frank Act Stress Test Scenarios. On February 15, 2024, OCC released economic and financial market scenarios for use in the upcoming stress tests for covered institutions. The results of the company-run stress tests provide OCC with forward-looking information used in bank supervision and assist the agency in assessing a covered institution's risk profile and capital adequacy. The scenarios were developed in collaboration with FRB and FDIC. Covered institutions are generally able to satisfy the OCC's disclosure requirement through actions taken to meet FRB's comparable requirement; however, the OCC reserves the right to require additional disclosure at its discretion.

Research and Analysis

  • Bank for International Settlements. Digital Payments. On February 13, 2024, BIS published a 19-page Issue Brief titled, "Tap, click and pay: how digital payments seize the day." The brief "highlights key payment trends as observed in the 2022 Red Book statistics." Its findings include: "The use of digital payment methods continues to increase, particularly for small amounts. In tandem, cash withdrawals and the number of small-denomination banknotes in circulation have declined."
  • Department of the Treasury. 2024 National Risk Assessments. On February 7, 2024, Treasury published its 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing. The public and private sectors can use these updated risk assessments to better understand the current illicit finance environment and to inform their own risk mitigation strategies.

Other News of Note

  • Department of the Treasury. Secretary Yellen Congressional Testimony. On February 6, 2024, Secretary Yellen testified concerning "The Annual Report of the Financial Stability Oversight Council" before the House Committee on Financial Services. In her opening remarks, she indicated that Financial Stability Oversight Council would continue to focus its work on risks from the banking sector and from nonbank financial institutions. Her remarks also discussed the use of AI in financial services, among other topics. The entire testimony can be viewed here. On the same day, members of Congress sent Secretary Yellen a letter demanding more information about FSOC's call to fill existing regulatory gaps in the spot market for non-security digital assets. On February 8, 2024, Secretary Yellen testified about the same topic before the Senate Committee on Banking, Housing, and Urban Affairs.
  • Federal Reserve Board. Long-Term Future of Banking. On February 2, 2024, FRB Governor Michelle Bowman gave a speech at the Southwestern Graduate School of Banking. Her speech discussed the potential impact of the current approach to public policy that affects bank regulation and the long-term future of banking.
  • Federal Reserve Board. Defining a Bank. On February 12, 2024, FRB Governor Michelle Bowman gave a speech at the American Bankers Association 2024 Conference for Community Bankers. Topics discussed in her speech included: alternative approaches to defining a community bank; how the current regulatory environment treats community banks; and recommendations for policymakers to enhance fairness in the treatment of community banks. These recommendations include "effective prioritization of risks," "[improving] transparency and predictability in the bank regulatory framework," and tailoring regulation and supervision for "smaller regional and community banks."
  • Federal Reserve Board. Accountability for Banks and Regulators. On February 13, 2024, FRB Governor Michelle Bowman published an essay that highlights the importance of transparency and accountability for banks, for regulators, and for the general public. She argued that "Banking regulation and supervision is not the appropriate method to implement new policies that are not mandated by Congress."
  • Federal Reserve Board. Monetary Policy, Market Functioning, and Liquidity Risk Management. On February 14, 2024, FRB Vice Chair for Supervision Michael S. Barr gave a speech to the National Association for Business Economics Economic Policy Conference. His speech discussed "current banking conditions, lessons learned from the March 2023 banking stress in terms of liquidity risk management, and how we can put those lessons to use for a resilient banking system."
  • House Financial Services Committee. Hearing on FinCEN and TFI Oversight. On February 14, 2024, HFSC held a hearing entitled "Oversight of the Financial Crimes Enforcement Network and the Office of Terrorism and Financial Intelligence (TFI)." In her opening remarks, FinCEN Director Andrea M. Gacki discussed FinCEN enforcement actions, BOI reporting requirements, and revision of the Customer Due Diligence Rule, among other topics. Under Secretary for Terrorism and Financial Intelligence Brian Nelson discussed foreign threats to the U.S. financial system, AML/CFT regulatory gaps in the residential real estate sector, and the misuse of the U.S. investment adviser sector by illicit actors. HFSC Chairman Patrick McHenry (NC-10) voiced skepticism about the "new, overly complex" reporting requirements and claimed that FinCEN was targeting Americans because "they have differing political views from the White House."

Jonathan Cristol is a regulatory analyst with Davis Wright Tremaine LLP.