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Texas Bankers Association Sues to Block Section 1071 Rule
The Texas Bankers Association and Rio Bank filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) to prevent the implementation of the final rule under Section 1071 of the Dodd-Frank Act. Section 1071 requires the collection and submission of data related to credit applications by women-owned, minority-owned, and small businesses. The suit claims that the CFPB has exceeded its authority by turning three pages of legislation requiring 13 data points into nearly 900 pages of regulation requiring 81 data points.
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FDIC Recommends ‘Targeted’ Coverage for Deposit Insurance Reform
The Federal Deposit Insurance Corporation (FDIC) has released a report on the Deposit Insurance Fund (DIF) and recommended a "targeted" deposit insurance system that provides additional coverage for business payment accounts as the best option for balancing financial stability and depositor protection. The FDIC considered three options: the existing limited coverage option, an unlimited coverage option, and the targeted system. However, the agency acknowledged that implementing the targeted option presents "significant, unresolved practical challenges." The report did not address the possibility of a special assessment fee to compensate for the hit to the DIF caused by Silicon Valley Bank and Signature Bank's systemic risk exemption declaration.
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Reports: Oversight, Bank Management Led to Bank Failures
Federal Reserve Vice Chairman for Supervision Michael Barr released a report on the failure of Silicon Valley Bank, in which he said that the Federal Reserve supervisors did not fully understand the extent of vulnerabilities as the bank grew in size and complexity. He also recommended changes to the current regulatory framework for bank supervision, including improving the speed, force, and agility of supervision, revisiting tailoring standards for banks with over $100 billion in assets, reevaluating liquidity risk supervision, and considering tougher standards for executive incentive compensation programs.
Additionally, the FDIC issued a report citing management failures and excessive exposure to the volatile crypto sector as reasons for the collapse of Signature Bank, which failed shortly after Silicon Valley Bank. A report by the Government Accountability Office (GAO) noted that supervisors failed to escalate their concerns about the banks’ management of risk related to deposits in the months preceding the failures.
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FDIC, OCC Highlight ‘Unfair, Deceptive’ Overdraft Practices
The FDIC and the Office of the Comptroller of the Currency (OCC) released a bulletin on certain overdraft practices that could result in violations of prohibitions against unfair or deceptive practices.
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