Agencies Propose Rule on the Capital Treatment of Land Development Loans

The federal bank regulatory agencies today invited public comment on a proposal to clarify the treatment of land development loans under the agencies’ capital rules.

The federal bank regulatory agencies today invited public comment on a proposal to clarify the treatment of land development loans under the agencies' capital rules.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2019/nr-ia-2019-77.html?utm_source=RSS_feed&utm_medium=RSS

Federal Reserve releases report on hazards of synthetic identity payments fraud

The Federal Reserve System released a report on the potential hazards of synthetic identity payments fraud.© Shutterstock This fast-growing problem – which affects individuals, financial institutions, government agencies, and private industry – stems from the creation of a synthetic identity. This synthetic identity is created by using a combination of real information with fictional information, […]

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The Federal Reserve System released a report on the potential hazards of synthetic identity payments fraud.

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This fast-growing problem – which affects individuals, financial institutions, government agencies, and private industry – stems from the creation of a synthetic identity. This synthetic identity is created by using a combination of real information with fictional information, which may include a made-up name, address, or date of birth.

Criminals use synthetic identities to commit payments fraud, which can escape detection by today’s identity verification and credit-screening processes. Over time, fraudsters build up the creditworthiness of the synthetic identity, then “bust out” by purchasing expensive goods and services on credit and disappear.

Because the identity was fake to begin with, there is limited recourse in tracing the perpetrators and holding them accountable. Consumers whose Social Security numbers were used for these synthetic IDs face the burden of having to correct their credit reports. It could also lead to denial of disability benefits, rejection of tax returns, and inaccuracies in health records.

“Crime rings see attractive opportunities in synthetic identity payments fraud,” said Ken Montgomery, Federal Reserve System payments security strategy leader and chief operating officer at the Federal Reserve Bank of Boston. “Law enforcement officials, financial institutions, and other organizations recognize it as a growing concern. But unfortunately, many consumers don’t realize how it can hurt their access to credit or how to protect themselves,” he said. “The white paper provides information on the current state of synthetic identity fraud, including the scope of the issue, causes, contributing factors, and its impact on the payments industry.”

Consumers can learn read the full report, called “Synthetic Identity Fraud in the U.S. Payment System” at FedPaymentsImprovement.org.

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Measure addresses company climate-related risk disclosure

Rep. Sean Casten (D-IL) and Sen. Elizabeth Warren (D-MA) recently touted the potential benefits of the Climate Risk Disclosure Act of 2019, which would require public companies to disclose key information about exposure to climate-related risks.© Shutterstock On Wednesday, the legislators reintroduced the bill, which was initially presented last year, as a means of aiding […]

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Rep. Sean Casten (D-IL) and Sen. Elizabeth Warren (D-MA) recently touted the potential benefits of the Climate Risk Disclosure Act of 2019, which would require public companies to disclose key information about exposure to climate-related risks.

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On Wednesday, the legislators reintroduced the bill, which was initially presented last year, as a means of aiding investors in assessing climate-related risks, accelerating the transition from fossil fuels to cleaner and more efficient energy sources and reducing the risks of both environmental and financial catastrophe.

“We need bold, comprehensive climate action,” Casten said. “Public corporations must take responsibility for the large financial risks posed by the impacts of climate change while embracing the economic opportunity of being global leaders in developing a clean energy economy. Our bill utilizes market mechanisms to incentivize climate action by ensuring that corporations disclose the risks posed by climate action to the benefit of their shareholders and the public.”

Warren said it is time to address corporations that pollute the environment and ask taxpayers to pay.

“I’m reintroducing the Climate Risk Disclosure Act again to give investors, and the American public, the power to hold corporations accountable for their role in the climate crisis,” she said.

The legislators said data determined a major climate-related disaster could trigger severe economic impacts. A recent Moody’s Analytics report reflected climate change could create tens of trillions of dollars in damages to the world economy by the year 2100 and will universally hurt worker health and productivity.

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SEC, CFTC approve new minimum margins on futures

The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have both approved a proposal to align the minimum margin on security futures with similar financial products. The commissions, which have joint rulemaking authority on margin requirements for security futures, set the minimum margin requirement at 15 percent of the current market […]

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The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have both approved a proposal to align the minimum margin on security futures with similar financial products.

The commissions, which have joint rulemaking authority on margin requirements for security futures, set the minimum margin requirement at 15 percent of the current market value of each security future.

The commissions jointly adopted rules establishing margin requirements for unhedged security futures products at 20 percent in 2002. However, since then, lower margin requirements have been established for comparable financial products. So, to correct this asymmetry, they found it appropriate to re-examine and lower the minimum margin.

“This proposal represents an important step taken by the Commissions to consider margin requirements for a jointly regulated financial instrument,” CFTC Chairman J. Christopher Giancarlo said. “I am hopeful that the Commissions will continue this work and examine other ways to increase efficiencies for consumers while maintaining adequate protections against risk in the overall financial system.”

This is just one element of their joint efforts to cooperate and harmonize their regulatory regimes.

“The proposal highlights the ongoing collaboration between the two Commissions and our progress in harmonization of our respective regulatory regimes,” SEC Chairman Jay Clayton said. “I want to thank our colleagues at the CFTC for their efforts and cooperation, and I look forward to continuing efforts in this area.”

The agencies will accept public comments on this proposal after it is published in the Federal Register.

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Community banks gain Volcker Rule exclusion

Five federal financial regulatory agencies have adopted a guideline excluding community banks from the Volcker Rule.© Shutterstock The Volcker Rule generally restricts banking entities from engaging in proprietary trading and from owning, sponsoring, or having certain relationships with hedge funds or private equity funds. The action is consistent with the Economic Growth, Regulatory Relief, and […]

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Five federal financial regulatory agencies have adopted a guideline excluding community banks from the Volcker Rule.

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The Volcker Rule generally restricts banking entities from engaging in proprietary trading and from owning, sponsoring, or having certain relationships with hedge funds or private equity funds.

The action is consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rule is being issued by the Federal Reserve Board, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Securities and Exchange Commission.

Under the final rule initiated by the regulatory agencies, community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5 percent or less of total consolidated assets gain exclusion.

The exclusion also permits a hedge fund or private equity fund, under certain circumstances, to share the same name or a variation of the same name with an investment adviser, as long as the adviser is not an insured depository institution, a company that controls an insured depository institution or a bank holding company.

Under the statute, authority for developing and adopting regulations to implement the prohibitions and restrictions of section 13 of the Bank Holding Company Act (BHC) is shared among the five agencies, which recently proposed amendments to the rules to provide clarity about what activities are prohibited and improve supervision and implementation of the BHC Act.

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CFTC report examines swap dealer rules

The U.S. Commodity Futures Trading Commission (CFTC) released a report that examines the swap dealer de minimis exception – with a focus on on-venue and cleared swaps.© Shutterstock The report, presented by the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO), stems from a June 2018 proposed rule change related to the swap dealer […]

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The U.S. Commodity Futures Trading Commission (CFTC) released a report that examines the swap dealer de minimis exception – with a focus on on-venue and cleared swaps.

© Shutterstock

The report, presented by the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO), stems from a June 2018 proposed rule change related to the swap dealer de minimis exception.

CFTC chair J. Christopher Giancarlo had requested a review of that proposed rulemaking and study possible alternative metrics for the calculation of the swap dealer de minimis threshold.

“Today’s staff report demonstrates DSIO’s commitment to using detailed swap data repository data to develop empirically-driven policy recommendations,” DSIO Director Matthew Kulkin said. “DSIO believes this staff report will assist the CFTC and market participants analyze the potential implications of certain policy proposals.”

The CFTC, along with the Securities and Exchange Commission, jointly stated in May 2012 further defining, among other things, the term “swap dealer” in CFTC regulation 1.3. That release provided for a de minimis exception to the swap dealer registration requirements.

Specifically, the de minimis exception states that a person shall not be deemed to be a swap dealer unless their swap dealing activities exceed an $8 billion aggregate gross notional amount threshold.

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GAO offers exemption recommendations for prohibited IRA transactions

The Government Accountability Office (GAO) has offered the Internal Revenue Service (IRS) and Department of Labor (DOL) recommendations regarding exemption oversight of prohibited IRA transactions.© Shutterstock The GAO is recommending the IRS and DOL establish a formal means, such as a memorandum of understanding or other mechanisms, to collaborate on the oversight initiative. The GAO […]

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The Government Accountability Office (GAO) has offered the Internal Revenue Service (IRS) and Department of Labor (DOL) recommendations regarding exemption oversight of prohibited IRA transactions.

© Shutterstock

The GAO is recommending the IRS and DOL establish a formal means, such as a memorandum of understanding or other mechanisms, to collaborate on the oversight initiative. The GAO is also recommending the DOL document policies and procedures for managing the exemptions process.

The GAO’s analysis included reviewing relevant federal laws and regulations; examining agency guidance, exemption process documentation, and application case files; assessing interagency coordination using internal control standards and prior work on interagency collaboration; and interviewing DOL and IRS officials.

The GAO determined roughly half of the IRA prohibited transaction exemption applications reviewed were withdrawn by the applicant before the review process was completed, noting it found most of the prohibited transactions for which an exemption was sought involved the sale of IRA assets.

As it related to the DOL’s application review process, the GAO said it learned the DOL had not sufficiently documented internal policies and procedures to ensure effective internal control of its process. Documenting procedures could increase transparency about how applications are handled, reduce the risk of DOL employees carrying out their duties inconsistently, and provide a means to retain organizational knowledge should key personnel leave unexpectedly.

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Agencies Adopt Final Rule to Exclude Community Banks from the Volcker Rule

Five federal financial regulatory agencies announced on Tuesday that they adopted a final rule to exclude community banks from the Volcker Rule, consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Five federal financial regulatory agencies announced on Tuesday that they adopted a final rule to exclude community banks from the Volcker Rule, consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Read more / Original news source: https://www.occ.gov/news-issuances/news-releases/2019/nr-ia-2019-76.html?utm_source=RSS_feed&utm_medium=RSS