OCC Calls for Research on the Implications of FinTech for the Banking Sector | Goodwin

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Regulatory developments

OCC Calls for Research on Implications of FinTech for the Banking Industry

On July 25, the OCC is seeking academic and policy-oriented research on the impact that fintech and non-bank entities are having on the banking sector and lending, deposit and payment services markets through August 21 2022. The OCC invites authors of selected papers to present to OCC staff and guests at OCC Headquarters in Washington, D.C., to be held November 7-8, 2022. These presentations are intended to serve as platform for academic, regulatory and other industry experts to discuss the research and explain how the banking system, with a particular focus on community banks, will benefit from the technology associated with fintech and, in turn, respond to the influx of new banking service providers. The call for papers describes the scholarship requested; interested parties are invited to submit papers to EconFINTECHSymposium@occ.treas.gov.

CFTC extends public comment period on request for information on climate-related financial risks

On July 18, the CFTC extended from August 7 to October 7 the deadline for the public comment period on a request for information on climate-related financial risk. The RFI seeks public comment to better inform the CFTC’s understanding and oversight of climate-related financial risk, which refers to physical risks characterized by damage from acute climate-related events and the risks of transition characterized by stresses for financial institutions or sectors resulting from changes in policies, regulations, customer and business preferences, etc. Climate-related financial risk can directly or indirectly impact CFTC-registered entities, registrants, and other market participants, as well as the underlying derivatives and commodity markets themselves, including by causing increased market volatility, disruptions to historical price correlations and challenges to existing risk management assumptions. The RFI also seeks answers on questions specific to data, scenario analysis and stress testing, risk management, disclosure, product innovation, voluntary carbon markets, assets technologies, greenwashing, financially vulnerable communities, and public-private partnerships and engagement.

“It is essential that the Commission proactively understands how climate-related financial risk can affect commodity and derivatives markets as well as our registered entities, registrants and other market participants, as they increasingly count in derivatives markets to manage their physical effects induced by climate change and transition risk.
– CFTC Chairman Rostin Behnam

The CFPB publishes a new FAQ on debt collection

On July 27, the CFPB published four new topics in its FAQ on debt collection rules: (1) Prohibitions on communications with third parties; (2) Electronic communications; (3) Electronic communication: opt-out notice; and (4) Unusual or inconvenient times or locations. Among the new answers to the FAQ, the CFPB confirms that nothing in the Debt Collections Rule requires a debt collector to communicate with consumers electronically, that consumers can limit communications from debt collectors by methods or specific media, and that all electronic communications or attempted electronic communications with a consumer in connection with the collection of a debt must contain a clear and conspicuous unsubscribe notice with a simple method (for example, a hyperlink, a “STOP” SMS or similar language) by which the consumer can unsubscribe from any further electronic communication by the debt collector on the specific electronic medium to which the communication was sent.

Notice of Proposed Valuations Rule, Amendments to Incorporate Updated Accounting Standards for Troubled Debt Restructuring

On July 20, the FDIC published a Notice of Proposed Rulemaking (the Proposal) in the Federal Register incorporate updated accounting standards into the risk-based deposit insurance rating system. The proposed regulations apply to all large, highly complex insured deposit-taking institutions. The proposal would amend the valuation regulations to expressly include the new accounting term, “amendments to financially distressed borrowers (the term)”, recently introduced by the Financial Accounting Standards Board (FASB), to replace distressed debt restructurings ( TDR) in the underperforming asset ratio and high risk asset ratio in the very complex large bank scorecards. In addition, the FDIC Board and other members of the Federal Financial Institutions Examination Council plan to revise call report forms and instructions to include the term as it will be defined in the instructions glossary. call report.

The proposal would not affect the deposit insurance rating system for FDIC-insured and/or FDIC-supervised institutions with total consolidated assets of less than $10 billion.

FDIC Updates Guidance Regarding Termination of Cease and Desist and Consent Orders

On July 25, the FDIC Revised Guidance Regarding Termination of Consent Orders and Cease and Desist Orders Under Section 8(b) of the Federal Deposit Insurance Act (FDI) . Under FDI law, the FDIC has the authority to issue cease-and-desist orders when an insured deposit-taking institution conducts business in a dangerous or unhealthy manner, or violates any law, regulation, or an agreement with the FDIC. Under new guidelines in the Enforcement Manual, cease and desist orders can be terminated when (1) the institution has fully complied with the order and corrected the violations that led to the ‘arrangement ; 2° the provisions with which the establishment does not comply have ceased to be relevant with regard to the situation of the establishment; or (3) new or revised formal actions have been taken against the institution by the FDIC. The Enforcement Actions Handbook guides FDIC staff in their interactions with all financial institutions supervised by the FDIC.

Litigation and enforcement

SEC Alleges Insider Trading in Crypto Asset Securities; The case has significant implications for the digital asset industry

On July 21, the SEC charged three people with insider trading in digital assets through a scheme to trade ahead of several announcements about making crypto assets available on a US-based digital asset exchange, in which a person was a former product manager. In the complaint, the SEC identifies nine “crypto asset securities” (the first time the agency has used this term) that the agency alleges as securities. The SEC also alleges that the individuals orchestrated the scheme more broadly on at least 25 digital assets – 16 of which are unidentified – making illicit profits of more than $1.1 million.

Read the customer alert to learn more about the case and its implications.

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