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The Examiner

"My weapon isn't my shot. It's me."

- Alexander Ovechkin
Captain, Washington Capitals

Sweeping Financial Regulatory Bill Becomes Law

This week, the House of Representatives approved and President Trump signed S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act. State financial regulators supported the passage of S. 2155, bipartisan legislation that will provide greatly needed relief for community banks.

“CSBS welcomes House passage of S. 2155, which will allow community banks to focus on what they do best: serve their customers and benefit local economies," said CSBS President and CEO John Ryan. “State financial regulators want to thank Chairman Crapo and Chairman Hensarling for their leadership and the bipartisan commitment of members of the House and Senate to helping foster local economic growth through healthy community banks.”

Among the provisions that will help community banks foster economic growth:

  • Qualified mortgage status will encourage community banks to lend more to prospective homebuyers, a provision suggested by CSBS to members of Congress working on the bill
  • Appraisal relief will help rural Americans in the homebuying process
  • Reciprocal deposits will be treated as a stable source of funding that keeps large deposits local
  • Volcker rule relief will allow community banks to legitimately hedge risk

In March, CSBS wrote a letter to Chairman Crapo, available here, supporting S. 2155 and urging its quick passage.

New FDIC Chair Supported by CSBS Confirmed by Congress

The Senate confirmed Thursday Jelena McWilliams by a vote of 69 to 24 to be a member of the FDIC Board of Directors and to serve as the next FDIC chair. In January, CSBS endorsed the nomination of McWilliams to lead the FDIC.

“State regulators look forward to working with new FDIC Chair McWilliams to continue tailoring federal regulations based on a bank’s risk profile," said CSBS President and CEO John Ryan. "In particular, state regulators look to be helpful partners in the rule-making process for the bipartisan regulatory reform law and in ensuring the safety and soundness of state-chartered financial institutions.” 

In addition to serving as the chief counsel at the Senate Banking Committee, McWilliams was a Federal Reserve Board of Governors lawyer and chief legal officer at Fifth Third Bank. McWilliams will join Martin Gruenberg (whose term as a member of the FDIC Board expires in December 2018), Comptroller Joseph Otting, and CFPB Acting Director Mick Mulvaney, giving the FDIC Board four of its five members.

CSBS to Provide Most Sweeping Cybersecurity Training Program in State Regulators' History

To combat growing cyber threats to the financial system, the CSBS announced a comprehensive cybersecurity program to train state bank and nonbank examiners. The program, approved by the CSBS Board of Directors earlier this month, represents an aggressive effort to respond to a national threat. 

“Cyberattacks are becoming more frequent and sophisticated. State regulators are acting to ensure the institutions they supervise are protected and prepared," said CSBS President and CEO John Ryan. "This training will provide state examiners with knowledge and tools to better assess security controls protecting an institution’s systems and infrastructure."

The training will cover the latest best practices in IT and cybersecurity risk management. During training sessions conducted over the course of the next year, state examiners will study:

  • How hackers attack financial institutions
  • Cybersecurity best practices and common defense techniques
  • Cybersecurity prevention practices, including how to reduce the impact of cyber attacks
  • Investigation techniques 
  • The examiner’s role in cyber defense
  • What to inspect, review and ask about during an IT-cyber examination
  • How to review vulnerability scans

The program will be funded with proceeds from the National Mortgage Settlement, a 2012 settlement between state and federal regulators and large mortgage servicers concerning foreclosure practices.

Comment Period for Lower Minimum Leverage Capital Requirements Proposal Extended 

In response to a request by CSBS, the Federal Reserve Board and Office of the Comptroller of the Currency (OCC) has extended the comment period to June 25 for their proposal to lower “enhanced supplementary leverage ratio” requirements for the largest U.S. banks.  

The Fed and OCC issued the proposed rule on April 11 with a 30-day comment period – half the usual time for the public response. CSBS asked for an extension, as the proposed rule would represent a $122 billion reduction in bank capital requirements. To put this proposed capital reduction in context, the Federal Deposit Insurance Fund had a balance of $93 billion as of the end of 2017. 

CSBS is concerned about the impact of the proposed change and wants more time to properly respond.