During the past week, the regulators and Congress engaged in a modest level of activity.  The agencies issued a joint statement on Suspicious Activity Reports and confidentiality.  The OCC approved two de novos that would engage in a range of digital asset services.  Andy Barr (R-KY) introduced legislation that would make substantial changes to the CFPB although given Congress’s tight schedule, passage in this Congress is unlikely.

Over this past week, two events stand out: Federal Reserve Chairman Kevin Warsh’s inaugural speech on August 28 in Jackson Hole and the FDIC’s and OCC’s release on August 27 of their final safety-and-soundness rule (which was accompanied by other releases from the OCC). Both events will have long-term consequences for the banking industry.

Of the agency actions over the week of August 17, two proposed rules are the most noteworthy: the SEC’s proposed Regulation Crypto Assets and the Treasury Department’s proposal to implement section 3 of the GENIUS Act. And there was one notable event today, the rescission of a 2022 interagency statement on special purpose credit programs.

During the past week, the crypto sector of the banking industry saw the most developments.  The Treasury Department proposed a rule to implement section 3 of the GENIUS Act; the OCC approved one, returned one, and received one application for a national trust bank charter; and the CFTC announced a key advisory committee meeting while the SEC canceled a Commission meeting on an offering regime for certain contracts involving crypto assets.

As we enter August, work in Washington has slowed but not stopped.  With public schools opening soon and vacations ending, we may see more news before the end of the month.  In the meantime, during the past week, the OCC took three notable actions, approving one de novo application and denying another, and issuing a proposed rule on confidential supervisory information.  The FDIC launched its new Office of Supervisory Appeals.

For the first half of last week, the one notable event in the bank regulatory sector was the meeting of the Federal Open Market Committee, at which it determined to hold the target range for the federal funds rate steady at 3½% to 3¾%.  Events then picked up.  On Thursday, the three banking agencies released guidance for community banks that opt into the community bank leverage ratio.  The next day, the banking agencies (not always acting as one) released three extensive proposed rules on CRA, insider loans, and mutual institutions.  Also worth a read is the latest blogpost by the New York Fed that talks about the non-crypto risks to stablecoins.

Vacation schedules appear to now dictate the timing of legislative and regulatory developments.  Last week, anticipating a summer break, the House passed the Main Street Capital Access Act, and Senate Republicans (but not Democrats) produced the latest and possible near-final version of the Clarity Act.  The agencies were quiet, but the OCC acted on two de novo applications for banks with digital assets businesses – one approval and (somewhat surprisingly) one denial.

Last week’s highlights include two interagency statements, one on cybersecurity and another on loans to persons not authorized to work in the United States – which notably did not formally bar such extensions of credit although it made these actions more burdensome.  On other issues, the Federal Reserve Board enjoyed the greatest activity – in the form of six speeches.  The Comptroller also was heard, and the New York Federal Reserve Bank entered the fray with several remarks or presentations.  All are notable, though, because they indicate where the Fed and other entities are or may be heading on critical issues. 

Last week saw some informal events at the banking agencies, such as speeches and announcements, but little formal action there or elsewhere in the government.  Indeed, reflective of last week’s subdued tone was the fact that a major piece of legislation, the 21st Century ROAD to Housing Act, became law as the result of Presidential inaction.

Events over the past week include a Supreme Court decision with long-term (if not permanent) consequences for the banking industry specifically and the economy generally. AI developments also warrant attention as an indicator of how involved the federal government will be in the regulation of large language models.

Although summer vacations may have started, the past nine days have seen important developments that, taken together, involve all three branches of the federal government.

The past eight days included two developments 1 that should be of immediate interest to banks: the Senate’s passage of the 21 st Century Road to Housing Act, which includes community bank provisions, and a facially anodyne bulletin from the OCC about deficient applications. The latter could have a significant impact and change the ways that potential applicants prepare their applications.

Over the past two weeks, there have been two particularly notable events.  The first and of immediate importance to banks has been discussion of recent changes and planned changes to the frameworks for bank supervision and failed bank resolutions.  Of potentially longer-term relevance to the industry is the Administration’s effort in the past three days to limit access to Anthropic’s Fable 5 and Mythos 5 models.

The week of Memorial Day is usually a quiet one, and so it proved to be this year.  Possibly the most far-reaching development for any bank involved in artificial intelligence occurred not through the traditional bank regulatory channels but through the Vatican with the release of a papal encyclical on AI.

Over the course of last week (the week of May 18), the most noteworthy events were a proposal from the federal banking agencies for significant changes to the CAMELS rating system, a proposal from the Federal Reserve for payment accounts at Reserve Banks for nonbank institutions, and the passage of a version of the ROAD to Housing Act in the House of Representatives.

This past week the Federal Reserve was once again in the spotlight with the confirmation of Kevin Warsh as chairman and Jerome Powell’s continued service as chair in a pro tem capacity.  However, the events with the longest-term impact were on Capitol Hill: the Senate Banking Committee marked up the CLARITY Act, and the chairman of the House Financial Services Committee introduced a new version of the 21^st Century Road to Housing Act.

Formal government action last week was limited to the Senate Banking Committee’s decision to mark up on May 14 the bill to enact the CLARITY Act, the OCC’s approval of a de novo national trust bank, and the SEC’s proposal of a rule on semiannual (rather than quarterly) reporting.  But several non-formal events, including speeches and papers, warrant attention as they may foreshadow formal action on such matters as private credit, stablecoins, and tokenization.

Through the middle of the week, the most noteworthy developments involved the Fed: the April meeting of the FOMC and the Senate Banking Committee’s approval of the nomination of Kevin Warsh as Chairman.  On Friday, two other notable events occurred.  A compromise appears to have been reached on the yield language in the Clarity Act.  The CFPB also released its final rule on the collection of small business loan data.

Developments over the past week on the nomination of Kevin Warsh as chairman of the Federal Reserve received the most public attention and may have the longest lasting impact of any events over the last several days. Elsewhere, in final agency action, the banking agencies finalized revisions to the community bank leverage ratio, and the CFPB finalized substantive changes to Regulation B.

This past week, banking agencies took a break from formal regulatory proceedings, but they provided interesting instruction otherwise.  The agencies issued new guidance on model risk management, and two members of the Federal Open Market Committee gave unusually detailed and specific speeches on monetary policy.  At least one new issue also emerged: by the end of the week, cybersecurity and AI had taken center stage.