Earlier today, March 21, the FDIC approved a notice of proposed rulemaking for a Statement of Policy on Bank Merger Transactions. The proposed policy would introduce several new considerations in the FDIC's review of merger applications. The attached Regulatory Note reviews some of the high points of today's action.

      Last week, on February 12, 2024, the FFIEC released a Statement on Examination Principles Related to Valuation Discrimination and Bias in Residential Lending. The Statement is aimed at under-valuations of homes in minority and low- and moderate-income communities. The attached Regulatory Note summarizes practical lessons for bank management that are part of the Statement.

On May 24, 2023, the House Financial Services Committee completed its markup of reform legislation relating to the failures of Silicon Valley Bank and Signature Bank and approved H.R. 3556, the “Increasing Financial Regulatory Accountability and Transparency Act.” The bill would make several changes to the existing regulatory framework for addressing risks to financial stability in the banking industry. Among other things, the bill limits some agency decision making and provides for enhanced Congressional oversight.

On May 25, 2023, the OCC published a new policy for enforcement actions involving certain national banks and federal savings associations (collectively, “banks”) that exhibit “persistent weaknesses.” The policy is contained in a new Appendix C to PPM 5310-3, the OCC’s policies and procedures manual on enforcement actions.

Yesterday, April 28, the Federal Reserve released its “Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank” (the “FRB Report”). At the same time, the FDIC issued FDIC’s Supervision of Signature Bank (the “FDIC Report”), and GAO published “Bank Regulation: Preliminary Review of Agency Actions Related to March 2023 Bank Failures” (the “GAO Report”).

On March 19, 2023, the FDIC sold substantial portions of Signature Bridge Bank (“SBB”) to Flagstar Bank, National Association (“Flagstar”), and, on March 26, significant portions of Silicon Valley Bridge Bank (“SVBB”) to First-Citizens Bank & Trust Company (“FCB”). The terms of the two transactions, memorialized in purchase and assumption agreements for Flagstar’s acquisition of SBB (the “Flagstar P&A”) and FCB’s acquisition of SVBB (the “FCB P&A”), depart in important ways from the typical P&A transaction.

On Sunday, the FDIC, the Federal Reserve, and the Treasury Department announced that all depositors in the now-closed Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”) would have immediate access to all funds on deposit, even if they exceeded the $250,000 ceiling on deposit insurance.

Yesterday, February 23, 2023, the three federal banking agencies issued a Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities (the “Joint Statement”). The Joint Statement discusses the volatility of and other liquidity risks associated with deposits that are placed at insured depository institutions by crypto-asset companies.

On January 27, 2023, the Federal Reserve Board issued a policy statement (the “Policy Statement”) that effectively requires Fed approval before a state member bank engages in any crypto-asset-related activity.

On January 3, 2023, the three federal banking agencies issued a Joint Statement on Crypto-Asset Risks to Banking Organizations (the “Joint Statement”). The publication is prompted by the recent failure of FTX and other events in 2022 that exposed several risks, notably the potential for problems in the crypto-asset sector to migrate to the banking system.

On November 16, 2022, the Treasury Department offered an agenda in 2023 for the regulation and supervision of relationships between banks and fintech companies by the federal banking agencies and the CFPB. The agenda is embedded in a report, “Assessing the Impact of New Entrant Non-bank Firms on Competition in Consumer Finance Markets” (the "Report").

Possible changes to the federal banking agencies’ review of bank mergers, foreshadowed in an Executive Order in July, were signaled on December 9. CFPB Director Rohit Chopra published a blog post, “How Should Regulators Review Bank Mergers?” The post recited the Director’s ex officio position on the FDIC board and stated that the FDIC Board had voted to approve a review of the FDIC’s Bank Merger Act policies.

On November 23, in a release to the public of Interpretive Letter 1179 (Nov. 18, 2021) (the “Letter”), the OCC announced a prior notice procedure for national banks and federal savings associations (collectively, “banks”) planning to conduct certain cryptocurrency-related activities. In a separate portion of the Letter, the OCC discusses its authority to charter national trust banks.

Yesterday, November 23, the three federal banking agencies issued a Joint Statement on Crypto-Asset Policy Sprint Initiative and Next Steps. While brief, the Joint Statement outlined the agencies’ regulatory agenda for the coming year, which is intended to provide additional public clarity on banks’ crypto-asset activities. The Joint Statement does not, however, provide a specific timetable for agency action.

On Monday, November 1, the President’s Working Group on Financial Markets, joined by the FDIC and the OCC, published a Report on Stablecoins (the “Report”). The Report could have far-reaching consequences for the banking industry: the Report’s threshold recommendation is that Congress permit only insured depository institutions to issue stablecoins. A bank that enters the issuing business would face several tasks, including decisions about reserve assets, management of new or expanded prudential risks, and compliance with laws against illicit finance.

Earlier today, October 27, the Consumer Financial Protection Bureau Director Rohit Chopra testified at a hearing before the House Financial Services Committee. The Committee customarily holds a hearing on the occasion of the Bureau’s most recent semi-annual report, in this case, the Spring 2021 Report.

Yesterday, October 21, the Financial Stability Oversight Council published the Report on Climate-Related Financial Risk, which states that “[c]limate change is an emerging threat to the financial stability of the United States.”

The President’s Executive Order on Promoting Competition in the American Economy, released on July 9, 2021, presents a few considerations for banks – especially those that may be considering a merger transaction in the coming months.

Yesterday, March 10, President Biden signed the American Rescue Plan Act into law. For bank lenders to small businesses, two sets of provisions are important: modifications to the Paycheck Protection Program (“PPP”) and the reauthorization of the State Small Business Credit Initiative (“SSBCI”). For those who have followed the progress of the legislation, the PPP modifications were not changed by the Senate after receiving the bill from the House, but the Senate did not make some potentially important changes to the SSBCI from the provisions in the initial House version.