June 28, 2022

Volume XII, Number 179

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June 27, 2022

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Federal Reserve Suspends Regulatory Examination Activity for Banks with Total Consolidated Assets Under $100 Billion

On March 24, 2020, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) issued a statement on its supervisory activities (“Statement”) during the unprecedented COVID-19 pandemic.  As part of that Statement, the Federal Reserve indicated that “to minimize disruption and burden on financial institutions, the Federal Reserve is reducing its focus on examinations and inspections at this time.”  In its effort to minimize the regulatory burdens placed on financial institutions, the Federal Reserve made the following pronouncements:

  • Applicable to All Financial Institutions. Any examination activities will be conducted off-site until normal operations are resumed at the bank and the applicable Federal Reserve Bank.

  • Applicable to Financial Institutions with Less Than $100 Billion in Assets. For financial institutions with less than $100 billion in total consolidated assets, the Federal Reserve intends to “cease all regular examination activity, except where the examination work is critical to safety and soundness or consumer protection, or is required to address an urgent or immediate need.”

  • Applicable to Financial Institutions with More Than $100 Billion in Assets. For institutions with total consolidated assets greater than $100 billion, the Federal Reserve intends to defer a significant portion of planned examination activity based on its assessment of the burden on the institution and the importance of the exam activity to the supervisory understanding of the firm, consumer protection or financial stability.  With respect to the upcoming Comprehensive Capital Analysis and Review, or CCAR, exercise, firms should submit the capital plans that they have developed by April 6, 2020.  The plans will be used to monitor how firms are managing their capital in the current environment, planning for contingencies, and positioning themselves to continue lending.

  • These changes to the Federal Reserve’s examination cycle will be reassessed during the last week of April 2020.

We note that the Statement is only applicable to institutions supervised by the Federal Reserve, including state member banks, bank holding companies, savings and loan holding companies, Edge Act Corporations, and the U.S. operations of foreign banking organizations.  To date, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and state banking regulators have not issued similar guidance.

Click here to read the Federal Reserve’s Statement on Supervisory Activities.

© 2022 Vedder PriceNational Law Review, Volume X, Number 87
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About this Author

James M. Kane, Vedder Price Law Firm, Finance Attorney
Shareholder

James M. Kane joined Vedder Price in 1993 as a shareholder and is a member of the firm’s Financial Institutions Group. From 1981 until joining Vedder Price, he was the district counsel in Chicago for the Office of the Comptroller of the Currency. As the chief legal officer for the Six-State Central District (Illinois, Wisconsin, Michigan, Ohio, Indiana and Kentucky), he was responsible for providing legal and policy advice to the Deputy Comptroller and the 500 examiners of the Central District. In this capacity, he authored opinions on a wide variety of banking law issues and represented...

312-609-7533
Daniel C. McKay, Vedder Price Law Firm, Financial Attorney
Shareholder

Daniel C. McKay, II concentrates his practice in the representation of financial institutions and corporations and their officers, directors and shareholders in connection with mergers and acquisitions, securities offerings, corporate finance, corporate governance and regulatory and compliance matters.  He has been involved in more than 150 bank or thrift  mergers and acquisitions/securities offerings, with aggregate consideration of these deals totaling over $50 billion.

312-609-7762
James W. Morrissey, Vedder Price Law Firm, Finance Attorney
Shareholder

James W. Morrissey is a shareholder and a member of the firm’s Financial Institutions Group and Finance and Transactions Group.

 

312-609-7717
Jennifer King, corporate, capital markets, securities, attorney, Vedder Price,
Shareholder

Jennifer Durham King joined Vedder Price’s Chicago office in 1997 as a member of the firm’s Corporate and Capital Markets practice areas. She concentrates her practice in capital markets and corporate securities transactions, with a specific focus on financial institutions. Ms. King regularly represents issuers and underwriters in a broad range of capital markets transactions, including public and private debt and equity offerings, trust preferred offerings, mergers and acquisitions, and capital planning and formation.

312-609-7835
Juan M. Arciniegas, Vedder Price, derivatives, structured products and futures
Shareholder

Juan M. Arciniegas is a Shareholder at Vedder Price and a member of the Investment Services group in the firm’s Chicago office.

Mr. Arciniegas works primarily as a derivatives lawyer and has significant experience in the market for over-the-counter (OTC) derivatives, structured products and futures. He advises on every stage throughout the life cycle of a derivatives transaction, from conducting pre-trade regulatory due diligence to negotiating transactional documentation and advising on post-trade reporting and recordkeeping obligations. This...

312-609-7655
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