December 12, 2018
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The FDIC formally launched its highly anticipated initiative to foster de novo bank formation. In a request for information , the FDIC is seeking feedback on how it could modify the application process for traditional community banks; whether and how it should support the evolution of emerging technologies and fintech firms as part of the application process; and any factors that discourage potential applicants.
 
The FDIC also issued a financial institution letter outlining a new process by which new applicants for deposit insurance may submit a draft application and receive feedback from FDIC staff prior to filing the formal application. In the FIL, the FDIC said it expects to provide updates to organizers within 30 days of receiving a draft proposal and communicate all feedback within 60 days.
 
Additionally, the FDIC issued an update to its de novo handbook , as well as a final version of its deposit insurance applications procedures manual . While the handbook and manual do not establish new policy or guidance, or modify existing policy or guidance, they are intended to provide greater transparency and clarity about the deposit insurance application and review process.
 
Finally, the FDIC reissued its processing timeframe guidelines for applications, notices and others filings submitted on behalf of institutions and other parties, as part of its ongoing effort to foster greater transparency within the agency.
 
The U.S. Postal Service should not pursue expanding into postal banking or other new sectors, the Treasury Department's task force on the postal system said. In its report, the task force established by President Trump noted that the USPS has narrow expertise and capital limitations and should not take on added balance sheet risks.  
 
ICBA has consistently opposed postal banking and called on the task force to recommend prohibiting an expansion of banking services at USPS. In an American Banker op-ed earlier this year, ICBA President and CEO Rebeca Romero Rainey wrote that financial services are best provided in a competitive marketplace.
 
The Report  >> 
 
The larger the community bank, the greater importance of new and emerging technologies, finds to a recent analysis of the CSBS 2018 Community Bank Survey. 
 
The majority of banks over $800 million reported that adopting new and emerging technologies was very important, while smaller banks gave it far less importance, according to a report by Temple University professors William C. Dunkelberg and Jonathon A. Scott. The banks showed a similar pattern when responding to the importance of being a local market leader in technology adoption.    
 
The economists have published a series of four reports that take a deep look at this year's CSBS survey responses. To read the full report, click here .  
 
In addition to financial technology use, the 521 community banks from 37 states answered questions about trends in small business and other lending, banking services, mergers and acquisitions and management succession.  
 
The annual survey is released each year at the annual Community Banking in the 21st Century research and policy conference held in October each year at the Federal Reserve Bank of St. Louis.
 
The Report  >> 
 
The Consumer Financial Protection Bureau is proposing changes to its so-called no-action letter policy and proposing to establish a regulatory sandbox that would encourage banks to test new, innovative financial products. The revised policy would seek to improve the no-action letter process by eliminating several redundant or burdensome elements, streamlining the CFPB's processing and review of the applications and expanding the types of relief available, among other things.  
 
In addition, through the proposed "product sandbox," banks could receive similar no-action relief, along with two additional forms of relief: "approval relief," which expressly states that acts taken or omitted in conformity with the approval fall within a statutory "safe harbor" from liability, or "exemptive relief," an exemption from a statutory or regulatory provision. The CFPB added that under the "sandbox" concept, it expects relief to be provided for a limited amount of time - in most cases, two years.  
 
Comments on the proposal are due 60 days after it is published in the Federal Register.  
 
The Office of the Comptroller of the Currency (OCC) reported credit, operational, compliance, and interest rate risks are key themes for the federal banking system in its Semiannual Risk Perspective for Fall 2018.
Highlights from the report include:
  • Credit quality remains strong, but the OCC is monitoring the origination quality of new loans, the potential for increased lender complacency within credit risk identification and management, and the potential embedded risks from successive years of eased underwriting.
  • Operational risk is elevated as banks respond to an evolving and increasingly complex operating environment.
  • Compliance risk is elevated as banks manage money laundering risks and comply with amended consumer protection requirements.
  • Rising interest rates and increased competition for deposits may result in changes in funding mix or costs.
The report also highlights the emerging risk posed by the growth in nonfinancial corporate debt, and includes a credit underwriting assessment supplement.
 
The report presents information in five main areas: the operating environment, bank performance, special topics in emerging risk, trends in key risks, and supervisory actions. It focuses on issues that pose threats to those financial institutions regulated by the OCC and is intended as a resource to the industry, examiners, and the public.
  THE BSA/AML Event of the Year! - March 12, 2019  
 
CFO Conference - April 4, 2019 
 
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