News Release | NR 2020-130 October 1, 2020
WASHINGTON—The Office of the Comptroller of the Currency (OCC) today released its bank supervision operating plan for fiscal year (FY) 2021.
The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC staff members use this plan to guide their supervisory priorities, planning, and resource allocations.
Supervisory strategies for FY 2021 focus on
- credit risk management, commercial and residential real estate concentration risk management, allowances for loan and lease losses, and allowances for credit losses.
- cybersecurity and operational resilience.
- Bank Secrecy Act/anti-money laundering (BSA/AML) compliance management.
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compliance risk management associated with 2020 pandemic-related bank activities.
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Community Reinvestment Act performance.
- fair lending examinations and risk assessments.
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the impact of a low-rate environment and preparation for the phaseout of the London Interbank Offering Rate (LIBOR).
- proper oversight of significant third-party relationships.
- change management over significant operational changes.
- payment systems products and services.
The OCC will provide periodic updates about supervisory priorities through the Semiannual Risk Perspective in the fall and spring.
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Bulletin | OCC 2020-85 October 1, 2020
To: Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
Summary
The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) published a rule finalizing the interim final rule1 to delay the estimated impact on regulatory capital stemming from the implementation of Accounting Standards Update No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (CECL2) by banks.3
This bulletin replaces and rescinds OCC Bulletin 2020-27, “Current Expected Credit Losses: Interim Final Rule,” and OCC Bulletin 2020-42, “Current Expected Credit Losses: Final Rule With Technical Changes to Interim Final Rule.”
Highlights
In March 2020, the agencies issued an interim final rule (2020 CECL IFR) that provides banking organizations that were required under U.S. GAAP (as of January 2020) to implement CECL before the end of 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option).
The final rule
adopts all provisions of the 2020 CECL IFR.
permits all banking organizations that adopt CECL in 2020 the option to use the new transition in the 2020 CECL IFR, even if not required to adopt CECL under U.S. GAAP in 2020.
clarifies that a banking organization is not required to use the transition in quarters in which it would not generate a regulatory capital benefit.
Further Information
Please contact Mark Ginsberg, Senior Risk Expert, Regulatory Policy, Bank Supervision Policy, at (202) 649-6370; Jung Sup Kim, Risk Specialist, Capital Policy, Bank Supervision Policy, at (202) 649-6370; Ashley Rangel, Professional Accounting Fellow, Office of the Chief Accountant, Bank Supervision Policy, at (202) 649-6550; or Kevin Korzeniewski, Counsel, Chief Counsel’s Office, at (202) 649-5490.
Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel
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1 85 Fed. Reg. 17723 (March 31, 2020), as corrected by 85 Fed. Reg. 29839 (May 19, 2020).
2 CECL stands for current expected credit losses.
3 The term "banks" refers collectively to national banks and federal savings associations.
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Bulletin | OCC 2020-84 September 30, 2020
To: Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
Summary
The Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council1 (FFIEC) has adopted revised interagency examination procedures for the Truth in Lending Act (TILA), implemented by Regulation Z. The revised interagency procedures reflect amendments to Regulation Z published in the Federal Register through May 18, 2018.
Rescissions
This bulletin rescinds the “Truth in Lending Act” booklet of the Comptroller’s Handbook. Office of the Comptroller of the Currency (OCC) examiners should rely on the revised interagency procedures. Also rescinded is OCC Bulletin 2018-31, “Truth in Lending Act: Revised Comptroller's Handbook Booklet and Rescissions.”
Highlights
The FFIEC members developed these procedures to promote consistency in the examination process and communication of supervisory expectations. These interagency procedures reflect
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amendments to Regulation Z that relate to the TILA-RESPA Integrated Mortgage Disclosure Rule.3
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amendments to TILA relating to the Economic Growth, Regulatory Relief, and Consumer Protection Act, including
- provisions relating to high-cost loans, appraisals, and student lending.
- an additional type of qualified mortgage for insured depository institutions with less than $10 billion in assets.
- an additional type of escrow exemption for insured depository institutions with less than $10 billion in assets.
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Bulletin | OCC 2020-83 September 29, 2020
To: Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
Summary
The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies), today approved a final rule that allows financial institutions to defer completion of appraisals and evaluations for 120 days after the closing of residential and commercial real estate transactions. The agencies are providing this flexibility for completing appraisals and evaluations to help financial institutions meet the immediate liquidity needs of borrowers during the coronavirus (also known as COVID-19) emergency. Recent health and safety restrictions relating to the COVID-19 emergency have caused delays in performing and completing the real estate appraisals and evaluations needed to comply with federal appraisal regulations.
The final rule becomes effective immediately upon publication in the Federal Register. The final rule expires on December 31, 2020, unless extended by the agencies. The final rule adopts the interim final rule issued by the agencies on April 17, 2020, without substantive change.
Highlights
This final rule provides temporary deferral of the requirements for appraisals and evaluations under the agencies’ appraisal regulations. The deferrals
- apply to residential and commercial real estate transactions, excluding loans for acquisition, development, and construction of real estate.
- allow a bank up to 120 days from the closing of a transaction to obtain the appraisal or evaluation required under the appraisal regulations.
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require a bank to use best efforts and available information to develop a well-informed estimate of the collateral value of the subject property when underwriting the transaction.
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are authorized until December 31, 2020, when the final rule terminates.
The final rule clarifies that transactions for the “acquisition, development, and construction” of real estate excluded from the 120-day deferral period means, for purposes of this rule, those loans described in the Instructions for Schedule RC-C, “Loans and Lease Financing Receivables,” Part I, “Loans and Leases,” item 1.a, “Construction, Land Development, and Other Land Loans,” of the call report.
Further Information
Please contact G. Kevin Lawton, Appraiser and Real Estate Specialist, at (202) 649-6670; or Mitchell Plave, Special Counsel, at (202) 649-5490.
Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel
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1 “Banks” refers to national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.
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The federal bank regulatory agencies finalized two rules, which are either identical or substantially similar to interim final rules currently in effect and issued earlier this year. They include:
- A final rule that temporarily defers appraisal and evaluation requirements for up to 120 days after the closing of certain residential and commercial real estate transactions; and
- A final rule that neutralizes—due to the lack of credit and market risk—the regulatory capital and liquidity effects for banks that participate in certain Federal Reserve liquidity facilities.
The final rule temporarily deferring appraisal and evaluation requirements is substantially similar to the interim final rule issued in April. It will allow individuals and businesses to more quickly access real estate equity to help address needs for liquidity as a result of the coronavirus. In response to comments, the final rule clarifies which loans are subject to the deferral. The final rule is effective upon publication in the Federal Register and will expire on December 31, 2020.
The final rule pertaining to Federal Reserve liquidity facilities adopts without change three interim final rules issued in March, April, and May, 2020. Earlier this year, the Federal Reserve launched several lending facilities to support the economy in light of the coronavirus response. The final rule neutralizes the regulatory capital and liquidity coverage ratio effects of participating in the Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility because there is no credit or market risk in association with exposures pledged to these facilities. As a result, the final rule will support the flow of credit to households and businesses affected by the coronavirus. The effective date of this final rule is 60 days after the date of publication in the Federal Register.
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