Financial Services Bulletin: Action At The CFTC, SEC, CFPB, Fed, And FDIC

by Perkins Coie
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CFTC and SEC Approve Joint Identity Theft Rule

On Wednesday, April 10, 2013, the Commodity Futures Trading Commission (the "CFTC") and the Securities and Exchange Commission (the "SEC") jointly issued final rules and guidelines that will require certain regulated entities to establish programs to address risks of identity theft.  These rules and guidelines implement provisions of Section 615(e) of the Fair Credit Reporting Act, as amended by Section 1088(a)(10)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which directs the CFTC and SEC to adopt rules requiring entities that are subject to their respective enforcement authorities to address identity theft.  The CFTC’s rules will apply to CFTC regulated entities that qualify as “financial institutions” or “creditors” under the Fair Credit Reporting Act.  The SEC's rules will apply to broker-dealers, mutual funds, investment advisers, and certain other regulated entities.

Specifically, the rules require these entities to develop and implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft in connection with existing accounts or in the opening of new accounts.  The rules include guidelines to assist entities in the formulation and maintenance of programs that would satisfy the requirements of the rules.  Further, the rules establish special requirements for any credit and debit card issuers that are subject to the CFTC's and SEC's respective enforcement authorities to assess the validity of notifications of changes of address under certain circumstances.

Read the CFTC press release

Read the SEC press release

CFPB Proposes Amendments to Escrow Rules

On Friday, April 12, 2013, the Consumer Financial Protection Bureau (the "CFPB") proposed clarifying and technical amendments to a final rule issued by the CFPB that amended Regulation Z to implement certain amendments to the Truth in Lending Act made by Sections 1461 and 1462 of the Dodd-Frank Act.  The proposed amendments would lengthen the time for which a mandatory escrow account established for a higher-priced mortgage loan ("HPML") must be maintained.  The proposed amendments would also clarify the determination method for exemption from the escrow requirements for certain creditors that operate predominantly in “rural” or “underserved” areas.

Read the CFPB rule

Fed and FDIC Issue Additional Instructions for Submission of Resolution Plans

On Monday, April 15, 2013, the Federal Reserve Board (the "Fed") and the Federal Deposit Insurance Corporation (the "FDIC") released additional guidance, clarification and direction for the first group of institutions filing their resolution plans pursuant to Section 165(d) of the Dodd-Frank Act.  Domestic bank holding companies with $250 billion or more in total nonbank assets and foreign-based bank holding companies with $250 billion or more in total U.S. nonbank assets are required to file annual resolution plans for rapid and orderly resolution in the event of material financial distress or failure.

In 2012, 11 institutions filed resolution plans with the Fed and the FDIC.  The Fed and FDIC have developed revised instructions for the firms to detail what information should be included in their 2013 resolution plan submissions.  In particular, the revised instructions include requests for more detailed information on, and analysis of, obstacles to resolvability under the Bankruptcy Code, including global issues, financial market utility interconnections, and funding and liquidity, as well as the provision of analyses to support the strategies and assumptions contained in the firms' resolution plans.  The Board and the FDIC also extended the filing deadline from July 1, 2013, to October 1, 2013.  The extension does not affect resolution plan submission dates for other banking organizations.

Read the Fed press release

Read the FDIC press release

Fed and FDIC Issue Additional Instructions for Submission of Resolution Plans

On Monday, April 15, 2013, the Fed issued a proposed rule to implement Section 318 of the Dodd-Frank Act.  The proposed rule would levy an annual assessment on bank holding companies and savings and loan holding companies with $50 billion or greater in total consolidated assets, and on nonbank financial companies designated by the Financial Stability Oversight Council for supervision by the Fed.  Section 318 directs the Federal Reserve to collect assessments, fees, or other charges equal to the expenses the Board estimates are necessary and appropriate to carry out its supervisory and regulatory responsibilities for these large financial companies.  The proposed rule outlines how the Fed would determine which companies are assessed, estimate the total expenses that are necessary or appropriate to carry out its supervisory and regulatory responsibilities for such companies, determine the amount of each company's assessment, and bill and collect the assessments.

Read the Fed press release

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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