Davis Polk Analyzes the Fed’s New Corporate Governance Guidance

The Federal Reserve’s proposed supervisory guidance on corporate governance is a breath of fresh air that should encourage banking boards to focus on their core responsibilities and avoid blurring the distinctions between executive and non-executive duties.  It is also a signal that supervisors intend to move away from the blunt “check-the-box” approach to corporate governance that has especially burdened banking boards in recent years.  We applaud this rebalancing in supervisory approach.

The following comments on this positive development are offered in the hope that the guidance, when finalized and as implemented, will avoid an overly prescriptive, “one-size-fits-all” approach.

Risk Is

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Davis Polk Offers Tips on Preparing for CFPB’s New Arbitration Rule

Since the CFPB issued its Arbitration Rule in July, most commentators have focused on ways the rule may be blocked from going into effect.  Chief among these is the possibility that Congress will vote to overturn the rule under the Congressional Review Act, and the House did promptly vote in favor of overturning the rule on July 26, 2017.  The Senate began its August recess without a vote to overturn the CFPB Arbitration Rule and with no indication for when it might take the matter up again. In light of that uncertainty, it is now time for financial institutions to … Read more

Davis Polk Cites Financial CHOICE Act as Potential Starting Point for Trump Reforms

President-Elect Trump’s transition website promises to “dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.” For those who wonder what that might mean in more detail, we believe that Rep. Jeb Hensarling’s (R-TX) Financial CHOICE Act, introduced earlier this year, is a starting point that signals a potential general direction of travel for financial reform. It is not the end, however, as we expect that the Republican Congress and Administration will have more ambitious plans for a significant reorientation of the regulatory framework (for instance, Rep. Hensarling has stated that he will … Read more

Davis Polk discusses Federal Agencies’ Report on Banks and Nonbank Affiliates

On September 8, the Federal Reserve, OCC and FDIC issued the long-expected report to Congress and the FSOC, as required under section 620 of the Dodd-Frank Act, regarding activities and investments of banks and their nonbank affiliates, which were defined collectively in the report as “banking entities” (the “620 Report”).  In addition to a comprehensive review and discussion of currently-permissible activities and investments of banking entities, that 107-page document includes a discussion by each agency of associated risks, applicable risk mitigation activities and legal limitations, and specific recommendations.  Below are our initial takeaways from the 620 Report.  We will circulate … Read more

Davis Polk discusses Trust-Preferred Securities and Involuntary Bankruptcy

The involuntary chapter 11 bankruptcy filing of American Bancorporation (“American”), commenced by a group of distressed debt investors holding American’s trust-preferred securities (“TruPS”), was upheld by the U.S. Bankruptcy Court for the District of Minnesota pursuant to an order entered on May 27, 2014. This development highlights the use of involuntary bankruptcy as the latest strategy by TruPS holders to increase their leverage and recovery in distressed bank holding company situations.

Background

TruPS are deeply subordinated junior debentures issued to statutory trusts that in turn issue preferred securities. They were at one time a commonly used structure for financing bank … Read more

Davis Polk Discusses OCC’s Risk Governance Guidelines for Banks

The OCC has proposed a set of enforceable and specific risk governance guidelines to formalize its heightened expectations for large national banks and federal savings associations. The risk governance guidelines would set new, and much higher, minimum standards for the design and implementation of a bank’s own risk governance framework and the oversight of such framework by the bank’s board of directors.

State banks that are not subject to the OCC’s proposed risk governance guidelines should still pay attention because the same or similar principles will likely be applied by the Federal Reserve and the FDIC to large state member … Read more

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Editor's Tweet: Davis Polk Discusses OCC's Risk Governance Guidelines for Banks

Swaps Pushout Rule: Federal Reserve Banks Revise Discount Window Documentation

Effective July 16, 2013, the Federal Reserve Banks’ Operating Circular No. 10 (“OC-10”) has been amended to include a new appendix entitledProhibition Against Federal Assistance to Any Swaps Entity (“Appendix 6”).  Appendix 6 is intended to ensure that the Federal Reserve Banks comply with the requirements of Section 716 of the Dodd-Frank Act (“Swaps Pushout Rule”) when making discount window advances under OC-10.  OC-10 sets forth the terms and conditions under which an entity may obtain advances from, incur obligations to, or pledge collateral to a Federal Reserve Bank.

The Swaps Pushout Rule … Read more

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Editor's Tweet: Davis Polk on the Swaps Pushout Rule: Federal Reserve Banks Revise Discount Window Documentation http://wp.me/p2Xx5U-1fO

Davis Polk’s Dodd-Frank Progress Report June 2013

On June 3, Davis Polk & Wardwell LLP released its June 2013 Dodd-Frank Progress Report, which can be found here. Davis Polk issues these Progress Reports monthly to update the market on the progress of the rulemaking required under Dodd-Frank.

  • No New Deadlines, 0 Requirements Met, 1 Proposed. No rulemaking requirements were due in May and no unmet rulemaking requirements were met with finalized rules. One new rule was proposed to meet rulemaking requirements.
  • Although the CFTC released final rules governing the registration and regulation of swap execution facilities (SEFs) pursuant to required rulemaking authority, these rules have

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Editor's Tweet: Davis Polk's Dodd-Frank Progress Report June 2013

Davis Polk’s Dodd-Frank Progress Report May 2013

On May 1, Davis Polk & Wardwell LLP released its May 2013 Dodd-Frank Progress Report, which can be found here. Davis Polk issues these Progress Reports monthly to update the market on the progress of the rulemaking required under Dodd-Frank.

  • No New Deadlines, 5 Requirements Met, 0 Proposed. No rulemaking requirements were due in April and 5 rulemaking requirements were met with finalized rules. No new rules were proposed to meet rulemaking requirements.
  • Current Status.  As of May 1, 2013, a total of 279 Dodd-Frank rulemaking requirement deadlines have passed. Of these 279 passed deadlines, 175 (62.7%) have

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Davis Polk’s Dodd-Frank Progress Report April 2013

On April 1, Davis Polk & Wardwell LLP released its April 2013 Dodd-Frank Progress Report, which can be found here. Davis Polk issues these Progress Reports monthly to update the market on the progress of the rulemaking required under Dodd-Frank.

  • No New Deadlines, Requirements Met or Requirements Proposed. No rulemaking requirements were due in March and no new rules were adopted or proposed to meet rulemaking requirements.
  • Current Status.  As of April 1, 2013, a total of 279 Dodd-Frank rulemaking requirement deadlines have passed. Of these 279 passed deadlines, 176 (63.1%) have been missed and 103 (36.9%) have

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Editor's Tweet: Davis Polk’s releases its Dodd-Frank Progress Report for April 2013

Davis Polk’s Dodd-Frank Progress Report March 2013

On March 1, Davis Polk & Wardwell LLP released its March 2013 Dodd-Frank Progress Report, which can be found here. Davis Polk issues these Progress Reports monthly to update the market on the progress of the rulemaking required under Dodd-Frank.

  • No New Deadlines, Requirements Met or Requirements Proposed. No rulemaking requirements were due in February and no new rules were adopted or proposed to meet rulemaking requirements.
  • Current Status.  As of March 1, 2013, a total of 279 Dodd-Frank rulemaking requirement deadlines have passed. Of these 279 passed deadlines, 176 (63.1%) have been missed and 103 (36.9%) have

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Dodd-Frank Progress Report February 2013

On February 1, Davis Polk & Wardwell LLP released its February 2013 Dodd-Frank Progress Report, which can be found here. Davis Polk issues these Progress Reports monthly to update the market on the progress of the rulemaking required under Dodd-Frank.

  • 46 New Deadlines. 42 rulemaking requirements and 4 studies were due in January.
  • 12 Requirements Met, 0 Proposed. The CFPB released final rules on qualified mortgage standards, mortgage servicing and loan originator compensation. The CFPB, FDIC, Federal Reserve, FHFA, NCUA and OCC released a joint final rule that establishes new appraisal requirements for higher-priced mortgage loans.
  • Current Status.  As

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Implications for the CFPB After the D.C. Circuit’s Recess Appointments Decision

A panel of three judges in the D.C. Circuit stunned Washington on Friday by striking down President Obama’s recess appointments to the NLRB in Noel Canning v. NLRB on a basis much more sweeping than had been anticipated. The two holdings in the decision cast doubt over the longstanding practice of intrasession recess appointment, which has been used especially frequently in the last two decades.

For financial institutions, the decision is of direct interest because it calls into question President Obama’s recess appointment that same day of Richard Cordray as Director of the CFPB and, as a result, all of … Read more

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Editor's Tweet: Davis Polk's Tahyar, Yanes, and Guynn discuss the DC Circuit's recent decision in Noel Canning v. NLRB and the Implications for the CFPB.

Davis Polk’s January 2013 Dodd-Frank Progress Report

Yesterday, Davis Polk & Wardwell LLP released its January 2013 Dodd-Frank Progress Report, which can be found here.  This report is one in a series of Davis Polk presentations that illustrate graphically the progress of the rulemaking work that has been done and is yet to occur under the Dodd-Frank Act. The Progress Report has been prepared using data from the Davis Polk Regulatory Tracker™, an online subscription service offered by Davis Polk to help market participants understand the Dodd-Frank Act and follow regulatory developments on a real-time basis.  Earlier blog posts about the progress report can be found … Read more

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Editor's Tweet: Margaret Tahyar and Gabriel Rosenberg of Davis Polk & Wardwell LLP have posted about the January edition of the Dodd-Frank Progress Report