The following are selected highlights from the agencies’ responses to issues raised by EGRPRA commenters to reduce regulatory burden, especially on community banks.
Simplifying the capital rules
The agencies are developing a proposal to simplify the generally-applicable framework. Such amendments likely would include:
- Replacing the framework’s complex treatment of high volatility commercial real estate (HVCRE) exposures with a more straightforward treatment for most acquisition, development, or construction (ADC) loans.
- Simplifying the current regulatory capital treatment for mortgage servicing assets (MSAs), timing difference deferred tax assets (DTAs), and holdings of regulatory capital instruments issued by financial institutions.
- Simplifying the current limitations on minority interests in regulatory capital.
Reduced regulatory reporting requirements with the introduction of a community bank Call Report
The streamlined FFIEC 051 Call Report, finalized in December 2016, was created for institutions with domestic offices only and less than $1 billion in total assets. This new Call Report, which will take effect March 31, 2017, will:
- Reduce the length of the Call Report from 85 pages to 61 pages
- Remove approximately 40 percent of the data items currently included in the FFIEC 041
Note: Further Call Report streamlining is anticipated in future proposals.
Raising appraisal threshold for commercial real estate loans
The agencies are developing a proposal to increase the threshold for requiring an appraisal on commercial real estate loans from $250,000 to $400,000.
Addressing appraiser shortages in rural areas
The agencies intend to issue a statement informing regulated entities of the availability of both temporary waivers and temporary practice permits, which are applicable to both commercial and residential appraisals, and may address temporary appraiser shortages. Additionally, the agencies will work with the Appraisal Subcommittee (ASC) to streamline the process for the evaluation of temporary waiver requests.
Clarified use of evaluations versus appraisals
To clarify current supervisory expectations regarding evaluations, particularly in response to commenters in rural areas, in March 2016 the agencies issued an interagency advisory on when evaluations can be performed in lieu of appraisals, including when transactions fall below the dollar thresholds set forth in the appraisal regulations.
Clarifying guidance regarding flood insurance
The agencies are updating and revising their Interagency Questions and Answers Regarding Flood Insurance (Interagency Flood Q&As) to provide additional guidance on a number of issues raised by EGRPRA commenters, including:
- the escrow of flood insurance premiums
- force-placed insurance
- detached structures
Increasing the major assets interlock threshold
The agencies anticipate issuing a proposal for comment to amend their rules implementing the Depository Institution Management Interlocks Act (DIMIA) to increase the asset thresholds in the major assets prohibition, currently set at $2.5 billion and $1.5 billion, based on inflation or market changes.
Increasing further guidance on Regulation O
The agencies are working to provide a chart or similar guide on the statutorily-required rules and limits on extensions of credit made by an IDI to an executive officer, director, or principal shareholder of that IDI, its holding company, or its subsidiary.
Reduced the full scope, on-site examination (safety-and-soundness examination), as well as Bank Secrecy Act (BSA) reviews frequency for certain qualifying institutions
The agencies issued a joint interim final rule to raise the asset threshold that, in general, makes qualifying IDIs with less than $1 billion in total assets eligible for an 18-month (rather than a 12-month) examination cycle. Because agency review of BSA compliance programs are typically conducted during safety-and-soundness examinations, institutions with assets between $500 million and $1 billion that are now eligible for safety-and-soundness examinations every 18 months will also generally be subject to less frequent BSA reviews.
Referred Bank Secrecy Act (BSA) and anti-money laundering (AML) comments
The agencies provided the Financial Crimes Enforcement Network (FinCEN) with the comments received during the EGRPRA review and FinCEN provided a response, which is attached to the report in appendix 5. In addition, the agencies have established common training policies for examiners, maintain an interagency examination manual, and issued an interagency statement setting forth the policy for enforcing specific AML requirements for greater consistency in enforcement decisions on BSA matters through publication of the FFIEC BSA/AML Examination Manual.
*Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, National Credit Union Administration