The Filing Cabinet

A recent survey by accounting firm Kaufman Rossin found that many banks plan sizeable increases to their budget for anti-money laundering compliance over the next 12 months. In this week’s podcast, we talk to Ivan Garces, a risk advisory services principal at accounting firm Kaufman Rossin about the evolving risk landscape banks face and how it is driving greater investment in their compliance programs.

Bank regulators, along with the Securities and Exchange Commission, Federal Housing Finance Agency, and U.S. Department of Housing and Urban Development have jointly issued a final rule that imposes credit risk retention requirements on sponsors of asset-backed securities. The rule requires sponsors to hold at least 5 percent of the credit risk of the assets underlying the securities. The rule includes exemptions for mortgage-backed securities collateralized by residential mortgages that meet "qualified mortgage" criteria established by the Consumer Financial Protection Bureau.

The Consumer Financial Protection Bureau is moving forward with new rules that would prohibit the mandatory arbitration clauses in contracts that banks, credit card companies, and others rely upon to prevent consumers from pursuing lawsuits. A variety of recommendations, published this week for public comment, are the results of a study that was required by the Dodd-Frank Act and released in March.

Unveiling yet another rulemaking effort to end taxpayer bailouts when large banks fail, the Board of Governors of the Federal Reserve has proposed an increase in the loss absorbing capacity of systemically important U.S. bank holding companies and the domestic operations of smilarly designated foreign banks. Covered institutions would be required to maintain a minimum amount of long-term debt that could be converted into equity in the event of a failure.

After five years of service, Comptroller of the Currency Thomas Curry will be leaving the agency. Keith Noreika, a partner at the law firm Simpson Thacher & Bartlett, will serve as acting Comptroller of the Currency.

The Office of the Comptroller of the Currency will consider applications from financial technology (FinTech) companies to become special purpose national banks. Charters would come with heightened risk management and liquidity requirements.

U.S. Senator Bob Menendez (D-N.J.), is among the concerned senators urging the Comptroller of the Currency to quickly act upon regulatory recommendations that emerged after last year’s fake accounts scandal at Wells Fargo.

The House of Representatives garnered bipartisan support for legislation that would exempt non-bank financial institutions that are not under supervision by the Federal Reserve, but overseen by the SEC and CFTC, from stress tests.

As part of his farewell tour, Thomas Hoenig, the departing vice chairman of the Federal Deposit Insurance Corporation, used a recent speech to candidly address the challenge of balancing prudential standards and regulatory initiatives when attempting to end big bank bailouts.