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The FDIC, the other federal financial institution regulatory agencies, the Securities and Exchange Commission, and the Federal Trade Commission have jointly published the attached final rules to implement the affiliate marketing provisions of the Fair Credit Reporting Act (FCRA) as amended by the Fair and Accurate Credit Transactions Act (FACT Act.) The final rules implement Section 214 of the FACT Act, which generally prohibits a person from using information received from an affiliate to make a solicitation for marketing purposes to a consumer, unless the consumer
Comptroller of the Currency John C. Dugan, at a meeting of the Federal Deposit Insurance Corporation’s Board of Directors late yesterday, made the following statement on the implementation of Section 312 of the FACT Act
The Federal Deposit Insurance Corporation (FDIC) today approved the final rule implementing the Advanced Approaches of the Basel II Capital Accord. The new rules are a significant change in regulatory practice, in that they require some large banks to calculate capital requirements using their own internal, model-driven risk estimates.
The Federal Reserve Board on Friday approved final rules to implement new risk-based capital requirements in the United States for large, internationally active banking organizations. The new advanced capital adequacy framework, known as Basel II, more closely aligns regulatory capital requirements with actual risks and should further strengthen banking organizations’ risk-management practices.
Summary: The FDIC is requesting comments on the attached proposed amendments to Part 363 of its regulations, which sets forth annual independent audit and reporting requirements for insured institutions with $500 million or more in total assets.
The Office of the Comptroller of the Currency announced today it has approved a final rule implementing the advanced approaches of the Basel II Capital Accord.This rule establishes regulatory and supervisory expectations for credit risk, through the Internal Ratings Based Approach (IRB), and operational risk, through the Advanced Measurement Approach (AMA), and articulates enhanced standards for the supervisory review of capital adequacy and public disclosures for the largest U.S. banks.
The Office of Thrift Supervision (OTS) today urged thrifts in areas affected by Southern California wildfires to consider all reasonable steps to meet customers’ financial needs. OTS will work with thrifts to identify ways to assist in the recovery efforts of their customers and communities. To facilitate recovery efforts while maintaining standards of safety and soundness, OTS encourages all thrifts in affected areas
Summary: The Department of the Treasury's Office of Foreign Assets Control has added new entries to its Specially Designated Nationals and Blocked Persons list.
Final Regulation R-Exceptions and Exemptions for Banks from the Definition of "Broker" FIL-92-2007, October 25, 2007 Summary: On October 3, 2007, the Board of Governors of the Federal Reserve System (Board) and the U.S. Securities and Exchange Commission (SEC) published the attached final rules that implement provisions of the Gramm-Leach-Bliley Act (GLBA) that except banks from the definition of "broker" under the Securities Exchange Act of 1934 when they conduct certain securities transactions.
The federal financial regulatory agencies issued final rules today that provide consumers with an opportunity to "opt out" before a financial institution uses information provided by an affiliated company to market its products and services to the consumer. The final rules on affiliate marketing implement section 214 of the Fair and Accurate Credit Transactions Act of 2003, which amends the Fair Credit Reporting Act (FCRA).
NEW ORLEANS, La. – Comptroller of the Currency John C. Dugan said today Federal bank regulators are nearing completion of the supervisory and regulatory framework for Basel II in the United States, with tangible progress to report as it relates to both rulemaking efforts regarding Pillar 1 – minimum capital requirements and Pillar 2 – supervisory review of capital adequacy at individual firms. Equally important, Mr. Dugan indicated that the banks and agencies are moving into a new stage in the Basel process – a stage that focuses on institution-specific implementation efforts and the supervisory scrutiny of those actions.
The Office of the Comptroller of the Currency today issued a proclamation allowing national bank offices affected by the wildfires in southern California to close at their discretion.
Interfaces for Personal Identity Verification (4 parts): 1- Card Application Namespace, Data Model & Representation 2- Card Appl. Card Command Interface 3- Client Appl. Programming Interface 4- Transitional Interfaces & Data Model NIST Special Publication 800-73-2, Interfaces for Personal Identity Verification , is now available for a 30 day public comment period.
DRAFT NIST IR 7328: Security Assessment Provider Requirements and Customer Responsibilities: Building a Security Assessment Credentialing Program for Federal Information Systems NIST announces the release of draft NIST Interagency Report 7328, Security Assessment Provider Requirements and Customer Responsibilities: Building a Security Assessment Credentialing Program for Federal Information Systems.
The FDIC Advisory Committee on Economic Inclusion (ComE-IN) will convene on October 24 to examine money services businesses (MSBs) and their access to banking services. The committee will hear from experts on the challenges facing the MSB industry as well as from bankers who have successful relationships with MSBs.
What GAO Found The inherent problems of measuring the costs and benefits of regulation make it difficult to assess the extent to which regulations may be unduly burdensome to U.S. financial services firms, particularly in comparison to firms in other countries.
NIST announces the release of five publications: Draft SP 800-110, Information System Security Reference Model, Special Publication (SP) 800-44 version 2, Guidelines on Securing Public Web Servers, Draft SP 800-55 Revision 1, Performance Measurement Guide for Information Security, Draft SP 800-61 Revision 1, Computer Security Incident Handling Guide, and Draft SP 800-82, Guide to Industrial Control Systems (ICS) Security.
NIST announces the release of five publications: Draft SP 800-82, Guide to Industrial Control Systems (ICS) Security,Special Publication (SP) 800-44 version 2, Guidelines on Securing Public Web Servers, Draft SP 800-55 Revision 1, Performance Measurement Guide for Information Security, Draft SP 800-61 Revision 1, Computer Security Incident Handling Guide, and Draft SP 800-110, Information System Security Reference Model.
NIST announces the release of five publications: Computer Security Incident Handling Guide, Draft SP 800-82,Special Publication (SP) 800-44 version 2, Guidelines on Securing Public Web Servers, Draft SP 800-55 Revision 1, Performance Measurement Guide for Information Security, Draft SP 800-61 Revision 1, Guide to Industrial Control Systems (ICS) Security, and Draft SP 800-110, Information System Security Reference Model.
NIST announces the release of five publications: Draft SP 800-55 Revision 1, Performance Measurement Guide for Information Security, Draft SP 800-61 Revision 1, Computer Security Incident Handling Guide, Draft SP 800-82, Guide to Industrial Control Systems (ICS) Security, Draft SP 800-110, Information System Security Reference Model, and Special Publication (SP) 800-44 version 2, Guidelines on Securing Public Web Servers.
NIST announced the release of five publications: Special Publication (SP) 800-44 version 2, Guidelines on Securing Public Web Servers, Draft SP 800-55 Revision 1, Performance Measurement Guide for Information Security, Draft SP 800-61 Revision 1, Computer Security Incident Handling Guide, Draft SP 800-82, Guide to Industrial Control Systems (ICS) Security, and Draft SP 800-110, Information System Security Reference Model.
The Securities and Exchange Commission (SEC) and Board of Governors of the Federal Reserve System (Board) on Monday announced the adoption of final joint rules to implement the “broker” exceptions for banks under Section 3(a)(4) of the Securities Exchange Act of 1934. These exceptions were adopted as part of the Gramm-Leach-Bliley Act of 1999 (GLB Act). The SEC and the Board approved the final rules at separate open meetings held on September 19, 2007, and September 24, 2007, respectively.
The federal bank and thrift agencies issued final rules on Friday expanding the range of small institutions eligible for an extended 18-month on-site examination cycle. The final rules allow well-capitalized and well-managed banks and savings associations with up to $500 million in total assets and a composite CAMELS rating of 1 or 2 to qualify for an 18-month (rather than a 12-month) on-site examination cycle.
Summary: The Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of Illinois that suffered major damage from storms and flooding.
Summary: In an update to FIL-75-2007, the Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in additional areas of Ohio and Wisconsin that are suffering from storms and flooding.
Summary: In an update to FIL-61-2007 and FIL-68-2007, the Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in additional areas of Oklahoma that are suffering from storms and flooding.
Summary: The Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of Minnesota, Wisconsin and Ohio that have suffered major damage from storms and flooding.
Fraudulent letters claiming to be from the Office of the Comptroller of the Currency are being sent to U.S. bank customers in an attempt to elicit funds. The Office of the Comptroller of the Currency (OCC) has notified the Federal Deposit Insurance Corporation (FDIC) that fraudulent letters are in circulation that concern the release of funds supposedly under the control of the International Monetary Unit (IMU) of the European Commission in Belgium. The letter is being sent to U.S. bank customers and indicates that in accordance with international monetary policy, monies are being held until the recipient can produce the necessary documents, which include a Money Laundering/Drug Free Clearance Certificate and an Anti-Terrorist Clearance and Capital Transfer Certificate. According to the European Commission's recent warning, victims are directed to pay approximately $25,000 (U.S. dollars) to obtain these bogus documents.
In an update to FIL-61-2007, dated July 6, 2007, the Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in additional areas of Texas and Oklahoma that are suffering from storms and flooding. Highlights: * Severe storms, tornadoes and flooding have caused significant damage to areas of Texas and Oklahoma. * In Texas, 33 counties have now been declared federal disaster areas, with the addition of Guadalupe, Henderson, Nueces, Van Zandt, Walker and Zavala counties on August 7, 2007.
NIST announces that the following draft Special Publications (SP) are now available for public comment: SP 800-113, Guide to SSL VPNs.
NIST announces that the following draft Special Publications (SP) are now available for public comment: SP 800-48 Revision 1, Wireless Network Security for IEEE 802.11a/b/g and Bluetooth.
NIST is pleased to announce the release of Special Publication 800-78-1, Cryptographic Algorithms and Key Sizes for Personal Identity Verification. The document has been modified to enhance interoperability, simplify the development of relying party applications, and enhance alignment with the National Security Agency's Suite B Cryptography.
This alert is about fraudulent correspondence regarding the release of funds supposedly under the control of the International Monetary Unit (IMU) of European Commission (EC) in Belgium. Correspondence, allegedly issued by the Office of the Comptroller of the Currency (OCC) regarding restricted funds purportedly under the control of the European Commission, is in circulation. The item is a hoax. Attached is a copy of this fraudulent correspondence, which is being sent to United States bank customers in an attempt to elicit funds from them. This letter indicates that, in accordance with international monetary policy, monies are being held until the recipient can produce the necessary documents, which include a Money Laundering/Drug Free Clearance Certificate and an Anti-Terrorist Clearance and Capital Transfer Certificate. According to the European Commission’s recent warning, which can be viewed at EU Warning and is also attached, victims of this fraud are directed to pay approximately $25,000 USD to obtain these bogus documents.
Computer interconnectivity has produced enormous benefits but has also enabled criminal activity that exploits this interconnectivity for financial gain and other malicious purposes, such as Internet fraud, child exploitation, identity theft, and terrorism. Efforts to address cybercrime include activities associated with protecting networks and information, detecting criminal activity, investigating crime, and prosecuting criminals.
FDIC Chairman Sheila C. Bair today commented on an agreement in principle that has been reached between The Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation regarding the implementation of Basel II in the United States. The agreement resolves major outstanding issues and will now lead to finalization of a rule implementing the advanced approaches for computing large banks' risk-based capital requirements.
The Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation reached an agreement today regarding the implementation of Basel II in the United States. The agreement resolves major outstanding issues and will now lead to finalization of a rule implementing the advanced approaches for computing large banks' risk-based capital requirements.
The Office of the Comptroller of the Currency announced the launch of HelpWithMyBank.gov, a new Web site dedicated to providing answers and assistance to national bank customers. "We created HelpWithMyBank.gov with national bank customers in mind," Comptroller of the Currency John C. Dugan said. "Our goal was to build a site that makes it easier for people to get answers and submit concerns about their bank because we are committed to ensuring fair access to financial services and equal treatment for national bank customers." HelpWithMyBank.gov provides answers to common questions based on thousands of calls made to the OCC Customer Assistance Group each year. While targeted to national bank customers, the site answers many questions common to all banking consumers and provides useful information about contacting regulators of institutions other than national banks.
DHS has issued a national plan aimed at providing a consistent approach to critical infrastructure protection, ensured that all 17 sectors have organized to collaborate on protection efforts, and worked with government and private sector partners to complete all 17 sector-specific plans.Nevertheless, our work has shown that sectors vary in terms of how complete and comprehensive their plans are. Furthermore, DHS recognizes that the sectors, their councils, and their plans must continue to evolve. As they do, and as the plans are updated and annual implementation reports are provided that begin to show the level of protection achieved, it will be important that the plans and reports add value, both to the sectors themselves and to the government as a whole. This is critical because DHS is dependent on these plans and reports to meet its mandate to evaluate whether gaps exist in the protection of the nation’s most critical infrastructure and key resources and, if gaps exist, to work with the sectors to address them.
The Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of Oklahoma and Texas that suffered major damage from storms and flooding that started in May and continued through June
The Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of Nebraska, Missouri and Kansas that suffered major damage from storms and flooding that started in May and have continued into early July
Fraudulent correspondence bearing the FDIC's name continues to be mailed, faxed and e-mailed. This correspondence is being used in illegal schemes to collect sensitive personal information, such as bank account numbers, and to steal money and other assets.
The Office of the Comptroller of the Currency reports fraudulent letters that appear to be faxed by the Federal Deposit Insurance Corporation are circulating to financial institutions worldwide.
In February 2007, the GAO issued its opinions on the calendar year 2006 financial statements of the Deposit Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF). It also issued its opinion on the effectiveness of the Federal Deposit Insurance Corporation’s (FDIC) internal control over financial reporting (including safeguarding assets) and compliance as of December 31, 2006, and its
The Financial Crimes Enforcement Network (FinCEN) has issued guidance to financial institutions to address law enforcement agency requests to keep open particular accounts.
Starting July 9, 2007, the FDIC will provide participating state bank regulators access to the FDICconnect Examination File Exchange system.
FDIC Chairman Sheila C. Bair today issued the following statement about Treasury Secretary Henry Paulson’s Remarks on Protecting the Financial System and Effective Implementation of the Bank Secrecy Act at the offices of the Financial Crimes Enforcement Network (FinCEN)
The National Institute of Standards and Technology (NIST) announces the release of Draft Federal Information Processing Standard (FIPS) 180-3 Publication, Secure Hash Standard (SHS)
The National Institute of Standards and Technology (NIST) announces the release of Draft Federal Information Processing Standard (FIPS) 198-1 Publication, The Keyed-Hash Message Authentication Code (HMAC).
The Financial Crimes Enforcement Network issued today the latest edition of the SAR Activity Review – By The Numbers that introduces a number of visual enhancements aimed at providing financial institutions with more information on the geographical dispersion of the Suspicious Activity Report filings.
Topics addressed in this issue include: A discussion of the risks associated with third-party relationships and the effect failure to manage those risks can have on a financial institution An overview of factors that have led to an increase in mortgage fraud, highlights of actual mortgage fraud cases in FDIC-insured institutions and mitigation steps t
How banks can manage risks associated with third-party arrangements for products and services is reported in the FDIC's summer 2007 issue of Supervisory Insights, released today. Other topics covered are the need for vigilance toward mortgage fraud, challenges in maintaining wind insurance, the electronic exchange of documentation in bank examinations, and recent decisions affecting the accounting for split-dollar life insurance.
The Financial Crimes Enforcement Network (FinCEN) has announced delayed implementation of the revised Suspicious Activity Report by Depository Institutions (SAR-DI) form. The revised form was scheduled to take effect on June 30, 2007, and become mandatory on December 31, 2007.
The Financial Crimes Enforcement Network (FinCEN) has updated two Bank Secrecy Act guidance. Financial institutions are recommended to read these guidance for the latest information on maintaining accounts and Suspicious Activity Report (SAR) supporting documentation.
The Office of the Comptroller of the Currency will host workshops for national community bank directors at the Arrowwood Conference Center, Alexandria, Minnesota, July 10-12. The workshops provide practical information that expands bank directors' skills and understanding of issues facing their banks.
Comptroller of the Currency John C. Dugan testified before Congress that current credit card disclosure rules should be changed to improve consumers’ ability to make well-informed decisions about the credit cards they choose.
Statement Of Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation on Improving Credit Card Consumer Protection: Recent Industry And Regulatory Initiatives before the Subcommittee On Financial Institutions and Consumer Credit of the Financial Services Committee,
Fraudulent correspondence regarding the release of funds supposedly under the control of Office of the Comptroller of the Currency (OCC) officials.
Fraudulent letters that claim to be from the FDIC are being faxed to financial institutions. The letters request that the financial institution provide a copy of its certification of foreign correspondent accounts.
The following items were recently posted to the Federal Deposit Insurance Corporation’s (FDIC) Office of Inspector General (OIG) Web site: http://www.fdicig.gov/ under Publications. In cases where an OIG report includes sensitive or confidential information, the OIG may redact certain information in the report, and the report will be marked as such. In some instances because of the highly sensitive nature of the entire report, the OIG may not make the report publicly available and instead, a brief summary of the report is posted to the Web site.
The Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of South Dakota that suffered major damage from storms and flooding, which started on May 4, 2007.
The Federal Bureau of Investigation (FBI) relies on a critical network to electronically communicate, capture, exchange, and access law enforcement and investigative information. Misuse or interruption of this critical network, or disclosure of the information traversing it, would impair FBI’s ability to fulfill its missions. Effective information security controls are essential for ensuring that information technology resources and information are adequately protected from inadvertent or deliberate misuse, fraudulent use, disclosure, modification, or destruction.
GAO was asked to assess information security controls for one of FBI’s critical networks. To assess controls, GAO conducted a vulnerability assessment of the internal network and evaluated the bureau’s information security program associated with the network operating environment. This report summarizes weaknesses in information security controls in one of FBI’s critical networks.
Banker Education Announcement This is a reminder about the Office of the Comptroller of the Currency’s workshops for national community bank directors. Our next workshop on credit risk will be held in Cape May, New Jersey at the historic Congress Hall Hotel. Set amidst a sweeping lawn overlooking the Atlantic Ocean, this hotel is a classic in America’s oldest seashore resort town. Workshops cost $65 each. Attendees receive a pre-course reading package, course materials, an OCC telephone seminar CD, other appropriate superviso
James. H. Freis, Jr., Director of the Financial Crimes Enforcement Network, hosted the 27th plenary of the Bank Secrecy Act Advisory Group (BSAAG) on Wednesday. At the meeting, his first since becoming FinCEN’s Director in April, Director Freis pledged to work closely with all BSAAG members to ensure that the Bank Secrecy Act (BSA) is being administered in the most effective and efficient way. The BSAAG is comprised of high-level representatives from financial institutions, federal law enforcement agencies, regulatory authorities, and others from the private and public sectors. "The Bank Secrecy Act Advisory Group is a model of public-private sector partnership in which its participants can engage in open dialogue about the issues facing them related to the protection of the U.S. financial system from money laundering, terrorist financing, and other abuse," said Director Freis. "The plenary gathering is extremely important
FinCEN has issued a SAR Activity Review report for financial institutions to use. Click to read the SAR Activity Review: Trends, Tips and Issues Update.
United States Department of the Treasury Financial Crimes Enforcement Network FinCEN Advisory
Subject:Transactions Involving Nigeria
This Advisory is being issued to inform banks and other financial institutions operating in the United States that Financial Crimes Enforcement Network (FinCEN) Advisory Issue 32, regarding the Federal Republic of Nigeria, is hereby withdrawn.
Since the issuance of Advisory 32, and as reflected in its June 23, 2006 decision, the Financial Action Task Force on Money Laundering has removed Nigeria from its list of countries that are non-cooperative in the fight against money laundering, recognizing the progress Nigeria has made in implementing anti-money laundering reforms. Nigeria has enacted significant reforms to its counter-money laundering system, addressing the deficiencies listed in Advisory 32, and has taken concrete steps to bring these reforms into effect. Because of the enactment of new laws and the beginning of effective implementation, the enhanced scrutiny called for in Advisory 32 with respect to transactions invol
New technologies are constantly adding speed, convenience and flexibility to practically everything we do -- including how we bank and pay for goods and services. The latest FDIC Consumer News (Spring 2007), published by the Federal Deposit Insurance Corporation, features a look at some revolutionary new ways to conduct daily financial transactions using high-tech cards and cell phones, along with tips for choosing and using these services. Also in this issue: advice for adjustable-rate mortgage (ARM) borrowers that may help them avoid losing their home if they are unable to make monthly payments when the interest rate goes up, and tips for avoiding inappropriate or fraudulent investments. Speed Banking and Paying: The newsletter focuses on three new forms of technology that can make paying and banking faster and easier -- cards with a pre-loaded value, such as gift cards for purchases at stores and pre-paid debit cards for use at businesses as
The Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to provide regulatory relief to financial institutions and to facilitate recovery in Kiowa County, Kansas, which suffered major damage from tornadoes on May 4, 2007.
FINANCIAL MARKET PREPAREDNESS Significant Progress Has Been Made, but Pandemic Planning and Other Challenges Remain Highlights of GAO-07-399, a report to congressional requesters This is GAO’s third report since the September 11 terrorist attacks that assesses progress that market participants and regulators have made to ensure the security and resiliency of our securities markets. This report examined (1) actions taken to improve the markets’ capabilities to prevent and recover from attacks; (2) actions taken to improve disaster response and increase telecommunications resiliency; and (3) financial regulators’ efforts to ensure market resiliency. GAO inspected physical and electronic security measures and business continuity capabilities using regulatory, government, and industry-established criteria and discussed improvement efforts with broker dealers, banks, regulators, telecommunications carriers, and trade associations. What GAO Recommends To improve the readiness of the securities markets to withstand potential disease pandemics, securities and banking regulators should consider taking additional actions, including providing formal expectations that market participants’ plans address even severe pandemic outbreaks and setting a date by which such plans should be completed. Banking and securities regulators indicated they believe organizations are adequately addressing this risk, but will consider taking the recommended actions if progress lags. GAO believes that giving greater consideration now would better assure market readiness.
The federal bank and thrift agencies on Tuesday requested public comment on proposed interim rules expanding the range of small institutions eligible for an extended 18-month on-site examination cycle. The proposed interim rules allow well-capitalized and well-managed banks and savings associations with up to $500 million in total assets and a composite CAMELS rating of 1 or 2 to qualify for an 18-month (rather than a 12-month) on-site examination cycle. Until recently, only institutions with less than $250 million in total assets could qualify for an extended 18-month on-site examination cycle. The proposed interim rules also revise the provisions governing the on-site examination cycle for the U.S. branches and agencies of foreign banks.
If you have a complaint against a thrift institution (or savings association), the Office of Thrift Supervision (OTS) may be able to help. The OTS is an office of the Department of the Treasury that regulates and supervises the nation's thrift industry. The OTS's mission is to ensure the safety and soundness of thrift institutions and their compliance with consumer protection laws. The OTS also supports the important role thrift institutions play as home mortgage lenders and providers of other forms of community credit and financial services. Additionally, the OTS oversees the activities and operations of thrift operating subsidiaries and holding companies that own or control thrift institutions.
The Federal Trade Commission today issued its annual report, "Consumer Fraud and Identity Theft Complaint Data" on complaints consumers have filed with the agency. For the seventh year in a row, identity theft tops the list, accounting for 36 percent of the 674,354 complaints received between January 1 and December 31, 2006. Other categories near the top of the complaint list include shop-at-home/catalog sales; prizes, sweepstakes and lotteries; Internet services and computer complaints; and Internet auction fraud.
Summary: The FDIC has revised its Compliance Examination Handbook. The new handbook contains the FDIC's compliance examination policies and procedures in effect as of June 2006. It also includes revised Community Reinvestment Act (CRA) examination procedures and performance evaluations. The handbook will be available in electronic format only and can be accessed on the FDIC's Web site at http://www.fdic.gov/regulations/compliance/handbook/index.html.
The Office of Thrift Supervision (OTS) announced that it expects publication in the Federal Register early next week of an interagency notice of proposed rulemaking (NPR) regarding potential revisions to the existing domestic risk-based capital framework (Basel IA). These changes would apply to U.S. banks, bank holding companies, and savings associations.
The Office of Thrift Supervision (OTS) announced the recent appointment of William H. Henley, Jr. as its Director of IT Risk Management. In this position, Henley is supporting the examination and supervision of savings associations for Information Technology (IT) issues. In particular, he is the principle advisor for development, implementation and maintenance of policies, procedures and guidelines in the IT area, including Technology Risk Management. Henley is also serving as the OTS representative to the FFIEC IT Subcommittee.
The Honorable William M. Thomas Chairman, Committee on Ways and Means House of Representatives Dear Mr. Chairman: During recent congressional hearings and in public speeches, statements made by the National Credit Union Administration's (NCUA) Chairman and another board member raised congressional interest in the ability of NCUA to collect and objectively analyze data on credit union membership and executive compensation. More generally, these statements also raised issues about the agency's overall vigilance as a regulator and the independence and objectivity of NCUA's board and senior staff from the industry being regulated.
National Credit Union Administration (NCUA) Executive Director J. Leonard Skiles has selected John E. Kutchey as Director of Risk Management. As Director of Risk Management, Kutchey is responsible for overseeing NCUA's credit union problem resolution program. Kutchey graduated Magna Cum Laude from the University of Baltimore in 1990 with a Bachelor's Degree in Business Administration with an Accounting Concentration. Kutchey joined NCUA in 1990 as an Examiner in Baltimore, MD. During his career with NCUA, Kutchey has served as an Examiner; Problem Case Officer; Supervisory Examiner; and most recently the Director of Supervision in Region II.
The Office of the Comptroller of the Currency (OCC) and the Conference of State Bank Supervisors (CSBS) announced agreement today on procedures for the exchange of consumer complaint information between state banking departments and the OCC. The agreement recognizes that consumers do not always know which regulatory agency - state or federal - supervises their bank, and provides a model Memorandum of Understanding to ensure misdirected complaints are sent to the appropriate agency. The MOU, which is intended to be executed by state banking departments and the OCC on a state-by-state basis, provides a two-way street for the sharing of such complaints, including information on how complaints are resolved.
The Federal Reserve Board announced the appointment of the chairmen and deputy chairmen of the twelve Federal Reserve Banks for 2007. Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as chairman and a second as deputy chairman.
FDIC Chairman Sheila C. Bair announced today that Sandra L. Thompson has been named Director of the Federal Deposit Insurance Corporation's Division of Supervision and Consumer Protection (DSC). In addition, Christopher J. Spoth has been named Senior Deputy Director, Supervisory Examinations; and John Lane will assume leadership of a newly created unit dedicated to large, complex financial institutions. "I am very pleased to make this announcement today," said Chairman Bair. "Sandra Thompson has repeatedly demonstrated her strengths and capability as a senior FDIC executive. Since she was named Acting Director of DSC in February of this year, she has shown exceptional leadership skills and vision. I am confident she will ensure the FDIC continues to fulfill its supervision and consumer protection mandates. Chris and John have also proven themselves to be effective leaders with many years of supervisory experience. Working under Sandra's leadership, they will continue the proud tradition of the FDIC examination corps for excellence and professionalism."
IIB and ABN AMRO discussed the following issues related to the United States' implementation of the Accord in the Basel II NPR published on September 25, 2006, and the European Union's implementation of the Accord in its Capital Requirements Directive (CRD): Definition of default. Commenters noted that the EU and US definitions of default are significantly different. For example, the US considers a wholesale obligor to be in default if any wholesale exposure has been placed in a non-accrual status consistent with the Call Report or Thrift Financial Report Instructions. By contrast, the EU considers a wholesale obligor to be in default when the bank makes a determination that the borrower is unlikely to pay its credit obligations to the credit institution in full without recourse by the credit institution to actions such as realizing collateral.
FDIC Chairman Sheila C. Bair today announced the appointment of Jesse O. Villarreal, Jr., as her Chief of Staff, effective October 24, 2006. As Chief of Staff, Mr. Villarreal will oversee all of the day-to-day operations of the Chairman's office. "I am very pleased that Jesse has agreed to serve as my Chief of Staff," said Chairman Bair. "Jesse has served with distinction throughout his career, most recently as Senior Advisor to the Assistant Secretary for Financial Markets at the Department of the Treasury. During my tenure as Assistant Secretary for Financial Institutions at Treasury, Jesse served as my Special Assistant. So I am well aware of his strong leadership skills, sound judgment and extensive government experience, particularly in the financial services field. With these attributes, Jesse will certainly be a valuable asset to me and to our entire management team."
Minority banks can play an important role in serving the financial needs of historically underserved communities and growing populations of minorities. For this reason, the Financial Institutions, Reform, Recovery, and Enforcement Act of 1989 (FIRREA) established goals that the Federal Deposit Insurance Corporation (FDIC) and the Office of Thrift Supervision (OTS) must work toward to preserve and promote such institutions (support efforts). To evaluate their efforts, as well as those of the Office of the Comptroller of the Currency (OCC) and the Federal Reserve, GAO (1) reviewed the profitability of minority banks, (2) identified the regulators' support and assessment efforts, and (3) obtained the views of minority banks on the regulators' efforts.
Good morning, Chairman Shelby, Ranking Member Sarbanes, and Members of the Committee. Thank you for the opportunity to discuss the views of the Office of Thrift Supervision (OTS) on the recently proposed Basel II capital framework and to update you on risk-based capital modernization in the U.S. When I testified before this Committee nearly a year ago, I discussed my views on the development of the Basel II framework as of November 2005. I expressed concern about what we had just learned from the quantitative impact study, QIS-4. In particular, I noted that if we applied the emerging U.S. Basel II standard to the portfolios of some of our largest banks, there could be a potentially significant drop in their capital levels and a wide dispersion of capital requirements between banks. I also stated that even beyond these concerns, we had yet to resolve difficult policy issues in the modernization of our risk-based capital standards.
Statement of Sheila C. Bair Chairman Federal Deposit Insurance Corporation on the Interagency Proposal Regarding the Basel Capital Accord; before the Committee on Banking, Housing and Urban Affairs; U.S. Senate; 10:00 A.M.; Room 538, Dirksen Senate Office Building September 26, 2006 Chairman Shelby, Senator Sarbanes and members of the Committee, I appreciate the opportunity to testify on behalf of the Federal Deposit Insurance Corporation (FDIC) concerning the Basel II international capital accord. The U.S. banking system is a network of institutions that are highly leveraged and whose financial health bears directly on the health of our broader economy. Significant problems or a lack of financial flexibility at many small banks, or at one or more large systemically important banks, can have contagion effects that impose significant costs on the deposit insurance funds and the overall economy.
The Office of the Comptroller of the Currency was named one of the 50 best places in America to start a career by Business Week magazine. "The Business Week ranking confirms what we've long known: that the OCC is a great place to start - and build - a career," said Comptroller of the Currency John C. Dugan. The OCC ranked 48th on Business Week's list of top employers for new college graduates.
U.S. Treasury Deputy Assistant Secretary D. Scott Parsons will speak about the financial sector's preparedness for a disaster or attack September 12, 2006 at 9:00 a.m. at the Financial and Banking Information Infrastructure Committee / Financial Services Sector Coordinating Council meeting. He will give remarks at the City University of New York's Graduate School and University Center.
The federal bank and thrift regulatory agencies announced today that they will request public comment on a notice of proposed rulemaking (NPR) that would implement new risk-based capital requirements in the United States for large, internationally active banking organizations. The NPR details the agencies' plans for implementing the Basel Committee on Banking Supervision's (BCBS) new capital accord (Basel II) that was issued in 2004. The agencies also will request comment on proposed Basel II supervisory reporting templates. The Federal Reserve Board (Board), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) first adopted risk-based capital standards in 1989. Those standards were based on the Basel Capital Accord that the BCBS originally issued in 1988 (Basel I). For banking organizations that meet qualifying criteria, the Basel II NPR would replace U.S. rules implementing Basel I. The proposed framework would be mandatory for large, internationally active banking organizations and optional for others.
The Office of the Comptroller of the Currency advised national banks today that registration for two conference calls on the revised FFIEC Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual will close on September 6. The conference calls are sponsored by the five federal banking agencies and the Financial Crimes Enforcement Network (FinCEN). The Office of Foreign Assets Control will also be participating in these calls. The banking industry calls will be held September 13 and 14, 2006. All calls will be from 11:00 a.m. to 12:00 noon (EDT).
Why GAO Did This Study The Internet protocol (IP) provides the addressing mechanism that defines how and where information such as text, voice, music, and video move across interconnected networks. IP version 4 (IPv4), which is widely used today, may not be able to accommodate the increasing number of global users and devices that are connecting to the Internet. As a result, Internet version 6 (IPv6) was developed to increase the amount of available address space. In August 2005, the Office of Management and Budget (OMB) issued a memorandum specifying activities and time frames for federal agencies to transition to IPv6. GAO was asked to determine (1) the status of federal agencies' efforts to transition to IPv6; (2) what emerging applications are being planned or implemented that take advantage of IPv6 features; and (3) key challenges industry and government agencies face as they transition to the new protocol.
Why GAO Did This Study Federal regulation is one of the basic tools of government used to implement public policy. In 1980, the Regulatory Flexibility Act (RFA) was enacted in response to concerns about the effect that regulations can have on small entities, including small businesses, small governmental jurisdictions, and certain small not-for-profit organizations. Congress amended RFA in 1996, and the President issued Executive Order 13272 in 2002, to strengthen requirements for agencies to consider the impact of their proposed rules on small entities. However, concerns about the regulatory burden on small entities persist, prompting legislative proposals such as H.R. 682, the Regulatory Flexibility Improvements Act, which would amend RFA. At the request of Congress, GAO has prepared many reports and testimonies reviewing the implementation of RFA and related policies. On the basis of that body of work, this testimony (1) provides an overview of the basic purpose and requirements of RFA, (2) highlights the main impediments to the Act’s implementation that GAO's reports identified, and (3) suggests elements of RFA that Congress might consider amending to improve the effectiveness of the Act. GAO's prior reports and testimonies contain recommendations to improve the implementation of RFA and related regulatory process requirements.
The FDIC Board of Directors has approved the attached notice of proposed rulemaking to replace the two separate official FDIC signs - one for insured banks, and the other for insured savings associations - with one new official sign that all FDIC-insured depository institutions would be required to display where deposits are received. The notice of proposed rulemaking would also require both banks and savings associations to use the official advertising statement ("Member FDIC") in advertisements that specifically promote deposit products and services or generally promote banking services. The proposed rulemaking would revise Part 328 of the FDIC Rules and Regulations, which governs official FDIC signs and advertising of FDIC membership. Comments on these proposals and related matters are due by September 15, 2006.
The Homeland Security Presidential Directive (HSPD) 12 mandated the creation of new standards for interoperable identity credentials for physical and logical access to Federal government locations and systems. Federal Information Processing Standard 201 (FIPS 201), Personal Identity Verification (PIV) of Federal Employees and Contractors, was developed to establish standards for identity credentials [FIPS201-1]. This document, Special Publication 800-78-1, specifies the cryptographic algorithms and key sizes for PIV systems and is a companion document to FIPS 201. 1.1 Authority This document has been developed by the National Institute of Standards and Technology (NIST) in furtherance of its statutory responsibilities under the Federal Information Security Management Act (FISMA) of 2002, Public Law 107-347.
Inspectors General In our role as principal auditor of the consolidated financial statements of the U.S. government (CFS), we plan to use the work of the inspectors general and contracted independent public accountants who audit the agency-level financial statements. The development of the joint PCIE/GAO Financial Audit Manual (FAM) has provided a common framework and methodology for federal financial statement auditing. Adherence to the FAM will enable us to readily review the work of other auditors as a basis for using that work under auditing standards. We want to all be on the same page so that we are in the position to use your work. Certain CFS line items that will be subject to our concurrent review because of their significance, such as the federal employee and veteran benefits payable line item, involve federal agencies’ significant actuarial estimations. Statement on Auditing Standards (SAS) No. 57, Auditing Accounting Estimates applies to such estimations. In addition, Statement of Federal Financial Accounting Standard (SFFAS) No. 5 requires that federal agencies disclose specific information in their financial statements for pensions, other retirement benefits, and other postemployment benefits.
The Office of the Comptroller of the Currency today issued a proclamation allowing national bank offices affected by severe weather in the northeast to close at their discretion. In issuing the proclamation, Timothy Long, Senior Deputy Comptroller for Mid-Size/Community Bank Supervision, said he expects that only those bank offices directly affected by the severe weather will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers, he added.
Sheila C. Bair was sworn in today as the 19th Chairman of the Federal Deposit Insurance Corporation (FDIC). Martin J. Gruenberg, Vice Chairman of the FDIC, had served as Acting Chairman since Donald E. Powell resigned on November 15, 2005. "I am pleased to be joining the FDIC at such an important time. There are many critical issues facing the agency – from implementation of deposit insurance reform to our ongoing work on Basel II and IA," said Chairman Bair. "I've spent most of my career in the financial services arena, focusing on the banking sector in recent years, so I am very familiar with the FDIC's important work. I am looking forward to the challenges that lie ahead, and working closely with our highly experienced Board and excellent staff.
The Office of the Comptroller of the Currency will host workshops for national community bank directors at the Millennium Knickerbocker Hotel, Chicago, on July 25-26. The workshops provide practical information that expands bank directors' skills and understanding of issues facing their banks. This year's workshops cover risk assessment and compliance risk.
The FDIC received an award June 15 for its innovative use of technology to support employees who telecommute. The Telework Exchange, a public-private partnership focused on eliminating telework gridlock, recognized the FDIC with a 2006 Telework Exchange Tele-Vision Award. The award was conferred in the category of Innovative Application of Technology to Support Telework. The FDIC provides an array of remote access services to support its telecommuting and mobile users. Services include a Remote Client Network (RCN), a Virtual Private Network (VPN) and a dial-up service. A recent addition to the FDIC's services is a "token" employees can use with any computer that has Internet access and a Web browser. This service—the Web Enabled Remote Client Network (WebRCN)—provides employees with secure access to commonly used software applications from their home computers, FDIC-issued laptop computers, conference computer-cafes and cybercafés. The token generates random alphanumeric passwords each time the device is turned on—a password is good for one logon. This feature enables virtually every eligible FDIC employee with access to a computer to participate in the FDIC's Telework Program.
FDIC Consumer Call Centers in Kansas City, Missouri, and Washington, D.C., have begun receiving a large number of complaints by consumers who received an e-mail that has the appearance of being sent from the FDIC. The e-mail informs the recipient that Department of Homeland Security Director Tom Ridge has advised the FDIC to suspend all deposit insurance on the recipient’s bank account due to suspected violations of the USA PATRIOT Act. The e-mail further indicates that deposit insurance will be suspended until personal identity, including bank account information, can be verified. This e-mail was not sent by the FDIC and is a fraudulent attempt to obtain personal information from consumers. Financial institutions and consumers should NOT access the link provided within the body of the e-mail and should NOT under any circumstances provide any personal information through this media.
Let me begin by thanking Andrew Hilton and CSFI for inviting me here this evening. These roundtables provide an excellent forum for the open discussion of the critical issues facing the financial sector today, and I applaud the independent thinking that the CSFI brings to these events.
Tonight I would like to discuss one of the most significant recent developments in the financial sector - the Basel II capital accord - which has certainly generated its fair share of controversy and taken quite a few years to get where we are now. In the U.S., a draft Notice of Proposed Rulemaking has at long last been released. Publications of the proposal will mark the final stage in our consultative process, in which comments are widely solicited, seriously evaluated, and in some cases intensely debated prior to the formulation of final implementing regulations. While this marks an important milestone, I can't help but be reminded of the famous Churchill line about this being not even the beginning of the end, but perhaps the end of the beginning. More prosaically, while much work has been done, much work remains before we have an up-and-running, fully supervised, and fully reliable Basel II risk-based capital regime.
Treasury Secretary John W. Snow today designated George S. Hender as Sector Coordinator and Chairman of the Financial Services Sector Coordinating Council for Critical Infrastructure Protection and Homeland Security (FSSCC). The FSSCC works closely with the Treasury and other federal financial
regulators to coordinate the private sector's preparation for events
including natural disasters and terrorist attacks, which could disrupt
the normal business of the financial services industry. Hender,
Management Vice Chairman of The Options Clearing Corporation, served
as FSSCC Vice Chairman since September 2004.
The FDIC insures bank and savings association deposits to help ensure stability and public confidence in the U.S. financial system. The deposit insurance funds must remain viable so that adequate funds are available to protect insured depositors if an institution fails. When an insured institution fails, the FDIC is responsible for ensuring that the institution's customers have timely access to their insured deposits.
Richard W. Hartt has been named Deputy Director of the Federal Deposit Insurance Corporation's (FDIC) Division of Information Technology (DIT). Mr. Hartt will head the division's Enterprise Technology Branch. "Rick has an extensive background in all areas of information technology, including strategic planning, enterprise architecture, data architecture, and performance measurement," said Michael Bartell, CIO and DIT Director. "Rick brings significant experience to the FDIC and the IT division and I am excited to have him on our executive team."
Why GAO Did This Study Since 1979, Egypt has received about $80 billion in military and economic assistance with about $34 billion in the form of foreign military financing (FMF) grants that enable Egypt to purchase U.S.-manufactured military goods and services. In this report, GAO (1) describes the types and amounts of FMF assistance provided to Egypt; (2) assesses the financing arrangements used to provide FMF assistance to Egypt; and (3) evaluates how the U.S. assesses the program's contribution to U.S. foreign policy and security goals. What GAO Recommends
We recommend that the Secretaries of State and Defence conduct: (1) an assessment of the impact of potential shifts in appropriations on the Egypt FMF program; and (2) periodic program-level evaluations of the program. Specifically, the agencies should define the current and desired levels of modernization and interoperability the U.S. would like to achieve.
While most people have a pretty good idea about how FDIC insurance works, a surprisingly large number of consumers have potentially costly misconceptions. The biggest concern: Some depositors who believe that their funds are fully insured may inadvertently have some money over the insurance limits and risk losing that portion if their bank fails. The Spring 2006 FDIC Consumer News, published by the Federal Deposit Insurance Corporation, offers a guide to understanding FDIC insurance coverage and making sure that all of a family's accounts are fully protected. It features: The "Top 10" misconceptions about FDIC insurance. The Number 1 fallacy: The most a consumer can have insured is $100,000. In fact, a person may qualify for more than $100,000 in coverage at each insured bank if the funds are deposited in different "ownership categories," such as individual accounts, joint accounts, and certain trust and retirement accounts. Depending on the circumstances, a family of four could have well over $1 million in deposit insurance coverage at the same bank -- and that coverage is separate from what is FDIC-insured at any other institution.
Fred S. Carns has been named Director of the FDIC's Office of International Affairs (OIA), replacing Michael Zamorski, who retired from the FDIC after 29 years of service. Mr. Carns will be responsible for coordinating the FDIC's international banking activities with a focus on building strong relationships with foreign regulators and deposit insurers, U.S. government entities and international organizations. OIA coordinates the FDIC's technical assistance and outreach activities that are provided to foreign entities in order to promote the development and maintenance of sound banking and deposit insurance systems.
Regulators, public companies, audit firms, and investors generally agree that the Sarbanes-Oxley Act of 2002 has had a positive and significant impact on investor protection and confidence. However, for smaller public companies (defined in this report as $700 million or less in market capitalization), the cost of compliance has been disproportionately higher (as a percentage of revenues) than for large public companies, particularly with respect to the internal control reporting provisions in section 404 and related audit fees. Smaller public companies noted that resource limitations and questions regarding the application of existing internal control over financial reporting guidance to smaller public companies contributed to challenges they face in implementing section 404. The costs associated with complying with the act, along with other market factors, may be encouraging some companies to become private. The companies going private were small by any measure and represented 2 percent of public companies in 2004. The full impact of the act on smaller public companies remains unclear because the majority of smaller public companies have not fully implemented section 404.
Pursuant to the provisions of the "Government in the Sunshine Act" (5 U.S.C. 552b), notice is hereby given that the Federal Deposit Insurance Corporation's Board of Directors will meet in open session at 2:00 p.m. on Tuesday, May 9, 2006, to consider the following matters: Summary Agenda: No substantive discussion of the following items is anticipated. These matters will be resolved with a single vote unless a member of the Board of Directors requests that an item be moved to the discussion agenda. - Disposition of minutes of previous Board of Directors' meetings. - Summary reports, status reports, and reports of actions taken pursuant to authority delegated by the Board of Directors. - Memorandum and resolution re: Interagency Statement on Sound Practices Concerning Elevated Risk Complex Structured Finance Activities.
As the nation's 76 million "baby boomers" (born between 1946 and 1964) enter their sixties, they will come face-to-face with the challenges of financing their retirement and will reshape U.S. markets for housing and financial services, according to the Spring 2006 issue of the FDIC Outlook. Taking the long view on forces shaping the financial services landscape, FDIC analysts report on how long-run demographic trends are affecting the funding of pension plans; how a large and relatively affluent baby boom generation is influencing the demand for housing; and how demographic shifts may also alter the mix of financial products and services offered by FDIC-insured institutions.
Beginning June 1, 2006, the Federal Deposit Insurance Corporation (FDIC) will change its primary method of distributing Special Alerts (SAs) to insured financial institutions from paper-copy delivery through the U.S. Postal Service to electronic delivery through the FDIC's free secure Web site, FDICconnect. The change is expected to provide institutions with a number of benefits, including: - An immediate e-mail notification that a SA has been issued. There will be no need for routine manual checks of FDICconnect to determine whether a new SA has been issued. - The immediate availability of the SA. Through the traditional mail system, receipt of the paper copy typically takes a week or longer. - Secure transmission of the SA attachments, which are often electronic copies of fraudulent and genuine instruments.
National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood joined fifty credit union CEOs in Boston for a roundtable dialogue during which he outlined his regulatory focus for 2006. "Regulatory flexibility will be a top priority of mine in 2006," said Vice Chairman Hood. He discussed the recent final rule empowering an additional 413 federal credit unions with RegFlex eligibility by allowing well-managed, well-capitalized credit unions with a qualifying net worth requirement of 7% rather than 9% for earned regulatory flexibility. "This rule demonstrates the Board’s belief that the agency should not micro-manage, well-managed institutions," said Vice Chairman Hood. "This year, I will look for ways to reduce unnecessary regulatory burdens on credit unions."
The FDIC established and implemented C&A policies, procedures, and practices that were satisfactory and consistent with federal standards and guidelines. The FDIC continued to build its C&A program during 2005 in response to evolving National Institute of Standards and Technology guidance, and additional improvements were underway at the close of our field work. Further, the FDIC had undertaken action to address certain C&A-related matters previously identified in the OIG’s September 2005 security evaluation report required by FISMA. The FDIC can further strengthen its C&A program by: - enhancing system sensitivity assessment guidance to describe how final security categorizations are determined; - ensuring that application security plans adequately describe how common security controls and general support systems critical to the security of the application are considered in the application's C&A; - ensuring the cost-benefit of alternative control solutions for reducing or eliminating vulnerabilities; - enhancing written procedures for defining the nature and scope of testing, managing system-level plans of action and milestones, accepting risks associated with system security weaknesses, and issuing interim systems authorizations; and - establishing formal milestone reviews at key points in the C&A process to ensure that critical documentation is current, accurate, and complete. These program enhancements will provide FDIC management with greater assurance that system security risks are effectively managed and that C&A practices are consistently applied throughout the Corporation. We also performed benchmarking with other federal agencies and included the results in this report.
The final agenda for the April public hearings on the proposed Wal-Mart Bank's federal deposit insurance application is now available on the FDIC's Web site. The agenda includes the names of parties who are scheduled to give oral presentations as well as the speaking times and the locations where the parties are scheduled to speak. FDIC Chief Operating Officer and Deputy to the Chairman John F. Bovenzi will serve as Presiding Officer at the hearings. In addition, Douglas H. Jones, Acting General Counsel of the FDIC, and Sandra L. Thompson, Acting Director of the FDIC's Division of Supervision and Consumer Protection, will serve as hearing officers.
Despite regional disparities in job growth and a high degree of reliance on real estate, the economy and the banking industry both continue to perform well across most areas of the nation, FDIC analysts reported in the spring 2006 editions of FDIC Regional Profile and FDIC State Profiles released today. "Moderate to strong job growth across much of the nation is helping to support loan growth and credit quality at federally insured banks and thrifts," said FDIC Chief Economist Richard A. Brown. "However, heavy dependence on mortgage and construction lending is making some banks more vulnerable to regional downturns in real estate activity."
National Credit Union Administration (NCUA) Chairman JoAnn Johnson announced the extension of the application deadline for the Community Development Revolving Loan Fund’s (CDRLF) disaster relief grants from March 31, 2006 to September 30, 2006. Qualifying credit unions in areas affected by the Gulf Coast hurricanes may apply for up to $2,500 for assistance in resuming operations.
The NCUA’s Community Development Revolving Loan Fund (CDRLF) was established by Congress to support credit unions that serve low-income communities by providing loans and technical assistance grants (TAGs) to qualifying institutions. The programs are designed to further the safety and soundness of low income credit unions while stimulating economic growth. Qualifying credit unions may also apply for CDRLF loans of up to $300,000. Loans have a maturity of 5 years and an interest rate of 1 percent.
The Northeast Region is conducting a second series of one-day Technology Managers Seminars focusing on IT issues of interest to our regulated financial institutions. Feedback from our 2004 Seminars indicated that attendees found it an excellent vehicle providing practical guidance for managing technology risks.
This year's topics will include:
The federal financial institution regulatory agencies and the Federal Trade Commission have jointly issued for comment an Advance Notice of Proposed Rulemaking (ANPR) on section 312 of the Fair and Accurate Credit Transactions Act (FACT Act). Comments are invited for the purpose of developing guidelines and rules to implement section 312. Section 312 requires the agencies to: (1) establish guidelines regarding the accuracy and integrity of information furnished to consumer reporting agencies; and (2) prescribe regulations that require the entities that furnish such information to establish reasonable policies and procedures for implementing the guidelines. Section 312 also requires the agencies to prescribe regulations that identify the circumstances under which an entity that furnishes information to consumer reporting agencies will be required to reinvestigate a dispute concerning the accuracy of information contained in a consumer credit report based on a consumer's direct request.
The Financial Crimes Enforcement Network (FinCEN) today issued an Advance Notice of Proposed Rulemaking seeking comments from both the money services business industry and the banking industry on the issue of money services businesses obtaining appropriate access to banking services. Today's action is part of FinCEN's ongoing efforts to address continued concerns about the ability of money services businesses to open and maintain accounts and obtain other services at banks and depository institutions as well as the caution of the banking industry in dealing with money services businesses. "Money services businesses play an important role in America's economy by providing valuable financial services to many Americans who do not, or cannot yet, take advantage of typical savings or checking accounts," said Robert W. Werner, FinCEN's Director. "It is critical for the health and safety of the U.S. financial system that MSBs obtain and maintain banking services and not be driven underground."
A draft agenda for the April public hearings on the proposed Wal-Mart Bank's application for federal deposit insurance is now available on the FDIC's Web site, www.fdic.gov. The agenda includes the names of parties who are currently scheduled to give oral presentations, as well as the speaking times and the locations where the parties are scheduled to speak. The final agenda will be posted to the FDIC's Web site no later than April 5, 2006. - The first hearing, to be held at the FDIC's Virginia Square Auditorium in Arlington, Virginia, will now be held from 9:00 a.m. to approximately 4:00 p.m. on Monday, April 10, and from 9:00 a.m. to approximately 11:15 a.m. on Tuesday, April 11. - The second hearing, to be held at the Overland Park Convention Center, Overland Park, Kansas, will now be held on one day only – Tuesday, April 25 – from 9:00 a.m. to approximately 4:15 p.m.
During the second half of 2005, OO staff spoke with 791 financial industry representatives through visits and telephone calls, industry-sponsored conferences and FDIC events. Approximately 82 percent reported overall satisfaction with the FDIC's regulatory process, three percent were dissatisfied, and the remaining 15 percent expressed no opinion. The following are examples of comments and suggestions expressed by bankers during outreach activities: Regulations: Of the 218 comments received about regulations affecting banks, 178 involved some degree of dissatisfaction. Of the latter group, 52 percent characterized regulations as burdensome and another 35 percent viewed some regulations as unfair or outdated. The Bank Secrecy Act (BSA) continued to be the subject of greatest concern among bankers, primarily because of the high cost of compliance with what many banker contacts perceived as little benefit. Of the BSA comments, 84 percent were negative. The BSA regulation is almost universally described as "burdensome." Rural community bankers stated that they do not want to be measured by the same gauge used for money center banks. One banker said that BSA procedures seemed like "searching babies at airports." Another banker believed in the spirit of the law, but did not want to be a "watchdog for society." In addition, doing business with money services businesses continued to provide challenges, but "zero tolerance" of filing errors appeared to be less of a concern.
For many years, GAO has reported that ineffective information security is a widespread problem that has potentially devastating consequences. in its reports to COngress since 1997, GAO has identified information security as a governmentwide high-risk issue - most recently in January 2005.
Concerned with accounts of attacks on commercial systems via the Internet and reports of significant weaknesses in federal computer systems that make them vulnerable to attack, Congress passed the Federal Information Security Management Act of 2002 (FISMA), which permanently authorized and strengthened the federal information security program, evaluation, and reporting requirements established for federal agencies.
Purpose The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and Office of Thrift Supervision are issuing this interagency advisory to financial institutions and their technology service providers. This advisory is intended to raise awareness regarding the threat of a pandemic influenza outbreak and its potential impact on the delivery of critical financial services. It further advises financial institutions and their service providers to consider this and similar threats in their event response and contingency strategies. This issuance discusses the National Strategy for Pandemic Influenza (National Strategy) and the roles and responsibilities it outlines for financial institutions.
The Federal Deposit Insurance Corporation (FDIC) Board of Directors today approved final rules that will raise the deposit insurance coverage on certain retirement accounts at a bank or savings institution to $250,000 from $100,000. The increase, the result of a new law boosting federal deposit insurance coverage for the first time in more than 25 years, will become effective on April 1. The basic insurance coverage for other deposit accounts, however, will remain at $100,000. "The increase in deposit insurance coverage on certain retirement accounts is a significant change," said Martin J. Gruenberg, Acting Chairman of the FDIC. "The FDIC is committed to helping depositors understand clearly the change that has been made and how it will affect the deposit insurance coverage for which they are eligible."
National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood joined Federal Deposit Insurance Corporation (FDIC) Acting Chairman Martin Gruenberg today for an update to consumer organizations and financial services associations regarding the impending changes to federal deposit insurance coverage. “I was pleased that the NCUA and FDIC joined together for such an important forum to discuss the implementation of deposit insurance changes recently signed into law by President Bush,” said Vice Chairman Hood. “It is vital that credit unions have accurate information available for members. We look forward to the assistance of those within the credit union system and consumer affairs in outreach efforts concerning enhancements to deposit insurance.”
Sites have been selected for the FDIC's April public hearings on the proposed Wal-Mart Bank's application for federal deposit insurance, the FDIC announced today. The first hearing, scheduled for Monday and Tuesday, April 10 and 11, will be held at the FDIC's Virginia Square auditorium (Building C), located at 3501 Fairfax Drive, Arlington, Virginia. The second hearing, scheduled for Tuesday and Wednesday, April 25 and 26, will be held at the Overland Park Convention Center (Courtyard Rooms four and five), 6000 College Boulevard, Overland Park, Kansas. The hearings in both locations are scheduled to begin at 9:00 a.m. and conclude no later than 5:30 p.m. each day. More detailed information relating to the hearing locations can be found on the FDIC's Web site, www.fdic.gov. Parties making oral presentations as well as those wishing to attend the hearings should plan to arrive early. Admission for those not making oral presentations will be based on a first-come, first-served basis as space permits. Parties attending the hearings will be subject to security screening.
"The President's signature today on the renewal of the U.S.A. Patriot Act enables us to continue to fight the war on terror with the tools necessary to do the job. "At the Treasury Department, the Patriot Act has significantly advanced the financial war on terror. While hatred fuels the terrorist agenda, it is money that makes it possible for them to carry out their ruthless acts. "The Patriot Act has greatly advanced the ability of the Treasury, working with businesses and the people of this great nation, to restrict the flow of terrorist blood money. Its renewal is good news for Americans, bad news for those who seek to harm us."
Comptroller of the Currency John C. Dugan applauded the work of independent banks and said America needs community institutions that are strong enough to help out in times of emergency, but also there in ordinary times to help people achieve their lives' dreams. In a taped speech to the annual convention of the Independent Community Banks of America, Mr. Dugan said that independent banks are at the heart of the OCC’s mission, noting that 90 percent of the institutions supervised by the agency have less than $1 billion in assets. The Comptroller added that it is vital that regulators strike a balance that preserves safety and soundness without sapping the industry’s strength. “Sensible regulation is essential to the industry’s safety and soundness,” he said. “But we have to be careful that the sheer volume of our regulations doesn’t overwhelm you, stifling initiative and chipping away at your ability to compete. Preserving that balance is a challenge I take very seriously.”
The Treasury Department this week launched the first meeting of the newly created Consumer Financial Protection Forum which was established to focus exclusively on financial consumer concerns and to provide a permanent forum for communication between federal and state regulators on these issues. The Forum is chaired by the Treasury Department and participants include the federal banking and credit union regulators, the Federal Trade Commission, and representatives from state supervisory organizations. "The strength of our economy and financial services sector depends on confidence in the system on the part of consumers," said Assistant Secretary for Financial Institutions Emil Henry, Jr. "The goal of the Forum is straightforward - bring federal and state regulators together to share information and discuss ways to address evidence of consumer financial abuse by financial institutions."
The Federal Deposit Insurance Corporation (FDIC) today announced that the Corporation has received its fourteenth consecutive set of unqualified audit opinions on the financial statements of the three funds that it manages. Comprehensive income (net income plus current period unrealized gains/losses on available-for-sale (AFS) securities) for the Bank Insurance Fund (BIF) decreased 32% to $680 million in 2005 from $1.004 billion in 2004. For the second consecutive year, comprehensive income has declined as a result of several factors. The year-over-year reduction of $324 million was primarily due to an increase in unrealized losses on AFS securities of $279 million, lower recoveries of prior years' provisions for insurance losses of $143 million, an increase in operating expenses of $25 million, and a decrease in assessment revenues of $43 million, offset by an increase of $161 million in interest revenue on U.S. Treasury obligations. As of December 31, 2005, BIF's fund balance was $35.5 billion (including $298 million in net unrealized gains on AFS securities), up from $34.8 billion at year-end 2004.
Summary: The FDIC is pleased to announce that its 2005 Annual Report is now available on the FDIC's Web site. Highlights: - The Annual Report provides an overview of the FDIC's activities and operations during the year. - It also reports on the FDIC's success in achieving the goals established for fiscal year 2005.
This document describes the mission, goals, and performance results of the Office of Thrift Supervision. It also provides OTS’s FY 2006 approved budget and strategies. Although OTS receives no appropriated funds from Congress, OTS provided this budget information to the Department of the Treasury for inclusion in the Justification for Appropriations and Performance Plans that Treasury submitted to Congress on February 6, 2006. OTS Strategic Priorities OTS’s FY 2006 budget totals $215.5 million. The budget directly supports OTS’s strategic and performance goals that provide for proactive supervision of the industry, reduced regulatory burden and improved credit availability. The FY 2006 budget enables OTS to continue tailoring supervisory examinations to the risk profile of the institutions, while effectively allocating resources to oversee and assess the safety and soundness and consumer compliance record of the thrift industry.
As Director of the Financial Crimes Enforcement Network, this nation’s financial intelligence unit, I am proud that our skilled professionals are at the forefront of this country’s efforts to protect our financial system from abuse by criminals and terrorist financiers. Under authorities granted to us by the Bank Secrecy Act and the USA PATRIOT Act, our role is to prevent and detect terrorist financing, money laundering, and other financial crime. These are times of rapid change in the financial arena. Internet-based financial activity, changing methodologies for money laundering and terrorist financing, and the sheer number and variety of worldwide financial transactions make tracking illicit financial activity increasingly challenging. In the face of these developments, the Financial Crimes Enforcement Network needs to become more sophisticated, agile, and creative in assessing and responding to financial system risks. Approaches that addressed the needs of the past must give way to policies, processes, and analytical techniques that meet present and future realities.
This guidance concerns Bank Secrecy Act requirements under current regulations for the initial registration, and registration renewal, of money services businesses. It also describes policies regarding de-registration and ceasing to be a money services business. Concurrent with the issuance of this guidance, the Financial Crimes Enforcement Network is undertaking a broader review of the regulatory framework for money services businesses. This review likely will result in further changes and additional regulatory guidance being issued, as appropriate. In the meantime, pending review of the registration regulations, the following guidance is offered to provide clarity concerning registration and de-registration of money services businesses.
The Financial Crimes Enforcement Network (FinCEN) has released the attached guidance to clarify the date on which certain U.S. financial institutions must complete recertifications to comply with regulations relating to correspondent accounts established, maintained, administered or managed in the U.S. for, or on behalf of, foreign financial institutions. Highlights: - On February 3, 2006, FinCEN issued guidance to clarify the date that U.S. financial institutions must complete recertifications to comply with regulations relating to correspondent accounts established, maintained, administered or managed in the U.S. for, or on behalf of, foreign financial institutions. - The Bank Secrecy Act prohibits banking institutions from establishing, maintaining, administering or managing a correspondent account in the U.S. for, or on behalf of, foreign banks that do not have a physical presence in any country. The regulations allow covered financial institutions to receive a "safe harbor" for compliance if they use the certification process.
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported net income of $134.2 billion in 2005, surpassing the previous record by $11.8 billion (9.6 percent) set in 2004 and representing the fifth consecutive year that industry earnings reached a new high. Increased net interest income (stemming from strong growth in loans) and a boost in noninterest income at larger institutions (particularly from trading and servicing activities) were the main factors contributing to the latest annual record. The industry's net income of $32.9 billion in the fourth quarter of 2005, while the fourth highest ever and a $1.7 billion (5.4 percent) increase over the same quarter a year ago, marked a decline of $1.7 billion (5.0 percent) from the record earnings of the third quarter of 2005. The average return on assets (ROA) fell to 1.22 percent in the fourth quarter, down from 1.25 percent a year ago. In a related development, the FDIC also noted that this past weekend the agency reached a milestone for the longest number of days during which it did not provide assistance to a failed or failing institution. The previous record of 609 days spanned between January 1945 and September 1946. “This historic milestone speaks to the favorable economic conditions we have recently experienced as well as to the efforts of bankers and regulators to manage risks in the industry," Gruenberg said.
Over the past two decades, systematic misappropriation of intellectual property has become a major concern to American businesses, artists, and authors. As the modern economy grows increasingly reliant on intellectual property, the proliferation of computers and computer networks has made the illegal reproduction and distribution of protected material much easier to accomplish. Congress has enacted workable criminal laws prohibiting such misappropriation. This manual begins in Chapter I with an overview of the legal protection of intellectual property. It first provides general background on intellectual property and the legal regimes employed to encourage its creation. It then explains the criminal law's role in addressing intellectual property misappropriation with a special focus on the recent Intellectual Property Rights Initiative.
In the last decade, computers and the Internet have entered the mainstream of American life. Millions of Americans spend several hours every day in front of computers, where they send and receive e-mail, surf the Web, maintain databases, and participate in countless other activities. Unfortunately, those who commit crime have not missed the computer revolution. An increasing number of criminals use pagers, cellular phones, laptop computers and network servers in the course of committing their crimes. In some cases, computers provide the means of committing crime. For example, the Internet can be used to deliver a death threat via e-mail; to launch hacker attacks against a vulnerable computer network; to disseminate computer viruses; or to transmit images of child pornography. In other cases, computers merely serve as convenient storage devices for evidence of crime. For example, a drug kingpin might keep a list of who owes him money in a file stored in his desktop computer at home, or a money laundering operation might retain false financial records in a file on a network server.
The Federal Reserve Board on Monday announced the approval of a final rule that expands the definition of a small bank holding company (BHC) under the Board's Small Bank Holding Company Policy Statement and the Board's risk-based and leverage capital guidelines for bank holding companies. The policy statement facilitates the transfer of ownership of small community banks by permitting debt levels at small BHCs that are higher than what would typically be permitted for larger BHCs. Because small BHCs may, consistent with the policy statement, operate at a level of leverage that generally is inconsistent with the capital guidelines, the capital guidelines provide an exemption for small BHCs.
I meet and work with financial leaders every day, but I can easily say that Credit Unions have the most heart. Your motto rings true to your culture: "not for charity, not for profit, but for service." You do good work: loans to small business, home mortgages, financial education and working in partnership with the government to fight the financial war on terror. You were wonderful in your response to hurricane Katrina, in a time when American's helping each other meant so very much. Each one of these efforts is critical to our country's economic health and strength, and I applaud you for doing good while you do business.
The Federal Deposit Insurance Corporation (FDIC) has scheduled public hearings in April in the Washington, D.C. area, and the Kansas City, Missouri, metro area on the application for federal deposit insurance filed on behalf of the proposed Wal-Mart Bank. On July 19, 2005, an application for federal deposit insurance was submitted to the FDIC by Wal-Mart Bank, a proposed Industrial Loan Company (ILC) headquartered in Salt Lake City, Utah. ILCs are state banks that are supervised and insured by the FDIC. There has been considerable public interest in the application. The FDIC believes that public participation will provide valuable insight into the issues presented by the application and will serve the public interest. The FDIC is interested in obtaining the views of the general public, the financial services industry and other industry trade groups, public interest groups, state financial institution supervisors, other state authorities, and any other interested parties.
The FDIC, along with the Federal Reserve Board and the Office of the Comptroller of the Currency, has issued the attached joint final rule clarifying the capital treatment for securities borrowing transactions for banks and bank holding companies that are subject to the Market Risk Capital Rule. Securities borrowing transactions are generally used in conjunction with short sales, securities fails (securities sold but not made available for delivery on the settlement date), and option and arbitrage positions. The final rule takes effect on February 22, 2006.
The nation’s federally insured credit unions reported strong loan growth as delinquencies remained low according to fourth quarter 2005 Call Report data submitted by the nation’s 8,695 federally insured credit unions. During 2005, the loan to share ratio climbed to 79.4 percent as loans grew nearly $44 billion, delinquencies remained well below 1 percent. “The strong pace of loan growth is an excellent indication that credit unions are fulfilling their mission of being the source of affordable loans for their members,” said Chairman JoAnn Johnson. “What’s more, net worth continues to grow at a consistent, healthy level, which indicates credit unions are effectively managing their balance sheets.”
U.S. Treasury Secretary John W. Snow today named Robert W. Werner as the new Director of the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. Werner currently serves as the Director of the Treasury's Office of Foreign Assets Control (OFAC). "OFAC and FinCEN are two premier agencies at the heart of an unparalleled campaign to combat terrorist financing and financial crime across the globe. Fortunately, the Treasury will continue to benefit from Bob's talents and vision, as he takes over FinCEN's critical efforts to safeguard the financial sector from illicit activity," said Snow.
"Bob's expertise and steady leadership brought OFAC into the 21st Century by enhancing the Office's administration of economic and trade-based sanctions and highlighting its potential to address a wide range of threats to our national and economic security," Snow continued. "Under Bob's leadership, OFAC has greatly strengthened its relationships with the financial sector and other U.S. Government agencies, as well as with foreign counterparts around the world."
The National Credit Union Administration (NCUA) requests public comment on whether and how to modify its Supervisory Committee audit rules to require credit unions to obtain an “attestation on internal controls” in connection with their annual audits; to identify and impose assessment and attestation standards for such engagements; to impose minimum qualifications for Supervisory Committee members; and to identify and impose a standard for the independence required of State-licensed, compensated auditors. In 1998, the Credit Union Membership Access Act (“CUMMA”), Pub. L. No. 105¬219, 112 Stat. 913 (1998), amended the Federal Credit Union Act to require credit unions having assets of $10 million or more to follow generally accepted accounting principles (“GAAP”) in all reports and statements filed with the NCUA Board. 12 U.S.C. 1782(a)(6)(C). CUMMA further required credit unions having assets of $500 million or more to obtain an annual independent audit of its financial statements (“financial statement audit”) performed in accordance with generally accepted auditing standards (“GAAS”) by an independent certified public accountant or public accountant licensed by the appropriate State or jurisdiction. 12 U.S.C. 1782(a)(6)(D).
Welcome to the fifth issue of the The SAR Activity Review - By the Numbers, a compilation of statistitcal data gathered from Suspicious Activity Report forms submitted by depository institutions since April 1996, casinos and card clubs since August 1996, certain money services businesses since January 2002, and certain segments of the securities and futures industries since January 2003. By the Numbers serves as a companion piece to the publication of The SAR Activity Review - Trends, Tips & Issues, which provides inforamtion about the preparation, use, and utility of Suspicious Activity Reports.
By the Numbers is produced twice a year to cover two filing periods: January 1 to June 30 and July 1 to December 31. The statistical data from the filing periods is available for publication on the FinCEN website after the end of each period, usually in the spring and fall. The last issue of By the Numbers was published in May 2005 and may be accessed through the following link:
Summary: The federal financial institution regulatory agencies have issued the attached final interagency advisory on the unsafe and unsound use of limitation of liability provisions in external audit engagement letters. Highlights: - The final advisory applies to all audits of financial institutions, regardless of the size of the financial institution, whether the financial institution is public or not, and whether the audits are required or voluntary.
The Office of the Comptroller of the Currency recently announced its 2006 workshop schedule for national community bank directors. The workshops provide practical information that expands bank directors' skills and understanding of issues facing their banks. This year's workshops cover risk assessment, credit risk, and compliance risk. Comptroller of the Currency John C. Dugan said the response to past workshops has been enthusiastic. "Hundreds of directors have attended our workshops, and they have consistently given them high marks," said Mr. Dugan.
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