As we finish off this week's publications, we close our game focused theme as well with Operation. Back in 1965, Hasbro introduced us all to a patient known as "Cavity Sam" who came with a red rubber-coated light bulb for a nose. In addition to that problem, he also had 12 medical ailments, including: Ankle Bone Connected to the Knee Bone, a Wish Bone, a Wrenched Ankle, Adam's Apple and a Broken Heart to name a few. This poor guy was in terrible shape and if the player wasn't careful in operating on the patient, they would be zapped by an electrical charge running through the metal board of the game. We don't know about you, but operating on someone at the risk of getting zapped, just did not seem to go together, so the stress was very high every time it was our turn. Many community banks we talk to are operating in their own electrically-charged environment these days, so we provide some information highlighting regulatory focus items to assist you.
We bank with a quick analysis on new regulatory issues, guidance and rulings that have come out since the beginning of the year. Since community bankers will have to incorporate these into business practices, we thought you might like to know. We started at the FDIC website and reviewed all advisories to bankers regarding the latest changes in policies or procedures. Of the 53 released so far, we then eliminated any related to regulatory relief in regions impacted by severe weather or the Gulf oil spill. That reduced the list down to 33 new advisories, which we have placed into the following major categories:
Proposed Rules Coming Soon (4): Regulatory Capital Standard - defining standards of creditworthiness, other than credit ratings, to apply to risk-based capital rules. Large Bank Contingent Resolution Plan - banks above $10B have to submit a plan that would show how the institution could be separated from its parent structure as needed to be wound down or resolved in an orderly fashion. Assessments - revises the risk-based assessment system for all large insured depository institutions; and alters the initial and total base assessment rates for all insured depository institutions. Compensation - modifies the deposit insurance assessment for institutions based on risks posed by certain employee compensation programs.
Seeking Comments (1): Overdraft Payment Programs - banks will have to tighten up oversight and management of overdraft programs, to include a broader focus on product over-use that could harm consumers. Increased disclosures, notices, opting in, honoring customer requests promptly to decline coverage, monitoring accounts, limiting customer use of high cost credit, daily limits on fees and processing priority all should be significantly strengthened.
Examination Manual Revisions (2): BSA/AML and the IT examination manuals have been updated. Bankers should look here to find out how the agencies are guiding examiners as to what they should be looking for when examining banks. Community banks should make sure policies, procedures and processes have been updated appropriately in advance. Remote deposit capture, ACH, merchant card, debit cards, stored value cards, account-to-account services, contactless payment devices and remotely created checks have all been updated.
We have run out of space, so we will cover the remaining categories of New Regulations/Guidance (10), Other (11) and Alerts/Warnings (5) next week. In the meantime, enjoy the banking game as you try not to get zapped.