Regulatory
TCH Association comments on regulatory matters and proposals to impact decisions and advance policies that are critical to systemically-important commercial banks.
TCH Believes FASB Proposal on Classification and Measurement Does not Improve Existing U.S. GAAP
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May 15, 2013 --
The Clearing House Association submitted a comment letter to the FASB on its classification and measurement proposal, recommending that the Board not proceed with the proposal and instead maintain the existing U.S. accounting model. While TCH supports classifying financial instruments based on the framework of an entity’s business model as well as the cash flow characteristics of the financial instruments, TCH believes the proposal does not improve existing U.S. GAAP. However, a few of TCH’s FBO Owners generally support the proposal, as it would more closely align U.S. GAAP with the proposed IASB model.
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TCH Urges International Coordination and Cooperation when Regulating FBOs
Apr 30, 2013 --
The Clearing House Association, joined by several trade association partners, submitted a comment letter on Dodd-Frank Sections 165/166 proposal for foreign bank organizations (FBOs).TCH letter focuses on concerns with the basic policy approach to host-country regulation of international banks. The letter recommends, among other things, that international bank regulation be based on a general policy of international regulatory cooperation while avoiding a ring-fenced, balkanized approach to FBO regulation in the United States. Furthermore, the Board should adopt a more flexible approach for global institutions based on deference to effective home-country regulators and regulatory schemes.
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TCH Requests Extension of OCC Lending Limits Compliance Date
Apr 25, 2013 --
The Clearing House Association along with two other trade associations submitted a letter to the OCC requesting an extension of the compliance date for the lending limits rule. The letter requests a delay until the first day of the quarter that begins after the third month following the date the final rule is published (e.g., if the final rule is published before the end of June, the compliance date would be October 1). This approach takes into account the Call Report periods and should give banks enough time after the final rule is issued to plan accordingly.
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TCH Comments on Fed’s Proposal to Establish Accounts for Financial Market Utilities
Apr 25, 2013 --
The Clearing House Association submitted a comment letter to the FRB on its proposal to amend Regulation HH, which would authorize a Federal Reserve Bank to establish an account for a financial market utility (FMU) that has been designated as systemically important by the FSOC. In the letter TCH suggests that the Board’s proposal should be revised to address the following issues: (i) the proposed sharing of confidential supervisory information about FMUs with the business operations of the FRBs is unacceptable, (ii) the Board should declare that any accounts established under Regulation HH are covered by the safe harbor of 12 U.S.C. § 4405, and (iii) Reserve Bank accounts should not be mandatory for FMUs. TCH also noted that the provisions of proposed Regulation HH regarding the payment of interest appear reasonable.
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TCH Comments on Proposed Remittance Transfer Reporting
Apr 22, 2013 --
The Clearing House Association joined by four other trade associations submitted a comment letter to the FRB, FDIC and OCC on their proposal to revise the Call Report and add a new Item 16 to Schedule RC-M. Item 16 would assist the Agencies with their supervisory responsibilities related to the new consumer protection regime created by Section 1073 of Dodd Frank Act and provide metrics by which the Agencies and the CFPB can gauge the impact of the Rule on the remittance transfer market. In the letter TCH requests that: (i) the remittance transfer reporting be conducted through an annual or semi-annual survey of all remittance transfer providers rather than through the Call Report, (ii) the comment period to respond to the proposed volume, value, and Temporary Exemption reporting in Item 16(e), be extended until at least two quarters after the effective date of the final Rule, (iii) institutions be required to report only remittance transfers for which they are the remittance transfer provider, and certain other changes.
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TCH Recommends Different Approach to FDIC’s Interpretation of “Deposit Liability”
Apr 22, 2013 --
The Clearing House Association filed a comment letter on the FDIC’s proposed rule to address the depositor preference issue. The letter asserts that the “dual payability” approach taken in the proposed rule creates significant operational and legal issues, and that a better approach would be for the FDIC to issue a formal interpretation that the term “deposit liability” includes foreign branch deposits regardless of whether they are dually payable. This better, and relatively simple approach, would allow the FDIC to achieve all of its policy objectives and could be adopted alone or as a supplement to the approach taken in the proposed rule.
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Oxford Economics Study Confirms Negative Impact of Higher Bank Capital Levels on Economy, Job Growth
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Apr 10, 2013 --
The Clearing House Association today released a study by Oxford Economics that reaffirms the expert consensus that increased capital and liquidity requirements on banks will have a negative impact on U.S. economic growth and future employment.
The study analyzed five of the most prominently and frequently cited capital cost studies using the Oxford Global Economic Model – the most widely used commercial international economic forecasting and scenario model in the world. The results demonstrated that while there is a wide range of conclusions on the severity of the impact of increased capital and liquidity requirements, all the studies conclude that there will be an economic and job cost to the U.S. economy.
The findings clearly demonstrate the need for any regulatory program to be carefully structured to avoid any unintended consequences to economic growth and employment.
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TCH Urges OCC to Forgo Expansion of MLR Report Collection to Midsize and Large Banks
Apr 8, 2013 --
The Clearing House Association filed a comment letter with the OCC on its proposal to expand to all national banks the current reporting requirement for small national banks to file annual Money Laundering Risk (MLR) reports on their high-risk products, services, customers, and geographies and use this information to determine how to allocate its examination resources. TCH urged the OCC to forego the proposal as TCH does not believe that the benefits of the proposal would outweigh its negative effects.
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TCH Requests Clarifications to the Country Exposure Report Proposals
Apr 1, 2013 --
The Clearing House Association submitted a joint comment letter to the U.S. banking agencies responding to the proposed revisions to the Instructions for the Preparation of the Country Exposure Report (the FFIEC 009 and 009a). While the letter generally supports the FFIEC’s efforts, TCH specifically requests a number of clarifications to the proposal to provide more accurate, consistent and comparable reporting. In view of the requested clarifications and volume and granularity of other changes included in the proposal, TCH requests a delay in the effective date of the proposal for at least 90 days to September 30, 2013.
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Vanquishing TBTF: Rhetoric Versus Reality
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Mar 26, 2013 --
Systemic risk and TBTF have been the subject of intense debate on Main Street, Wall Street, and in the halls of Congress. At a March 26th event at Boston University, TCH Association President Paul Saltzman presented TCH’s analysis on the rhetoric and misperceptions surrounding TBTF and highlight the various reforms in place to end TBTF including Title II, enhanced capital and liquidity standards, and improved ex ante macro-prudential tools to identify and monitor potential sources of systemic risk.
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TCH Urges FASB to Extend Comment Deadline
Mar 22, 2013 --
The Clearing House Association submitted a request to the FASB to extend the comment period on the FASB credit loss exposure draft to coincide with the end of the July 5 comment period for the credit loss proposal issued by the IASB. TCH believes this would allow for a more in-depth evaluation of the implications of the two proposals.
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TCH Comments on FR Y-15 Disclosure
Mar 15, 2013 --
The Clearing House Association joined the ABA in submitting a supplemental comment letter to the FRB on the FR Y-15. The issue of primary concern in the supplemental letter relates to the requirement of public disclosure of components of high quality liquid assets, the numerator in the LCR. The letter requests that the Fed either remove the LCR line items from the FR Y-15, or alternatively provide confidential treatment to the FR Y-15, at least until the LCR is finalized and fully implemented in the U.S. TCH previously commented on the proposed FR Y-15 on October 19, 2012 as part of a joint trade comment letter.
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Financial Industry Addresses Alleged Large Bank Subsidy in Policy Brief
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Mar 11, 2013 --
The Clearing House Association joined fellow trade associations in a policy brief in response to questionable assertions of a "taxpayer subsidy" to large banks. The policy brief states that the recent estimation that large banking companies enjoy a subsidy worth $83 billion is based on a flawed methodology, and on the extrapolation of stale and unreliable financial market data collected before passage of the Dodd-Frank Act. Furthermore, several more recent studies indicate that, since the passage of Dodd-Frank, any cost of funding advantage has been dramatically reduced or even eliminated.
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TCH Comments on Proposed Data Collection Schedule Revisions
Feb 19, 2013 --
The Clearing House Association submitted a joint trade comment letter to the FRB on the revisions to the proposed annual, quarterly, and monthly data schedules. The associations generally support the revisions to the proposed schedules but have concerns with several components of the schedules. The letter addresses broader concerns regarding the data collection process and specific problems with the schedules and worksheets, including the requirements for extensive supporting documentation to be filed in connection with the mid-year company-run stress test.
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TCH Releases Title II Resolution Simulation Exercise Materials
Feb 11, 2013 --
The Simulation exercise - which took place on November 8 and 9, 2012, and was attended by over 160 industry leaders, former regulators and legal experts - simulated the failure of a large U.S.-based global banking organization and its resolution under the Title II single-point-of-entry approach.
To obtain a copy of the documents used in the simulation exercise, please contact David.Helene@theclearinghouse.org.
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TCH Comments on CFTC’s Swap Regulatory Regime Proposal
Feb 6, 2013 --
The Clearing House Association, joined by several trade association partners, submitted a comment letter to the CFTC regarding its Exemptive Order on compliance with certain cross-border swaps provisions. The letter provides detailed commentary on the Commission’s specific proposals in the Further Proposed Guidance and reiterates the previous comments made in the industry comment letters filed in August, particularly regarding the definition of “U.S. Person.” The letter also notes that the trade associations do not support the proposed clarifications to two prongs of the proposed “U.S. Person” definition and the proposed alternative interpretation of the aggregation requirement, which requires aggregation of swap transactions of non-U.S. persons with U.S. affiliates.
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TCH Requests Extension of Comment Deadline for Foreign Bank Rules
Jan 31, 2013 --
The Clearing House Association along with five other trade associations filed a letter with the FRB urging the Board to extend the deadline for comments on its proposed rule implementing the enhanced prudential standards and early remediation requirements mandated by Sections 165 and 166 of Dodd-Frank, for foreign banking organizations and foreign nonbank financial companies. As a result of the tremendous breadth, complexity, potential interrelationships and importance of the proposed rule the trade associations asked the Board to extend the comment period for 60 days, from March 31 to May 30. The associations are concerned that the existing deadline for comments does not provide sufficient time to perform the level of analysis that this proposal merits, or to achieve an adequate understanding of the implications and potential consequences of the proposed rules.
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TCH Suggests Further Modifications to Remittance Transfer Rule
Jan 30, 2013 --
The Clearing House Association submitted a comment letter, joined by six other trade associations, responding to the CFPB’s proposal to revise the remittance transfer rule. The letter suggests that the rule should: (i) eliminate the requirement to disclose recipient institution fees or replace it with a “may apply” statement, (ii) replace the requirement to disclose estimated foreign tax amounts with a “may apply” statement, and (iii) exclude from the definition of “error” any delay, extra cost, or loss of funds that results from a sender’s incorrect instructions, if the provider has correctly executed those instructions. The letter also requests that if the Bureau does not adopt the industry’s suggested changes, the final rule become effective in 180 days, rather than the proposed 90 days, after release.
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TCH Releases Title II OLA Resolution Simulation Report
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Jan 17, 2013 --
The Clearing House Association (TCH) today released a report on TCH’s recently-concluded Title II OLA-Resolution Simulation exercise. The Simulation exercise – which took place on November 8 and 9, 2012 and was attended by over 160 industry leaders, former regulators and legal experts – simulated the failure of a large U.S.-based global banking organization and its resolution under the Title II single-point-of-entry approach. The report released today details what those who participated in the Simulation Exercise witnessed firsthand – which is that a single-point-of-entry private sector recapitalization can resolve a large, complex financial institution in a manner that is orderly and which preserves financial stability and fully protects taxpayers from loss.
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TCH Releases White Paper on Title II and Ending Too-Big-to-Fail
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Jan 17, 2013 --
The Clearing House Association (TCH) today released a white paper detailing how Title II and the single-point-of-entry approach can be used to resolve a large, complex financial institution. The white paper provides a detailed analysis of the workability and benefits of a Title II single-point-of-entry approach. The paper argues that Title II provides regulators with an important safety valve to use in the event that a large, complex financial institution fails and ordinary resolution frameworks prove inadequate to protect financial stability. The paper asserts that Title II effectively ends the perceived “Too-Big-To-Fail” problem in the United States by requiring that shareholders lose their entire investment, creditors bear all the remaining losses, culpable management is terminated and no cost is imposed on the taxpayer.
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TCH Supports Temporary Delay of Remittance Transfer Rule
Jan 15, 2013 --
The Clearing House submitted a comment letter to the CFPB, supporting the temporary delay of the remittance transfer rule and thanking the CFPB for its efforts to address the industry’s concerns. The Associations also urged the CFPB to allow the industry the time needed for an orderly transition once the new final rule is issued.
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TCH Urges a Delay in Upcoming Changes to Social Security ACH Payments Processing
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Dec 20, 2012 --
The Clearing House submitted a letter to the Treasury Department requesting delay of certain technical changes to social security ACH payments beginning in January. Specifically TCH requested that the changes be delayed until March 1 to afford banks and software vendors time to make coding changes so that there would be no disruption to social security recipients.
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TCH Releases White Paper Focused on Central Counterparty Risk
Dec 18, 2012 --
The Clearing House Association’s white paper Central Counterparties: Recommendations to Promote Financial Stability and Resilience, identifies the unique roles that central counterparties (CCPs) can play in the derivatives market and in the promotion of financial stability. The Association believes that, if particular care is not given to their structure, operation, and regulation, these institutions could threaten the stability of the financial system during periods of market stress by imposing severe capital and liquidity strains on the market generally and specifically on their clearing members, which provide key elements of the credit support infrastructure that underpins the financial integrity of CCPs. The stated purpose of the paper is to provide guidance for the private and public sector designed to avoid arrangements that, under adverse circumstances, could frustrate shared objectives for the promotion of financial stability and resilience during periods of market stress.
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TCH Clarifies Members’ Position on Lending Limits Rule
Dec 14, 2012 --
The Clearing House Association submitted a joint letter with ABA to the OCC regarding its interim final rule proposal to amend lending limits rule to include credit exposures arising from derivative and securities financing transactions. The letter clarifies the Member Banks’ positions on the methods for measuring securities financing transactions contained in the rule, expressed in the joint trades’ August 6 letter. The clarification letter argues that when measuring securities financing transactions, banks should be allowed to use the Basel Collateral Haircut Approach.
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TCH Study: U.S. Banking Industry Significantly More Liquid than at the End of 2010
Dec 14, 2012 --
The Clearing House Association released an update of its study on the Basel III Liquidity Coverage Ratio (LCR), which finds that the U.S. banking industry is making significant progress in meeting the enhanced Basel III LCR requirement and now maintains one of the largest liquidity buffers that it has held since the 2008 crisis. The updated study’s findings are based on TCH’s ongoing research on the impact of the LCR on the U.S. banking industry and are derived from proprietary data from eleven TCH owner banks, which account for $9.2 trillion or 53 percent of total U.S. industry assets, based on data available as of Q2 2012.
On January 6 the Group of Governors and Heads of Supervision, which oversees the BCBS, approved a significantly revised version of the Liquidity Coverage Ratio (LCR) and liquidity monitoring tools. The BCBS release expands the pool of assets that qualify as high-quality liquid assets, refines assumed inflow and outflow rates, includes a phase-in period beginning in 2015 with a minimum LCR requirement of 60%, and reaffirms the usability of the stock of liquid assets in periods of stress. The revised LCR incorporates a number of changes related to the recalibration of outflow rates that were recommended by TCH in our 2012 Liquidity Update and our 2011 Liquidity Study, including reductions on the outflow: (i) of certain fully insured retail deposits from 5% to 3%; (ii) of non-operational deposits from 75% to 40%; (iii) of committed liquidity lines to non-financials from 100% to 30%; and (iv) of committed inter-financial (as opposed to inter-bank) liquidity lines from 100% to 40%.
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TCH Comments on CFPB’s Foreign Remittance Transfer Announcement
Dec 13, 2012 --
The Clearing House Association submitted unsolicited comments to CFPB staff in response to the November 27 bulletin that announced the agency’s intent to issue an NPR to address certain issues with the rule. The comments specifically addressed the CFPB’s proposed “published fee schedule” approach to disclosing beneficiary account fees.
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TCH Comments on Agencies’ Basel III Proposed Capital Rules
Oct 22, 2012 --
The Clearing House Association filed a joint trade comment letter with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (the “Agencies”) in response to the Basel III notices of proposed rulemaking. TCH is broadly supportive of U.S. Basel III rules as proposed by the Agencies, but believes some modifications or clarifications will further the objectives expressed in the NPRs. We agree that the Agencies should implement Basel III for U.S. banks in a manner that is consistent with international standards where feasible and commensurate with the actual risk posed to the financial institution. While TCH does not revisit provisions opposed in prior comment letters on which international regulators have already reached agreement, there are limited areas where certain aspects of the NPRs do raise particular substantive concerns for our members. Specifically, we are primarily concerned about elimination of the filter for income/loss reported in accumulated other comprehensive income, the treatment of residential mortgage exposures, the definition of “financial institution,” and the proliferation of capital ratios.
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TCH Assists in International Understanding of the Final Remittance Transfer Rule
Oct 22, 2012 --
The Clearing House Association and the Payment Market Practice Group published a co-authored white paper for the international community regarding Section 1073 and the final rule. The purpose of the paper is to provide information which will enhance the global market’s awareness and understanding of the new regulatory requirements and explain why U.S. providers will need to change the way they handle currency conversions and their need for fee information from their correspondents.
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TCH Comments on Banking Organization Systemic Risk Report
Oct 19, 2012 --
The Clearing House Association filed an industry comment letter with the Fed on the proposed Banking Organization System Risk Report (FR Y-15). The letter requests, among other things, (i) additional information as to the purpose of the information collection, (ii) an exclusion for FBOs, (iii) additional time for companies to submit the requested information, (iv) the removal of the CFO attestation requirement, (v) the Fed to maintain the confidentiality of the data submitted, and (vi) that the initial submission be on a “best efforts” basis.
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TCH Comments on OCC Stress Testing Information Collection Proposal
Oct 15, 2012 --
The Clearing House Association filed a joint trade comment letter with the OCC on its recent Stress Testing Information Collection Proposal. The letter requests (i) transparency on the intended use of the data collected, (ii) that the OCC confirm its Basel III data collection template to those of the other agencies, and (iii) more detailed instructions for the schedules as well as a formal process for clarifying uncertainties.
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TCH Comments on CPSS-IOSCO’s Consultation on Resolution Plans for FMIs
Sep 28, 2012 --
The Clearing House Association filed a comment letter with CPSS and the IOSCO, in response to their Consultative Report on the Recovery and Resolution of Financial Market Infrastructures. TCH urged CPSS-IOSCO to convene expert panels on insolvency law as well as FMI specific operational concerns, and to issue another round of commentary which takes into consideration the pressing concerns included in TCH’s comment letter and the findings from the experts prior to issuing a final proposal.
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TCH Urges FASB to Withdraw Proposed Liquidity and Interest Rate Risk Disclosures
Sep 25, 2012 --
The Clearing House Association submitted a comment letter recommending that the FASB withdraw their proposed disclosures on liquidity and interest rate risk and instead work with the SEC and other regulators to determine a method for public company disclosures that is more consistent with the way banks actually manage such risks and to include any such disclosures in MD&A rather than in footnotes to the financial statements.
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TCH to BCBS: Intraday Liquidity Proposal Lacks Clarity
Sep 14, 2012 --
The Clearing House Association filed an industry comment letter with the Basel Committee on its recent consultative document on monitoring indicators for intraday liquidity management. The letter raised concerns over whether or not the use of the proposed indicators for monitoring intraday liquidity will allow supervisors to have a complete understanding of how banks manage intraday liquidity including peak flows and govern the overall payments process. Additionally, the industry believes that the current proposal lacks clarity with respect to purpose, scope, cost and individual measurements.
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TCH Comments on CFPB’s All-in Mortgage-Finance Charge Proposal
Sep 7, 2012 --
The Clearing House Association filed a comment letter in response to the CFPB’s NPR on integrating mortgage disclosures under RESPA and TILA. The letter states that an “all-in” finance charge is inappropriate at this time without further study of its interaction with other mortgage laws, such as HOEPA, and supports the proposed delay in the implementation of certain disclosure requirements established by Title XIV of Dodd-Frank. The letter also recommends that the CFPB carefully consider the interplay and sequencing of this proposal with other pending rulemakings and publish its expected rulemaking schedule for comment. TCH will be following up with the CFPB after the recently-extended comment period ends.
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TCH Comments on Capital Assessments and Stress Testing Information Collection Proposal
Sep 4, 2012 --
The Clearing House Association filed an industry comment letter with the Federal Reserve on its recent proposal addressing information collection related to capital assessments and stress testing (FR Y-14). The letter raised certain aspects of the proposal that cause the industry concern including the appropriate set of rules that should be used for Basel III projections for the upcoming comprehensive capital analysis and review (“CCAR”), the new chief financial officer attestation requirement, confidentiality, and legal reserves. Additionally, the industry raised a significant number of specific areas where additional clarification was needed in order to provide meaningful and accurate data submissions.The Fed finalized its proposed revision to its FR Y-14 series, effective September 30, 2012. After considering the issues raised in TCH’s comment letter, the Fed accepted each of TCH's key recommendations and suggestions. Specifically, the new rules do not include a CFO attestation requirement; require banks to prepare Basel III estimates on the basis of the U.S. NPRs rather than the BIS rules used in CCAR 2012; permit banks to exclude a particular data item from the schedules if a foreign law prohibits the bank from providing such information (subject to legal analysis); delay implementation of the MSR schedule; and allow first-time respondents extended filing deadlines. With respect to the disclosure of litigation reserves in the PPNR projections and quarterly worksheet, the Fed has adopted the industry’s preferred alternative, Method 4, which would reduce the possibility that an outside observer could identify the existence and value of reserves related to a particular event.
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TCH Urges CFTC to Clarify Its Guidance on Cross-Border Application of Certain Swaps Provisions
Aug 27, 2012 --
The Clearing House Association filed a comment letter in response to the CFTC’s proposed interpretive guidance regarding the cross-border application of the swaps provisions of Title VII of Dodd-Frank. TCH is concerned that, as a general matter, the proposed guidance may exceed the limits imposed by Dodd-Frank. More specifically, TCH is concerned that the definition of “U.S. Person” would include a non-U.S. branch or agency of a U.S.-based bank, but not a non-U.S.-based subsidiary. The guidance may in effect dictate the organizational structure of firms in a way that ignores international recognition of efficient bank structures, consolidated supervision of financial holding companies, and enterprise-wide risk management requirements. The guidance could indeed result in additional and new systemic risks and increase capital costs for banks as a result of the need to restructure in order to remain on a level-playing field with other U.S. and non-U.S. institutions.
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TCH Comments to FinCEN on FBAR Reporting Requirements
Aug 17, 2012 --
The Clearing House Association submitted an unsolicited joint trades letter to FinCEN urging the agency to reinstitute a permanent exception to the FBAR filing requirement for employees who have signature authority over employment-related accounts (including accounts of their employer’s affiliates) in which they have no financial interest, in order to avoid significant confusion and uncertainty during the 2012 individual income tax filing season.
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TCH Comments on Exemptive Order Regarding Delayed Compliance with Certain Swap Regulations
Aug 13, 2012 --
The Clearing House Association filed a comment letter to address the CFTC’s proposed exemptive order regarding delayed compliance with certain swap regulations. In the letter, TCH urges the CFTC to revise the proposed order to: (i) provide a complete exemption from the application of rules or concepts that are still subject to comment or significant ambiguities, (ii) treat swap dealers equally and consistently so that the relief itself does not create an unlevel playing field among market participants, and (iii) incorporate a sufficient amount of time to accomplish its purpose of providing an orderly transition to the new regulatory regime as well as to changes in non-U.S. regulatory regimes.
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TCH Raises Safety and Soundness Concerns on Bank Disclosures of Legal Reserves
Aug 6, 2012 --
The Clearing House Association filed an industry comment letter with the Fed regarding its proposal to require large bank holding companies to provide granular information relating to banks’ individual litigation reserves as part of the CCAR operational risk reporting process. TCH’s letter stated that disclosure of legal reserve information would be potentially very damaging to banks whenever they are defendants in litigation, irrespective of the merits of the claim, and thus inimical to the safety and soundness of financial institutions. Additionally, TCH commented on five Fed alternative proposals for disclosure of such data, expressing concern over the various methods of disclosure and expressing a potential preference (assuming certain modifications) for the Fed’s proposal to report an aggregated frequency quarterly and an annual consolidated legal reserve balance. In light of the industry’s concerns about the Fed’s proposed disclosure methods, TCH also suggested an additional “processed data option” to disclose the requested information to the Fed while maintaining the confidential nature of the legal reserve data.
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TCH Comments on OCC Revisions to Lending Limits Rule
Aug 6, 2012 --
The Clearing House Association supports the OCC’s approach to measuring credit exposures arising from derivative and securities financing transactions – an approach which generally allows a bank to choose between a regulator-approved internal model or a non-model measurement methodology. However, TCH urges the OCC to clarify how internal models will be approved, and to provide banks with additional flexibility as to which non-model methodology they choose to apply. In addition, TCH believes that an extension of the compliance date until October 1, 2013 is necessary and appropriate for various reasons, including that banks need time to incorporate the rule into bank systems and to develop necessary compliance programs and policies.
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TCH Opposes Additional D-SIB Surcharge
Aug 1, 2012 --
The Clearing House Association submitted a comment letter to the Basel Committee on its recent proposal addressing domestic systemically important banks (D-SIBs). TCH’s letter supported the principled approach contained in the proposal, particularly the inclusion of significant national discretion in the application of any D-SIB surcharge. Additionally, TCH requested that any surcharge contain calibration methodologies that are transparent and available for public review and comment, and that size not receive a disproportionate weighting as a factor for any D-SIB surcharge.
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TCH Testifies at FinCEN’s Hearing on Customer Due Diligence
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Jul 31, 2012 --
The Clearing House Association supports robust, effective anti-money laundering rules that work to protect the financial system and the public from the serious harm caused by money launderers and terrorists, and FinCEN’s effort to codify and clarify its rules regarding the customer due diligence responsibilities of financial institutions. Nevertheless, TCH believes FinCEN’s proposed definition of beneficial owner could be confusing, difficult to implement, and may not actually collect the information that law enforcement and regulators need.
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TCH Comments on Proposed Special Measures against CredexBank
Jul 30, 2012 --
The Clearing House Association filed a comment letter in response to FinCEN’s proposal to impose two special measures on JSC CredexBank under Section 311 of the USA PATRIOT Act: (i) reporting requirements under the first special measure, and (ii) restrictions on the use of U.S. bank correspondent accounts by Credex. TCH does not object to the imposition of the special measures, and recommend that the first special measure provide that: (i) covered financial institutions be required to report only those transactions in which Credex or an affiliate of Credex specifically identified by FinCEN appears in the transaction instruction as a party; and (ii) the report consist of a copy of the transaction instruction and a statement of how the institution disposed of the transaction. TCH does not object to the imposition of the fifth special measure, but asked FinCEN to move expeditiously to adopt the final rule.
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TCH Statement on Qualified Mortgages
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Jul 27, 2012 --
The Clearing House Association, whose position on “qualified mortgages” (QM) has been considered in recent Congressional hearings and by the CFPB and the financial-services industry, issued a statement today on the pending QM rule, which will play a central role in determining the extent of consumer access to housing-finance credit. The statement reiterates prior TCH support for an objective QM definition as part of a clearly articulated legal standard that provides certainty at the closing table that the QM and ability-to-repay standards are met.
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TCH Encourages CFPB to Define GPR Prepaid Cards Narrowly
Jul 23, 2012 --
The Clearing House Association submitted a comment letter to the CFPB which encourages the Bureau to define general purpose reloadable (GPR) prepaid cards narrowly to include only prepaid cards that function as deposit account substitutes, to apply Regulation E to GPR cards in a similar manner as it applies to payroll card accounts (with some modifications), and to be mindful of the negative impact on innovation and consumer access that excessive regulation might have.
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TCH Urges CFPB to Avoid Overly Prescriptive MLO Rules
Jul 18, 2012 --
In advance of a rule proposal and in response to a CFPB outline, TCH submitted a letter to the CFPB arguing that the Bureau has (i) misinterpreted critical statutory language regarding the potential inclusion of mortgage-loan-originator (MLO) compensation in the definition of “points and fees,” (ii) proposed overly prescriptive waiver restrictions, which represent an unwarranted and potentially disruptive intrusion into the business practices and pricing policies of mortgage lenders with no clear evidence that such requirements will benefit borrowers, and (iii) expressed an intention to impose on MLOs employed by depositories additional qualification requirements. These requirements are unwarranted and unnecessary, will affect tens of thousands of employees, and will add to the mortgage process unnecessary and duplicative costs that consumers ultimately will bear.
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TCH to CFPB: Adopt Broad, Clearly Defined QM Standards
Jul 9, 2012 --
The Clearing House Association submitted comments to the CFPB in response to its questions on the utility of certain mortgage-loan data and projected litigation costs associated with the proposed ability-to-repay rule. Building on its prior submissions, TCH urges the CFPB to adopt broad, clearly defined QM standards. TCH supports the use of a debt-to-income (DTI) cap and argues that, if a loan is properly underwritten, DTI can be relatively high without jeopardizing a consumer’s repayment ability. TCH developed two sets of cost estimates to show how loans’ litigation costs could vary by default rate and litigation probability. The letter then uses these matrices to demonstrate the wide range of possible outcomes, the uncertainty of the estimates, and the need for clear standards to mitigate litigation risk. TCH also presents additional recommendations on the treatment of government loans, streamlined refinancings and loan-officer compensation.
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TCH Comments on Global Regulators’ Financial Market Infrastructures Proposal
Jun 15, 2012 --
The Clearing House Association filed a comment letter to CPSS and IOSCO on two consultative reports: Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities and Disclosure Framework for Financial Market Infrastructures. The letter supports the proposed assessment methodology and disclosure framework, but suggests ways that certain of the principles should be clarified.
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TCH Responds to FASB's Request for Additional Information on Revenue Recognition
Jun 13, 2012 --
The Clearing House Association filed a follow-up letter to the FASB responding to the FASB’s request for additional information with respect to (i) the volume discount approach for accounting for credit card interchange revenue and (ii) the interrelationship between fees and interest in regard to the assessment of onerous obligations for treasury management service contracts. In the March 2012 letter TCH recommended that: (i) financial instruments be excluded from the proposal, (ii) netting of underwriting revenues and expenses be continued, (iii) onerous contracts be assessed at the customer level, (iv) the onerous loss calculation be based on incremental direct costs to fulfill the obligation, and (v) the boards adopt a principles-based approach to disclosures.
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TCH Comments on FinCEN’s Customer Due Diligence Proposal
Jun 11, 2012 --
The Clearing House Association submitted a letter to FinCEN on customer due diligence (CDD) requirements for financial institutions. The letter supports the concept of having a single regulation setting out banks’ CDD requirements, but points out a number of issues with FinCEN’s proposal, especially in the sections proposing a blanket requirement to identify and, in some cases, verify the beneficial owners of corporate accounts.
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TCH Association Board Approves Guiding Principles for Enhancing Banking Organization Corporate Governance
Jun 6, 2012 --
After receiving comments from a broad spectrum of interested parties on its exposure draft, The Clearing House Association issued its Guiding Principles for Enhancing Banking Organization Corporate Governance. The Clearing House strongly believes that good corporate governance and an effective board are essential to promote a safe and sound banking system and a profitable enterprise. These Governance Principles not only outline key legal and regulatory requirements and guidance, but also incorporate enhancements to governance practices that go beyond what is usually legally required. These enhancements include: (i) recommendations for a substantial majority (not just a majority) of independent directors and limited management presence on the holding-company board, (ii) a delineation of core elements of the board’s oversight duties and responsibilities, including risk management, capital planning, resolution plans, and liquidity risk, (iii) recommendations on the need for financial expertise on the audit committee, (iv) a discussion of the need, if the same person serves as both CEO and chairperson of the board, for a lead independent director, and (v) a recommendation that the board meet periodically with its principal bank regulators. TCH’s Governance Principles are intended to help guide banking organizations as they deal with corporate-governance issues, but they are not designed to be prescriptive or to set minimum requirements or best practices applicable to all banking organizations. Each banking organization must tailor its governance practices to its own situation.
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TCH Seeks CFPB’s Clarification and Guidance on Remittance Issues
Jun 6, 2012 --
The Clearing House Association submitted a letter to the CFPB seeking clarification on various issues related to its remittances transfer rule. In the letter, TCH requests that the Bureau provide clarification and guidance on the following: (i) the definition of a “remittance transfer,” especially with respect to several specific items, (ii) the definition of “remittance transfer provider,” including with respect to the distinction between situations involving “agents” of a provider and those involving “multiple remittance transfer providers,” (iii) certain aspects of the content and timing requirements for disclosures, and (iv) certain aspects of the error resolution provisions.
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TCH Comments to FDIC on Enforcements of Contracts Belonging to Resolved Financial Companies
May 29, 2012 --
The Clearing House Association, along with other trade associations, sent a letter to the FDIC to comment on an NPR relating to section 210(c)(16) of the orderly-liquidation-authority provisions of Dodd-Frank. In addition to commending the FDIC for providing much-needed clarifications of certain terms used in section 210(c)(16) and embracing the spirit of the statute, the letter suggests that the proposed rule should be revised (i) to clarify that authority under section 210(c)(16) cannot be exercised to enforce contracts upon a default by a subsidiary or affiliate of the covered company itself, (ii) to require that adequate protection be provided when enforcing “naked” cross-defaults (contracts that are “linked to,” but not “supported by,” the CFC), (iii) to preserve the right of a counterparty to call for margin based on the changed credit quality of affiliates of the other party to the contract, and (iv) to clarify the definitions of “adequate protection” and “indubitable equivalent”.
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TCH Comments to FDIC on Proposed Definitions of Higher-Risk Loans and Securities
May 29, 2012 --
The Clearing House Association submitted an industry comment letter to the FDIC on the proposed definitions of higher-risk consumer and commercial and industrial loans and securities used in the large bank pricing (LBP) rule for assessments. The Associations commended the FDIC for their willingness to work with the industry on these definitions, but also provided recommendations to add to the clarity and workability of the definitions. The FDIC’s final rule, approved on October 9, incorporates the definitions used to identify concentrations in higher-risk assets to better reflect the risk to institutions and the FDIC, accommodating many changes requested by TCH in our joint trade comment letter, including: (i) that a $5 million threshold be part of the purpose test, (ii) the look back at purpose and materiality of debt should apply only when currently outstanding debt is refinanced, and (ii) the look back period is only five years.
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TCH Comments on Proposed Regulations under FATCA
Apr 30, 2012 --
The Clearing House Association filed a joint comment letter to the IRS and Treasury on the proposed regulations under FATCA. The letter recommends, among other things, that (i) USFIs and FFIs should be permitted to treat accounts open prior to January 1, 2014 as preexisting accounts, (ii) withholding agents should be allowed to rely on certifications made on Form W-8, (iii) chapter 4 “reason to know” standards should have the same safe harbor provisions as the related chapter 3 provisions, (iv) the presumption rules for certain exempt recipients should be eliminated, (v) documentary evidence standards should mirror local law standards, and (vi) service payments should be excluded from FATCA. TCH is currently scheduling meetings with IRS and Treasury to discuss our comments.
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TCH Proposes Modifications to Remittance Transfer Rule
Apr 27, 2012 --
The Clearing House Association filed a comment letter with the CFPB proposing modifications to the final remittance transfer rule. TCH asked the CFPB to consider (i) a phased-in implementation of the final rule, (ii) a change to the strict liability regime for incorrect sender information, (iii) the elimination of the foreign tax disclosure, (iv) a process by which the industry may recommend countries be added to the safe harbor list, and (v) that the agency express its support for a proposed changed to §4A-108 of NY’s commercial code.
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TCH Raises Concerns about Proposal to Limit Credit Exposure
Apr 27, 2012 --
The Clearing House Association filed its comment letter in conjunction with other financial trades on Sections 165/166 of the Dodd-Frank Act which addresses single-counterparty credit limits, capital surcharges, liquidity requirements, early remediation, stress testing, and risk management. The data-driven letter offers technical corrections to avoid unintended consequences and achieve the shared goal of enhanced risk management. The associations also encourage regulators to take the necessary time to conduct a holistic review of these critical rules including the impact to consumers and the competitiveness of firms operating in the United States, and a cost/benefit analysis.
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TCH Urges FSB, IASB to Reconsider Lease Accounting Proposal
Apr 25, 2012 --
The Clearing House Association, along with multiple other trade associations, filed a letter with the IASB and FASB recommending that the IASB and FASB: (i) do an economic impact study and conduct extensive field testing before finalizing a standard on leasing; (ii) re-expose the proposed leasing standard for public comment; and (iii) reconsider their decisions on the (a) allocation and presentation of lease costs for the former operating leases, (b) accounting for short term leases, and (c) limiting of the accounting definition for renewals and variable rents.
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TCH Supports FASB’s Goodwill and Other Intangibles Proposal
Apr 24, 2012 --
The Clearing House Association submitted a comment letter to the FASB on its proposal on goodwill and other intangibles. In the comment letter, TCH supports the proposal and believes that if finalized, it will both enhance the quality of the testing of goodwill for impairment as well as reduce the cost and complexity of performing the test. TCH also supports the FASB’s permitting early adoption of the proposal.
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TCH Comments on CCAR Data Collection Schedules Proposal
Apr 23, 2012 --
The Clearing House Association submitted a comment letter to the FRB on the proposed changes to the Comprehensive Capital Analysis and Review (the CCAR) data collection schedules. The letter addresses substantive concerns related to (i) the proposed operational risk data collection schedule; (ii) proposed changes to the wholesale schedule and (iii) proposed increases in frequency of reporting for three retail portfolios from quarterly to monthly (FR Y-14M).TCH urges the Board to provide all banks sufficient time to develop systems to capture the requested data items. On June 27 the Fed published in the Federal Register an announcement extending the comment period for the CCAR information collection (FR Y-14A/Q/M) from July 5 to August 6, 2012. The extension was granted at the request of TCH in order to allow additional time to analyze and discuss with the Fed acceptable alternatives to the original proposal regarding production of legal reserve information.
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TCH Reiterates Opposition to Mandatory Audit Firm Rotation
Apr 19, 2012 --
The Clearing House Association, along with multiple other trade associations, filed a comment letter with the PCAOB opposing the requirement for mandatory audit firm rotation for the following reasons: (i) PCAOB’s failure to present supporting evidence for mandatory audit firm rotation, (ii) the potential harm to overall corporate governance by reducing audit quality, diminishing the role of the audit committees and increasing the incidence of undetected fraud, and (iii) the increase in costs and disruption to U.S. capital markets.
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TCH Seeks Clarifications from NY Fed on Reporting Central and FedLine Web Applications
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Apr 17, 2012 --
The Clearing House Association submitted an unsolicited letter to the New York Fed describing TCH’s specific questions on the Reporting Central and FedLine Web applications. The questions relate generally to (i) downloading application software, (ii) contingency planning, and (iii) expected features. TCH will be meeting with the New York Fed to discuss Reporting Central and FedLine Web applications.
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TCH Urges CFTC to Repropose Volcker Rule
Apr 16, 2012 --
The Clearing House Association and its trade association partners filed a letter with the CFTC to address its separate NPR implementing the Volcker Rule. This letter reiterates and references previous comments made in joint-trade letters, while also focusing on the sizeable cost-benefit issues that were improperly assessed in the Volcker Rule proposal, the effect of the CFTC’s proposal on swaps markets with a particular emphasis on the fact that the proposal does not fully account for the market making activity of swap dealers, the importance of interaffiliate transactions to risk management, and the overly broad definitions for key terms that are incorporated into the proposal. Based on these serious concerns, the Associations have asked the CFTC to repropose this rule.
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TCH Urges Consistent Privilege Protection Standard for Information Shared by Banking Regulators
Apr 16, 2012 --
The Clearing House Association filed a joint-trade comment letter to the CFPB on its proposed rule aimed at protecting against the waiver of privilege for information submitted to the agency by financial institutions subject to its supervision or that the CFPB shares with other regulatory agencies. The letter supports the proposed rule, but urges the CFPB to (i) continue to support a statutory amendment that would expressly clarify the protection of privileged information provided to and shared by the CFPB, consistent with the express statutory protection provided for privileged information provided to and shared by the prudential regulators; (ii) expressly reaffirm in its final rule the CFPB’s recognition of the importance of the privileges to our legal system and of the need to limit its requests for privileged information when possible; and (iii) expressly reaffirm in its final rule the CFPB’s policy that limits the sharing of privileged information with nonsupervisory agencies. The associations also ask the CFPB to address in the final rule steps that a supervised entity should generally take to designate materials as privileged when it provides such materials to the Bureau.
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TCH Urges CFPB to Assess Impact of Remittance Transfer Rules on Consumer International Transfers
Apr 9, 2012 --
The Clearing House Association’s comment letter to the CFPB responded to the Bureau proposal to (i) exclude providers that send 25 remittance transfers a year from the Regulation E remittance transfer requirements and (ii) refine the disclosure and cancellation requirements for preauthorized transfers. TCH (i) asserted that 25 transfers a year is too low to be a useful exemption and (ii) argued that providers should not have to guarantee an exchange rate for a transfer scheduled more than one day in advance. In addition, TCH reminded the CFPB that the overall impact of the remittance transfer regulations may make the issue of preauthorized transfers moot because many financial institutions will no longer offer international transfers to consumers at all. TCH urged the CFPB to assess the impact of the final remittance transfer rules on the market for consumer international transfer services and delay the effective date of the final rule.
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TCH Publishes Comprehensive List of Bank Holding Company Board Responsibilities
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Mar 28, 2012 --
The Clearing House Association published a comprehensive list of matters that boards of directors of banks and bank holding companies are required to perform under various statutes, regulations, regulatory guidance, and examination manuals.
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TCH Comments on FASB and IASB’s Revenue Recognition Proposals
Mar 20, 2012 --
The Clearing House Association submitted a comment letter to FASB and IASB on their joint proposal on revenue recognition. In the comment letter, TCH requests a meeting with the FASB and IASB Boards to discuss the potential application of the proposal to the credit card reward programs, and to understand the relevance of contract assets to the commercial banking industry. TCH also recommended that: (i) financial instruments be excluded from the proposal, (ii) netting of underwriting revenues and expenses be continued, (iii) onerous contracts be assessed at the customer level, (iv) the onerous loss calculation be based on incremental direct costs to fulfill the obligation, and (v) the boards adopt a principles-based approach to disclosures.
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TCH Requests Extension of Comment Deadline
Mar 19, 2012 --
The Clearing House Association, along with its trade association partners, submitted a letter seeking an extension of the comment period by the FDIC and OCC on their respective proposed rules on stress testing. On March 21 the FDIC and OCC extended the deadlines for comments until April 30. The new deadlines match that set by the Fed for its stress testing proposal, which was included in its greater § 165/166 release.
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TCH Discusses Definition of “QM” with CFPB
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Mar 7, 2012 --
The Clearing House Association, along with some consumer groups, met with the CFPB to discuss the associations’ recommendations on the definition of “qualified mortgages” (QMs). The groups urged the CFPB (i) to define QMs as broadly as possible to ensure continued access to sustainable mortgage credit for a wide range of qualified borrowers, (ii) to establish objective, “bright line” standards for defining a QM and (iii) to ensure that consumers have access to safe, affordable loans by providing the legal underpinnings that (a) prevent widespread litigation for routine foreclosure actions, (b) preserve and protect the investor’s security interest in the property, and (c) encourage the continued flow of capital into the mortgage market.
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TCH Opposes Proposed OFR Expense Allocations
Mar 5, 2012 --
The Clearing House Association filed a separate comment letter to Treasury regarding its NPR proposing an assessment on bank holding companies and nonbank financial companies supervised by the Fed with assets over $50 billion in order to provide funding for the Office of Financial Research, FSOC, and the orderly-liquidation authority start-up activities of the FDIC. The letter argues that although nonbank financial companies supervised by the Fed are included in Treasury’s proposed assessments, none have yet been designated which in turn imposes the full burden of the assessments on banks. This letter also argues that Treasury should consider the equitable distribution of assessments given that currently all of the assessment burden would fall on banks but much of the OFR’s and the FSOC’s expenses have been, and are likely to continue to be, attributable to the agencies’ responsibilities to research, oversee, and manage the systemic risks associated with nonbank financial companies.
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TCH Urges CFPB to Remove Redundant Compliance Requirements
Mar 5, 2012 --
The Clearing House Association filed a comment letter with the CFPB on its initiative to streamline regulations it inherited from other federal agencies. TCH (i) encourages the Bureau to take practical steps to ease compliance with the inherited regulations, (ii) supports efforts to expand and remove barriers to the use of electronic disclosures within the inherited regulations, (iii) agrees that the Bureau should eliminate superfluous and unnecessary compliance requirements, and (iv) requests that the Bureau delay implementation and study the far-reaching application of the new remittance transfer rules.
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TCH Comments on Allocation of Fees for OFR Expenses
Mar 2, 2012 --
The Clearing House Association, along with four other trade associations, filed a comment letter to Treasury regarding its NPR proposing an assessment on bank holding companies and nonbank financial companies supervised by the Fed with assets over $50 billion in order to provide funding for the Office of Financial Research, FSOC, and the orderly-liquidation authority start-up activities of the FDIC. The letter argues that, among several other concerns, (i) to ensure maximum accountability and efficiency, OFR expenses and budgeting process should be transparent, open to public comment, and subject to robust governance and controls, (ii) the assessment schedule should ensure that assessments are reasonably allocated between the industry and the Fed and generally ensure fairness, and (iii) Treasury should clarify the conditions and procedure under which a company ceases to be an assessed company.
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TCH Advises Against Removal of AOCI Filter
Mar 1, 2012 --
The Clearing House Association and the ABA filed a joint comment letter with the FRB cautioning the Board against removing the existing filter of certain unrealized gains and losses on financial instruments. The letter argues, among other things, that removal of the AOCI filter will likely: (i) cause banks to shorten the duration of their investment portfolios, (ii) negatively impact banks’ regulatory capital in a rising interest rate environment, decreasing the ability of banks to extend credit, and (iii) have a larger impact on regulatory capital when combined with other aspects of the Basel III capital framework. While TCH supports maintaining the existing AOCI filter, our letter also requests that to the extent the Board alters the filter, that the filter remain in place at least for certain high-quality liquid assets.
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TCH Urges Fed to Limit Disclosure of Stress-Test Results
Mar 1, 2012 --
The Clearing House Association filed a comment letter with the FRB urging the Board to limit the content of the stress test results published as part of 2012 CCAR to the information that was published as part of the Board’s 2009 Supervisory Capital Assessment Program (SCAP). TCH believes this measure would provide the benefit of giving the Board a meaningful opportunity to fully consider comments on the proper scope of stress test disclosures by the Fed proposed under the Section 165/166 NPR.
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Empirical Data Supports TCH Position on Creditworthiness Standards Proposal
Feb 23, 2012 --
The Clearing House Association, along with three other trade associations, sent a follow-up letter to the FRB, FDIC, and OCC on the agencies’ NPR to incorporate into their proposed market-risk rules alternative methodologies for calculating specific risk-capital requirements for debt and securitization positions that do not rely on credit ratings. The letter, and an attached annex, includes calculations to show how changes in the underlying collateral performance of a securitization are reflected in the capital charge through different points in time.
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TCH Comments on Basel Capital Disclosure Requirements
Feb 17, 2012 --
The Clearing House Association and the Institute of International Finance submitted a comment letter responding to the Basel Committee’s Consultative Document on the Definition of Capital Requirements. TCH and IIF generally support the use of common templates to achieve comparability in disclosures, but propose that banks have the option to make detailed information on capital available only on their websites rather than in their published financial reports. In addition, the associations recommend that the Committee defer the proposed 2013 implementation date of the new disclosures to provide sufficient lead time for the national implementation of capital disclosure requirements. Furthermore, the associations believe that banks should provide narrative explanations of the most significant differences between the regulatory capital template instead of the balance sheet line-by-line mapping of the capital disclosure template and balance sheet.
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TCH Comments on FASB and IASB’s Investment Entities Proposals
Feb 15, 2012 --
The Clearing House Association submitted a comment letter to FASB and IASB on their proposals on investment companies and on FASB’s Proposal on Investment Property Entities. TCH recommends that the standard on investment companies be principles-based with the overall principle that an entity is an investment company if the nature of the entity’s activities is investing in an investment(s) for returns from capital appreciation, investment income or both. TCH also recommends that the FASB converge its standard on investment property entities with International Accounting Standards 40, Investment Property, whereby entities would have the option to carry investment properties at fair value.
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TCH Recommends Improvements to FASB and IASB Consolidation Proposal
Feb 15, 2012 --
The Clearing House Association submitted a comment letter to FASB and IASB on FASB’s proposal on Consolidation: Principal versus Agent. TCH supports the proposal’s requirement to perform a qualitative analysis that requires the use of judgment to determine whether a decision maker is a principal or an agent, as well as certain other aspects of the proposal. TCH also made several recommendations to improve the proposal including (i) FASB issue guidance to state that no consolidation is required for certain securitization entities where there is no ongoing decision making ability, and (ii) that if an entity determines it is acting as an agent, no further analysis is required.
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TCH Concerned Volcker Rule Will Result in Far-Reaching Negative Consequences
Feb 13, 2012 --
The Clearing House Association’s comment letter expresses deep concerns that the implementation of the proposed Volcker Rule will negatively impact U.S. and global financial markets, the safety and soundness of banking entities, and the recovery of the U.S. economy. TCH urges the agencies to reject the proposed plan to implement the rule in a highly restrictive manner and instead revise the rule during the conformance period to reduce unnecessary harm to the markets, customers and financial institutions resulting from overly restrictive regulations. TCH believes that (i) the assumption that only limited damage would occur and that the financial system will be self-correcting at some future point is both unproven and risky, (ii) the loss of the ability to engage in certain parts of the market-making business may force banking entities to consider shuttering the entire business, (iii) the global markets will adapt quickly to any major regulatory change, and, once they adapt, the competitive position of the U.S. financial system and individual affected banking entities will suffer irreparable damage.
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TCH Urges Agencies to Preserve Banks’ Asset-Liability-Management Activities
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Feb 13, 2012 --
The Clearing House Association joined by ABASA submitted a comment letter expressing substantial concerns that the Volcker Rule may significantly inhibit the ability of banking organizations to engage in asset-liability-management (ALM) activities that are essential to the safe and sound management of the risks that arise from the core business of banking. The rule’s broad definition of trading account would cause important ALM activities to fall within the prohibition on proprietary trading to the detriment of both banking organizations and financial markets. The associations urge the agencies to replace the exclusion provided for liquidity management activities with an exclusion that would cover transactions in furtherance of a banking organization’s bona fide ALM activities.
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TCH Urges Regulators To Ensure Volcker Rule Proposal Is in Line with Congressional Intent
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Feb 13, 2012 --
The Clearing House Association, along with three other trade associations, submitted a comment letter to the regulatory agencies on the proprietary trading provisions of the proposed rules implementing the Volcker Rule. The associations stress the importance of market-making, underwriting, risk-mitigating hedging, and other customer-focused and specifically permitted activities and argue that these exceptions should be expanded and strengthened, while at the same time avoiding artificial bright-line distinctions between permitted activities and prohibited proprietary trading. The associations also believe it would be prudent for the agencies to repropose the Volcker Rule, as well as develop a phased-in approach to its application and specially articulate how the agencies plan to coordinate interpretation, examination and enforcement of its provisions.
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TCH Warns Agencies of Potential Harm Volcker Rule’s Treatment of Hedge-Fund and Private-Equity May Cause
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Feb 13, 2012 --
The Clearing House Association, along with three other trade associations, submitted a comment letter to the regulatory agencies addressing their proposed rule implementing the Volcker Rule, specifically commenting on provisions related to hedge funds and private equity funds. The comment letter argues, among other things, that: (i) the agencies need to define the term “covered funds” in a manner that excludes ordinary business structures that have never been considered hedge funds or private equity funds, (ii) the agencies should define “similar fund” in a manner consistent with the scope and intent of Dodd-Frank, (iii) the agencies should exclude all permitted covered funds and certain other entities from the term “banking entity,” (iv) the agencies should provide that all of the “permitted activities” exemptions, other than the asset management exemption, will apply to Super 23A in addition to the general prohibition on sponsoring or investing in a covered fund, (v) the SBIC exemption should extend to “public welfare” investments outside the U.S., and (vi) the agencies should define “covered transactions” to reflect the exclusions from that term contained in § 23A of the Federal Reserve Act. The associations’ letter also addresses important compliance and conformance issues.
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TCH Comments on Creditworthiness Standards Proposal
Feb 7, 2012 --
The Clearing House Association, along with five other trade associations, submitted a comment letter to the FRB, FDIC, and OCC addressing the agencies’ proposal to incorporate into their proposed market risk capital rules alternative methodologies for calculating specific risk capital requirements for debt and securitization positions that do not rely on credit ratings. The comment letter addresses (i) the associations’ concerns with respect to the proposed rule’s methodologies applicable to exposures other than securitizations and to securitizations, (ii) substantive concerns with the treatment of correlation trading positions under the proposed rule, and (iii) additional concerns with respects to the potential consequences of the proposed rule.
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TCH Seeks Clarification of Swap Entities Registration Rules
Feb 2, 2012 --
The Clearing House Association, along with several other trade associations, submitted a letter to the CFTC seeking further clarity and guidance on extraterritorial issues as well as the treatment of inter-affiliate transactions, guarantees, and branches prior to mandating the registration of swap dealers and major swap participants pursuant to the CFTC’s final rule issued on January 11.
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TCH Seeks NYS Filing Deadline Clarification
Feb 2, 2012 --
The Clearing House Association submitted an unsolicited letter to the New York State Department of Taxation and Finance regarding a potentially incorrect filing deadline contained in guidance issued by the Department with respect to credit card information reporting intended to piggyback off of the federal filing requirements. On February 10 the New York State Department of Taxation and Finance issued revised guidance regarding filing deadlines with respect to credit card information reporting. The revisions incorporate changes expressly requested by TCH and state that the required information returns will be due on either March 29, 2012, or April 30, 2012, depending on whether the information returns are filed with the IRS in a paper format or electronically.
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TCH Comments on Iran Sanctions
Jan 27, 2012 --
The Clearing House Association filed a comment letter with FinCEN on its proposal to impose a special measure under the USA PATRIOT Act against Iranian financial institutions. The letter supports the overall approach but suggests several areas where the rule needs clarification. The letter also points out that legislation enacted since the proposal was issued may lessen the need for the proposed rule.
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TCH Requests Section 165 and 166 Comment Deadline Extension
Jan 25, 2012 --
The Clearing House Association, along with four other trade associations, submitted a letter to the FRB requesting an extension of the comment deadline with respect to the Board’s proposed rules implementing Sections 165 and 166 of Dodd-Frank. In light of the scope and complexity of the rule, TCH requested that the deadline be extended from March 31 to May 31. On March 2 the FRB extended the comment period deadline of its Section 165/166 NPR from March 31 to April 30.
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TCH Comments on Proposed Call Report Revisions
Jan 20, 2012 --
The Clearing House Association submitted a comment letter to the OCC, FRB, and FDIC on the proposed Call Report revisions. TCH disagrees with the proposed changes insofar as they require a disaggregation of the loan loss allowance that is inconsistent with the business model banks use to estimate their allowance. TCH recommends that the agencies collect information on loan origination activity only at the bank holding company level, using the data reported for CCAR purposes (FR Y-14Q). TCH also sent a comment letter to the FRB on the FR Y-9C, Financial Statements for Bank Holding Companies, mirroring the comments in the TCH letter on the proposed Call Report revisions.On March 16, 2012 the FRB issued revisions to its proposed FR Y-9C changes. The final revisions incorporate the following changes expressly requested by TCH in our January 20 comment letter: (i) the FRB will re-evaluate the proposed new schedules on (a) disaggregated data on the allowance for loan and lease losses (ALLL) and (b) loan origination activity, and (ii) collection of disaggregated ALLL data would not take effect before the September 30, 2012, report date.
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TCH Supports FAF Plan for Private Company Standards Improvement Council
Jan 11, 2012 --
The Clearing House Association submitted a comment letter to the Financial Accounting Foundation (FAF) supporting its plan to establish the Private Company Standards Improvement Council (PCSIC). TCH (i) agrees there is a need to improve the standard-setting process for private companies, (ii) supports the recommendations of the FAF to (a) establish a PCSIC chaired by a member of the FASB and overseen by the FAF Board of Trustees, and (b) propose changes to existing U.S. GAAP for private companies that would be subject to ratification by the FASB, and (iii) does not support the recommendation of the Blue-Ribbon Panel on Standard Setting for Private Companies to establish a separate private company standards board.
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TCH Comments on Credit Rating Alternatives
Dec 29, 2011 --
The Clearing House Association, along with three other trade associations, submitted a comment letter to the OCC on the proposal to eliminate references to credit ratings in its non-capital rules and on proposed guidance on eligible investment securities. The Associations generally support the OCC’s proposed rule and proposed guidance but strongly urge the OCC to provide a reasonable transition period for compliance with the due-diligence requirements.
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TCH Opposes FHFA Fee-for-Service Compensation Proposal for Mortgage Servicing
Dec 22, 2011 --
The Clearing House Association, along with four other trade associations, submitted a follow-up comment letter on the Alternative Mortgage Servicing Compensation Discussion Paper of the Federal Housing Finance Administration (FHFA). The associations believe that (i) a fee-for-service approach would have negative consequences for the industry and for the customers that we serve (ii) and adopting such a structure would inevitably produce large changes with uncertain consequences for lenders, servicers, investors and borrowers.
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TCH Comments on FRB’s Reserves Simplification Proposal
Dec 14, 2011 --
The Clearing House Association filed a comment letter with the FRB on its proposal to simplify the administration of reserve requirements. TCH supports the common two-week reserve maintenance period and has no objection to the introduction of a penalty-free band to replace the current carryover procedure, but believes that the penalty-free band should be set at the greater of $50,000 or 4% of a bank’s total reserve requirement. In addition, TCH has no objection to the elimination of the clearing balance program or replacing as-of adjustments with direct compensation, so long as the Federal Reserve continues to pay interest on reserves at the effective fed funds rate.
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TCH Opposes Mandatory Audit Firm Rotation
Dec 13, 2011 --
The Clearing House Association filed a comment letter with the PCAOB on its concept release on auditor independence and audit rotation. TCH opposes the requirement for mandatory audit firm rotation for the following reasons: (i) a company’s Audit Committee is best suited to evaluate whether reappointment of the existing audit firm is appropriate; (ii) the potential downside risks of the concept release would be significant because mandatory rotation would inhibit the ability of audit firms to develop and maintain specialized industry expertise; (iii) there is no clear evidence that mandatory audit firm rotation would enhance auditor independence; (iv) the concept release would likely increase the duration and cost of audits significantly; and (v) many recent improvements that have been made to the audit process have had a positive impact on auditor independence.
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TCH Provides Additional Information to FRB on Deferred Tax Assets under Basel III
Dec 13, 2011 --
The Clearing House Association submitted a follow-up comment letter to the FRB, responding to questions raised at our September 20 meeting with respect to deferred tax asset calculations for regulatory-capital purposes under Basel III. The letter provides additional information with respect to several issues, including (i) an annual MSR election with respect to netting of DTLs; (ii) examples of transition rules; (iii) examples of provisions in the Current Rules that supplement U.S. GAAP; (iv) a comparison treatment of leveraged leases under U.S. GAAP and IFRS; and (v) an example illustrating application of the 10% and 15% threshold calculations during the transition period as recommended by TCH and that could be included in instructions to Call Reports (or FAQs). TCH also requests that DTLs arising from equity investments in unconsolidated financial institutions be treated in the same manner as DTLs associated with MSRs.
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TCH Objects Proposed Revisions of FR 2028 Surveys
Dec 9, 2011 --
The Clearing House Association filed a comment letter with the FRB on the Surveys on Terms of Lending (FR 2028 Surveys) objecting to the proposed revisions to add a column (i) to the Surveys to collect the RSSD ID of the branch that originated each loan and (ii) to the FR 2028A to collect the amount of the loan origination fees. The data for reporting the RSSD ID would not be meaningful since business and farm loans are not typically originated in traditional branches; therefore, TCH has offered to work with the FRB to develop an alternative proposal to achieve the FRB’s objectives. TCH also requested that the effective date of any of the proposed additions be delayed until after the May 2012 survey week.
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TCH Proposes Definition of “Qualified Mortgage” to CFPB
Dec 7, 2011 --
This Clearing House Association presentation to the CFPB utilizes publicly available and anonymized proprietary member-bank information to analyze the opportunities and challenges that the bureau faces in crafting the definition of a “qualified mortgage”: (i) opportunities to protect consumers from abusive lending and challenges in balancing (ii) responsible lending that ensures that borrowers can repay their mortgages, and (iii) access to mortgage credit to the widest range of creditworthy borrowers at the lowest possible cost. The solution proposed by TCH—a legal safe harbor with an expanded, clearly defined closing document and set of underwriting criteria, including a specific debt-to-income-ratio limit, verified income and employment status, and documentation of debt and payment obligations—offers a practical way to balance these two objectives.
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TCH Submits Extension Request Letter to FASB
Dec 2, 2011 --
The Clearing House Association, joined by other associations, submitted a letter requesting that the FASB extend the comment period until February 15, 2011 for three Proposed Accounting Standard Updates: Financial Services – Investment Companies (Topic 946); Real Estate – Investment Company Entities (Topic 973); and Consolidation – Principal versus Agent Analysis (Topic 810). The Clearing House is concerned that the comment period does not provide adequate time to address the proposals’ complex accounting issues and their impact on other outstanding FASB projects (such as leasing). On December 8 the FASB voted unanimously to extend the comment letter period on three proposals to February 15, 2012 as requested in The Clearing House letter.
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TCH Urges FSB Workshop Participants To Adopt Global LEI Solution
Nov 22, 2011 --
TCH Association, along with 11 other financial-services trade associations, sent a letter to the regulators who participated in the September 2011 legal-entity-identifier workshop under the auspices of the Financial Stability Board. In the letter the associations encourage the regulators to support the use of the LEI standard that the associations developed specifically in relevant policymaking going forward.
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In FDIC Letter TCH Recommends Recapitalization, Other Resolution Suggestions
Nov 18, 2011 --
TCH Association, along with other financial-services trade associations, submitted a letter to the FDIC commenting on its interim final rule requiring living wills for insured depository institutions (“IDIs”) with $50 billion or more in total assets. The letter comments on certain key requirements of the rule, focusing in particular on those that require IDIs to show a strategy for resolving the IDI at “least cost,” and recommends that the FDIC consider the recapitalization option that TCH has been advocating. TCH also offers specific suggestions for further aligning the rule with the related one promulgated under Section 165(d) of Dodd-Frank.
On January 23, the FDIC published in the Federal Register a final rule on Resolution Plans Required for Insured Depository Institutions with $50 Billion or More in Total Assets. Many of the comments that TCH submitted in its letter on the FDIC’s interim final rule were either adopted in the final rule or acknowledged as being allowed by it, including, among several others, the comments related to the following areas: (i) recapitalization as an alternative to traditional resolution methods, (ii) harmonization of economic conditions to be planned for, (iii) harmonization of certain requirement dates and the notice of material events with those required by the related Section 165(d) rule, and (iv) requiring the FDIC to consult with appropriate domestic and international regulators before any adverse finding.
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TCH Urges FinCEN to Postpone Electronic Filing of All BSA Reports
Nov 15, 2011 --
The Clearing House Association submitted a comment letter to FinCEN on its proposal to require electronic filing of all Bank Secrecy Act reports beginning on June 30, 2012. TCH supports electronic filing, but believes that this proposal must be analyzed in conjunction with the new E-file formats for the Currency Transaction Report (“CTR”) and the Suspicious Activity Report (“SAR”). Because these new formats will require banks and other filers to make extensive systems changes, TCH believes that FinCEN should allow at least 24 months implementation deadline from the time it announces the final rule.
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TCH Supports Expanded Access to Mainstream Financial Institutions by Unbanked and Underbanked
Nov 14, 2011 --
The Clearing House Association submitted a comment letter on the Treasury’s proposal regarding how the Office of Financial Education and Financial Access (OFEFA) can promote initiatives designed to enable low- and moderate-income individuals to establish one or more accounts in a federally insured depository institution. The Clearing House letter advocates that Treasury's efforts focus on financial education of unbanked and underbanked, and that Treasury should work with other regulatory agencies to minimize regulatory impediments to providing banking services to these segments.
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TCH Urges Improvements to FRB’s Proposed Regulation II Surveys
Nov 14, 2011 --
The Clearing House Association led a broad trade association coalition in submitting comments on the Federal Reserve’s proposal to gather data and associated information regarding interchange fees from payment card networks and debit card issuers. To facilitate information collection the Board has issued drafts of four surveys. Two surveys, one for debit card issuers and one for payment card networks, will collect information on costs, debit card usage, and interchange fees. The Clearing House’s letter strongly encourages the Board to revise each of the surveys to: (i) ensure that the Surveys elicit complete and accurate information reporting, (ii) establish a formal approach to answering respondent questions, (iii) ensure that the Surveys collect sufficient data to reflect all costs associated with debit card programs, (iv) ensure that the Surveys do not collect data that is of dubious value and likely to be misleading, particularly regarding incentive payments, and (v) ensure that the reporting burden falls on the proper party.
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TCH Urges UK to Adopt Single-Resolution-Plan Approach, Cross-Border Coordination
Nov 9, 2011 --
The Clearing House Association, along with other financial-services trade associations, submitted a comment letter to the UK’s Financial Services Authority. The letter responds to the FSA consultative paper on recovery and resolution plans, which proposes requirements for certain financial-services firms to prepare living wills that outline how the firms could be wound down when facing collapse without damaging the greater financial system and economy. The letter recommends a single-plan approach, cross-border cooperation and coordination agreements, harmonized informational elements and a cooperative, iterative process. TCH also suggests that measures to improve the resolvability of an institution be balanced against the need to manage it as a going concern.
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TCH Suggests Improvements in FSB’s Common Data Template Proposal
Nov 8, 2011 --
The Clearing House Association letter endorses the Financial Stability Board’s proposal to improve the data collection and sharing of information on linkages between G-SIBs and their exposures and funding dependencies. TCH believes that the proposal for a common data template is a promising idea that could help address this important issue. However, The Clearing House feels that an important prerequisite to the adoption of a common data template would be the creation of standardized definitions of the data elements requested in current international and national regulatory reporting initiatives. The Clearing House’s letter outlines this and other concerns and makes suggestions for moving forward.
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TCH Comments on Proposed Capital Assessments and Stress Testing Report
Nov 7, 2011 --
The Clearing House Association submitted a comment letter in response to the FRB’s proposed information collection of the bank holding companies annual (the “FR Y-14A”) and quarterly (the “FR Y-14Q”) Capital Assessments and Stress Testing reports. The letter addresses substantive concerns with the schedules and worksheets and issues that require further clarification. TCH recommends a robust FAQ process and raises specific technical issues where clarifications are needed. The Clearing House urges the Board to consider the transition cost and burdens that will weigh on institutions as systems are constructed to track and report the data sought by the proposed data templates.
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TCH Proposes Reserve Mortgage-Servicing Account and Reduced Fee
Nov 7, 2011 --
In a letter to the Federal Housing Finance Agency, The Clearing House Association reaffirms its approach to servicing-compensation reform, one of two alternatives that the FHFA cited in its recent discussion paper. The Clearing House’s recommended approach has two key elements: (i) a material reduction in the minimum servicing fee and (ii) a separate custodial reserve account to support unanticipated market or regulatory changes that significantly increase the cost of servicing loans in default. The Clearing House believes that the best way forward is a middle-ground approach that would provide capital relief while preserving the mortgage-servicing-rights asset - and all the incentives and relationships it represents.
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TCH Study Assesses Economics of Large Banks
Nov 7, 2011 --
The Clearing House Association released a fact-based study on the economics of large banks. The empirical study reveals that the 26 largest U.S. banks provide an estimated $50 to $110 billion in unique economic value annually, with direct beneficiaries including consumers, companies and governments. This value comes in the form of economies of scale, the broad scope of products and services that large banks provide, and the spread of banking innovation. Our research also finds that (1) banks larger than $500 billion in assets account for over half of this amount, (2) the belief that marginal benefits for services performed by banks drops off above the $50-billion-asset range is false and (3) the majority of benefits detailed in this study can only be provided by large banks.
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TCH Study Assesses Basel III Liquidity Coverage Ratio
Nov 2, 2011 --
The Clearing House Association released a long-awaited report analyzing the Basel III 30-day liquidity standards (the Liquidity Coverage Ratio or “LCR”). The empirical study revealed that the LCR fails to recognize the true liquidity value of many instruments currently held by U.S. banks and could potentially inhibit the U.S. housing market recovery. The proposed standards will effectively redraw the structure of U.S. housing finance by discouraging the use of the Federal Home Loan Bank System and capping the credit for securities issued by Fannie Mae and Freddie Mac (the GSEs). TCH’s analysis indicates that simple changes to the LCR framework would create a more robust and accurate liquidity standard and help address a potential liquidity shortfall.
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TCH Opposes Basel III’s Removal of “AOCI” Filter from Regulatory Capital
Oct 27, 2011 --
The Clearing House Association submitted a letter to the Fed, FDIC and OCC regarding the removal of the existing filter of certain unrealized gains and losses on financial instruments (the “AOCI Filter”) from regulatory capital components. Elimination of the AOCI Filter would (i) force the recognition in capital ratios of unrealized gains and losses that result principally from movements in interest rates as opposed to changes in the relevant underlying credits, which are likely never to be realized and typically result in no adverse effect whatsoever on the banking organization, (ii) force banks to maintain ratios of both common equity Tier 1 (“CET1”) to risk-weighted assets and Tier 1 capital to risk-weighted assets substantially above the levels that would otherwise apply after buffers in order to avoid the sanctions applicable to banks that fall into the buffer range, (iii) introduce substantial volatility into CET1 and Tier 1 capital as measures of capital, and (iv) deprive banks of an important asset-liability management tool. The letter strongly urges the Agencies to revisit the appropriateness of Basel III’s removal of the AOCI Filter as they proceed to propose their own guidelines and regulations implementing Basel III.
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TCH Comments on Proposed Revisions to FR Y-10 and FR Y-6 Reports
Oct 11, 2011 --
The Clearing House Association submitted a comment letter to the FRB in response to their proposed revisions to the FR Y-10 and FR Y-6 Reports. TCH recommends that (i) changes to Item 1.a. (Event Types) on the 4(k) Schedule to the FR Y-10 be limited to reporting that large merchant banking investment entities either (a) are no longer reportable or (b) have changed their name; (ii) entities holding debts previously contracted should be excluded from being reported on the FR Y-10; and (iii) that the requirement to report the state and country of incorporation on the FR Y-6 should be limited (a) to entities that are reportable on the FR Y-10 and (b) only required on a prospective basis. If the Board decides to require the reporting of the state and country of incorporation on a retrospective basis on the FR Y-6, The Clearing House recommends that the Board delay implementation until the December 31, 2012 FR Y-6 Reports to allow BHCs sufficient time to collect the information for all existing entities. On November 21 the FRB issued a final approval of the revisions to the FR Y-10 and FR Y-6 Reports that includes these changes specifically requested by The Clearing House: (i) addition to event types of the 4(k) Schedule selections for ‘‘No Longer Reportable’’ and ‘‘Name Changes’’ and removal of the selection for ‘‘Changes to Initial Investment” and (ii) the implementation of the requirement to add the state and country of incorporation to the FR Y-6 would be delayed until fiscal years beginning December 31, 2012.
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TCH to Fed: Debit Card Fraud Prevention Adjustment Amount Too Low
Sep 30, 2011 --
TCH Association filed a letter with the FRB to comment on the fraud prevention adjustment provisions articulated as an interim final rule in Regulation II. TCH Association believes that the 1 cent amount is insufficient to cover the true costs that issuers bear for fraud prevention for several reasons: (i) the Interim Rule bases the 1 cent adjustment amount on what the Federal Reserve calculates to be the median fraud prevention costs of covered issuers, which would deny half of all covered issuers the ability to recoup crucial fraud prevention costs that they incur above 1 cent per transaction, (ii) the 1 cent amount does not include the important fraud prevention costs that issuers incur in responding to customer inquiries about fraudulent or potentially fraudulent activity related to their debit cards, (iii) the 1 cent amount does not include any costs incurred by issuers for adopting and utilizing new fraud prevention technology and systems, and (iv) the 1 cent amount fails to consider at all the higher fraud prevention costs of issuers with assets under $10 billion. The associations believe that when these flaws in the Interim Rule’s calculation of the fraud prevention adjustment amount are rectified, the appropriate amount would be at least 4 to 5 cents per transaction.
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TCH Comments on FATCA Transition Rules
Sep 28, 2011 --
The Clearing House Association submitted a comment letter in response to the IRS Notice 2011-53. In the letter TCH recommends that Treasury and the IRS make certain modifications to the transition rules and adopt certain permanent rules promptly, as part of revised transition guidance.
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TCH Requests FRBNY Highlights Changes in Supplemental Instructions to Call Reports
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Sep 28, 2011 --
The Clearing House Association submitted an unsolicited letter to the Federal Reserve Bank of New York requesting that the Supplemental Instructions highlight any changes from the instructions for the immediately prior period. On October 13, in response to the recommendation made by TCH Association, the FRBNY agreed to highlight changes in future iterations of the Supplemental Instructions to the Call Reports. This change eliminates the burden of comparing each word of the Supplemental Instructions to the Call Report against the immediately prior period’s instructions in order to complete the Call Reports, as well as decreases the likelihood those changes to the instructions are inadvertently overlooked.
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TCH Proposes Redefinitions for Subprime and Leveraged Loans
Sep 26, 2011 --
The Clearing House Association submitted a comment letter to regulatory agencies regarding the proposed revisions to the Call Report and the Thrift Financial Report. These revisions include several changes to implement the FDIC rule that redefines the deposit insurance assessment base and the large bank pricing rule. TCH letter addresses serious concerns about some key definitions that underlie the proposed Call Report and TFR changes and recommends a consensus solution that significantly improves the definitions of subprime and leveraged loans. TCH also strongly recommends that the current transition reporting rules be continued until the large bank pricing rule is revised to reflect the new definitions.
On September 28, the FDIC advised that the leveraged loans and subprime transition guidance has been extended until April 1, 2012 for the Call Report to allow the FDIC sufficient time to review the definitions of subprime and leveraged loans. In the interim, the FDIC will allow large institutions to continue to use their existing methodologies to report subprime and leveraged loans originated or purchased prior to April 1, 2012. On March 20, 2012 the FDIC approved a proposal with new definitions for leveraged loans, renamed “higher risk C&I loans and securities,” and subprime consumer loans, renamed “higher-risk consumer loans and securities,” which would amend the February 25, 2011 final rule on bank assessment regulations for large bank pricing. The FDIC included in the proposed amendments the following recommendations from TCH’s September 26 joint trade comment letter: (i) subprime consumer loans should be stratified by the probability of default at origination for borrowers, as determined by a credit scoring system either developed internally or by a recognized third party vendor, and (ii) the de minimis leveraged loan threshold should be raised to $5 million and factors for the original purpose should be added to the definition of leveraged loans. The proposed amendments would become effective October 1, 2012.
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TCH Study Shows G-SIB Capital Surcharges Unnecessary
Sep 26, 2011 --
In another example of The Clearing House leadership, the Association released a study examining capital levels during the economic crisis as well as the capital levels that banks would be required to meet under the proposed Basel III requirements and the proposed G-SIB capital surcharge. TCH's study shows that the Basel III capital requirements, without an additional G-SIB surcharge, are a prudent standard to maintain financial stability during episodes of financial stress. The study finds that relative to pre-crisis levels, banks would have to raise an additional 100% more capital, or $525 billion in common equity, to meet Basel III’s 7% common equity capital requirement (from $525 to $1050 billion). The study also reveals that the proposed G-SIB surcharge would decrease bank ROE from 12.1% to 7.2% but reduce the market required rate of return on equity only from 12.1% to 11.5%. To meet investor’s required rate of return, banks would have to either increase the borrowing costs to their customers or decrease their fixed costs, consequences that would have a negative impact on the economic recovery.
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TCH Urges U.S. Implementation of Basel III DTA Proposals Not Disadvantage U.S. Banks
Sep 19, 2011 --
TCH Association filed an unsolicited comment letter with the FRB, FDIC and OCC on certain calculation issues raised by Basel III with respect to the treatment of deferred tax assets (“DTAs”). TCH recommends that: (i) the rules for the treatment of DTAs previously adopted by a bank’s regulator be retained, except to the extent they have been specifically overridden by Basel III; (ii) DTAs realizable via loss carrybacks do not rely on the future profitability of the bank and therefore should be treated as valid assets for regulatory capital purposes; (iii) an election be permitted to net deferred tax liabilities (“DTLs”) associated with mortgage servicing rights (“MSRs”) against the MSRs before the MSRs are subjected to the 10% and 15% “threshold calculations”; (iv) (a) the 10% threshold calculation be made separately for each item, without reduction for any of them and (b) during the transition period, the 15% calculation be made without reduction for each item; and (v) that the transition framework ensure consistent treatment across jurisdictions.
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TCH Encourages G-20 to Support Global LEI
Sep 12, 2011 --
The Clearing House Association, along with 14 other trade associations, submitted a follow-up letter to G-20 finance ministers to outline the progress made toward developing a uniform and global LEI and to encourage them to support a coordinated and global LEI solution. The letter builds on the FSB’s recent statement in support of the LEI to help provide global momentum to the LEI process.
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TCH Urges Accelerated Reforms of Cross-Border-Resolution Frameworks
Sep 2, 2011 --
The Clearing House Association filed a comment letter responding to the Financial Stability Board’s consultative document on effectively resolving systemically important financial institutions. The letter strongly supports the underlying conclusion that reforms of domestic resolution regimes and cross-border resolution frameworks need to accelerate to ensure that, within a reasonable timeframe, SIFIs can be resolved without systemic disruption or exposing taxpayers to the risk of loss. The associations address a number of the FSB’s recommendations, including duties of the relevant authorities, rules governing creditor rights, resolution planning, cross-border cooperation and consensus, confidentiality of plans and transparency of processes and actions, resolvability assessments, local-depositor preference laws, implications for G-SIFI surcharges, implementation timelines and various resolution tools such as recapitalization.
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TCH Calls G-SIB Surcharges Premature
Aug 26, 2011 --
In another example of The Clearing House leadership, the Association submitted a comment letter responding to the Basel Committee’s consultative document on assessment methodology and the additional loss absorbency requirement for global systemically-important banks. The comment letter addresses the fundamental problems with the premises underlying the entire capital surcharge construct. Parts of the commentary address the suppositions on which the proposal is based and the impact of enacting capital surcharges. The letter also provides a comprehensive discussion of the technical criteria used to designate firms as G-SIBs and the level of applicable surcharges.
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TCH Advocates Broad Authority Over Nondepositories
Aug 15, 2011 --
In another example of The Clearing House leadership, the Association submitted a comment letter to the CFPB on defining larger participants (nondepositories) in certain consumer financial products and services markets for purposes of supervision and regulation by the CFPB under § 1024 of Dodd-Frank. The manner in which the CFPB defines larger participants is essential to the agency fulfilling its mandate under Dodd-Frank to ensure that federal consumer financial law is enforced consistently, without regard to the status of an entity as a depository institution in order to promote fair competition. TCH argued that such authority should be exercised broadly, based on the risk that such participants pose to consumers.
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TCH Requests Further Study Before OCC Expands Opt-in and Disclosures for Overdraft Programs
Aug 8, 2011 --
In response to the OCC’s request for comments on its proposed Guidance on Deposit Related Consumer Credit Products, The Clearing House Association recommended that further study is needed before opt-in and disclosure requirements are expanded beyond the Fed’s 2009 Reg E overdraft requirements. TCH also suggested that any final guidance should employ principles-based standards, rather than prescriptive requirements, to better ensure that national banks effectively monitor for credit risk while treating customers fairly and honoring consumer choice.
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TCH Addresses Critical Issues in Fed's Capital Planning Proposal
Aug 5, 2011 --
In another example of The Clearing House leadership, the Association led a coalition of fellow trade associations in responding to the Fed’s capital planning NPR. The comment letter advocates for (i) changes to the proposed process, (ii) clarifications that would permit firms to make uninterrupted capital distributions, and (iii) related substantive requests pertaining to the timing and amount of distributions. On November 29, 2011 the Federal Reserve Board published in the Federal Register a final rule requiring top-tier U.S. bank holding companies with total consolidated assets of $50 billion or more to submit annual capital plans for review.
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TCH Proposes Alternative Approach on Impairment
Aug 5, 2011 --
The Clearing House Association submitted an unsolicited letter to the FASB and IASB on TCH’s proposed alternative approach on impairment that seeks to balance well-defined classifications for impaired loans to ensure a consistent approach among financial institutions and to allow for management judgment.
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TCH Strongly Supports CPSS-IOSCO Plan to Update FMI Standards
Jul 29, 2011 --
In another example of The Clearing House leadership, the Association sent a letter to the BIS’s Committee on Payment and Settlement Systems and the Technical Committee of the International Organizations of Securities Commissions commenting on their consultative report, Principles for Financial Market Infrastructures. TCH recognizes the systemic importance of large-value payment systems and the risks that they pose if they are not properly managed and therefore strongly supports the CPSS and IOSCO in their goal to update the standards applicable to systemically important payment systems and other financial market infrastructures. In that spirit and in light of over 40 years’ experience in operating a systemically important funds-transfer network, TCH made a number of comments to help clarify the principles and to reduce the burden that the revisions could impose.
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TCH Urges Iterative Approach to Application of Proposed Stress Testing Guidance
Jul 29, 2011 --
The Clearing House Association submitted a letter to the FDIC, OCC and FRB that urged the Agencies to avoid rigid initial application of the proposed guidance. The letter endorsed the broad guidance framework proposed by the regulators, while also raising several concerns related to the structure, use, and regulatory review of stress testing.
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TCH Voices Support for Development of Global Accounting Standards
Jul 29, 2011 --
In another example of The Clearing House leadership, the Association submitted a comment letter to the SEC on its Work Plan for global accounting standards. The Clearing House recommends that (i) the U.S. have adequate voting representation in the IFRS Foundation and the IASB; (ii) the IASB remain committed to and continues to enhance a robust due process; and (iii) the IFRS Foundation must ensure that the IASB has a permanent and independent global funding source.
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TCH Leads Industry Effort Urging Revisions to Fed’s Proposed Remittance Transfer Rules
Jul 22, 2011 --
The Clearing House Association, along with nine other trade groups, submitted a comment letter to the Fed asserting that the Fed’s proposed Reg E remittance-transfer rules, oriented towards closed networks, are unworkable for open-network (ACH and wire) transfers. The letter urges that the final rule either exclude open-network transfers or provide a separate rule set tailored to such transfers. The letter also suggests that the application of the final rule be limited to transfers in an amount that is consistent with the value of a traditional remittance.
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TCH Recommends Changes to TIC Instructions
Jun 30, 2011 --
The Clearing House Association submitted a letter to the Federal Reserve Bank of New York requesting that (i) the TIC instructions be revised to provide uniform definitions of defined terms and to clarify reporting for a bank’s “own foreign office” and the definitions of other terms used in the instructions to the TIC reports and (ii) TIC B instructions’ Consolidation/Combination Rules be clarified with respect to where on the TIC B reports a reporting entity should consolidate a subsidiary.
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TCH Reiterates the Importance of Preemption Doctrine
Jun 27, 2011 --
The Clearing House Association submitted a letter to the Office of the Comptroller of the Currency (OCC) commenting on its proposal to implement Section 1044 of the Dodd-Frank Act. TCH endorsed much of the preemption framework proposed by the OCC. The comment letter noted that Section 1044 merely codified the existing preemption standard and was not an attempt to create a new, narrower formulation. The letter also addressed process issues related to preemption determinations, existing OCC regulations that are affected by the proposed rule, and the important market and operational impacts that may occur if the existing framework is altered. Last, TCH also addressed specious arguments linking Federal preemption to the subprime mortgage crisis.
On July 21 the OCC published in the Federal Register its final rule on preemption. The final rule largely tracks the initial proposal and incorporates several substantive comments made by TCH Association.
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TCH Calls SIFI Surcharges Premature
Jun 15, 2011 --
In another example of The Clearing House leadership, the Association submitted a comment letter to regulators regarding the application of capital surcharges to systemically-important financial institutions in the U.S. The letter argues that proposed surcharges are premature given the macroprudential reforms still being implemented and are based on untested academic models and theories.
Basel III’s capital reforms, when fully implemented, will result in a tripling of the amount of Tier 1 common equity currently required by the U.S. banking regulators. Moreover, the myriad systemic risk reforms contained in the Dodd-Frank Act are yet to be finalized. Given that the full impact of these reforms is not yet known, the incremental benefit of any surcharge may be minimal, particularly when compared to the potential negative macroeconomic effects. TCH’s empirical analysis demonstrates that the Basel III capital levels would have been sufficient for all banks to have survived the financial crisis. This indicates that the macroprudential benefit of a capital surcharge would likely be minimal.
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TCH Advocates Iterative Resolution Planning
Jun 10, 2011 --
The Clearing House Association filed a comment letter with the FDIC and Fed on their proposal implementing resolution planning and credit-exposure reports. The letter advocates for, among other things, a phasing in of the proposed rule, a pilot program, a more iterative and supervisory process, international coordination and greater confidentiality standards.
At its September 13 meeting, the FDIC Board approved a rule on the living wills required by § 165(d)(1) of Dodd-Frank.
Key features of the § 165 Rule include several changes from the proposed version, as advocated by TCH: (i) an iterative process actively involving dialogue between firms and regulators, (ii) phasing in the implementation of the submission deadlines, starting with the largest firms, which will have to submit their resolution plans by July 2012, (iii) a requirement, upon a material change, to give notice to the agency (rather than to submit an updated plan), (iv) postponement of final rulemaking on credit-exposure reports to allow further coordination with FRB actions, and (v) greater confidentiality protections. In addition, as TCH recommended in its related comment letter, the FDIC has harmonized the IDI Rule with the § 165 Rule, so that, for example, timing and content requirements are more consistent and duplicative effort is limited.
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TCH Proposes Alternatives to Current Mortgage-Servicing-Compensation Structure
Jun 10, 2011 --
The Clearing House Association submitted a letter to the Federal Housing Finance Agency to refine details of TCH’s proposal to create a “rainy day” reserve account that would be available to cover unanticipated increases in the costs of servicing non-performing loans. Under TCH's proposal an incremental share of the mortgage cash flow (e.g., 3 bps) would be retained by the servicer and used to create a refundable custodial reserve account designed to cover unanticipated increases in either the costs or incidence of nonperforming loans. The reserve account would be tied to a specific vintage and held in trust by a bankruptcy-remote entity, with unused portions refunded to the servicer if the application of the funds proved unnecessary to cover extraordinary servicing costs. The terms for both accessing and releasing the reserve funds would be established in advance as part of the servicing contract. TCH also recommended reducing the minimum servicing fee to approximately half of the existing level, one of several alternatives identified on FHFA’s website.
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TCH Proposes Each FATCA Rule Is Analyzed Individually
Jun 7, 2011 --
The Clearing House Association and ABA submitted a joint comment letter responding to the second round of preliminary guidance issued by IRS (Notice 2011-34) with respect to implementation of FATCA. TCH acknowledges the difficulty that IRS and Treasury face in designing rules that strike the appropriate balance between the U.S. government’s interest in receiving information and the need for the new rules to be practical, logical and administratively manageable for both IRS and taxpayers. TCH believes, however, that certain provisions in Notice 2011-34 do not appropriately strike that balance. Specifically, TCH proposes that (i) the application of the passthru payment percentage initially apply only to dividend payments made by a FFI described in Code Section 1471(d)(5)(C) and to related custodial payments where the investment is held through a foreign custodian and that the percentage be a based on a standardized formula, (ii) the rules requiring heightened due diligence focus solely on account balance and clarify the account information that is subject to the heightened due diligence search for U.S. indicia, (iii) the requirements for the Chief Compliance Officer’s certification be clarified and (iv) the rules to qualify as a deemed compliant FFI be simplified.
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TCH and Industry Comment on Proposed Changes to Reg CC
Jun 3, 2011 --
The Clearing House Association submitted a joint comment letter with ECCHO, ICBA, and BITS to the Fed regarding proposed changes to Reg CC to facilitate the continuing transition to fully electronic check clearing and return. Key changes include making the duty of expeditious return contingent upon a depository bank’s willingness to accept electronic returns, permitting a paying bank to require the same day settlement items be presented electronically, and expanding certain check warranties to cover paperless remotely created checks. The comment letter responds in detail to each aspect of the Fed’s proposal.
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TCH Comments on Proposed Changes to Reg CC
Jun 3, 2011 --
The Clearing House Association submitted a comment letter to the Fed regarding proposed changes to Reg CC to facilitate the continuing transition to fully electronic check clearing and return. Key changes include making the duty of expeditious return contingent upon a depository bank’s willingness to accept electronic returns, permitting a paying bank to require the same day settlement items be presented electronically, and expanding certain check warranties to cover paperless remotely created checks. TCH’s comment letter focuses on two issues: check fraud liability and the legal status of paperless remotely created checks.
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TCH Raises Concerns About FDIC’s Assessment Proposal
May 31, 2011 --
The Clearing House Association filed a comment letter with the FDIC on its proposal implementing assessment rate adjustment guidelines for large and highly complex institutions. The letter raised several concerns with the proposal and suggested that the FDIC use its discretionary authority for upward adjustments rarely and only in clearly compelling circumstances and that any upward adjustment should require concurrence by an institution’s primary regulator. TCH also asked the FDIC to explain the rationale for any upward adjustment and to adjust downward the assessments for firms that pose less risk to the insurance fund.
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TCH Recommends Ways to Improve CISADA Regulations
May 26, 2011 --
The Clearing House Association submitted a comment letter responding to the FinCEN’s proposal to implement 104(e) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA). TCH recommended ways to improve the proposal, including, eliminating or clarifying the need for a U.S. bank to certify the foreign bank’s response, and clarifying that a foreign bank’s failure to respond to the inquiry would not, by itself, require the U.S. bank to close the foreign bank’s correspondent account. On October 11 the Treasury and FinCEN released the final CISADA reporting requirements under Section 104(e) rule. The rule requires a U.S. bank that maintains a correspondent account for a foreign bank to inquire of the foreign bank, and report to FinCEN certain information with respect to transactions or other financial services provided by that foreign bank. Under the rule, U.S. banks will only be required to report this information to FinCEN upon receiving a specific written request from FinCEN.
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TCH Comments on Garnishment of Accounts Containing Federal Benefit Payments
May 24, 2011 --
The Clearing House Association submitted a comment letter responding to interim rules issued by the Treasury and four other federal agencies. The interim rules protect federal benefit payments by requiring banks to follow certain procedures when garnishment orders are issued against the bank accounts of federal benefit recipients. The letter requests clarification on a number of issues and suggests that the procedures should not be applicable in certain instances.
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TCH Advocates Coordinated Effort When Implementing Certain OLA Provisions
May 23, 2011 --
The Clearing House Association submitted a joint comment letter with SIFMA, ABA and FSR responding to an NPR on implementing claims, processes and executive-compensation provisions under OLA. On July 15 the FDIC published in the Federal Register a final rule under the Dodd-Frank orderly-liquidation authority. The changes from the interim final rule and the NPR affect the provisions that, with respect to a failed firm resolved under the authority, claw back compensation of an executive or director, prioritize payments, define “financial company,” and regulate the payments of claims, including the rights of secured claimants.
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TCH Proposes Recapitalization as a Tool To Resolve SIFIs
May 23, 2011 --
The Clearing House Association submitted a joint comment letter with SIFMA responding to a second NPR under Title II. This letter submits a working paper on recapitalizations as an effective way to resolve systemically important banks and non-bank financial companies on a closed basis without taxpayer-funded bailouts.
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TCH Opposes Designation of Retail Payments Systems (ACH & Check Image) as Systemically Important under Title VIII
May 20, 2011 --
The Clearing House Association and Payments Company filed a comment letter responding to the FSOC NPR on the criteria, processes, and procedures for the designation of FMUs as systemically important. While not taking specific issue with the criteria, processes, and procedures outlined, The Clearing House provided additional information on why EPN and IPN do not fit the criteria for designation as systemically important under Title VIII and the FSOC proposed rule. On July 18 the FSOC approved a final rule addressing the criteria and process for designation of financial-market utilities (“FMUs”) under Title VIII of Dodd-Frank. Under the rule the FSOC will use a two-step process to designate FMUs. In the first stage the FSOC will use quantitative data to identify a preliminary set of FMUs, and in the second stage it will conduct a closer examination of quantitative data and particular characteristics to designate FMUs.
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TCH Contends Retail Payment Systems Are Not Systemically Important FMUs
May 19, 2011 --
The Clearing House Association and Payments Company filed a comment letter to the FRB regarding risk management standards for FMUs under Section 804 of the DFA and standards for determining when a designated FMU must provide advance notice of a proposed material change to its rules, procedures, or operations under Section 806 of the DFA. The letter argues that the proposed risk management standards demonstrate that ACH clearing and settlement arrangements do not pose the kind of systemic risk contemplated in the DFA, and further suggests that the Board’s proposed definition of materiality for advance notice of changes to rules, procedures, or operations should be crafted more narrowly and the review process provide for more streamlined reviews.
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TCH Addresses Proposed Revisions to Call Reports
May 16, 2011 --
The Clearing House Association submitted a letter to the FDIC, OCC and FRB addressing our concerns with the reporting of subprime and leveraged lending data on the Call Report, as well as other reporting issues. The letter also recommends that the agencies ensure that examination and supervision information that is proposed for collection in the Call Report remain confidential.
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TCH Responds to FDIC’s Request for Comment Related to the Repeal of Reg Q
May 16, 2011 --
The Clearing House Association submitted a joint letter with the ABA to the FDIC to suggest that (i) FDIC incorporate the Federal Reserve principles governing earnings credits into a Financial Institution Letter (FIL) to memorialize the Fed rules and govern the continued development of these programs and (ii) Federal Reserve and FDIC host roundtables with the industry to work through certain regulatory details related to the repeal of Regulation Q prior to July 21, 2011.
On July 14 the FDIC published in the Federal Register a final rule repealing the prohibition against the payment of interest on demand deposit accounts effective July 21. As requested in TCH’s comment letter, the FDIC has stated that it will continue to rely on the Fed’s interpretation of Reg Q for purposes of determining which accounts are eligible for temporary, unlimited deposit-insurance coverage.
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TCH Responds to FRB’s Request for Comment Related to the Repeal of Reg Q
May 16, 2011 --
The Clearing House Association submitted a joint letter with the ABA to the Fed to suggest that (i) Federal Reserve opinions and other interpretative Regulation Q materials be maintained for a period of 18 months or more after repeal of Regulation Q and the (ii) Federal Reserve and FDIC host roundtables with the industry to work through certain regulatory details related to the repeal of Regulation Q prior to July 21, 2011.
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TCH and Industry Solicit LEI Solution Providers
May 13, 2011 --
Having developed a comprehensive set of requirements for the legal entity identifier (LEI) system, The Clearing House Association, along with 12 other trade associations, are now looking to identify one or more solution providers who, individually or collectively, can build the LEI system capable of meeting or exceeding the expectations outlined in the May 3 requirements document. To facilitate the identification process, the trade associations are conducting a solicitation of interest exercise and are inviting solution providers who meet the prerequisites to respond to the questions in the document by June 3, 2011.
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TCH’s Perspectives on Mortgage-Servicing Compensation
May 11, 2011 --
The Clearing House Association submitted a presentation to the FHFA to provide TCH’s perspective on the relationships among servicing-compensation structures, mortgage-banking business models and incentive structures and to propose some alternative ways to structure servicing compensation going forward.
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TCH Suggests Improvements to CFPB’s Consumer Response Intake Form Process
May 9, 2011 --
The Clearing House Association submitted a joint comment letter with the ABA to the CFPB Implementation Team in response to a proposed intake form for consumer “complaints, questions, and other information” about financial products or services. The letter (i) notes that in order to establish a robust and effective consumer complaint and inquiry process, a more engaging and facilitative process is necessary than a Paperwork Reduction Act notice and comment; (ii) suggests that separate intake forms be used for consumer complaints versus general consumer inquiries or comments, and (iii) urges the implementation team to focus first on getting a workable consumer complaint intake process in place by July before considering intake forms and processes for the collection of general consumer inquiries and comments.
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TCH and Industry Propose Requirements for LEI Solution Providers
May 3, 2011 --
The Clearing House Association, along with 12 other trade associations, published a legal-entity identifier (LEI) requirements document. The LEI will help enable organizations to measure and manage counterparty exposure more effectively while providing substantial operational efficiencies and customer-service improvements to the industry.
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TCH Comment Letter to FASB and IASB on Balance Sheet Offsetting
Apr 28, 2011 --
The Clearing House Association submitted a comment letter to the FASB and IASB in response to their proposal on netting. TCH believes that (i) net presentation provides a superior presentation of an enterprise’s liquidity and credit risk for derivatives and certain securities financing contracts than gross presentation; (ii) there is no compelling reason to further limit the availability of net presentation; and (iii) the Boards should consider the effect of the proposal on financial ratios and other charges that are based on total assets and total liabilities. TCH also encourages the Boards to consider the significant operational costs of compliance, as well as two alternative approaches, netting for certain derivatives and the linked presentation approach.
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TCH Supports Proposed Special Measure Against Lebanese Canadian Bank
Apr 18, 2011 --
The Clearing House Association submitted a letter to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) commenting on FinCEN’s proposal to impose a special measure on Lebanese Canadian Bank, which FinCEN has designated as a financial institution of primary money-laundering concern. The letter supports the proposed special measure but states that (i) the notice requirement could be made less burdensome by allowing banks to put in the terms and conditions governing their correspondent banking relationships a requirement that the correspondents use their account in a manner that is consistent with U.S. law, and (ii) FinCEN should promptly review the status of the designation as a financial institution of primary money-laundering concern if there is a change of ownership, organization or control.
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TCH Suggests Credit-Rating Alternatives
Apr 12, 2011 --
The Clearing House Association submitted its October 12, 2010 comment letter on alternatives to the use of credit ratings to the SEC and the NCUA in response to their NPRs. As does the TCH letter submitted to the federal banking agencies, each of these letters expresses concerns about any complete removal of references to, or requirements of reliance on, credit ratings in the agencies’ regulations, notes international regulators’ concerns, offers possible alternatives and its cooperation in working with regulators to develop others, and urges the agencies to allow external credit ratings to continue to be used within the constraints imposed by Dodd-Frank.
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TCH to G-20: Support Global LEI Solution
Apr 12, 2011 --
The Clearing House Association, along with eight other financial industry trade associations, submitted a letter to the G-20 finance ministers. The associations recommend that the ministers support a uniform, global legal-entity identifier (LEI) solution as a new tool to help promote industry and supervisory efforts to monitor and evaluate systemic risk and to enhance financial stability. The letter also offers to work with regulators and supervisors globally to develop the LEI.
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TCH Concerned by Dodd-Frank Debit Card Interchange Provisions
Apr 11, 2011 --
The Clearing House Association, joined by eight other trade associations, filed a letter with the FRB emphasizing the extraordinary breadth and depth of organizations and Government officials that have expressed concerns similar to those expressed in the associations’ February 22 comment letter to the Board on its proposed rule to implement the debit card interchange provisions of Dodd-Frank. The letter also addresses suggestions that governments in other countries have capped or eliminated debit card interchange fees without any negative consequences to consumers or debit card issuers in those countries, focusing particularly on the experience in Canada where consumers have ended up paying slightly more than the current debit interchange fee of 44 cents received by U.S. issuers. On July 20, 2011 the FRB published in the Federal Register its final Regulation II, implementing the Durbin Amendment. The rule, which differs from the Board’s December 16 proposed rule, caps interchange fees for debit card transactions at 21 cents plus an ad valorem component of five basis points as an adjustment for fraud losses. A debit card transaction interchange fee that does not exceed this threshold is conclusively deemed reasonable and proportional. The FRB also approved an interim final rule that allows an issuer to receive an adjustment of 1 cent to its interchange transaction fee if the issuer complies with certain fraud prevention standards outlined by the FRB. The interchange fee limitations and the interim final rule are effective October 1, 2011.
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TCH Requests Clarification on Basel II Pillar 3 Reporting Deadlines
Apr 11, 2011 --
The Clearing House Association submitted a letter to the OCC, Board of Governors, FDIC and OTS (the “Agencies”) recommending that (i) the Agencies provide sufficient notice to a core bank when granting it permission to exit its parallel run; (ii) the annual Pillar 3 disclosure submission deadlines be no earlier than the corresponding SEC filing deadlines (60 days); (iii) the first Pillar 3 disclosure submission deadline be a minimum of 60 days after quarter end; and (iv) the disclosures described in the Basel Committee's proposed Pillar 3 disclosure requirements for remuneration not be adopted by the Agencies. On December 7 the FRB responded to TCH Association’s letter agreeing with TCH’s recommendations that (i) the annual and first reporting period Pillar 3 disclosures may be published more than 45 days after the end of the calendar quarter, but no later than the applicable SEC guidelines, and (ii) the Fed will notify a banking organization of the successful completion of its parallel run at least 30 days prior to the end of the parallel run period.
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TCH Seeks Risk-Based Capital Rules’ Clarifications
Apr 11, 2011 --
The Clearing House Association along with the ABA, IIF, ISBA and SIFMA submitted a comment letter to the FDIC, FRB and OCC in response to the agencies’ risk-based capital guidelines proposal. The comment letter addressed several critical concerns shared by a multitude of financial institutions and sought to clarify other important issues. Of particular note, the comment letter argues for: (i) removing the redundancies found throughout the proposal; (ii) ensuring that risk reduction and mitigation efforts are properly counted; (iii) aligning the regulatory framework with idiosyncratic and market risks that exist and (iv) clarifying where, how, and why the proposal departs from Basel II.5.
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TCH Comments on Remittance Transfers
Apr 8, 2011 --
The Clearing House Association submitted a comment letter to the FRB proposing a definition of “error” for purposes of the error resolution rules that the FRB must issue under § 1073 (remittance transfers) of Dodd-Frank. TCH suggests that errors exclude unauthorized wires that are effective against the sender under UCC 4A, variances in amount when a financial institution has provided a reasonably accurate estimate of the amount to be received and delays in receipt or variances in amount which are caused by circumstances beyond a financial institution’s reasonable control. The proposed language also preempts UCC 4A-108 so that remittance transfers that are wires remain funds transfers and, as between financial institutions, UCC 4A is still applicable. Finally, the letter requests that the Board limit the application of § 1073 to remittances less than $500.
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TCH Proposes Development of Full-Scope Impairment Model
Apr 1, 2011 --
The Clearing House Association submitted a letter to the FASB and IASB in response to the FASB’s and IASB’s proposal on impairment. TCH recommends that (i) the FASB and IASB develop a full-scope impairment model and expose it for comment, as it is difficult for our members to fully evaluate the proposal given its narrow scope and the insufficient time afforded to field test it; (ii) the definition of the bad book be based on the current U.S. GAAP definition of an impaired loan; (iii) the new approach be a conceptually sound model that also acknowledges the need for the application of significant judgment on the part of management; and (iv) the specific guidance for troubled debt restructurings be eliminated.
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TCH Responds to NYS Department of Taxation and Finance Request
Mar 18, 2011 --
The Clearing House Association submitted a letter to the New York State Department of Taxation and Finance responding to their request for background information on § 1256 of the Internal Revenue Code and also responding to public comments made on March 17 by the New York State Tax Commissioner. TCH provided information on § 1256 in support of our request that the proposed corporate tax reform legislation include not only assets marked-to-market under IRC § 475 but also assets marked-to-market under Code § 1256. We also listed the few issues with respect to corporate tax reform that we believe had been left open at the end of last year and/or we would like to discuss further with the Department.
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TCH Suggests Hedge Accounting Revisions
Mar 9, 2011 --
The Clearing House Association submitted a comment letter to the IASB and the FASB on IASB’s exposure draft on hedge accounting. TCH recommends that (i) the IASB and FASB align hedge accounting with the economics of hedging transactions in a converged model; (ii) the Board permit dedesignation of hedge accounting relationships and hedge accounting if the risk component is separately identifiable and reliably measurable; (iii) the Board reconsider the accounting for hedging credit derivatives and the hedge accounting model for macro-hedging; and (iv) the proposed disclosures remain principles-based. Additionally, TCH objects to the proposed hedge effectiveness requirements and does not support the proposed presentation changes for fair value hedges.
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TCH Opposes Collins Amendment’s Risk-Based Capital Ratio
Feb 28, 2011 --
The Clearing Housing Association and SIFMA submitted a comment letter to the FRB, OCC, and FDIC regarding their notice of proposed rulemaking to implement the Collins Amendment, § 171 of Dodd-Frank, by replacing the transitional floors in § 21(e) of the Advanced Risk-Based Approach with a permanent floor equal to the Tier 1 and Total risk-based capital ratios as calculated under the U.S. Basel I Standards. TCH and SIFMA expressed concern that (i) the NPR’s approach does not accommodate the possibility that the agencies’ implementation of Basel III’s risk-based standards may apply differently to core banks as compared to small banks; (ii) it is not possible to understand the operation and consequences of the Collins Amendment without simultaneously addressing the broader range of related changes in capital regulation; and (iii) the NPR does more than the Collins Amendment requires.
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TCH Supports Broad Criteria for NBFCs
Feb 25, 2011 --
The Clearing House Association filed a letter with the FSOC in response to its notice of proposed rulemaking requesting comments on the criteria to be used to designate systemically important nonbank financial institutions for enhanced regulation. The letter argues that designations should be broadly-based, prompt and based primarily on a firm's size, interconnectedness, dependency and reasonable prospects of ever being subjected to the orderly-liquidation authority's special resolution provisions.
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TCH Joins Trades in Letter to SEC on Proposed Municipal Advisor Registration Requirements
Feb 22, 2011 --
The Clearing House Association submitted, along with the ABA and ABASA, a letter to the SEC on its notice of proposed rulemaking to establish a permanent registration system for municipal advisors under § 975 of Dodd-Frank. While the associations support the goal of ensuring that market participants providing investment advice to municipalities are appropriately regulated, they believe that the proposed rules go beyond legislative intent and public policy need by regulating already-regulated traditional banking products that are outside the ambit of § 975. The letter encourages the SEC to (i) state clearly that traditional banking products and services are not covered by § 975, (ii) provide an exemption from § 975 requirement for advisory activities that would be exempt were banks required to register as advisers under the Advisers Act, and (iii) rethink its proposal to exclude appointed members of a municipality’s governing body from the definition of “employee of a municipal entity.”
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TCH to Fed: Debit Card Interchange Fees Too Low
Feb 22, 2011 --
The Clearing House Association, along with eight other trade associations, submitted a comment letter strongly urging the Federal Reserve Board to fundamentally revise its proposed rule on debit card interchange fees. The proposed rule imposes a fixed cap on interchange fees that the FRB admits will prevent banks and credit unions from recovering even the basic costs of providing debit card services. Hence, the letter urges the FRB to revise its rules and allow issuers to receive fees that, as specified by the Durbin Amendment, are reasonable and proportional to the issuers’ actual costs with respect to debit card transactions. The letter also asks the FRB to follow its mandate from Congress to carefully consider the impact of any price regulation on consumers, financial institutions and the U.S. payments system as a whole.
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TCH Submits Comments to SEC on Study Regarding Extraterritorial Private Rights of Action
Feb 18, 2011 --
The Clearing House Association submitted a comment letter to the SEC on the Commission’s study on expanding the scope of private litigant securities fraud lawsuits to include those involving fraudulent acts occurring outside of the U.S. TCH expressed its belief that (i) the SEC should recommend to Congress that it not expand the Exchange Act’s private right of action to purchase and sales of securities that occur outside the U.S., and (ii) that under Morrison v. National Australia Bank the Exchange Act’s private right of action does not cover any purchase or sale of a security conducted outside the U.S. TCH’s comment letter was joined by the IIB and ABASA.
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TCH Supports Predictable OLA Rules That Reflect Bankruptcy-Code Recoveries
Feb 18, 2011 --
The Clearing House Association submitted a comment letter to the FDIC on a notice of interim final rule implementing certain provisions of the Dodd-Frank orderly-liquidation authority (OLA). The comment letter states that the comments made to the FDIC in our related November 18, 2010, and January 11, 2011, letters generally remain applicable. The letter urges the FDIC to consider three overarching goals as it develops OLA rules in the months ahead: (i) predictable, transparent, fair and well-integrated procedures, (ii) approaches and results reflecting those that would apply to a company under the Bankruptcy Code as well as creditor recoveries generally no less than those received thereunder, and (iii) regulations that reduce, or at least not enhance, the likelihood of failure in order to manage systemic risk while reducing moral hazard.
On July 15 the FDIC published in the Federal Register a final rule under the Dodd-Frank orderly-liquidation authority. The changes from the interim final rule and the NPR affect the provisions that, with respect to a failed firm resolved under the authority, claw back compensation of an executive or director, prioritize payments, define “financial company,” and regulate the payments of claims, including the rights of secured claimants.
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TCH Comments on CFPB Consumer Inquiry Database Proposal
Feb 8, 2011 --
The Clearing House Association, along with four other trade associations, submitted a comment letter to the CFPB Implementation Team on the proposed establishment of a Consumer Inquiry and Complaint Database. The associations believe that the resolution of consumer concerns is an important and delicate matter, and expressed concerns that (i) the Implementation Team may not promptly refer all consumer complaints or inquiries received by the Implementation Team to existing prudential regulators, which are best equipped to address them, (ii) the breadth of routine uses proposed for the Implementation Team CIC Database will result in consumer inquiry and complaint information disclosures not anticipated or expected by consumers, and (iii) responding to and resolving consumer complaints and inquiries is beyond the scope of Treasury’s statutory authority.
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TCH Submits List of Tax Regulations in Need of Clarification
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Feb 1, 2011 --
The Clearing House Association submitted a reply to Internal Revenue Service Commissioner Shulman’s request that we provide him with a list of the major areas of current Treasury tax regulations which, in our members’ view, are most in need of additional, clarifying guidance. TCH recommends increased reliance on book-tax conformity generally, recommends a purposive approach under § 382 of the Internal Revenue Code for certain situations not involving the potential for abuse, suggests that the Internal Revenue Service reconsider its position regarding the "all or nothing" rule and other unnecessarily punitive tax consequences of the dual consolidated loss rules and suggests that the Internal Revenue Service clarify that swaps with upfront payments that are notional principal contracts cleared through a U.S. clearinghouse by a controlled foreign corporation of a U.S. shareholder that owns an interest in the clearinghouse do not create “deemed loans” under § 956 of the Internal Revenue Code.
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TCH Offers Suggestions on LEI Development
Jan 31, 2011 --
The Clearing House Association, along with seven other trade associations, submitted a comment letter to the Office of Financial Research on a proposal to develop a system of uniform legal-entity identifiers (LEIs) to measure and evaluate systemic risk in the financial system. The comment letter urges OFR (i) to work with all the major domestic and global financial-services regulators toward one LEI standard, (ii) to choose a non-profit LEI issuer with a stable funding source and an open and transparent process, (iii) to define clearly which parties are responsible for obtaining LEIs, (iv) to institute an LEI system in accordance with the interagency whitepaper, “Creating a Linchpin for Financial Data: The Need for a Legal Entity Identifier,” especially one that issues neutral LEIs, and (v) to consider carefully the phase-in strategy and which data elements to require. The associations noted that they are working together to develop an industry proposal.
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TCH Recommends Same Effective Date for All Boards’ Standards
Jan 31, 2011 --
The Clearing House Association submitted a comment letter to the FASB and the IASB (the “Boards”) recommending that all standards have the same effective date, but with the option to early adopt any or all standards. TCH also recommends that the Boards adopt a prospective transitional approach for new standards wherever possible; recommends that if a single date approach is adopted, the Boards provide for approximately a five-year transition period, with an additional year for each year that is required to be presented on a retrospective basis; and recommends that the Financial Statement Presentation project be deleted from the Boards’ agendas before any major new standards are required to be implemented.
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TCH: Only Largest Interbank Payments Systems Should Be Systemically Important
Jan 20, 2011 --
The Clearing House Association filed a comment letter with the FSOC in response to an ANPR regarding the criteria that should be applied under § 804 of Dodd-Frank to designate financial-market utilities as systemically important. In the letter TCH indicates its support for the purposes of Title VIII but also sets forth its belief that only the largest interbank-payment systems pose the type of systemic risk contemplated by Title VIII. The designation of lower-value payment systems, such as PayCo’s EPN and IPN under Title VIII, would only add additional layers of regulatory oversight without commensurate benefits in mitigating systemic risk and would be beyond the scope of Title VIII.
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TCH Supports No-Worse-Than-Chapter 7 Recovery for OLA Creditors
Jan 11, 2011 --
The Clearing House Association sent a comment letter to the FDIC in response to the FDIC’s notice of proposed rulemaking implementing certain orderly-liquidation-authority provisions of the Dodd-Frank Act. The Association requests that the FDIC provide clear confirmation that it stands fully behind the statutory mandate that creditors and counterparties of a covered financial company fare no worse in a Dodd-Frank liquidation than they would in a Chapter 7 bankruptcy proceeding. TCH also stresses the importance that the regulations be fully coordinated with the other terms and goals of Dodd-Frank and the vast array of regulations that the various agencies are adopting to govern the conduct of business under the Act, particularly the heightened regulatory regime for systemically important financial institutions (SIFIs).
On January 18 the FDIC Board of Directors approved an interim final rule clarifying how it will treat certain creditor claims under the new Dodd-Frank orderly liquidation authority. The interim final rule differs from the FDIC’s October 19, 2010, proposed rule in that it clarifies the standard for valuation for collateral on secured claims and revises the provision relating to treatment of contingent claims.
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Trades Comment to CFTC and SEC on Aggregation of Ownership Limits for DCOs, DCMs, and SEFs
Jan 11, 2011 --
The Clearing House Association joined a joint-trades comment letter to the CFTC and SEC on the aggregation of ownership limits for DCOs, DCMs, and SEFs. The letter was filed in response to the position the Department of Justice took in a December 28 letter to the CFTC advocating for stricter aggregation rules for DCOs and expanding similar limits to DCMs and SEFs. The Associations wrote that the DOJ letter does not appear to take into account the regulatory framework established under Dodd-Frank to address the very concerns it cites.
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TCH Opposes Formation of UCC Drafting Committee
Jan 6, 2011 --
The Clearing House Association sent a comment letter to the Uniform Law Commission Executive Committee and Scope and Program Committee opposing a recommendation that a drafting committee be formed to revise U.C.C. Articles 3, 4 and 4A beyond what is minimally necessary to address specific issues concerning mortgage promissory notes and foreclosure.
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TCH Proposes Revisions to Deposit Insurance Pricing System
Jan 3, 2011 --
In another example of The Clearing House leadership, the Association submitted a letter to the FDIC on its NPR to revise the pricing system applicable to large insured depository institutions and to revise the deposit-insurance assessment base and rates. The letter states that the NPR remains deeply flawed and requires fundamental change to comport with the FDIC’s obligation to carry out its statutory mandate to base assessments on risk to the deposit insurance fund.
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TCH Comment Letter to Federal Reserve Board and OMB on Federal Reserve Regulatory Reports (FR Y-9C, FR Y-9LP, FR Y-11 and FR 2314)
Dec 30, 2010 --
The Clearing House Association submitted a comment letter to the Board of Governors (the “Board”) and OMB recommending that the Board delay changes relating to troubled debt restructurings (“TDRs”) until after the Financial Accounting Standards Board has finalized its accounting for TDRs under U.S. GAAP; the effective date of the proposed new Schedule HC-V, Variable Interest Entities be delayed until the September 30, 2011 FR Y-9C Report; the maturity and repricing data for assets and liabilities at contractual ceilings and floors instructions should remain unchanged; urging the Board to combine the FR Y-11 and FR 2314 into a single report; and requesting the opportunity to discuss with the Board a comprehensive review of the FR Y-9C Report.
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TCH Comments on FRB’s Proposal on Volcker Rule Conformance Period
Dec 30, 2010 --
The Clearing House Association sent a comment letter to the Federal Reserve Board commenting on a proposed rule regarding the conformance period for entities engaged in proprietary trading or private-equity-fund and hedge-fund activities. The Association believes that the proposal severely limits the availability of the special extension for banking entities’ investments in illiquid funds, which is contrary to Congressional intent and will raise legal and prudential concerns for banking entities. TCH recommends certain changes to the definitions in the proposed rule to allow the special extension for banking entities’ investments in illiquid funds to achieve its statutory purpose, taking into account how funds operate in practice. On February 9 the FRB approved a final rule to implement Dodd-Frank provision providing firms with a defined period to conform activities and investments to the requirements of the Volcker Rule. The final rule is largely similar to, but differs in certain respects from, the November 2010 proposed rule. Changes include expanded conditions under which an asset may be considered an “illiquid asset” and broadened the types of documents that may be considered in determining whether a hedge fund or private equity fund is “contractually committed” to principally invest in illiquid assets or whether a banking entity that has sponsored a hedge fund or private equity fund is “contractually obligated” to invest or remain invested in the fund. The rule is effective April 1.
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TCH Submits Comments to FinCEN on Cross-Border Funds Transfers
Dec 29, 2010 --
The Clearing House Association sent a letter to FinCEN commenting on its proposal to require U.S. banks to file reports on Cross-Border Electronic Transmittals of Funds. In the letter, TCH generally supported a program allowing the government to identify possible abuses of the funds-transfer system by terrorists and enhance the government’s ability to thwart possible attacks and neutralize the terrorists and their networks, but believes FinCEN’s proposal is unclear on a number of issues which must be resolved before a reporting system is implemented.
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TCH Comment Letter to FDIC Providing Additional Comments on Revisions to Call Reports
Dec 22, 2010 --
The Clearing House Association submitted a comment letter to the FDIC recommending that the effective date of the proposed new Schedule RC-V, Variable Interest Entities be delayed until the September 30, 2011 Call Report and that certain deposits and money orders/travelers checks and certified checks/other checks be reported in the same category either as partnerships/corporations or as individuals.
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TCH Comment Letter to FASB and IASB on Proposed Joint Draft Standard on Leases
Dec 15, 2010 --
The Clearing House Association submitted a comment letter to the FASB and the IASB (the “Boards”) stating that we have concerns regarding the methodology proposed, as well as the overall operational complexity of the model. TCH recommends that the Boards not change the current accounting model for lessors; agrees with the basic model proposed for lessee accounting but not with the proposal to include optional lease periods and contingent lease payments in the measurement of lease payment liability; strongly recommends that the proposal permit non-core leases to be accounted for as operating leases; strongly recommends that interest expense relating to non-core leasing activities be excluded from net interest margin; and recommends that the Boards adopt a prospective transitional approach for existing leases.
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TCH Comment Letter to FASB on Proposed Accounting Standards Update on Troubled Debt Restructurings
Dec 13, 2010 --
The Clearing House Association submitted a comment letter to the FASB recommending that FASB not proceed with the finalization of the Proposed Accounting Standards Update (the “Proposed ASU”). However, if the FASB does proceed with the Proposed ASU, TCH recommends that the FASB clarify the impairment measurement guidance to explicitly state that loans that are considered Troubled Debt Restructurings (“TDRs”) under the Proposed ASU do not have to be measured for impairment under FAS 114 if there is no impairment; urges the FASB to add a scope exception from the definition of TDRs; suggests that the FASB revise the Proposed ASU to provide that a borrower’s lack of access to funds at a market rate is not determinative of financial difficulty; and recommends that the FASB change the transition method to provide for prospective application of the Proposed ASU.
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TCH Requests FDIC Extend Comment Period for Large-Bank Pricing NPR
Dec 10, 2010 --
The Clearing House Association filed a comment letter with the FDIC asking that it extend the comment period for its proposals to revise the assessment base for FDIC insurance and the method for calculating large-bank assessments.
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Trade Associations Express Concern with Dodd-Frank Rules Process
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Dec 6, 2010 --
The Clearing House Association joined ten industry groups in a letter to the SEC and the CFTC to urge the Commissions to use their discretion to propose, adopt and implement rules in a sequence that gives market participants sufficient time to do the work necessary to comply with new requirements being imposed on them.
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TCH Comment Letter to OCC, Federal Reserve Board, FDIC, and OMB on Revisions to Call Reports
Nov 29, 2010 --
The Clearing House Association submitted a comment letter to the OCC, Board of Governors, FDIC and OMB (the “Agencies”) recommending that the Agencies delay changes relating to troubled debt restructuring (TDR) until after the FASB has finalized its accounting for TDRs under U.S. GAAP; not include in the final regulations the request for data on the nonbrokered deposits obtained through the use of deposit listing service companies; the proposed reporting for separate deposits for partnerships/corporations and individuals be delayed until March 31, 2012 and that certain deposits and money orders/travelers checks and certified checks be reported in the same category either as partnerships/corporation or as individuals; the effective date of the proposed new Schedule RC-V, Variable Interest Entities be delayed; and suggesting that the Agencies prospectively provide earlier notification of future proposed Call Report changes. TCH also requests the opportunity to discuss with the Agencies a comprehensive review of the Call Report, in a collaborative effort to determine whether any information requested is duplicative or no longer necessary.
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TCH Comments on Orderly-Liquidation-Authority Provisions of the Dodd-Frank Act
Nov 18, 2010 --
The Clearing House Association filed a letter urging the FDIC to refrain from implementing certain orderly-liquidation-authority provisions of Dodd-Frank and to coordinate its work with the Financial Stability Board and other international bodies. TCH recommended that rules implementing the Dodd-Frank authority be carefully coordinated with the evolving global-resolution framework to avoid trapped liquidity pools and similar results that would not only put U.S. banking organizations at a competitive disadvantage, but also increase the very market risk that they are intended to reduce.
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TCH Comments on Implementation of FATCA
Nov 5, 2010 --
The Clearing House Association submitted a comment letter to the U.S. Treasury and the Internal Revenue Service responding to Notice 2010-60 (the “Notice”), which provided initial guidance on many of the implementation issues regarding the Foreign Account Tax Compliance Act (“FATCA”) provisions of HIRE and inviting comments on several issues not addressed in the Notice. TCH makes several recommendations to clarify certain defined statutory terms, recommends that reliance be permitted on self-certification of a payee or the USFI’s own documentation to determine the payee’s status for purposes of FATCA reporting and withholding provided the USFI has no actual knowledge or reason to know the documentation is unreliable or incorrect; suggests clarifications to the effective dates for reporting and withholding; and offers recommendations to simplify FATCA reporting and withholding.
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TCH Cautions Against Overly Broad Application of Volcker Rule Restrictions
Nov 5, 2010 --
In a letter to the FSOC, The Clearing House Association recommends that the Council and the agencies consult with affected institutions and other market participants prior to implementing any regulation.
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TCH Comments on Critical Issues in Basel Capital and Liquidity Reform
Nov 5, 2010 --
The Clearing House Association expressed support for capital and liquidity reform efforts in a letter to U.S. representatives on the Basel Committee on Bank Supervision, but also pointed out a number of areas that remain of significant concern. TCH recommended that the quantitative analysis and calibration assumptions of the official sector underlying capital and liquidity reform should be more transparent, with quantitative metrics supporting each proposed reform established in advance of implementation and that the reform of liquidity and capital should proceed in a coordinated fashion and holistically, informed by not only the Basel III proposals but also their interplay with existing capital standards and other sources of capital and liquidity regulation that bear upon their ultimate application.
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TCH Comments on Supervision of Systemically Important NBFCs
Nov 5, 2010 --
The Clearing House Association submitted a letter to the FSOC recommending that it make its determination whether to designate a nonbank financial company (NBFC) as systemically important based on a comprehensive review of its size and interconnectedness as well as the nature of the entity’s operations, rather than its legal form. Determinations should be made as promptly as practicable and on a case-by-case basis.
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Trade Associations Comment on Debit Interchange Transaction Fee Restrictions
Nov 1, 2010 --
The Clearing House Association and the Financial Services Roundtable submitted a joint letter to the FRB outlining their position on what incremental costs should be recoverable under the Durbin Amendment.
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TCH Comments on Agencies’ Credit-Ratings Alternatives Proposal
Oct 12, 2010 --
In a letter to the OCC, Fed, OTS, and FDIC, The Clearing House Association expressed its concern with a proposal to remove credit ratings from all of the federal agencies’ rules. TCH also outlined constructive alternatives to ratings and committed to work with the agencies on this proposal.
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TCH Submits Comment Letter to OCC on Alternatives to Credit Ratings
Oct 12, 2010 --
In a letter to the Comptroller of the Currency, The Clearing House Association expressed its concern with a separate OCC proposal to remove credit ratings from its rules. TCH also outlined constructive alternatives to ratings and committed to work with the OCC on its proposal.
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TCH Comment Letter to SEC on XBRL Filings
Oct 6, 2010 --
The Clearing House Association submitted a comment letter to the Securities Exchange Commission commenting on Phase II of the XBRL filing schedule and offered suggestions on how to achieve the SEC’s goal of providing users with high quality and complete financial information while balancing the reporting burden to registrants. TCH suggests that reporting companies be given the option to file Forms 10-Q and 10-K via EDGAR without Exhibit 101 and then file Exhibit 101 within ten days of filing their Forms 10-Q and 10-K.
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TCH Comments on Basel Proposal on Loss Absorbency of Regulatory Capital
Oct 1, 2010 --
The Clearing House Association's comment letter takes the position that the proposal would be unnecessary in the U.S. because of the resolution framework established by Dodd-Frank. The proposal may be premature because of other ongoing efforts to promote orderly cross-border resolution regimes for systemically-important financial institutions and other “bail-in” proposals. The adoption of the proposal would lead to substantially higher costs of capital for issuers of these instruments, decreasing their access to capital in times of stress.
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TCH Comment Letter to FASB on Proposed Accounting Standards Update on Statement of Comprehensive Income
Sep 30, 2010 --
The Clearing House Association submitted a comment letter to the FASB stating that we do not believe that this proposal improves financial reporting since it does not provide any additional information that is not already readily available in financial statements today. TCH also suggested that the FASB allocate its limited resources to higher priority projects such as financial instruments, impairment and consolidation and should address after the completion of these projects any potential financial presentation changes as part of its financial statement presentation project.
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TCH Comments on New Corporate Information Reporting Requirements
Sep 29, 2010 --
The Clearing House Association submitted a comment letter to the Internal Revenue Service in response to IRS Notice 2010-51, regarding information reporting under the amendments to Internal Revenue Code § 6041 for payments to corporations and payments of gross proceeds with respect to property. TCH recommends that future regulations provide exemptions from reporting where such reporting is unlikely to generate a significant increase in tax compliance; recommends that payors have the option to file Form 1099-MISC on a combined basis; proposes a definition for the term “gross proceeds”; recommends adjustments to the timing of the implementation of the new regulations; and proposes changes to various Internal Revenue Service forms to reflect the new rules.
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TCH Comments on FDIC’s Guidance on Overdraft Payments Programs and Consumer Protection
Sep 27, 2010 --
The Clearing House Association submitted a comment letter to the FDIC identifying those areas of the FDIC’s guidance that go beyond interpretive agency guidance and are more appropriately suited to be addressed through a formal rulemaking process and provided comments on specific measures outlined in the FDIC’s guidance, such as the FDIC’s expectation that depository institutions ensure board-level oversight of their overdraft programs and engage in monitoring and customer outreach in connection with them. The letter also recommended that the guidance empower depository institutions to determine the appropriate oversight for their overdraft programs and suggested that the proposed monitoring and customer outreach is unnecessary because customers are adequately protected under Regulations E and DD.
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TCH Comment Letter to FASB on Proposed Accounting Standards Update, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities
Sep 17, 2010 --
The Clearing House Association submitted a comment letter to the FASB stating that we do not support adoption of the Proposed Accounting Standards Update (the “Proposed ASU”) in its current form and believe that many elements of the Proposed ASU should be modified. Most significantly, TCH believes amortized cost should be retained as a measurement attribute for financial instruments held for the receipt or payment of cash flows; the credit impairment model should incorporate expectations as to future changes in economic conditions and a longer loss emergence period; and the measurement of interest income should be based on amortized cost, not on amortized cost net of the credit impairment allowance. We also strongly recommend that the FASB form a joint FASB/IASB Expert Advisory Panel to conduct proper field testing to fully understand the economic risks, systemic consequences to the banking system, and potential, unintended consequences of the Proposed ASU.
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TCH Comment Letter to FASB and IASB on Proposed Impairment Model for Financial Instruments
Sep 10, 2010 --
The Clearing House Association submitted a comment letter to the FASB and the IASB suggesting that the Boards prioritize adoption of an impairment model for financial instruments and develop a joint project and timeline to work closely on their re-deliberations.
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TCH Comments on Basel Committee Proposal on Countercyclical Capital Buffers
Sep 10, 2010 --
The Clearing House Association submitted a comment letter to the Basel Committee concerning its countercyclical buffers proposal. These capital buffers would be added to the minimum-capital requirements during times when national regulators or monetary authorities determine that excess aggregate credit growth in the economy could indicate a build-up of systemic risk in the banking sector. TCH supports efforts to reduce systemic risk but believes that the proposed buffers would result in a de facto minimum-capital requirement that would adversely affect the ability of financial institutions to conduct core banking functions.
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