Acting FDIC Chair Martin J. Gruenberg Reveals FDIC Priorities for 2022 Including Climate Change, Crypto-Assets

The Federal Deposit Insurance Corporation (FDIC) Acting Chair Martin J. Gruenberg released on February 7, 2022 the following statement and summary of the FDIC’s priorities for the coming year:

“The FDIC’s core mission is to maintain stability and public confidence in the U.S. financial system. The FDIC carries out this mission through its responsibilities for deposit insurance, banking supervision, and the orderly resolution of failed banks, including systemically important financial institutions.”

As stated in the update:

“Banking supervision encompasses safety and soundness and consumer protection, both of which are essential to this important mission. While there are many pressing issues the FDIC will have to address this year, key priorities are: the Community Reinvestment Act; climate change; the Bank Merger Act; crypto-assets; and the Basel III capital rule. All of these priorities will require close collaboration among the federal banking agencies.”

Martin J. Gruenberg further noted that he’d like to acknowledge the extraordinary dedication of the FDIC staff who will be critical “to carrying forward the work on these priorities.”

In addition, Gruenberg said he wants “to recognize Chair Jelena McWilliams for her contributions to the FDIC, in particular for her commitment, which I share, to diversity and inclusion and minority depository institutions.”

As mentioned in the announcement:

“Strengthen Community Reinvestment Act (CRA): The federal banking agencies – the Federal Reserve, the Comptroller of the Currency, and the FDIC – have been working on a major revision of the rule implementing CRA.”

As explained in the update, the CRA requires banks “to meet the credit needs of all the communities they serve, including low- and moderate-income communities.” The agencies plan “to act jointly on a notice of proposed rulemaking in the near future that would strengthen and enhance CRA.” Action on a revision of CRA will be “the top priority of the FDIC.”

As noted in the announcement:

“Address Financial Risks Posed by Climate Change: Addressing the financial risks that climate change poses to banking organizations and the financial system will also be a top priority of the FDIC. This will include seeking public comment on guidance designed to help banks prudently manage these risks, establishing an FDIC interdivisional, interdisciplinary working group on climate-related financial risks, and joining the international Network of Central Banks and Supervisors for Greening the Financial System.”

The update also mentioned:

“Review Bank Merger Process: The Bank Merger Act establishes the standards used by the federal banking agencies to consider bank merger applications. The process for considering bank mergers by the agencies has not been comprehensively reviewed in 25 years. In light of the significant implications of bank mergers for competition, safety and soundness, financial stability, and meeting the financial services needs of communities, a careful interagency review of the bank merger process is warranted.”

Other arears of focus are as follows:

Evaluate Crypto-Asset Risks: The rapid introduction of a variety of crypto-asset or digital asset products into the financial system “could pose significant safety and soundness and financial system risks.” It is imperative that the federal banking agencies “carefully consider the risks posed by these products and determine the extent to which banking organizations can safely engage in crypto-asset-related activities.” To the extent such activities can be conducted in a safe and sound manner, “the agencies will need to provide robust guidance to the banking industry on the management of prudential and consumer protection risks raised by crypto-asset activities.”

Finalize Basel III Capital Rule: The Basel Committee on Banking Supervision “reached a final agreement on modifications to the Basel III international regulatory framework.” This final agreement would “strengthen the regulatory framework for large banking organizations, including strengthening the capital requirements related to market risk, operational risk, and the risks associated with financial derivatives.” Implementation of this final agreement will be “a priority for the federal banking agencies in the coming year.”

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