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Kevin Petrasic

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The world’s leading banks trust Kevin to manage their regulatory challenges. An in-depth understanding of regulators and their objectives, coupled with his comprehensive knowledge of the banking business, have positioned him as a trusted advisor to clients across the financial sector.

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On March 28, the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) (together, the federal banking agencies) announced their intent to rescind the 2023 Community Reinvestment Act (CRA) final rule and reinstate the previous CRA framework. This decision comes in light of pending litigation in the Fifth Circuit by various banking trade associations contesting the rules by alleging regulatory overreach. The agencies stated they will continue to work together to promote a consistent regulatory approach to implementation of the CRA.

On March 20, the Office of the Comptroller of the Currency (OCC) announced that it will no longer examine its regulated institutions for reputation risk. According to the OCC’s “Categories of Risk,” reputation risk is the risk to earnings or capital arising from negative public opinion, which can affect an institution’s ability to establish new relationships or services or to continue servicing existing relationships. The decision to stop examining banks for reputation risk comes in the wake of the introduction of the Financial Integrity and Regulation Management (FIRM) Act, which aimed to eliminate reputational risk as a component of the supervision of depository institutions.

On January 20, Travis Hill became the Acting Chairman of the Federal Deposit Insurance Corporation (FDIC). Following his remarks on FDIC policy issues on January 10 at the American Bankers Association, in his first statement as Acting Chairman, Hill highlighted various priorities and mentioned new initiatives, emphasizing a commitment to regulatory reform, innovation, and a focus on core financial risks.

On January 8, the United States District Court for the Southern District of New York dismissed the claims brought by Banco San Juan Internacional, Inc. (BSJI) against the Federal Reserve Bank of New York (FRBNY) and the Board of Governors of the Federal Reserve System (Board). BSJI alleged that the termination of its master account by the FRBNY violated various federal laws. The ruling in the BSJI case underscores the discretionary authority of Federal Reserve Banks in granting or denying master accounts.

As discussed here, on June 28, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) proposed significant amendments to the anti-money laundering and countering the financing of terrorism (AML/CFT) program requirements for financial institutions subject to the Bank Secrecy Act (BSA). Last week, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency (collectively, the agencies) issued a joint statement announcing their own notice of proposed rulemaking for their supervised institutions. The purpose of the proposed rulemaking is to align the agencies’ respective AML/CFT program rules with FinCEN’s proposed revisions, ensuring a unified standard for compliance.

On June 24, the Office of the Comptroller of the Currency (OCC) announced it is requesting comments on proposed amendments to its recovery planning guidelines. A recovery plan’s purpose is to provide a covered bank with a framework to effectively and efficiently address the financial effects of severe stress events and avoid failure or resolution. Among other things, the proposed amendments aim to expand the guidelines to apply to banks with average total consolidated assets between $100 billion and $250 billion. The proposal also seeks to incorporate a testing standard and clarify the role of non-financial risks in recovery planning.

On May 30, the U.S. Supreme Court unanimously decided Cantero, reaffirming and elaborating on the Barnett Bank preemption standard, and remanding the case to the Second Circuit for further proceedings. Cantero addressed whether a New York law requiring the payment of at least 2% per annum interest on mortgage escrow deposits was preempted by federal law as to national banks. The Supreme Court held that the Second Circuit erred when it failed to apply the preemption standard articulated in Barnett Bank of Marion County, N.A. v. Nelson, which was incorporated by Congress into the Dodd-Frank Act. The Court rejected the lower court’s holding “that federal law preempts any state law that ‘purports to exercise control over a federally granted banking power,’ regardless of ‘the magnitude of its effects.’” The Court also rejected the approach argued by the petitioners, explaining it would “yank the preemption standard to the opposite extreme, and would preempt virtually no non-discriminatory state laws that apply to both state and national banks.”

On March 29, a Texas federal court granted a preliminary injunction enjoining the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies) from implementing their Final Rule modernizing how they assess lenders’ compliance under the Community Reinvestment Act (CRA). Notably, the court found the plaintiffs demonstrated a substantial likelihood of success on the claim that the Final Rule violates the CRA, indicating how the district court will likely find on the merits.

Today, a divided Federal Deposit Insurance Corporation’s (FDIC) Board of Directors issued a proposed Statement of Policy (SOP) on bank merger transactions that would create a combined bank with more than $100 billion in assets. The proposed SOP would replace the FDIC’s current SOP on bank merger transactions and proposes a principles-based overview that describes…