Page 8 - May 23, 2024 Bulletin

aRTiCLeS

Personal lending: Banks reported tightening lending standards least $1 billion in assets. The 2016 draft being re-proposed creates
and most terms for all consumer loan categories. Significant net a three-tiered approach based on the size of the institution, from
shares of banks reported tightening standards for credit card $1 billion to $50 billion, $50 billion to $250 billion and more
loans, while moderate and modest net shares of banks reported than $250 billion, with larger institutions subject to stricter
tightening standards for other consumer loans and auto loans, requirements. ABA at the time raised multiple concerns about
respectively. A significant net share of banks reported increasing how the proposal failed to consider individual banks’ business
minimum credit score requirements for credit card loans, while models and risk profiles. The rulemaking failed to advance.
moderate net shares of banks reported doing so for auto loans and Gruenberg said that the FDIC and other banking agencies have
other consumer loans.
continued to address incentive-based compensation practices
Read more: https://www.federalreserve.gov/data/sloos/sloos-202404.htm at supervised institutions since the rule was first proposed in
2016. “Despite these supervisory efforts and other regulatory
Biden Administration to Ease developments, however, the mandate under Section 956 to

Federal Restrictions, Reclassify prohibit any types or features of incentive-based compensation
arrangements that encourage inappropriate risks to re-enforce
Cannabis those efforts is clear,” Gruenberg said. “The agencies are proposing
to meet that mandate under this proposal by applying a
It has been reported that the Biden Administration will soon consistent set of enforceable standards to covered institutions.”
propose that cannabis be reclassified from a Schedule I drug to a
Schedule III drug, allowing the drug to be studied and researched Gruenberg also acknowledged the absence of the Fed and SEC,
for potential medical benefits. The move will also remove federal saying the proposal would only move forward once it is adopted
tax burdens for cannabis businesses operating in states where it is by all six agencies. In an accompanying statement, FDIC Vice
legal and allow for them to deduct ordinary business expenses. Chairman Travis Hill said he opposed the proposal, calling the
decision to advance it “extremely odd” when the Dodd-Frank
The reclassification does not legalize cannabis and therefore does Act states that the rulemaking must include participation by all
not provide guaranteed federal protection for banks to provide the agencies. “Should commenters invest time and resources to
services to the cannabis industry. NDBA continues to lobby respond to this proposal, or wait until all the relevant agencies are
Congress to pass the SAFER Act, which would create a “safe in agreement?” Hill asked.
harbor” from federal sanctions for banks working with cannabis-
related businesses. Read more: https://www.fdic.gov/sites/default/files/2024-05/2024-05-
03-incentive-based-compensation-agreements.pdf
Read more: https://www.msn.com/en-us/news/us/dea-
to-reclassify-marijuana-easing-restrictions-nationwide/ar- Fed Proposes Expanding
AA1nWnAs?ocid=BingNewsSerp
Operating Times of Fedwire, NSS
Some Banking Agencies Seek to to Weekends, Holidays

Place Restrictions on Incentive The Federal Reserve is proposing to expand the operations
Compensation of the Fedwire Funds Service and the National Settlement
Service to include weekends and holidays so both would be
Banking and housing regulators have reintroduced a 2016 available every day of the year. Currently, both payments
proposed rule to establish new limits on incentive compensation services operate Monday through Friday, excluding holidays.
at institutions with at least $1 billion in assets. However, the In its announcement, the Fed said that expanding the times of
Federal Reserve and the Securities and Exchange Commission operation of both would “support the safety and efficiency of the
did not join the other agencies in proposing the rule, despite U.S. payment system and help to position the nation's payment
the Dodd-Frank Act requirement that all the agencies must and settlement infrastructure for the future,” but acknowledged
jointly work on the effort. In addition, FDIC Chairman Martin there could be drawbacks.
Gruenberg said the proposal won’t advance unless all of the
required agencies sign on. “For example, potential benefits of expanding operating days
include improving the credit risk and operational efficiency of
Section 956 of the Dodd-Frank Act requires the Fed, FDIC, systemically important financial market utilities and private-
OCC, National Credit Union Administration, SEC and Federal sector retail payment arrangements, spurring innovation in new
Housing Finance Agency to jointly issue regulations or guidelines or enhanced private-sector payment solutions, and supporting
to prohibit incentive-based compensation arrangements that more efficient cross-border payments flows,” the Fed said. “On
encourage excessive risk-taking at financial institutions with at

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