OCC published Bulletin 2023-15 to update the Liquidity Booklet of Comptrollers Handbook, which is a guide on assessing quantity of a bank’s liquidity risk and of liquidity risk management. The updated version of the booklet discusses banking risks associated with liquidity. It reflects changes in regulations since the booklet was last updated on August 16th, 2021, and it includes clarifying edits on supervisory guidance and sound risk management practices. Additionally, it contains OCC issuances published since the booklet was last updated. The updated liquidity booklet V. 1.2 became effective upon publication, on May 25th, 2023.
Consumer Financial Protection Bureau (CFPB) FINAL Federal Regsiter (2023-07230): Small Business Lending Rule
The CFPB issued a final rule on its Small Business Lending Data collection and reporting on May 31st, 2023, effective beginning August 29th, 2023. The rule requires covered financial institutions to collect and report to CFPB data on credit applications for small businesses, including those owned by women/minorities, and it aims to provide better access by increasing transparency in the lending marketplace. For covered financial institutions, the origination threshold is at least 25 credit transactions. The 28 data points that institutions would be required to report have been provided. Covered financial institutions (tier 1 of 3) must comply with the final rule beginning January 1st, 2024.
Bank of International Settlements (BIS) Basel Working Paper Issued on Insights Into Credit Loss Rates
The Basel Committee issued a working paper titled “Insights into Credit Loss Rates: A Global Database.” Credit risk was a key factor in the great financial crisis and numerous other crises. Alternative micro- and macro-prudential concepts, metrics presented to establish actual credit loss rates and forward-looking market, as wel as macro-implied credit loss rate estimates have been discussed. It proposes a public dashboard with 10 economy-level credit loss rate metrics, which would be updated regularly. The project aims to help close long-standing data gap issues on economy-level credit loss information by providing public resource for researchers, policymakers, and practitioners.
Bank of International Settlements (BIS) Basel Climate Risk Scenarios & Analyses based on Network for Greening the Financial System (NGFS)
The Basel Committee published an Executive Summary on Climate Risks Scenario Analysis, which draws on the NGFS guide on assessing climate risk impact, and reference scenarios increasingly used by public and private sector players to analyze climate-related financial risks. It explains the four-step process of scenario analysis: decide objectives and scope; select and design scenarios; assess economic/financial impact; and use/communicate results. Each scenario explores assumptions on policy, emissions and temperature evolution. It attributes scenarios to climate risk-sensitive sectors, and addresses problems related to a lack of data.
The FSB Regional Consultative Group (RCG) for Americas met in Toronto, Canada on May 26th, 2023. The Group discussed financial system vulnerabilities, the recent banking sector turmoil, developments in crypto-asset markets, and financial risks from climate change. The Group also held a seminar on public and private sector experiences with cross-border payments, and the implementation of an FSB-coordinated cross-border payments roadmap. Climate related risks were a priority topic, as members exchanged views on how physical and transition risks arising from climate change inform financial stability assessments. Role scenario analysis and transition plans were also discussed.