Final rules on the covered funds provisions of the Volcker Rule, swap margin requirements, and federal interest rate authority are slated by the federal bank deposit insurer next Thursday.
The Federal Deposit Insurance Corp. (FDIC) Board is set to take up action on these items during an open meeting now scheduled for 10 a.m. ET (a change from the previously announced 2:30 p.m. ET meeting start time). The meeting will be viewable online only as the agency continues to exercise “an abundance of caution related to current and potential coronavirus developments,” according to the meeting notice.
A proposed rule on branch application procedures is slated for summary action, meaning a vote with no substantive discussion preceding it. The discussion agenda is as follows:
- Memorandum and resolution re: Interagency Final Rule on Volcker Re-Proposal of Certain Aspects of the Covered Funds Provisions of the Volcker Rule (Volcker 2.1).
- Memorandum and resolution re: Final Rule to Amend Swap Margin Rule.
- Memorandum and resolution re: Final Rule on Federal Interest Rate Authority.
All three of the above issues were addressed in joint agency proposals of the FDIC, Federal Reserve, and Office of the Comptroller of the Currency (OCC):
- Volcker rule covered funds provisions: The provisions would be eased under a proposal by banking regulators (as well as the Securities and Exchange Commission and Commodity Futures Trading Commission). The proposed rule would, among other things, remove a 3% limit on the investment banks can make in venture funds that they offer to their clients and customers. Limits on investment in hedge funds and private equity funds were preserved in the proposal.
- Swap margin: Banking regulators proposed to revise swap margin rules to remove the need for holding initial margin for uncleared swaps with affiliates. The proposal also addresses the transition away from the London Interbank Offered Rate (LIBOR).
- Federal interest rate authority (valid-when-made): The FDIC and OCC issued similar proposals that would allow preservation of the interest rate on a loan regardless of subsequent events, such as a change in state law, change in the relevant commercial paper rate, or the sale, assignment, or other transfer of the loan. The OCC finalized its rule change in May.
Next week’s open meeting can be viewed live via http://fdic.windrosemedia.com; the meeting will be recorded and the recording available on demand about one week afterward.