Weekly RoundUp May 27, 2021

President Biden Signs Executive Order Addressing Climate-Related Financial Risks

Editor's Note
In This Issue. President Biden signed an executive order addressing climate-related financial risks; the Office of the Comptroller of the Currency (OCC) finalized a rule applicable to national banks and federal savings associations regarding the withdrawal period requirement for collective investment funds; and the federal banking agencies finalized changes to Call Reports proposed by the agencies on December 18, 2020 and  February 5, 2021. These and other developments are discussed in more detail below.
Editor's Note
Editor's Note
Editor's Note

Regulatory Developments

President Biden Signs Executive Order Addressing Climate-Related Financial Risks

On May 20, President Biden signed an executive order asserting that the “intensifying impacts of climate change present physical risks to assets, publicly traded securities, private investments, and companies” and directing the Secretary of the Treasury, with assistance from the Office of Financial Research, to engage Financial Stability Oversight Council (FSOC) members in:

  • assessing physical and transitional climate-related financial risk to the financial stability of the Federal Government and stability of the U.S. financial system;
  • facilitating the dissemination of climate-related financial risk data among FSOC member agencies and other executive departments and agencies;
  • issuing a report to the President within 180 days of the executive order on efforts by FSOC member agencies to integrate consideration of climate-related financial risk in their policies and programs; and 
  • including an assessment of climate-related financial risk in the FSOC’s annual report to Congress.

The Secretary of the Treasury must also direct the Federal Insurance Office to assess climate-related issues or gaps in the supervision and regulation of insurers and the potential for major disruptions of private insurance coverage in regions of the country particularly vulnerable to climate change impacts. The executive order also directs the Secretary of Labor to take certain actions to address climate-related financial risks that could affect retirement savings and pension funds, including considering publishing by September 2021 proposals to suspend, revise or rescind the prior administration’s finalized rules on environmental, social and governance (ESG) investing and proxy voting.

OCC Finalizes Rule Regarding Withdrawal Period Requirement for Collective Investment Funds

On May 21, the OCC finalized a rule applicable to national banks and federal savings associations administering a collective investment fund invested primarily in real estate or other assets that are not readily marketable. On August 13, 2020, the OCC had published an interim final rule that codified the standard one year period that a bank generally has for withdrawing an account from a covered collective investment fund and provided for extensions to such withdrawal period with OCC approval, if certain conditions are met. The final rule revises one of the conditions for the extensions and otherwise adopts the interim final rule as final without further change. The rule is effective as of the date of its publication in the Federal Register.

“The agency actions spurred by the President’s directive today will help safeguard the financial security of America’s families, businesses, and workers from the climate related financial risks they are already facing.” 
– The White House

Federal Banking Agencies Finalize Changes to Call Reports

On May 24, the Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System and OCC (collectively, the agencies), under the auspices of the Federal Financial Institutions Examination Council, finalized changes to Call Reports proposed by the agencies on December 18, 2020 and  February 5, 2021. 

No revisions were made to the December 2020 proposal, which will become effective on June 30, 2021 as originally proposed.

After considering comments to the February 2021 proposal, the agencies are proceeding with the proposed revisions to the reporting forms and instructions for the Call Report, with certain modifications, as described in the linked Federal Register notice. These revisions reflect the intent stated in the Net Stable Funding Ratio Final Rule (see FIL-98-2020, dated October 20, 2020) and in the Final Rule on Brokered Deposits and Interest Rate Restrictions (see FIL-113-2020, dated December 15, 2020). To allow institutions time to implement reporting changes to the Call Report related to sweep deposits on Schedule RC-E, Deposit Liabilities, the agencies would delay the implementation date for this reporting until the September 30, 2021 report date.

Reopening Massachusetts: Commonwealth Set to Ease Mask Mandates, Business Restrictions

On May 17, Massachusetts Governor Baker announced that, effective May 29, 2021, Massachusetts will lift all remaining COVID-19 restrictions on businesses. In addition, effective the same date, Massachusetts’ current face covering order will be rescinded. Governor Baker’s announcement expedited the Commonwealth’s anticipated full reopening date by more than two months. Read the client alert for more information about the updated guidance and its relation to The Equal Employment Opportunity Commission. 

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