Weekly RoundUp July 21, 2022

FDIC Updates Brokered Deposits Information

Editor's Note

In This Issue. The Federal Deposit Insurance Corporation (FDIC) updated public information on brokered deposits; the Board of Governors of the Federal Reserve System (the Federal Reserve) invited comment on its implementation of Congress’s Adjustable Interest Rate (LIBOR) Act; the U.S. Department of the Treasury (Treasury) released a notice seeking public comment regarding potential opportunities and risks presented by developments and adoption of digital assets as part of its work under Section 5 of Executive Order 14067, “Ensuring Responsible Development of Digital Assets” (the Executive Order); and the U.S. Securities and Exchange Commission (SEC) proposed further limitations on proxy statement exclusion of shareholder proposals and adopted amendments to rules governing proxy voting advice. These developments are discussed in more detail below.

Editor's Note
Editor's Note
Editor's Note

Regulatory Developments

FDIC Updates Brokered Deposits Information

On July 15, the FDIC issued a statement (the Statement) regarding reporting of sweep deposits on call reports, added a new Question and Answer (Q&A) feature and updated public information on the Banker Resource Center Brokered Deposits page.

The FDIC issued the Q&A and updated the Banker Resource Center Brokered Deposits page in order to provide assistance and to remind FDIC-insured depository institutions (IDIs) that, if there are any third parties involved that qualify as a deposit broker (as defined in Section 337.6 of the FDIC’s rules), those deposits swept from broker dealers who have a primary purpose exception to unaffiliated IDIs must be reported as brokered. The Statement also provides additional clarity on the brokered deposits final rule regarding IDIs, which became effective April 1, 2021.

Federal Reserve Invites Comment on its Implementation of Congress’s Adjustable Interest Rate (LIBOR) Act

On July 19, the Federal Reserve invited comment on a proposal that would implement the Adjustable Interest Rate (LIBOR) Act (the Act), which Congress passed in March 2022. The Act lays out default rules that apply to legacy financial contracts, subject to U.S. law, that formerly used the London Interbank Offered Rate (LIBOR) as the reference rate and provided uniform solutions for replacing references to LIBOR in existing contracts. The Federal Reserve’s proposal notes that LIBOR currently exists as the benchmark rate in more than $200 trillion worth of contracts worldwide. The Act was in response to the discontinuance of LIBOR after June 30, 2023. The Federal Reserve’s proposal would also replace references to LIBOR in certain contracts with the Federal Reserve-selected replacement rate following the discontinuance of LIBOR for contracts that will not mature by the LIBOR discontinuance date. The comment period on the proposal is 30 days following publication in the Federal Register.

Treasury Releases Request for Comment on Risks and Opportunities and Presented by Digital Assets

On July 12, Treasury released a notice seeking public comment regarding potential opportunities and risks presented by developments and adoption of digital assets as part of its work under Section 5 of the Executive Order. The Executive Order directs Treasury, in consultation with the Secretary of Labor and other relevant agencies, to report to the President on the implications of development and adoption of digital assets and changes in financial market and payment infrastructures for consumers, investors and businesses in the United States. Section 5 outlines principal U.S. policy objectives with respect to digital assets. The principal policy objectives are:

  • Protection of consumers, investors and businesses in the U.S.
  • Protection of U.S. and global financial stability and the mitigation of systemic risk
  • Mitigation of illicit finance and national security risks posed by misuse of digital assets
  • Reinforcement of U.S. leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets
  • Promotion of access to safe and affordable financial services
  • Support of technological advances that promote responsible development and use of digital assets

“For consumers, digital assets may present potential benefits, such as faster payments, as well as potential risks, including risks related to frauds and scams.”
- Nellie Liang, Secretary of the Treasury for Domestic Finance

SEC Proposes Further Limitations on Proxy Statement Exclusion of Shareholder Proposals and Adopts Amendments to Rules Governing Proxy Voting Advice

On July 13, the SEC proposed amendments to Rule 14a-8, which specifies the conditions under which companies can exclude shareholder proposals from the company’s proxy materials for shareholder meetings even if the shareholder has satisfied the procedural conditions of Rule 14a-8. The proposed amendments are the latest in a series of regulatory actions taken by the SEC that limit the ability of companies to exclude shareholder proposals from proxy statements. At the same meeting, the SEC adopted final amendments to its rules governing proxy voting advice and rescinded a related interpretive position on the voting responsibilities of investment advisers, which are described in a separate Goodwin alert.

Read the client alert to learn more.

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