Fitch: New Guide Dissects Evolving U. S. Bank Regulation and Legislation
"U. S. banks will continue to grapple with heightened regulatory and compliance expectations for the foreseeable future and many banks have altered their business models in response to the evolving landscape," said Joo-Yung Lee, Managing Director, Fitch Ratings.
The guide focuses on the applicability of key new regulations, their general purpose and some of the differences between U. S. regulation and international Basel standards set by the Basel Committee on Banking Supervision (BCBS). With the implementation of Basel III, one of the biggest departures from prior banking regulations is the proliferation of tiered regulation based on asset size. As a result, this report aims to highlight the regulatory impact to banking organizations by their asset size.
While U. S. and global regulators have made significant progress in their agendas, there are several important regulations on the horizon that banks are watching closely. Regulation pending finalization includes a proposal on total loss absorbing capacity (TLAC); a proposal for the net stable funding ratio (NSFR) in the U. S; a proposal for single-counterparty limits for large banks; a proposed rule for qualified financial contracts (QFC Rule) between global systemically important banks (GSIBs) and their counterparties; and a proposal to update the standardized approach to credit risk.
"Uncertainty remains around pending regulation, but in Fitch's view U. S. banks will likely have sufficient time to comply with new rules ahead of phase-in and full implementation," added Lee.
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