Dodd-Frank: The Federal Reserve’s Enhanced Supervision Standards
The late December 2011 notice made by Federal Reserve System regarding Enhanced Prudential Supervision will likely have a major impact on financial institutions.The Knowledge Group is assembling a team of experts that will provide a comprehensive overview of the proposals. They will discuss the substantive provisions of these rules as well their impact on the financial services industry and all other businesses impacted. A live interaction with the audience in a question and answer format is also included in this event.
Ernest T. Patrikis, Partner,
White & Case LLP
- The importance of common equity capital as an intended key supervisory tool for the Federal Reserve Board cannot be overemphasized.
- There continues to be little guidance on the “difficult” issue of application of enhanced standards to covered foreign banking organizations and, given the proposed rules to implement the Volcker Rule, much uncertainty as their potential extraterritorial reach.
- The enhanced standards would limit to only U.S. government securities the sovereign debt eligible for use in meeting liquidity requirements or excludable from the counterparty credit limits.
- The application of the proposed single counterparty credit limits to broadly defined credit transactions and the narrow limits for major counterparties may create a significant disadvantage for covered financial companies.
- The lack of specific criteria for supervisory stress testing already has proven the difficulty in predicting test results with accuracy and as a result the ability to adjust operations and capital adequately to avoid the potential negative effects of failing the test on a covered company’s business and investors.
- The Federal Reserve Board’s stated objective of creating an incentive to reduce the “systemic footprint” of covered banking organizations should be read as a clear message of the Board’s mindset.
Preston Thompson , Executive Director | Financial Services Risk Management , and
Christopher A. Maher, Principal, Financial Services,
Ernst & Young LLP
- The enhanced standards build on the trend of codifying enterprise-wide and specific risk management practices into formal regulatory requirements with associated enforcement powers and penalties
- The standards significantly raise the bar on corporate governance and expanded responsibilities for the Boards of Directors, especially with respect to risk governance; requiring specific full Board approval of capital plan, establishment and review of liquidity risk tolerance, and annual approval of contingency funding plan
- The proposed rule formally imbeds stress testing as an ongoing supervisory and regulatory tool, as well as a required internal risk management practice
- The enhanced standards will require significant data aggregation, risk measurement and risk reporting capabilities, specifically requirements for disclosure of stress test results and use of early remediation triggers pose significant challenges for many institutions
- Capital and liquidity constraints may require strategic analysis on the viability of certain products and activities
Who Should Attend:
- General Counsel
- Internal Auditors of All Levels
- Other Related Professionals
- Bank Regulators
- Bank Presidents
- Bank Owner/Executives
- Financial Institutions’ Executives
- Bank Supervisors
- Compliance Officers
- Chief Risk Officers
- Banking Regulation Lawyers
- Banking Lawyers & Consultants
- Finance Lawyers
- Senior Management
Ernest (Ernie) T. Patrikis is a partner in the New York office in the firmwide Bank and Insurance Regulatory Practice.Mr. Patrikis is one of the few lawyers in private practice who has extensive experience in both the banking and insurance industries, having served in senior positions for 30 years at the Federal Reserve Bank of New York and for eight years at AIG. Before joining White & Case, he led the regulatory practice at Pillsbury Winthrop Shaw Pittman LLP.During his 30-year career at the Federal Reserve Bank of New York, Mr. Patrikis served as General Counsel for many years and later acted as Chief Operating Officer in his role as First Vice President. He also served as Deputy General Counsel and an alternate member of the Federal Open Market Committee, a staff member of the President’s Working Group on Financial Markets that was created in the aftermath of the 1987 financial markets crisis, a member of the Committee on Payments and Settlement Systems of the G-10 central bank governors, legal advisor to the Basel Committee on Banking Supervision, and one of the principal drafters of the US International Banking Act of 1978.Mr. Patrikis began his eight years with AIG as Special Advisor to the Chairman in 1998 and became General Counsel and Senior Vice President in 1999. As General Counsel, he directed one of the largest corporate law departments in the world, managing all of AIG’s corporate, litigation, governance, regulatory, compliance and enforcement matters. He played an active role in AIG’s 2001 acquisition of American General Life Insurance, which further transformed AIG into the world’s leading international insurance organization. He also led the team that settled enforcement proceedings brought against AIG by the US Department of Justice, the US Securities and Exchange Commission, the New York State Attorney General and the New York Insurance Department.
Ernest (Ernie) T. Patrikis is a partner in the New York office in the firmwide Bank and Insurance Regulatory Practice.Mr. …
Preston Thompson is an Executive Director in the Financial Services Office of Ernst & Young LLP. Preston co-leads our capital planning efforts which focuses on those firms subject to Basel II ICAAP or the Federal Reserve’s Capital Plan rule and associated stress testing regime (i.e., CCAR). His areas of expertise include many aspects of banking regulation and supervision with special emphasis on capital regulation, risk management and controls, and supervision of systemically important institutions.Preston joined E&Y in 2011 after more than 18 years within the Federal Reserve System. One of Preston’s principle responsibilities was acting as the Federal Reserve System’s Basel II Coordinator. In that capacity Preston was responsible for overseeing virtually all aspects of Basel II implementation and qualification in the US. Preston led a number of multi-disciplinary teams that included subject matter experts across a wide range of specific risk dimensions.Since joining E&Y Preston has been involved in a number of engagements that include Basel II assistance, CCAR and capital planning efforts and preparations for various elements of the Dodd-Frank Act.
Preston Thompson is an Executive Director in the Financial Services Office of Ernst & Young LLP. Preston co-leads our capital …
Chris is a principal in EY’s Financial Services Office (FSO). He leads EY’s prudential supervision team. He concentrates on risk management and advisory services covering activities conducted by US domestic banks, bank holding companies, and international banking organizations supervised by the Federal Reserve. He also focuses on risk management services to nonbank financial services organizations. He has extensive experience consulting with financial services organizations to address the implications of regulatory developments including the Dodd Frank Act, related rulemaking processes, and Basel guidance.Chris joined Ernst & Young in 1993 after 13 years at the Federal Reserve Bank of New York, where he left as a team leader in bank supervision. At the Federal Reserve, he managed domestic and international examinations and inspections of banking organizations and nonbank subsidiaries. He received his BBA in management at the College of William and Mary.
Chris is a principal in EY’s Financial Services Office (FSO). He leads EY’s prudential supervision team. He concentrates on risk …
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