FinReg Round-Up Vol. 4, No. 2

As we hit mid-2023, some significant deadlines are looming. In this installment of the FinReg Round-Up, we highlight the final adjustments being made before the cessation of LIBOR at the end of June and guidance to help small businesses with beneficial ownership information (BOI) reporting requirements that commence on Jan. 1, 2024. We also look at a new Federal Deposit Insurance Corp. (FDIC) report on potential reforms in the wake of two high-profile bank failures. 

CFPB Issues LIBOR Interim Final Rule To Facilitate Loan Transition

The Consumer Financial Protection Bureau (CFPB) issued an interim final rule that amends the agency’s 2021 LIBOR transition rule and took effect on May 15. The interim final rule facilitates the orderly transition of those consumer loans that currently use the LIBOR index to other indexes in anticipation of the planned cessation of U.S. dollar LIBOR after June 30, 2023. It includes updates reflecting the enactment of the Adjustable Interest Rate (LIBOR) Act in 2022 and issuance of an implementing regulation by the Board of Governors of the Federal Reserve Board System. The CFPB is now conforming Regulation Z, also known as the Truth in Lending Act, to the LIBOR Act and the board’s implementing regulation by adding references to the replacement for the 12-month LIBOR index, among other amendments.

Guidance for Small Business BOI Reporting Requirements Published by FinCEN

The Financial Crimes Enforcement Network (FinCEN) published its first set of guidance materials to help the small-business community understand BOI reporting requirements that take effect on Jan. 1, 2024. The new regulations require many corporations, limited liability companies and other entities created in or registered to do business in the United States to report to FinCEN information about the persons who ultimately own or control the company. The materials published on FinCEN’s BOI reporting webpage include FAQs about the reporting requirements, key filing dates and informational videos. Additional guidance, including a Small Entity Compliance Guide, will be published in the coming months, according to FinCEN.

New FDIC Report Offers Options for Deposit Insurance Reform After Bank Failures

On May 1, the FDIC released a report that provides options for the reform of the deposit insurance system to address concerns following the recent failures of Silicon Valley Bank and Signature Bank. The report, “Options for Deposit Insurance Reform,” outlines three options for reform: 1) limited coverage, which maintains the current deposit insurance framework and provides insurance to depositors up to a specified limit by ownership rights and capacities, 2) unlimited coverage, which extends unlimited deposit insurance coverage to all depositors, and 3) targeted coverage, which offers different deposit insurance limits across account types and gives business payment accounts significantly higher coverage than other accounts. Of the three options, the FDIC favors targeted coverage as best meeting the objectives of deposit insurance of financial stability and depositor protection. The proposed options would require congressional action.