Recent Posts

Heath P. Tarbert, partner and head of Weil’s Financial Regulatory Reform Working Group, was quoted on BankDirector.com regarding the predicted effect of the Dodd-Frank Act’s Volcker rule. The Volcker rule goes into effect next month and will place two significant restrictions on financial institutions: (1) a prohibition on proprietary trading; and (2) a ban on certain hedge fund and private equity activities.

Mr. Tarbert was quoted as follows: 

I am generally skeptical of the Volcker rule’s purposed benefits to bank safety and soundness. I think appropriate capital, leverage, and liquidity requirements—when combined with a robust risk management framework and culture inside each institution—will do far more to lower the risk profile of large banks. Moreover, the Volcker rule in its current form only compounds the problem by requiring regulators and market participants to make, in some cases, spurious distinctions between and among proprietary trading, market making and hedging.

The June 26, 2012 article, entitled “Volcker Rule: Hero or Villain?” was written by Kelsey Weaver and was published on BankDirector.com.

On June 25, 2012, Heath Tarbert, partner and head of Weil’s Financial Regulatory Reform Working Group, and Sylvia Mayer, a partner in the Business Finance & Restructuring practice in Weil’s Houston office, were each quoted in the current issue of American Banker regarding the July 1 first round deadline for certain financial institutions to submit so-called “living wills” to resolve their affairs if the institution faced material distress or failure.  Tarbert was quoted as saying: “In many ways, this first round is probably a little bit less about potential resolution than it is about how these organizations are structured . . . [t]he goal over time will be to have the various scenarios built into the overall plan.”  Mayer added that “As no one has ever done this before, this first round of filing will effectively set the floor for this process . . . [t]he regulators have said informally that with this first round, nobody is going to fail. But after these first submissions, regulators are going to have expectations.”  The article, entitled “Banks’ Living Wills Face First Critical Test,” was written by Joe Adler and appears in the June 25th, 2012 issue of American Banker. [click to continue…]

On 14 June 2012, the UK government published a White Paper giving details of its proposals for banking reform in the UK, which closely follow the recommendations of the Independent Commission on Banking chaired by Sir John Vickers (the “Vickers report”). As Vickers suggested, the UK is proposing to introduce a requirement for banks to “ring fence” certain retail activities and separate them from investment banking activities. This “ring fence” is effectively the UK’s version of the Volcker rule.

To read this alert please follow this link.

On June 7, 2012 the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Fed), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the Agencies) released three notices of proposed rulemaking (NPRs) that suggest comprehensive revisions to the Agencies’ regulatory capital framework to incorporate the international Basel III standards and Basel capital framework as well as implement certain relevant provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).  To make it easier to understand the Agencies’ objectives, the overall proposal is divided into three separate NPRs: (1) Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, Minimum Regulatory Capital Ratios, Capital Adequacy, Transition Provisions, and Prompt Corrective Action (Basel III NPR); (2) Regulatory Capital Rules: Standardized Approach for Risk-Weighted Assets; Market Discipline and Disclosure Requirements (Standardized Approach NPR); and (3) Regulatory Capital Rules: Advanced Approaches Risk-based Capital Rule; Market Risk Capital Rule (Advanced Approaches and Market Risk NPR).  Each NPR is summarized below. [click to continue…]

On June 7, 2012 the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Fed), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the Agencies) released revisions to their market risk capital rules in a final rule titled Risk-Based Capital Guidelines: Market Risk.  The rule, which implements certain revisions made by the Basel Committee on Banking Supervision (BCBS) to its market risk framework between 2005 and 2010, requires large banking organizations to adjust their capital requirements to better capture the market risk in their trading activities.  Consistent with certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the final rule does not include aspects of the BCBS’s market risk framework that rely on credit ratings and instead includes alternative standards for calculating standardized specific capital requirements for debt and securitization positions.  The rule applies to banks with aggregate trading assets and trading liabilities equal to at least 10 percent of total assets or at least $1 billion dollars. [click to continue…]