USA Law and Practice Contributed by: Edward P. O’Keefe, Neil T. Bloomfield, John A. Stoker and Kathryn (Kate) G. Wellman, Moore & Van Allen, PLLC
ing revisions to implement BCBS reforms to the global Basel III capital rules. These reforms will have a significant impact on the regulatory capital framework applicable to large banking organisations through revisions to requirements associated with credit, market, operational, and credit valuation adjustment risks and changes to enhance the transparency of the capital frame - work and promote consistency across banking organisations. The proposals would also require all (rather than some) large banking organisa - tions to include unrealised gains and losses associated with certain securities in their capital ratios and to comply with a supplementary lever - age ratio and any imposed countercyclical capi - tal buffer. As proposed, the rule would require full compliance by July 2028, after a multi-year transition period beginning in July 2025. In September 2024, the Vice Chair of Supervi - sion at the Federal Reserve Board publicly noted that, following extensive public feedback on the proposals and continuing conversations with the OCC and FDIC, the Vice Chair had concluded that broad and material changes to the proposal were warranted, as well as to a companion pro - posal to adjust the GSIB surcharge. The Vice Chair specifically referenced that banks with assets between USD100 billion and USD250 bil - lion may no longer be subject to the proposed changes, except for requirements to recognise unrealised gains and losses in the securities portfolios in regulatory capital. The statements also suggested that large banks that are not GSIBS, but that have total assets of more than USD250 billion, would be subject to new credit and operational risk requirements, but would only be subject to the market risk and credit val - uation adjustment frameworks if they engaged in significant trading activity. The Vice Chair also discussed the 2023 US GSIB surcharge pro - posal and potential changes to address areas
of industry comment, including removing provi - sions that would increase a GSIB’s surcharge related to client-cleared derivatives, and the need for provisions allowing for the calculation methodology to account for economic growth in measuring a firm’s risk profile. Legislative and Regulatory Consumer Protections and Rights Initiatives The CFPB is continuing its supervisory and enforcement efforts on fees and charges for con - sumer financial products that it deems unfair to consumers and on discrimination in the provi - sion or offering of consumer financial products and services. The agency also finalised its “open banking” proposed rule, which requires deposi - tory and non-depository entities to make certain financial data regarding a consumer’s transac - tions and accounts available to the consumer and their authorised third parties at no cost. The rule also contains data privacy obligations on third parties authorised to access the con - sumer’s data. Concerned with the risks and unintended conse - quences of the use of artificial intelligence mod - els, legislatures and regulators are sharpening their focus in this area. States have begun efforts to legislate a regulatory framework specifically directed at these risks, including expectations for developers to identify, assess and seek to mitigate the risks and harm that usage of certain AI decision-making models may pose to con - sumers. Colorado passed the Colorado Artificial Intelligence Act in the Spring of 2024, and AI legislation was passed in the Summer of 2024 in California but was vetoed by its Governor. While vetoing the specific legislation, the California Governor issued statements clearly indicating support for a refined legislative measure that incorporated feedback from industry experts. At the federal level, US banking agencies finalised a
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