On Friday, May 8, 2020, the Federal Reserve published its semi-annual Supervision and Regulation Report in tandem with its testimony before Congress. The report explained that the Fed has implemented several measures to accommodate the novel issues faced by financial institutions in light of the COVID-19 pandemic. Notably, the report explains that in the interest of the health and safety of both examiners and bank employees, the Fed has ceased almost all examination activity for institutions with less than $100 billion in total consolidated assets, except where the work is critical to safety and soundness or consumer protection or is required to address an urgent supervisory concern. For institutions with more than $100 billion in total consolidated assets, the Fed deferred a significant portion of examinations planned for the second quarter of 2020 after analyzing the burden on supervised firms from the effects of the current crisis. For the remainder of the year, any examination activity at large financial institutions will target areas of heightened risk due to containment measure developments as well as known deficiencies.
Also, before the current crisis, the Fed had launched the 2020 supervisory stress test to evaluate the resiliency of bank capital, based on bank exposure data as of the end of 2019. Now, however, the Fed intends to additionally conduct a series of sensitivity analyses using alternative scenarios and certain adjustments to portfolios to credibly reflect current economic and banking conditions. Despite these measures, the Fed did note that “[t]he global banking system is more resilient and better placed to sustain financing to the real economy as a result of regulatory reforms enacted, and measures taken by the banking industry, in the aftermath of the 2008 global financial crisis[.]”
About Faruqi & Faruqi, LLP
Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Georgia and Pennsylvania.
Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, direct purchasers, consumers and employees.
To schedule a free consultation with our attorneys and to learn more about your legal rights, call our offices today at (877) 247-4292 or (212) 983-9330.
Faruqi & Faruqi
New York office
Tel: (212) 983-9330
Fax: (212) 983-9331