LRA Updates

REGULATORY DEVELOPMENTS Reputational Risk in Supervisory Oversight On March 6 Senate Banking Committee Chairman Tim Scott (R-SC) introduced legislation that would require the Federal banking regulators to remove reputational risk from any regulations, examinations and supervisory guidance. In the press release, Senator Scott indicated that the concept had caused legitimate businesses to be debanked (i.e.,…

LEGISLATIVE DEVELOPMENTS House and Senate Approve Separate Budget Resolutions In February the House (H.Con.Res.14) and Senate (S.Con.Res.7) each approved budget resolutions. The resolutions are materially different. The House version is more ambitious, including approval of net tax cuts of $4.5 trillion over 10 years if Congress achieves $2 trillion in spending cuts. The Senate version…

TAX DEVELOPMENTS Ken Kies Nominated to be an Assistant Secretary of the Treasury On January 22 Ken Kies was formally nominated to be an Assistant Secretary of the Treasury. According to press reports, Mr. Kies is expected to focus on tax policy. Mr. Kies has been a tax policy lobbyist, including work with Finseca. He…

LEGISLATIVE DEVELOPMENTS Wyden Releases Proposed Legislation Targeting Private Placement Life Insurance On December 16 Senate Finance Committee Chair Ron Wyden (D-OR) released draft legislation to alter the tax treatment of certain private placement life insurance (PPLI) contracts. This draft legislation was prepared in connection with the report, “Private Placement Life Insurance: A Tax Shelter for…

REGULATORY DEVELOPMENTS House Financial Services Hearing – Regulators to Pause Major Rulemakings until 2025 On November 20 the House Financial Services Committee held a hearing entitled “Oversight of Prudential Regulators.” Witnesses included Michael Barr (FRB Vice Chairman), Martin Gruenberg (FDIC Chairman) and Michael Hsu (OCC Acting Comptroller). Of note, during the session, the banking regulators…

ACCOUNTING DEVELOPMENT Article on BOLI Surrender and Redeploy Considerations On October 9 professionals from RSM US published an article on Insurance Newsnet, titled BOLI, bonds and banks: Accounting for early surrender. Since the recent increases in interest rates, many banks have considered surrendering recently purchased (i.e., prior to the run up in interest rates) BOLI…

REGULATORY DEVELOPMENTS FRB Vice Chair for Supervision – Remarks on Status of Basel III Endgame On September 10 the FRB Vice Chair for Supervision, Michael S. Barr, delivered a speech at the Brookings Institution. His comments focused on Basel III Endgame and capital surcharges for G-SIBs. Noteworthy statements include ● He will recommend a re-proposal…

JUDICIAL DEVELOPMENTS NY Premium Refund Litigation On August 8 the US Court of Appeals (Second Circuit) affirmed a prior District Court ruling in a case alleging that the insurer (Lincoln Life & Annuity of New York) should be obligated to refund part of a planned, annual premium paid into a universal life insurance policy prior…

JUDICIAL DEVELOPMENTS Court Dismisses NQDC Plan Participants’ Lawsuit Versus FDIC On July 12 the US District Court (Northern California) granted the FDIC’s motion to dismiss a lawsuit brought on behalf of a group of former First Republic Bank employees that were participants in a Deferred Compensation Plan. This lawsuit was interesting because the Plaintiffs staked…

JUDICIAL DEVELOPMENT Supreme Court Affirms IRS Position Regarding Life Insurance Owned by a Closely Held Corporation On June 6 the Supreme Court of the United States unanimously ruled in favor of the IRS in an estate tax challenge (see Connelly v. United States). As a result, the Supreme Court determined that life insurance proceeds received…