PNC Bank 2010 Annual Report Download - page 14
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Please find page 14 of the 2010 PNC Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.We anticipate new legislative and regulatory initiatives over
the next several years, focused specifically on banking and
other financial services in which we are engaged. These
initiatives would be in addition to the actions already taken by
Congress and the regulators, including EESA, the American
Recovery and Reinvestment Act of 2009 (Recovery Act), the
Credit Card Accountability Responsibility and Disclosure Act
of 2009 (Credit CARD Act), the Secure and Fair Enforcement
for Mortgage Licensing Act (the SAFE Act), and the Dodd-
Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank), as well as changes to the regulations
implementing the Real Estate Settlement Procedures Act, the
Federal Truth in Lending Act, and the Electronic Fund
Transfer Act, including the new rules set forth in Regulation E
related to overdraft charges.
Dodd-Frank, which was signed into law on July 21, 2010,
comprehensively reforms the regulation of financial
institutions, products and services. Dodd-Frank requires
various federal regulatory agencies to implement numerous
rules and regulations. Because the federal agencies are granted
broad discretion in drafting these rules and regulations, many
of the details and much of the impact of Dodd-Frank may not
be known for many months or years. Among other things,
Dodd- Frank provides for new capital standards that eliminate
the treatment of trust preferred securities as Tier 1 regulatory
capital; requires that deposit insurance assessments be
calculated based on an insured depository institution’s assets
rather than its insured deposits and raises the minimum
Designated Reserve Ratio (the balance in the Deposit
Insurance Fund divided by estimated insured deposits) to
1.35%; places restrictions on a financial institution’s
derivatives activities; limits proprietary trading and owning or
sponsoring hedge funds and private equity funds; places
limitations on the interchange fees we can charge for debit
card transactions; and establishes new minimum mortgage
underwriting standards for residential mortgages.
Dodd-Frank also establishes, as an independent agency that is
organized as a bureau within the Federal Reserve, the Bureau
of Consumer Financial Protection (CFPB). Starting July 21,
2011, the CFPB will have the authority to prescribe rules
governing the provision of consumer financial products and
services, and it is expected that the CFPB will issue new
regulations, and amend existing regulations, regarding
consumer protection practices. Also on that date, the authority
of the OCC to examine PNC Bank, N.A. for compliance with
consumer protection laws, and to enforce such laws, will
transfer to CFPB.
Additionally, new provisions concerning the applicability of
state consumer protection laws will become effective on
July 21, 2011. Questions may arise as to whether certain state
consumer financial laws may be preempted after this date. We
expect to experience an increase in regulation of our retail
banking business and additional compliance obligations,
revenue impacts, and costs.
Legislative and regulatory developments to date, as well as
those that come in the future, have had and are likely to
continue to have an impact on the conduct of our business.
The more detailed description of the significant regulations to
which we are subject that follows is based on the current
regulatory environment and is subject to potentially material
change. See also the additional information included in
Item 1A of this Report under the risk factor discussing the
impact of financial regulatory reform initiatives, including
Dodd-Frank and regulations promulgated to implement it, on
the regulatory environment for the financial services industry.
On November 17, 2010, the Federal Reserve announced that,
together with the primary federal bank regulators, it would
undertake a supervisory assessment of the capital adequacy of
the 19 bank holding companies (BHCs) that participate in the
Supervisory Capital Assessment Program (SCAP). This
capital adequacy assessment will be based on a review of a
comprehensive capital plan submitted by each SCAP BHC to
the Federal Reserve and its primary federal bank regulator.
Pursuant to this review, PNC filed its capital plan with the
Federal Reserve on January 7, 2011.
The Federal Reserve will evaluate PNC’s capital plan based
on PNC’s risk profile and the strength of PNC’s internal
capital assessment process under the regulatory capital
standards currently applicable and in accordance with PNC’s
plans to address proposed revisions to the regulatory capital
framework developed by the Basel Committee on Banking
Supervision (Basel III) and as set forth in relevant provisions
of Dodd-Frank. The Federal Reserve’s evaluation will take
into consideration any capital distribution plans, such as plans
to increase common stock dividends or to reinstate or increase
common stock repurchase programs. In accordance with the
Federal Reserve announcement of the SCAP evaluation, PNC
expects to receive its results from the Federal Reserve by the
end of the first quarter 2011. Further, while the Basel III
capital framework has yet to be finalized by the Federal
banking agencies, and is therefore subject to further change,
management believes that, based on its current interpretation
of the new framework, PNC will be Basel III compliant, on a
fully phased-in basis, during the first half of 2012.
At least in part driven by the current economic and financial
situation, there is an increased focus on fair lending and other
issues related to the mortgage industry. Ongoing mortgage-
related regulatory reforms include measures aimed at reducing
mortgage foreclosures.
Among other areas that have been receiving a high level of
regulatory focus over the last several years have been
compliance with anti-money laundering rules and regulations
and the protection of confidential customer information.
Additional legislation, changes in rules promulgated by the
Federal Reserve, the OCC, the FDIC, the CFPB, the SEC, other
federal and state regulatory authorities and self-regulatory
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