PNC Bank 2012 Annual Report Download - page 23

S UPERVISION AND R EGULATION
O VERVIEW
PNC is a bank holding company registered under the Bank
Holding Company Act of 1956 as amended (BHC Act) and a
financial holding company under the Gramm-Leach-Bliley
Act (GLB Act).
We are subject to numerous governmental regulations, some
of which are highlighted below. See Note 22 Regulatory
Matters in the Notes To Consolidated Financial Statements in
Item 8 of this Report, for additional information regarding our
regulatory matters. Applicable laws and regulations restrict
our permissible activities and investments and require
compliance with protections for loan, deposit, brokerage,
fiduciary, investment management and other customers,
among other things. They also restrict our ability to
repurchase stock or pay dividends, or to receive dividends
from our bank subsidiary, and impose capital adequacy
requirements. The consequences of noncompliance can
include substantial monetary and nonmonetary sanctions.
In addition, we are subject to comprehensive examination and
supervision by, among other regulatory bodies, the Board of
Governors of the Federal Reserve System (Federal Reserve)
and the Office of the Comptroller of the Currency (OCC),
which result in examination reports and ratings (which are not
publicly available) that can impact the conduct and growth of
our businesses. These examinations consider not only
compliance with applicable laws and regulations, but also
capital levels, asset quality and risk, management ability and
performance, earnings, liquidity and various other factors. The
results of examination activity by any of our federal bank
regulators potentially can result in the imposition of
significant limitations on our activities and growth. These
regulatory agencies generally have broad discretion to impose
restrictions and limitations on the operations of a regulated
entity where the relevant agency determines, among other
things, that such operations are conducted in an unsafe or
unsound manner, fail to comply with applicable law or are
otherwise inconsistent with the regulations or supervisory
policies of the agency. This supervisory framework could
materially impact the conduct, growth and profitability of our
operations.
The Consumer Financial Protection Bureau (CFPB), a new
agency established by the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank), is responsible for
examining PNC Bank, N.A. and its affiliates (including PNC)
for compliance with most consumer financial protection laws
and for enforcing such laws with respect to PNC Bank, N.A.
and its affiliates. This authority previously was exercised by
the OCC and the Federal Reserve. The CFPB also now has
authority for prescribing rules governing the provision of
consumer financial products and services such as credit cards,
student and other loans, deposits and residential mortgages.
The agency has issued final regulations that impose broad new
requirements relating to our mortgage origination activities
and the servicing activities we perform for residential
mortgage loans. These regulations include a requirement that
residential mortgage lenders, like PNC Bank, make a “good
faith and reasonable determination” at or before the time of
consummation of a residential mortgage loan that the
prospective borrower has a reasonable ability to repay that
loan. The new regulations also include broad new
requirements applicable to servicers of residential mortgage
loans, like PNC, which include provisions requiring policies
and procedures relating to how servicers respond to and
manage loans of borrowers who are in default. Most of these
regulations are scheduled to take effect in January of 2014. In
addition, the CFPB is now considering additional regulations
that will modify the application and closing disclosures that
must be provided to borrowers in connection with residential
mortgage loans.
As a result of Dodd-Frank, after July 21, 2011, subsidiaries of
PNC Bank, N.A. are subject to state law and regulation to the
same extent as if they were not subsidiaries of a national bank.
Additionally, based on Dodd-Frank, state authorities may
assert that certain state consumer financial laws that provide
different requirements or limitations than Federal law may
apply to national banks, including PNC Bank, N.A. Such state
laws may be preempted if they meet certain standards set forth
in Dodd-Frank or other applicable law. We expect to
experience an increase in regulation of our Retail Banking,
Asset Management Group and Residential Mortgage Banking
businesses and additional compliance obligations, revenue and
cost impacts.
We also are subject to regulation by the SEC by virtue of our
status as a public company and by the SEC and the
Commodity Futures Trading Commission (CFTC) due to the
nature of some of our businesses. Our banking and securities
businesses with operations outside the United States,
including those conducted by BlackRock, are also subject to
regulation by appropriate authorities in the foreign
jurisdictions in which they do business.
As a regulated financial services firm, our relationships and
good standing with regulators are of fundamental importance
to the operation and growth of our businesses. The Federal
Reserve, OCC, CFPB, SEC, CFTC and other domestic and
foreign regulators have broad enforcement powers, and certain
of the regulators have the power to approve, deny, or refuse to
act upon our applications or notices to conduct new activities,
acquire or divest businesses or assets and deposits, or
reconfigure existing operations.
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 the Credit Card
Accountability, Responsibility, and Disclosure Act of 2009
4The PNC Financial Services Group, Inc. – Form 10-K