Huntington National Bank 2015 Annual Report Download - page 20

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non-depository entities of a holding company on its subsidiary depository institution(s). The ratings assigned to us, like those
assigned to other financial institutions, are confidential and may not be disclosed, except to the extent required by law.
Under the Dodd-Frank Act, because we are a bank holding company with consolidated assets greater than $50 billion, we are
subject to certain enhanced prudential standards. As a result, we expect to be subject to more stringent standards and requirements
than those applicable to smaller institutions, including with respect to capital requirements, leverage limits, and stress testing. The
Federal Reserve has issued supervisory guidance which sets forth an updated framework for the consolidated supervision of large
financial institutions, including bank holding companies with consolidated assets of $50 billion or more. The objectives of the
framework are to enhance the resilience of a firm, lower the probability of its failure, and reduce the impact on the financial system
in the event of an institution’s failure. With regard to resiliency, each firm is expected to ensure that the consolidated organization
and its core business lines can survive under a broad range of internal or external stresses. This requires financial resilience by
maintaining sufficient capital and liquidity, and operational resilience by maintaining effective corporate governance, risk
management, and recovery planning. With respect to lowering the probability of failure, each firm is expected to ensure the
sustainability of its critical operations and banking offices under a broad range of internal or external stresses. This requires, among
other things, that we have robust, forward-looking capital-planning processes that account for our unique risks.
The Bank, which is chartered by the OCC, is a national bank and our only bank subsidiary. It is subject to comprehensive
examination, regulation and supervision primarily by the OCC and, with respect to Federal consumer protection laws, by the
CFPB, which was established by the Dodd-Frank Act. In addition, as a member of the Federal Reserve System, the Bank is
subject to certain rules and regulations of the Federal Reserve. As a FDIC member, the Bank is subject to deposit insurance
assessments payable to the Deposit Insurance Fund and various FDIC requirements. The National Bank Act and the OCC
regulations primarily govern the Bank’s permissible activities, capital requirements, branching, dividend limitations, investments,
loans, and other matters. Our nonbank subsidiaries are also subject to examination and supervision by the Federal Reserve or, in
the case of nonbank subsidiaries of the Bank, by the OCC. All subsidiaries are subject to examination and supervision by the CFPB
to the extent they offer any consumer financial products or services. Our subsidiaries may be subject to examination by other
federal and state regulators, including, in the case of certain securities and investment management activities, regulation by the
SEC and the Financial Industry Regulatory Authority.
In September 2014, the OCC published final guidelines to strengthen the governance and risk management practices of
certain large financial institutions, including national banks with $50 billion or more in average total consolidated assets, such as
the Bank. The guidelines became effective November 10, 2014, and require covered banks to establish and adhere to a written
governance framework in order to manage and control their risk-taking activities. In addition, the guidelines provide standards for
the institutions’ boards of directors to oversee the risk governance framework. Given its size and the phased implementation
schedule, the Bank is subject to these heightened standards effective May 2016. As discussed in Item 1A: Risk Factors, the Bank
currently has a written governance framework and associated controls.
Legislative and regulatory reforms continue to have significant impacts throughout the financial services industry.
The Dodd-Frank Act, enacted in 2010, is complex and broad in scope and several of its provisions are still being
implemented. The Dodd-Frank Act established the CFPB, which has extensive regulatory and enforcement powers over consumer
financial products and services, and the Financial Stability Oversight Council, which has oversight authority for monitoring and
regulating systemic risk. In addition, the Dodd-Frank Act altered the authority and duties of the federal banking and securities
regulatory agencies, implemented certain corporate governance requirements for all public companies including financial
institutions with regard to executive compensation, proxy access by shareholders, and certain whistleblower provisions, and
restricted certain proprietary trading, and hedge fund and private equity activities of banks and their affiliates. The Dodd-Frank Act
also required the issuance of numerous implementing regulations, many of which have not yet been issued. The regulations will
continue to take effect over several more years, continuing to make it difficult to anticipate the overall impact to us, our customers,
or the financial industry in general.
On October 3, 2015, the CFPB’s final rules on integrated mortgage disclosures under the Truth in Lending Act and the Real
Estate Settlement Procedures Act became effective. On January 1, 2016, most requirements of the OCC’s Final Rule in Loans in
Areas Having Special Flood Hazards (the Flood Final Rule) became effective, including the requirement that flood insurance
premiums and fees for most mortgage loans be escrowed subject to certain exceptions. The Flood Final Rule also incorporated
other existing flood insurance requirements and exceptions (e.g. the exemption from flood insurance requirements for non-
residential detached structures - a discretionary item) with those portions of the Flood Final Rule becoming effective on October 1,
2015. We continue to monitor, evaluate, and implement these new regulations.
Throughout 2015, the CFPB continued its focus on fair lending practices of indirect automobile lenders. This focus led to
some lenders to enter into consent orders with the CFPB and Department of Justice. Indirect automobile lenders have also received
continued pressure from the CFPB to limit or eliminate discretionary pricing by dealers. Finally, the CFPB has implemented its