PNC Bank 2013 Annual Report Download - page 22

The results of the CFPB’s examinations, which are not
publicly available, also can result in restrictions or limitations
on the operations of a regulated entity as well as enforcement
actions against a regulated entity, including the imposition of
monetary penalties.
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, assets or 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. 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 included in this Report 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 factors discussing the
impact of financial regulatory reform initiatives, including
Dodd-Frank and regulations promulgated to implement it, on
the regulatory environment for PNC and the financial services
industry.
Among other areas that have been receiving a high level of
regulatory focus over the last several years are compliance
with the Bank Secrecy Act and anti-money laundering laws,
the oversight of arrangements with third-party vendors and
suppliers, and the protection of confidential customer
information. In addition, there is an increased focus on fair
lending and other consumer protection issues.
Additional legislation, changes in rules promulgated by
federal financial regulators, other federal and state regulatory
authorities and self-regulatory organizations, or changes in the
interpretation or enforcement of existing laws and rules, may
directly affect the method of operation and profitability of our
businesses. The profitability of our businesses could also be
affected by rules and regulations that impact the business and
financial communities in general, including changes to the
laws governing taxation, antitrust regulation and electronic
commerce.
There are numerous rules governing the regulation of financial
services institutions and their holding companies.
Accordingly, the following discussion is general in nature and
does not purport to be complete or to describe all of the laws,
regulations and supervisory policies that apply to us. To a
substantial extent, the purpose of the regulation and
supervision of financial services institutions and their holding
companies is not to protect our shareholders and our non-
customer creditors, but rather to protect our customers
(including depositors) and the financial markets in general.
Dodd-Frank Act. The Dodd-Frank Wall Street Reform and
Consumer Protection Act (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 new rules and regulations. Because
federal agencies are granted broad discretion in drafting these
rules and regulations, and many implementing rules have not
yet been issued, have only been issued in proposed form, or
have only recently been finalized, many of the details and
much of the impact of Dodd-Frank may not be known for
months or years. Among other things, Dodd-Frank established
the CFPB; 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; raises the minimum
Designated Reserve Ratio (the balance in the Deposit
Insurance Fund divided by estimated insured deposits) to
1.35%; establishes a comprehensive regulatory regime for the
derivatives activities of financial institutions; prohibits
banking entities from engaging in certain types of proprietary
trading, as well as having investments in, sponsoring, and
maintaining certain types of relationships with hedge funds
and private equity funds (through provisions commonly
referred to as the “Volcker Rule”); places limitations on the
interchange fees charged for debit card transactions; and
establishes new minimum mortgage underwriting standards
for residential mortgages.
Dodd-Frank also established the 10-member inter-agency
Financial Stability Oversight Council (FSOC), which is
charged with identifying systemic risks and strengthening the
regulation of financial holding companies and certain non-
bank companies deemed to be “systemically important.” In
extraordinary cases, the FSOC, in conjunction with the
Federal Reserve, could order the break-up of financial firms
that are deemed to present a grave threat to the financial
stability of the United States. Dodd-Frank requires the Federal
Reserve to establish enhanced prudential standards for bank
holding companies with total consolidated assets of $50
billion or more, such as PNC, as well as systemically
4The PNC Financial Services Group, Inc. – Form 10-K