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Nutter Bank Report: December 2025
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- FDIC Proposes GENIUS Act Application Procedures for Stablecoin Issuers
- OCC and FDIC Announce Withdrawal from Interagency Leveraged Lending Guidance
- FDIC Adopts New Rule to Expedite Branch Applications for Certain Qualifying Banks
- Federal Reserve Proposes New Limited Purpose Accounts for Clearing and Settling Payments
- Other Developments: Interest Rate Exportation and Deposit Insurance Assessments
1. FDIC Proposes GENIUS Act Application Procedures for Stablecoin Issuers
The FDIC has issued a proposed rule that would establish application procedures for FDIC-supervised banks that seek approval to issue payment stablecoins through a subsidiary under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). Under the proposed rule released on December 16, an applicant would submit to its FDIC regional office a letter application containing the information listed in the rule, including a description of the proposed payment stablecoin and the proposed activities of the subsidiary of the applicant. The applicant would also be required to describe how the subsidiary plans to maintain the proposed payment stablecoin’s value, and any proposed incidental activities to the payment stablecoin activities or digital asset service provider activities. Under the GENIUS Act, the FDIC is only permitted to deny an application if the FDIC determines that the activities of the applicant would be unsafe or unsound based on the factors described in the statute. The proposed rule would also establish hearing and appeal procedures in the event an application is denied. Public comments on the proposed rule are due by February 17, 2026. Click for a copy of the proposed rule.
Nutter Notes: The other federal banking agencies are required to issue regulations to implement the GENIUS Act by July 18, 2026. It appears that the Federal Reserve and OCC are allowing the FDIC to take the lead on developing application procedures for stablecoin issuers. Additional rulemaking from the federal banking agencies required by the GENIUS Act include establishing an overall regulatory framework, including the establishment of a Stablecoin Certification Review Committee to review and approve state-level regulatory frameworks for state-approved stablecoin issuers, along with implementing capital, liquidity and risk management requirements, and developing diversification standards for the reserve assets backing an issuer’s stablecoins. In a related development, the OCC on December 9 confirmed in Interpretive Letter 1188 that a national bank may engage in riskless principal crypto-asset transactions as part of the business of banking. The OCC also announced on December 12 that the agency has granted conditional approvals for five national trust banks, all of which propose to engage in digital asset activities.
2. OCC and FDIC Announce Withdrawal from Interagency Leveraged Lending Guidance
The OCC and FDIC announced that they are rescinding the Interagency Guidance on Leveraged Lending (2013 Guidance) and their related 2014 Frequently Asked Questions for Implementing March 2013 Interagency Guidance on Leveraged Lending (2014 FAQS). In their joint announcement on December 5, the OCC and FDIC stated that they “expect banks to manage leveraged lending exposures consistent with general principles for safe and sound lending.” Supervisory expectations for banks regulated by the OCC or FDIC that are engaged in leveraged lending activities will include assessments of underwriting, risk rating, and monitoring of the adequacy of loan loss reserves in accordance with general principles of safe and sound lending, according to the agencies. Examination of leveraged lending activities will be tailored to the size, complexity, and risk of the activities. In the view of the FDIC and OCC, the 2013 Guidance and 2014 FAQs were responsible for regulated banks losing market share in leveraged lending and significant increases in leveraged lending market share by nonbank lenders that are not subject to direct federal regulatory supervision. The Federal Reserve has not rescinded the 2013 Guidance and 2014 FAQs, so the federal guidance on leveraged lending remains applicable to state member banks. Click for a copy of the joint statement by the OCC and FDIC on their rescission of the 2013 Guidance and 2014 FAQs.
Nutter Notes: In rescinding the 2013 Guidance and 2014 FAQs, the OCC and FDIC announced eight general principles for safe and sound lending banks should follow when managing the risks associated with leveraged lending. These principles include effectively managing credit, liquidity and other core financial risks, and adopting policies that clearly define the bank’s risk appetite in a manner that is “reasonable and reflects the aggregate level and types of risk it is willing and able to assume to achieve its strategic objectives.” The principles also state that each bank should determine its own definition of a “leveraged loan.” The 2014 FAQs address differences between the 2013 Guidance and the FDIC’s deposit insurance assessment rule. For example, the FDIC defines higher-risk commercial and industrial loans differently than leveraged loans defined under the 2013 Guidance. The FDIC assessment rule contains several specific tests to determine whether a C&I loan is considered higher risk for deposit insurance assessment purposes (which is generally applicable to the risk-based assessment rate of institutions with total assets over $10 billion), whereas the leveraged lending guidance does not establish a uniform definition for leveraged loans.
3. FDIC Adopts New Rule to Expedite Branch Applications for Certain Qualifying Banks
The FDIC has approved a final rule to streamline the application processes for the establishment and relocation of domestic branches and main offices. The final rule released on December 16 provides that domestic branch filings from banks eligible for expedited processing will be deemed approved three business days after submission to the FDIC. The rule also eliminates the FDIC’s discretion to remove domestic branch filings from expedited processing, eliminates public notice and public comment requirements, and eliminates filing requirements for de minimis branch facility changes. The rule applies to insured state non-member banks applying to establish a branch or relocate a main office or branch, and to insured branches of a foreign bank applying to relocate. The final rule will become effective on February 27, 2026. Click for a copy of the final rule.
Nutter Notes: The Federal Deposit Insurance Act requires insured state non-member banks to obtain the FDIC’s prior written consent to establish and operate a new domestic branch or to relocate a main office or any domestic branch. The branch application processing timeline depends primarily upon whether the bank is eligible for expedited processing. All well- and adequately-capitalized banks currently are required to submit substantially the same information for a branch application regardless of the type of proposed change and regardless of whether the bank is eligible for expedited processing. The FDIC’s current regulations also require that branch applications be subject to public notice and comment, which in the FDIC’s experience can significantly prolong the length of time routine branch applications can take to process. The OCC and Federal Reserve require similar filings from national banks, federal savings associations, and state member banks for permission to establish and operate a new domestic branch or to relocate a main office or any domestic branch. The OCC is currently considering a proposed rule issued in October 2025 that would streamline review of applications for establishment or relocation of a branch, or relocation of a main office, by certain qualifying community banks.
4. Federal Reserve Proposes New Limited Purpose Accounts for Clearing and Settling Payments
The Federal Reserve has requested public input on a new type of special purpose Reserve Bank account prototype (a “Payment Account”), which eligible financial institutions could use for the limited purpose of clearing and settling their payments. According to the Federal Reserve’s request for information and comment issued on December 19, Payment Accounts would be designed to pose limited risk to the Federal Reserve Banks and the overall payment system. The Federal Reserve Banks would generally conduct a streamlined review of requests for Payment Accounts. Any financial institution that is legally eligible for a Federal Reserve account or service under the Federal Reserve Act would be eligible to request to open a Payment Account. The Federal Reserve clarified that the Payment Account protype proposal does not seek to expand or otherwise change legal eligibility for access to other Federal Reserve accounts or services. Comments on the proposal are due by February 6, 2026. Click for a copy of the request for information and comment.
Nutter Notes: According to the Federal Reserve’s proposal, a Payment Account would be distinct from a master account, which is what financial institutions currently use to access payments services from the Federal Reserve. A Payment Account would hold overnight balances for the express purpose of clearing and settling the institution’s payments, and the balances at the close of business would be limited by each Reserve Bank. These end-of-day balances would be intended only to provide liquidity for payment activity at the beginning of the next business day. A Payment Account would not pay interest, not have access to Federal Reserve credit, and would be subject to balance caps. Additionally, a payment account would not expand or otherwise change legal eligibility for access to payments services from the Federal Reserve. Each Reserve Bank would retain discretion to impose additional restrictions and risk controls on a Payment Account on a case-by-case basis.
5. Other Developments: Interest Rate Exportation and Deposit Insurance Assessments
- Federal Appeals Court Decision Upholds Colorado Law Preventing Out-of-State Banks from Exporting Rates to Colorado Borrowers
Comptroller of the Currency Jonathan V. Gould issued a statement on December 9 criticizing the decision of the United States Court of Appeals for the Tenth Circuit in National Association of Industrial Bankers v. Weiser, which upholds a Colorado law that imposes interest-rate caps on certain loans made by state-chartered banks located outside of Colorado to Colorado borrowers. In its ruling, the court held that the federal Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDA) does not preempt Colorado’s interest-rate caps for loans from out-of-state banks to Colorado borrowers. Click for a copy of the court’s decision.
Nutter Notes: DIDA generally preempts state laws capping interest rates and gives state-chartered banks access to the same interest rates set for national banks. DIDA also permits a state to opt out of this national standard for “loans made in such [s]tate,” which is not defined in the statute. Comptroller Gould argues that the court’s decision “risks undermining state banks’ ability to effectively administer multi-state lending programs and, perhaps more importantly, disadvantages state banks that wish to lend in Colorado compared to national banks and Federal savings associations.” Comptroller Gould has called on other courts or Congress to overturn the Tenth Circuit’s decision.
- FDIC Announces Adjustment to Special Assessment to Recover Losses to the DIF Stemming from 2023 Bank Failures
The FDIC issued an interim final rule on December 16 that amends the collection of the special assessment to recover losses to the Deposit Insurance Fund arising from the systemic risk determination resulting from large bank failures in 2023, as required by the Federal Deposit Insurance Act. The interim final rule reduces the rate at which the special assessment will be collected in the eighth collection quarter, with an invoice payment date of March 30, 2026. Click for a copy of the interim final rule.
Nutter Notes: The interim final rule reduces the rate at which the special assessment will be collected in the eighth collection quarter from 3.36 basis points to 2.97 basis points, and provides an offset to regular quarterly deposit insurance assessments for banks subject to the special assessment if the amount collected exceeds losses following the resolution of litigation between the FDIC and SVB Financial Trust and again following the termination of the receiverships for the failed banks. The special assessment applies to banking organizations that reported estimated uninsured deposits in excess of $5 billion as of the quarter ending December 31, 2022.
Nutter Bank Report
Nutter Bank Report is a monthly electronic publication of the Banking and Financial Services Group of the law firm of Nutter McClennen & Fish LLP. Chambers and Partners, the international law firm rating service, after interviewing our clients and our peers in the profession, has ranked Nutter’s Banking and Financial Services practice among the top banking practices in the nation. Visit the U.S. rankings at Chambers.com. The Nutter Bank Report is edited by Matthew D. Hanaghan. Assistance in the preparation of this issue was provided by Daniel W. Hartman and Heather F. Merton. The information in this publication is not legal advice. For further information, contact:
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Michael K. Krebs Tel: (617) 439-2288 |
Matthew D. Hanaghan Tel: (617) 439-2583 |
Daniel W. Hartman |
Kate Henry khenry@nutter.com Tel: (617) 439-2304 |
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