RMA Group Opposes Fed Call to Disclose Litigation Reserves

Philadelphia, PA (November 18, 2016) —

The Risk Management Association's Advanced Measurement Approaches Group (AMAG) is once again objecting to a Federal Reserve (Fed) proposal that would require large bank holding companies to provide litigation reserve information to the Fed as part of the Comprehensive Capital Analysis and Review (CCAR) process.

The Federal Reserve had previously called for disclosure of litigation reserve information—and AMAG voiced objections—in 2012 and 2014.  

In its latest comment letter to the Fed on the matter, filed earlier this week, the RMA group argues that including legal reserve information in the CCAR submissions would subject banks to significant prejudice, and that there is no assurance such information would remain confidential.

The Fed’s most recent call for the disclosure of litigation reserves came in an FAQ release dated October 3, 2016. 

“Any public disclosure of legal reserves would subject banks to significant prejudice, as it would both inform their adversaries of how the bank weighs the strengths/weaknesses of the subject claims and establish a floor for plaintiffs’ settlement demands on those claims,” the AMAG letter states. “AMAG does not understand the FRB’s continued effort to obtain firms’ legal reserve information despite longstanding public policy reflected in attorney-client privilege and attorney work product doctrine.”

About AMAG 
The AMAG was formed by RMA in 2005 at the suggestion of the U.S. AMA-BQT (formerly the Inter-Agency Working Group on Operational Risk). The purpose of the AMAG is to share industry views on aspects of Advanced Measurement Approaches (AMA) implementation with the U.S. financial services federal regulatory agencies. The Group consists of operational risk management professionals working at financial service organizations throughout the United States.

About RMA 
Founded in 1914, The Risk Management Association is a not-for-profit, member-driven professional association whose sole purpose is to advance the use of sound risk management principles in the financial services industry. RMA promotes an enterprise approach to risk management that focuses on credit risk, market risk, and operational risk. Headquartered in Philadelphia, Pennsylvania, RMA has 2,500 institutional members that include banks of all sizes as well as nonbank financial institutions. They are represented in the Association by more than 18,000 risk management professionals who are chapter members in financial centers throughout North America, Europe, Australia, and Asia/Pacific.

Media Contacts 
Stephen Krasowski, skrasowski@rmahq.org, 215-446-4095 
Frank Devlin, fdevlin@rmahq.org, 215-446-4137