On September 8, the Board of Governors of the Federal Reserve System (the "Federal Reserve"), the FDIC and the Office of the Comptroller of the Currency (collectively, the "federal banking agencies") issued a joint report to Congress and the Financial Stability Oversight Council in accordance with Section 620 of the Dodd-Frank Act. Section 620 had directed the federal banking agencies to conduct a study of the activities and investments in which banking entities may engage and the risks and risk mitigation strategies associated with those activities and investments. Section 620 also required the agencies to make recommendations as to any additional restrictions that might be necessary to further address these risks. Each agency prepared a portion of the report that addressed the banking entities for which it has supervisory authority.

The Federal Reserve's recommendations (if enacted) would have the most impact; in particular, on the subset of unitary savings and loan holding companies that were in existence at the time of the passage of the Gramm Leach Bliley Act in 1999. Prior to Gramm Leach Bliley, a savings and loan holding company with only one subsidiary institution had no restrictions on the types of activities in which it could engage. While Gramm Leach Bliley imposed the same restrictions that applied to bank holding companies on savings and loan holding companies, it exempted those unitary savings and loan holding companies in existence at the time from the new restrictions. In the Section 620 report, the Federal Reserve recommended that this grandfather provision be repealed. Interestingly, the Federal Reserve's stated rationale for this proposal was not one of risk mitigation but rather to level the playing field among all institutions.  

The Federal Reserve also proposed that the authority given to financial holding companies to engage in merchant banking activities as part of the Gramm Leach Bliley Act be repealed. While the Federal Reserve's report included an extensive discussion of the procedures and limitations already in place in Regulation Y and noted that, due to the size of these entities engaged in merchant banking, they are under almost continuous supervision, it still attributed the reason for the proposed change to safety and soundness concerns. The Federal Reserve also proposed certain changes that would affect commodities activities and industrial loan companies and certain other activities. All of the Federal Reserve's proposals would require statutory changes.

In its section of the report, the OCC expressed concerns about national banks engaging in physical commodities trading and hedging activities, in particular, copper. Concurrent with the release of the report, the OCC issued proposed regulations regarding these activities. The OCC also stated that it is continuing to study derivatives activities as well as national banks’ membership in clearinghouses so it is possible to see future OCC action in these areas. The FDIC did not propose any specific changes in its section but indicated that the agency was continuing to review existing regulations with respect to activities.