Consumer Financial Protection Bureau (CFPB)
TILA-RESPA Integrated Disclosure Rule implementation materials updated.
The CFPB announced an update to its TILA-RESPA regulatory implementation materials available on its site. The update incorporates finalized changes to the guide to forms, disclosure timeline, and samples. The CFPB also updated its Small Entity Compliance Guide for the Loan Originator Rule.
More information can be found on here.
Policy for public consumer complaints finalized.
The CFPB announced that it finalized its policy empowering consumers to voice publicly their complaints about consumer financial products and services. When consumers submit a complaint to the CFPB, they now have the option to share their account of what happened in the CFPB’s public-facing Consumer Complaint Database.
More information can be found here.
Rule proposal concerning Regulation E and Regulation Z.
In December of 2014, the CFPB issued a Notice of Proposed Rulemaking (NPR) concerning amendments to Regulation E, which implements the Electronic Fund Transfer Act (EFTA), and Regulation Z, which implements the Truth in Lending Act (TILA). The proposed rule would create comprehensive consumer protections for prepaid financial products, as well as expressly bring such products within the domain of Reg E as prepaid accounts and create new provisions specific to such accounts. Comments for this proposal closed on March 23, 2015.
Information about the rule can be found here.
Office of the Comptroller of the Currency (OCC)
$500,000 civil money penalty assessed against Pennsylvania bank.
In late February, the OCC assessed a $500,000 civil money penalty against a Pennsylvania bank for Bank Secrecy Act (BSA) violations. The OCC found that the bank had failed to file suspicious activity reports (SARs) on a timely basis in connection with certain suspicious transactions. The transactions that were reported in the suspicious activity reports took place between 2005 and 2009.
More information can be found here.
Enforcement actions and terminations for March.
The OCC released the latest enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations.
The full list can be viewed here.
Statement regarding $3.6 trillion municipal securities market.
In March the OCC issued a statement regarding investments in municipal securities made by national banks and federal savings associations. The purpose of the statement was to confirm that the OCC recognizes the importance of the $3.6 trillion municipal securities market as a source of infrastructure funding for states, cities, and localities in the U.S.
The full statement can be viewed here.
Securities and Exchange Commission (SEC)
Trading in 128 inactive penny stock companies suspended.
At the beginning of March, the SEC announced that it had suspended trading in 128 inactive penny stock companies in order to ensure that they did not become a source for pump-and-dump schemes. These suspensions are the latest in a microcap fraud-fighting initiative known as Operation Shell-Expel in which the SEC Enforcement Division’s Office of Market Intelligence utilizes technology to scour the over-the-counter (OTC) marketplace and identify dormant companies ripe for abuse.
The full announcement can be viewed here.
Over $475,000 awarded to whistleblower.
The SEC announced a whistleblower award payout between $475,000 and $575,000 to a former company officer who reported original, high-quality information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million at the beginning of March.
The SEC has now awarded 15 whistleblowers since its whistleblower program began more than three years ago. Payouts have totaled nearly $50 million out of an investor protection fund established by Congress. More information about this program can be viewed here.
$225,000 penalty assessed for customer protection violations.
The SEC assessed a $225,000 penalty against an Irving, Texas-based brokerage firm with violating key customer protection rules after failing to adequately supervise registered representatives who misappropriated customer funds. The company agreed to settle the charges and acquire an independent compliance consultant to improve supervisory controls.
More information on the case can be found here.
Federal Deposit Insurance Corporation (FDIC)
Banks examined for CRA compliance.
At the beginning of March the FDIC issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in December 2014. Banks are assessed according to the following ratings: O for Outstanding; S for Satisfactory; NI for Needs to Improve; and SN for Substantial Non-compliance.
The March list can be found here.
$6.6 million in losses reported from 2012 closure.
According to several sources, the FDIC reported that the 2012 failure of one financial institution resulted in over $6 million in losses for the regulator. In March, the FDIC sued 14 decision-makers at the previously $71 million-asset bank to attempt the recovery of funds lost. The FDIC had initially estimated a $17 million loss from the bank’s failure.
$2.6 million settlement over failed lender collapse.
In late March, the FDIC finalized a $2.6 million settlement with board members of a failed Charleston-based lender, which will be covered by an insurance policy. The FDIC had predicted a $43 million loss after the lender’s 2011 collapse. The FDIC had initially filed a Directors and Officers Liability (D&O) lawsuit against the directors and officers of the lender for negligence concerning 22 loans totaling nearly $19 million.
National Credit Union Administration (NCUA)
Suit filed against state and federal law violator.
In March the NCUA announced a lawsuit in federal court against a bank, alleging that the institution violated state and federal law by failing to fulfill its duties as trustee for 37 residential mortgage-backed securities trusts. The bank, as trustee, had contractual, statutory, and common law duties to protect the interests of certificate holders, and each trust consisted of hundreds of residential mortgage loans that were pooled together and securitized for sale to investors. The bank’s failure to live up to its obligations resulted in almost $2 billion lost in residential mortgage-backed securities.
More information about the suit can be found here.
Proposed rule to eliminate fixed-assets cap.
The NCUA approved the proposal of a rule to provide regulatory relief to thousands of federal credit unions by eliminating certain provisions in the agency’s fixed-assets rule, including the current 5% cap on investments in fixed assets. This is the latest step in NCUA’s Regulatory Modernization Initiative; the proposed rule would eliminate the current 5% aggregate limit on investments in fixed assets for federal credit unions with assets of at least $1 million and provide other relief.
More information on the proposal can be found here.
New video series on CDFI certification.
The NCUA announced a new five-part video series, “CDFI Fun Certification,” on its YouTube channel that will help credit unions interested in becoming certified as Community Development Financial Institutions. The videos will discuss the seven criteria that must be met, including the purpose and process of CDFI certification.
The YouTube channel can be accessed here.
Federal Reserve Bank
Supervisory bank stress test results released.
At the beginning of March, the Federal Reserve released the results of supervisory stress tests, indicating that the largest U.S.-based bank holding companies continue to build their capital levels and to strengthen their ability to lend to households and businesses during a period marked by severe recession and financial market volatility. According to the FDIC press release, the most severe hypothetical scenario projects that loan losses at the 31 participating bank holding companies would total $340 billion during the nine quarters tested.
The Dodd-Frank Act 2015 supervisory stress test methodology and results paper can be found here.
Comprehensive Capital Analysis and Review (CCAR) results released.
According to a March 11th press release, the Federal Reserve on Wednesday announced it has not objected to the capital plans of 28 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). The CCAR evaluates the capital planning processes and capital adequacy of the largest U.S.-based bank holding companies, including the firms' planned capital actions such as dividend payments and share buybacks and issuances.
More information on the CCAR results can be found here.
Requirement proposed concerning Legal Entity Identifiers (LEIs).
The Federal Reserve Board announced a proposal to require banking organizations to include their existing Legal Entity Identifiers (LEIs) on certain regulatory reporting forms. The LEI is a unique reference code to enable easier identification of a firm's legal entities. The proposal, if approved, would require LEIs on certain reporting forms from June 30, 2015 onward.
The Federal Reserve announcement can be found here.
Other Regulatory Bodies
$10 million civil money penalty assessed against casino for BSA/AML violations.
An Atlantic City casino with a “long history of prior, repeated BSA violations” was fined a $10 million civil money penalty by the Financial Crimes Enforcement Network (FinCEN) last month for willful and repeated violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) program requirements, reporting obligations, and recordkeeping requirements. FinCEN is also requiring that the casino conduct periodic external audits and report to FinCEN and the casino’s Board.
Rules of Practice revisions.
The Federal Trade Commission (FTC) has announced that it is revising certain rules of practice to promote fairness, flexibility and efficiency in its investigations, studies, and adjudicative proceedings. These rule revisions include a revision to the rule governing the status of cases in administrative adjudication following a district court's denial of preliminary injunctive relief in an ancillary proceeding, among other changes.
For more information, visit the Federal Register here.
Final rule concerning bank capital stock and capital plans adopted.
The Federal Housing Finance Agency (FHFA) is adopting a final rule transferring existing parts of the Federal Housing Finance Board regulations to the FHFA regulations. These rules address capital stock and plans; changes were not substantive but proposed to delete certain provisions applying to the one-time conversion of bank stock.
More information can be found here.