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July 2021 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

As Federal Eviction Protections Come to an End, CFPB Warns Landlords and Consumer Reporting Agencies to Report Rental Information Accurately    

The Consumer Financial Protection Bureau (CFPB) released an Enforcement compliance bulletin reminding landlords, consumer reporting agencies (CRAs), and others of their critical obligations to accurately report rental and eviction information. Inaccurate rental and eviction information on a tenant screening report or a credit report can unfairly block a family from safe and affordable housing. As the federal eviction moratorium and other pandemic rental protections come to an end, the CFPB wants to protect families from being denied housing on the basis of inaccurate information. The CFPB’s bulletin is part of its ongoing commitment to a fair and equitable recovery.

  

The Office of the Comptroller of the Currency (OCC) 

OCC Announces Organizational Changes

The Office of the Comptroller of the Currency (OCC) today announced structural changes intended to enhance the agency’s efficiency and effectiveness. The agency is realigning its Economics, Supervision System and Analytical Support, and Systemic Risk Identification Support and Specialty Supervision units under a new Senior Deputy Comptroller for Supervision Risk and Analysis. Blake Paulson will move from the Chief Operating Officer position to take on this new role. The agency is retiring the Chief Operating Officer role. As a result of this change, agency bank supervision units (Bank Supervision Policy, Midsize and Community Bank Supervision, Large Bank Supervision, and Supervision Risk and Analysis) and the Office of Management will report directly to the head of the agency.

 

National Credit Union Administration

NCUA Board Proposes Complex Credit Union Leverage Ratio

The proposed rule would modify the NCUA’s capital adequacy regulation and provide a simplified measure of capital adequacy that federally insured credit unions classified as complex can opt into. The new Complex Credit Union Leverage Ratio (CCULR) gives complex credit unions that maintain a minimum net worth level and meet other qualifying criteria a streamlined framework to manage capital in their institutions. As long as a credit union in the CCULR framework maintains the minimum net worth ratio, it would be considered well capitalized. Under this proposal, the minimum net worth level under the CCULR framework would initially be 9 percent on January 1, 2022, and this level would gradually increase to 10 percent by January 1, 2024. Using December 31, 2020, financial performance data, the NCUA estimates that most complex credit unions would be able to meet the CCULR’s initial net worth requirement of 9 percent.

 

FDIC Issues Proposed Rule Regarding Deposit Insurance Simplification

The Federal Deposit Insurance Corporation (FDIC) today issued a proposed rule to simplify aspects of the agency’s deposit insurance coverage rules. 

First, the proposed rule would simplify deposit insurance coverage for deposits held in connection with revocable and irrevocable trusts by merging these two deposit insurance categories and applying a simpler, common calculation to determine coverage for all trust accounts. Currently, the FDIC receives more inquiries related to deposit insurance coverage for trust deposits than all other types of deposits combined. The proposal would make the trust rules consistent and easier to understand for bankers and depositors, and also would facilitate prompt payment of deposit insurance by the FDIC in the event of an insured depository institution’s failure.

Additionally, the proposal would amend the rule that governs coverage for mortgage servicing accounts to allow principal and interest funds advanced by a mortgage servicer to be included in the deposit insurance calculation.

 

June 2021 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Issues Rule Explaining Authority to Continue Examining Institutions Regarding MLA    

After discontinuing the Military Lending Act examinations in 2018, the Consumer Financial Protection Bureau announced an interpretive rule that established an explanation regarding their authority to resume examining certain institutions for conduct that violates the MLA and puts active military members and their dependents at risk.  

  

The Office of the Comptroller of the Currency (OCC) 

OCC Reports Decline in Mortgage Performance  

According to the Mortgage Metrics Report from the Office of the Comptroller of the Currency, first-lien mortgages performance declined in the first quarter of this year. The report showed that 94.2 percent of the mortgages included were current and performing. Last year, that number was up to 96.5 percent due to the pandemic. 

 

National Credit Union Administration

Regulators Update BSA/AML Examination Manual  

The Nation Credit Union Administration reported that federal and state regulators released updates to several areas of the Bank Secrecy/Anti-Money Laundering (BSA/AML) Examination Manual regarding the International Transportation of Currency or Monetary Instruments Reporting, Purchase and Saleof Monetary Instruments Recordkeeping, Reports of Foreign Financial Accounts, and Special Measures sections of the Manual. The updates are meant to increase transparency regarding the examination process and improve risk-focused examination work.  

 

 

The Securities and Exchange Commission

SEC and Other Regulators Announce New Resource to Prevent Abuse of Seniors 

The Securities and Exchange Commission (SEC) along with the NASAA and FINRA announced a new free training program that would assist security firms in training certain personnel in how to detect, prevent and report senior financial exploitation and financial exploitation of other vulnerable adult investors. This training program will serve as a resource for institutions as they implement the Senior Safe Act, which addresses problems in reporting the suspected financial exploitation of seniors.  

 

FDIC Issues New Policy Statement Regarding Minority Depository Institutions  

The Federal Deposit Insurance Corporation board approved a final policy enhancing efforts to preserve and promote Minority Depository Institutions (MDIs). The new policy statement clarifies the agency’s policies regarding the existing MDI actions in response to public comment for a proposal form August of 2020.  

 

May 2021 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Details Challenges COVID-19 Continues to Place on Mortgage Borrowers  

The Consumer Financial Protection Bureau issued two reports that reveal mortgage borrowers are in need of more help coping with the COVID-19 pandemic and subsequent downturn in the economy. One report issued stated that overall complaints to the CFPB are higher than they’ve been in three years. The other reports that Black and Hispanic mortgage borrowers are more likely to be delinquent or in forbearance programs. Acting CFPB Director, Dave Uejio, said “More borrowers are behind on their mortgage payments than any time since the height of the Great Recession.”  

  

The Office of the Comptroller of the Currency (OCC) 

OCC Published Final Rule Establishing Exception to Withdrawal Period Requirement for CIFs        

The Office of the Comptroller of the Currency finalized a rule that creates an exception to the requirement for banks that administer collective investment funds for real estate or other assets that aren’t readily marketable. The new rule codifies the time a bank has for withdrawing an account from a covered CIF and the bank may receive and extension to the usual time window with OCC approval, if certain requirements are met.  

 

National Credit Union Administration

NCUA Approves Final Rule Regarding Derivatives and Requests Comment on the Share Insurance Fund Normal Operating Level Policy  

The Board of the National Credit Union Administration held its fifth open meeting of 2021, unanimously approving a final rule that modernizes the administration’s derivatives rule by shifting it to an approach based more on principles while still retaining safety and soundness components. The Board also approved a notice requesting comment on the Share Insurance Fund Normal Operating Level Policy.   

 

 

The Securities and Exchange Commission

SEC Names New Chief Economist and Director of the Division of Economic and Risk Analysis  

The Securities and Exchange Commission announced that Jessica Wachter was appointed the Chief Economist and Director of the Division of Economic and Risk Analysis (DERA). Dr. Wachter comes to the SEC after 23 years as a professor at the Wharton School of the University of Pennsylvania.  

 

FDIC Begins Gathering Information on Digital Assets  

The Federal Deposit Insurance Corporation announced that it was requesting information and asking for comments from those interested about the digital asset activities of insured depository institutions. Recognizing the unique factors associated with digital assets, the FDIC is requesting this information to better understand the interest in digital assets from an institution’s standpoint and that of consumers.   

 

April 2021 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X  

The Bureau of Consumer Financial Protection (Bureau) is proposing amending Regulation X to assist borrowers affected by the COVID-19 emergency. The proposed amendments would generally prohibit servicers from making the first notice or filing required for foreclosure until after December 31, 2021, amend early intervention and reasonable diligence obligations to ensure that servicers are communicating timely and accurate information to borrowers about their loss mitigation options during the current crisis, and temporarily permit mortgage servicers to offer certain loss mitigation options made available to borrowers experiencing a COVID-19-related hardship based on the evaluation of an incomplete application.  

  

The Office of the Comptroller of the Currency (OCC) 

Agencies Invite Comment on Proposed Rule for Income Tax Allocation Agreements      

The federal bank regulatory agencies today invited comment on a proposed rule that updates and codifies existing guidance on income tax allocation agreements involving depository institutions and their affiliates.

Under the proposed rule, banks that file tax returns as part of a consolidated tax filing group would be required to enter into tax allocation agreements with their holding companies and other members of their consolidated group. The proposed rule also describes the provisions required to be included in those agreements and specifies regulatory reporting treatment.

Comments must be received within 60 days of the proposed rule’s publication in the Federal Register.

 

    

Federal Reserve Board

Federal Reserve issues FOMC statement   

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened. The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

 

 

National Credit Union Administration

NCUA Board Briefed on Emerging Cybersecurity Threats, PCA Relief Measures

Board Briefed on Evolving Cyberthreats to the Financial System

The COVID-19 pandemic has increased cybersecurity vulnerabilities for federally insured credit unions and financial services market participants, which remain a target for hackers and thieves. Top threats include ransomware, malware and phishing attacks, identity theft, denial of service, ATM skimming, pandemic-themed attacks, and supply chain attacks.

As stressed in the briefing provided to the Board by the Chairman’s Special Advisor for Cybersecurity, supply chain risk is a significant threat to financial services because of the layered dependencies that exist in a complex, multi-service provider environment found in the financial services sector.

The NCUA continues to encourage credit union boards of directors to use previously issued advisories to review their relationships, assess and mitigate risk as it relates to their specific supply chain, and continue to strengthen their institution’s cyber vigilance and preparedness efforts.

Interim Final Rule Renews Prompt Corrective Action Relief

The NCUA Board received a briefing by the Office of Examination and Insurance staff on an interim final rule(opens new window) that temporarily modifies certain regulatory requirements to help ensure federally insured credit unions remain operational and able to provide needed financial services during the COVID-19 pandemic.

Specifically, the interim final rule makes two temporary changes to the NCUA’s prompt corrective action regulations. The first change temporarily reduces the earnings retention requirement for federally insured credit unions classified as adequately capitalized. The second change temporarily permits an undercapitalized credit union to submit a streamlined net worth restoration plan if it becomes undercapitalized predominantly because of share growth. If a credit union becomes less than adequately capitalized for reasons other than share growth, it must still submit a net worth restoration plan under the current requirements in NCUA’s regulations.

 

 

The Securities and Exchange Commission

SEC Issues Notice of Substituted Compliance Application and Proposed Substituted Compliance Order for United Kingdom and Reopens Comment Period for Notice and Proposed Substituted Compliance Order for France

The Securities and Exchange Commission voted to take two actions to continue to advance implementation of security-based swap regulation under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The Commission is publishing a notice of application and proposed substituted compliance order in response to an application from the United Kingdom’s Financial Conduct Authority (FCA).  In addition, the Commission is re-opening the comment period on the notice of application and proposed substituted compliance order in relation to the application by France’s Autorité des Marchés Financiers (AMF) and Autorité de Contrôle Prudentiel et de Résolution (ACPR).

March 2021 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Abusiveness Policy Statement Rescinded  

The Consumer Financial Protection Bureau announced that it would rescinding its “Statement of Policy Regarding Prohibition on Abusive Acts or Practices”, a policy statement issued on January 24, 2020. In order to better protect consumers and the marketplace and to enforce the law as it was written by Congress, the CFPB intends to use its authority as supervisor and enforcer with the full scope of its authority, established by the Dodd-Frank Act.  

  

The Office of the Comptroller of the Currency (OCC) 

OCC and Other Agencies Seek Opinions on Use of Artificial Intelligence      

The Office of the Comptroller of the Currency and four other federal regulatory agencies are looking for more information regarding the use of artificial intelligence (AI) by financial institutions. They are looking for information on the use of AI in activities such as fraud prevention, customer service personalization, credit underwriting, and other operations.  

    

Federal Reserve Board

FRB Announces Restrictions on Bank Holding Company Dividends Ending for Most on June 30    

The Federal Reserve Board announced that temporary and additional bank holding company dividend and share repurchase restrictions will end for most institutions on June 30, after stress tests are completed and depending on the institution’s capital levels. If capital levels are above what is required by the stress test, the firm will no longer be subject to the additional restrictions.  

 

National Credit Union Administration

NCUA Board Extends CUSO Rule Comment Period 

The NCUA Board unanimously approved a 30-day extension to the comment period regarding the proposed rule on credit union service organizations, Part 712. The rule would increase the number of permissible activities and services for CUSOs, including originating loans that a federal credit union may originate and granting the NCUA Board more flexibility approving permissible activities and services.  

 

 

The Securities and Exchange Commission

SEC Amends and Seek Comment on Holding Foreign Companies Accountable Act 

The Securities and Exchange Commission has implemented an interim final rule applying requirements mandated by congress regarding submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act). These amendments apply to those who register with the Commission and meet certain requirements.  

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