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  • CFPB solicits comments on proposed rule regarding civil penalty inflation adjustments

    Agency Rule-Making & Guidance

    On October 12, the CFPB published an amendment to its rule regarding inflation adjustments for the maximum amount of each civil penalty within its jurisdiction, pursuant to the 2015 Inflation Adjustment Act amendments. Under the Bureau’s amendment, adjusted penalty amounts would only apply to assessments with associated violations occurring on, or after, November 2, 2015. The Bureau noted that because the amendment “would limit the civil penalties covered persons may pay, the proposed rule would not impose any additional costs on them. Nor does the rule impose any new, affirmative duty on any small entity or change any existing requirements on small entities, and thus no small entity who is currently complying with the laws that the Bureau enforces will incur any expense from the amended rule.” Comments must be received by November 13.

    Agency Rule-Making & Guidance CFPB Civil Money Penalties

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  • FDIC FIL provides guidance on HMDA partial exemptions

    Agency Rule-Making & Guidance

    On October 10, the FDIC issued FIL-58-2018 which summarizes guidance provided by the CFPB on the implementation of partial exemptions from certain of HMDA’s reporting requirements for specific insured depository institutions and insured credit unions pursuant to Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act. On August 31, as previously covered in InfoBytes here, the Bureau issued an interpretive and procedural rule to implement and clarify recent HMDA amendments and outline exemption qualification requirements. FIL-58-2018 reminds FDIC-supervised institutions subject to HMDA and Regulation C of the following clarifications made by the Bureau: (i) there are 26 data points covered by the partial exemptions and 22 other data points that all HMDA reporters must collect, record, and report”; (ii) loans counted towards partial exemption thresholds must otherwise be reportable under Regulation C; (iii) exception based on Community Reinvestment Act examination reports will be determined by the two most recent CRA ratings as of December 31 of the preceding calendar year; (iv) if an institution eligible for a partial exemption chooses not to report a universal loan identifier, it must report a non-universal loan identifier unique within the institution; and (v) institutions exempt from certain reporting requirements may still report exempt data fields so long as they “report all data fields associated with that data point.”

    Agency Rule-Making & Guidance FDIC CFPB HMDA EGRRCPA S. 2155 Mortgages CRA

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  • VA provides status update to address 2014 loan guaranty interim final rule

    Agency Rule-Making & Guidance

    On October 9, the Department of Veterans Affairs (VA) published a status update in the Federal Register to inform the public that it will not publish a final rule to adopt provisions outlined in its May 2014 interim final rule (IFR). The IFR was issued to implement provisions of Dodd-Frank concerning ability-to-repay standards and qualified mortgages (QM) as defined under TILA. According to the status update, section 309 of Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) superseded certain elements of the IFR. Specifically, the EGRRCPA’s “seasoning and recoupment requirements for [Interest Rate Reduction Refinance Loans] effectively eliminated the category of rebuttable presumption QM.” The VA reminded program participates to refer to Circular 26-18-13, previously issued in May and covered by InfoBytes, which addressed “loan churning” of VA-guaranteed refinance loans and set out new requirements for VA eligibility as addressed by EGRRCPA. The VA commented that it will publish future rulemaking to supersede the IFR, but that in the meantime, the IFR remains in effect to the extent the provisions do not conflict, or are not superseded by, EGRRCPA.

    Agency Rule-Making & Guidance Department of Veterans Affairs Dodd-Frank Americans with Disabilities Act Qualified Mortgage TILA EGRRCPA S. 2155 Mortgages

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  • Federal Reserve releases eligibility criteria for 18-month on-site examination cycles

    Agency Rule-Making & Guidance

    On October 1, the Federal Reserve Board (Board) issued SR 18-7 to qualifying state member banks and U.S. branches and agencies of foreign banks outlining updated 18-month on-site examination eligibility criteria. As previously covered in InfoBytes, the Board, OCC, and FDIC issued an interim final rule effective August 29—as authorized by the Economic Growth, Regulatory Reform, and Consumer Protection Act—which qualifies banks with less than $3 billion in total assets (an increase from the previous threshold of $1 billion), provided they satisfy additional criteria. SR 18-7 separately lists the relevant eligibility criteria for state member banks and for U.S. branches or agencies of foreign banks, and requires that qualifying banks (i) not be subject to a federal banking agency’s formal enforcement proceeding or order; and (ii) not have experienced a change of control during the previous 12 months that would have required a full-scope examination. Additional eligibility criteria address component and composite examination ratings and risk-based capital ratios.

    Agency Rule-Making & Guidance Federal Reserve EGRRCPA S. 2155 Examination OCC FDIC

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  • Agencies permit bank resource sharing for Bank Secrecy Act compliance

    Agency Rule-Making & Guidance

    On October 3, the Financial Crimes Enforcement Network, Federal Reserve Board, FDIC, NCUA, and OCC (together, the agencies) issued an interagency statement outlining instances where banks and credit unions may choose to enter into collaborative arrangements to share resources in order to more efficiently and effectively manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations. The statement noted that collaborative arrangements are most suitable for “banks with a community focus, less complex operations, and lower-risk profiles for money laundering or terrorist financing.” The agencies described several examples in which collaboration between banks may be beneficial, such as (i) conducting internal control functions, including reviewing and drafting BSA/AML policies and procedures and risk-based customer identification and account monitoring processes; (ii) sharing resources for BSA/AML independent testing; and (iii) conducting BSA/AML training on regulatory requirements and internal policies, procedures, and processes. Other potential benefits include cost reductions, increases in operational efficiencies, and the availability to leverage specialized expertise.

    However, the agencies cautioned that banks who choose to enter into collaborative agreements should carefully consider the associated risks “in relation to the bank’s risk profile, adequate documentation, consideration of legal restrictions, and the establishment of appropriate oversight mechanisms.” Moreover, banks should ensure that the collaborative arrangement is consistent with sound principles of corporate governance, have in place a contractual agreement, conduct periodic performance reviews, and consult their regulator’s guidance concerning third-party relationship to ensure compliance. The agencies further noted that “each bank is responsible for ensuring compliance with BSA requirements. Sharing resources in no way relieves a bank of this responsibility.” The interagency statement emphasizes that it is not applicable “to collaborative arrangements or consortia formed for the purpose of sharing information under Section 314(b) of the USA PATRIOT Act,” and “banks that form collaborative arrangements as described in this interagency statement are not an association for purposes of Section 314(b) of the USA PATRIOT Act.”

    (See also Federal Reserve Board press release, FDIC press release, NCUA press release, and OCC press release and Bulletin 2018-36.)

    Agency Rule-Making & Guidance Federal Reserve FDIC OCC FinCEN NCUA Bank Secrecy Act Anti-Money Laundering Bank Compliance

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  • Federal Reserve seeks comments on proposals to facilitate faster payments

    Agency Rule-Making & Guidance

    On October 3, the Federal Reserve Board (Board) issued a request for comments on “potential actions the Federal Reserve could take to promote ubiquitous, safe, and efficient faster payments . . . by facilitating real-time interbank settlement of faster payments.” The Board indicated it would consider any alternative approaches to the specified potential actions that will achieve its goals. As previously covered in InfoBytes, the Board’s Faster Payments Task Force issued a report in 2017 making several recommendations, including the development of a round-the-clock settlement service to support faster payments. Among the potential actions that the Board is seeking feedback on is whether the Reserve Banks should consider developing such a 24/7/365 real-time gross settlement service, which would use banks’ balances in accounts at the Reserve Banks to facilitate interbank settlement of faster payments. The Board also seeks comments on the potential use of a liquidity management tool, which would support services for real-time interbank settlements by enabling transfers between Federal Reserve accounts on a 24/7/365 basis.

    Comments must be received by December 14.

    Agency Rule-Making & Guidance Federal Reserve Payments

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  • FDIC announces transparency initiative, publication of performance metrics

    Agency Rule-Making & Guidance

    On October 3, the FDIC announced the “Trust through Transparency” initiative, an agency-wide program designed to “strengthen the trust between the agency, other regulators, the public, and banks.” The FDIC chairman’s remarks at the 2018 Community Banking in the 21st Century Research and Policy Conference emphasized the importance of trust through transparency to the FDIC’s core mission of “maintaining stability and public confidence in the nation's financial system.”

    According to the announcement, the FDIC has launched a new section of its website, which will publish and regularly update key performance metrics such as (i) examination turnaround times; (ii) application processing times, including for de novo banks; and (iii) call center usage and response rates. Within the same section of the website, users will be able to access (i) FDIC policies and procedures; (ii) decisions and guidance related to material supervisory determination and deposit insurance assessment appeals; and (iii) information related to the process for implementing the risk-focused supervision program. As part of this initiative, the chairman noted, the agency is undertaking a review of information it has deemed confidential and its FOIA process, including, specifically, the application of exemptions.

    As previously covered in InfoBytes, the FDIC issued a request for information seeking comments and information on how the agency can more effectively streamline its communications and transparency efforts.

    Agency Rule-Making & Guidance FDIC

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  • FDIC issues RFI aimed at improving its communication with banks

    Federal Issues

    On October 1, the FDIC released a request for information (RFI) on “FDIC Communication and Transparency.” The agency is seeking comments and information on how the agency can make its “communication with insured depository institutions (IDIs) more effective, streamlined, and clear [, including] . . . maximiz[ing] efficiency and minimiz[ing] burden associated with obtaining information on FDIC laws, regulations, policies, and other materials relevant to IDIs.” The RFI requests feedback on all types of communication from the FDIC, including (i) regulations, policies, procedures, and guidance; (ii) news and updates; (iii) industry data, educational materials, and outreach; and (iv) general and direct communications, such as email subscriptions, in-person meetings, and compliance reviews. In addition to general feedback, the RFI includes a list of suggested topics and questions for commenters to address.

    Comments must be received by December 4.

    Federal Issues Agency Rule-Making & Guidance FDIC RFI

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  • Federal banking agencies request comments on proposal to revise and extend various information collection procedures

    Agency Rule-Making & Guidance

    On September 28, the Federal Reserve Board, FDIC, and OCC (the Agencies)—with the approval of the Federal Financial Institutions Examination Council (FFIEC)—published a joint notice and request for comment proposing to extend and revise currently approved collections of information for: (i) Consolidated Reports of Condition and Income (Call Reports) for certain banks (FFIEC 031, 041, 051); (ii) Reports of Assets and Liabilities for branches and agencies of foreign banks (FFIEC 002, 002S); (iii) Foreign Branch Reports of Condition (FFIEC 030, 030S); and (iv) the Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101). Among other things, the proposed revisions generally address the revised accounting for credit losses described within Accounting Standards Update No. 2016-13, and include reporting changes for regulatory capital related to the Agencies’ current expected credit losses methodology.

    The revisions would begin taking effect March 31, 2019, for quarterly report date respondents; December 31, 2022, for annual report date respondents; and on later dates for certain respondents. Comments must be submitted by November 27.

    Agency Rule-Making & Guidance OCC Federal Reserve FDIC Call Report

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  • CFPB bulletin announces changes to supervisory communications

    Agency Rule-Making & Guidance

    On September 25, the CFPB issued Bulletin 2018-01, which announces changes to how it communicates supervisory expectations to institutions. According to the bulletin, effective immediately, examination reports and supervisory letters will include two categories of findings that convey supervisory expectations: (i) Matters Requiring Attention (MRAs); and (ii) Supervisory Recommendations (SRs). MRAs will continue to be used to outline specific goals for institutions to accomplish in order to correct violations of law, remediate harmed consumers, and address compliance management system (CMS) weaknesses, and will include timeframes for companies to report on its efforts to address MRAs and timeframes for implementation. SRs will be used when the Bureau has not identified violations of law but noted weaknesses in CMS and will contain recommended actions to address weaknesses. The bulletin notes that neither MRAs nor SRs are legally enforceable, but emphasizes the Bureau will consider an institution’s response in addressing the noted concerns when assessing a compliance rating, prioritizing future supervisory work, or assessing the need for an enforcement action.

    Agency Rule-Making & Guidance CFPB Supervision Examination

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