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NYDFS puts CFDL compliance obligations on hold
On December 31, NYDFS announced that providers’ compliance obligations under the state’s Commercial Finance Disclosure Law (CFDL) will not take effect until the necessary implementing regulations are issued and effective. The CFDL was enacted at the end of December 2020, and amended in February 2021, to expand coverage and delay the effective date to January 1, 2022. (See S5470-B, as amended by S898.) Under the CFDL, providers of commercial financing, which include persons and entities who solicit and present specific offers of commercial financing on behalf of a third party, are required to give consumer-style loan disclosures to potential recipients when a specific offering of finance is extended for certain commercial transactions of $2.5 million or less. In October 2021, NYDFS published a notice announcing a proposed regulation (23 NYCRR 600) to implement the CFDL, which provided that the compliance date for the final regulation will be six months after the final adoption and publication of the regulation in the State Register (covered by InfoBytes here). Comments on the proposed regulation were due December 19. NYDFS noted in its announcement that “[i]n light of the significant feedback received, the Department is carefully considering the comments received and intends to publish a revised proposed regulation for notice-and-comment early in the new year.”
FDIC updates brokered deposit FAQs
On December 29, the FDIC released an update to the Questions and Answers Related to the Brokered Deposits Rule. The FDIC clarified in a new FAQ that, with respect to third-party administrators of health savings accounts (HSAs) that hire third parties, “the HSA exception applies when: ‘[t]he agent or nominee places, or assists in placing, customer funds into deposit accounts for the primary purpose of paying for or reimbursing qualified medical expenses under section 223 of the Internal Revenue Code.’” Therefore, a third party that is an agent or nominee of a customer may qualify for the HSA exception where the third party’s primary purpose is to help place customer funds into HSAs to facilitate the payment for or reimbursement of qualified medical expenses. The updated FAQs also explained that entities relying upon the “25 percent test” to calculate their percentage of total assets under administration at IDIs for reporting purposes must submit a notice and provide quarterly reporting to the FDIC that “include[s] calculations based upon the average daily balance of funds placed at IDIs over the course of each reporting quarter.” Non-compliance with the reporting requirement may lead to revocation of the primary purpose exception and removal from the FDIC’s public register of entities that rely on the primary purpose exception on the FDIC’s webpage. An annual certification is required within 30 days of the anniversary date of the original filing.
OCC revises CRA small and intermediate bank asset-size threshold adjustments
On December 30, the OCC announced revisions to the asset-size thresholds used to define small and intermediate small banks and savings associations under the Community Reinvestment Act (CRA). Effective January 1, a small bank or savings association will mean an institution that, as of December 31 of either of the past two years, had assets of less than $1.384 billion. An intermediate small bank or savings association will mean an institution with assets of at least $346 million as of December 31 of both of the prior two years, and less than $1.384 billion as of December 31 of either of the prior two years. The adjustments follow a final rule issued last month, which rescinded the OCC’s 2020 CRA rule and replaced it with a rule based largely on the prior rules adopted jointly by the federal banking agencies in 1995, as amended. (Covered by InfoBytes here.) Under the 2021 final rule, banks are evaluated under different CRA examination procedures based on their asset-size threshold amounts. As previously covered by InfoBytes, the Federal Reserve Board and the FDIC also announced joint annual adjustments to the CRA asset-size thresholds used to define “small bank” and “intermediate small bank” in December.
Jelena McWilliams to resign as FDIC chairman
On December 31, Jelena McWilliams announced her resignation as FDIC Chairman effective February 4. McWilliams, who was appointed in 2018, noted in her resignation letter to President Biden that throughout her tenure at the agency the FDIC “has focused on its fundamental mission to maintain and instill confidence in our banking system while at the same time promoting innovation, strengthening financial inclusion, improving transparency, and supporting community banks and minority depository institutions, including through the creation of the Mission Driven Bank Fund.” She also credited FDIC staff for taking swift measures to maintain stability and provide flexibility for banks and consumers impacted by the Covid-19 pandemic.
McWilliams’ resignation follows a conflict among members of the FDIC Board of Directors related to a joint request for information (RFI) seeking public comment on revisions to the FDIC’s framework for vetting proposed bank mergers. Last month, FDIC Board member Martin J. Gruenberg and Rohit Chopra (who has an automatic board seat as Director of the CFPB) issued a joint statement announcing that the FDIC Board of Directors voted to launch a public comment period on updating the FDIC’s regulatory implementation of the Bank Merger Act. Gruenberg and Chopra indicated at the time that the Board members taking part in this action had approved the RFI. Shortly following the announcement, the FDIC released a statement disputing that any action had been approved. (Covered by InfoBytes here.) Chopra issued a follow-up statement challenging the view that only the FDIC Chairperson has the right to raise matters for discussion in Board meetings, and called for “immediate[]” resolution of the conflict, stating that “[a]bsent a return to legal reality and constructive engagement, board members will need to take further steps to exercise independence from management and to ensure sound governance of the [FDIC].” (Covered by InfoBytes here.)
Education Dept. extends student loan moratorium
On December 22, the Department of Education announced a 90-day extended pause on student loan repayment, interest, and collections through May 1, 2022, which will allow the Biden Administration “to assess the impacts of the Omicron variant on student borrowers and provide additional time for borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after restart.” As previously covered by InfoBytes, in August 2021, President Biden announced the extension of the moratorium on collecting student loans until January 31, 2022. According to the Department, the extended pause will assist 41 million borrowers in saving $5 billion per month and “[b]orrowers are encouraged to use the additional time to ensure their contact information is up to date and to consider enrolling in electronic debit and income-driven repayment plans to support a smooth transition to repayment.”
FinCEN issues final rule replacing obsolete BSA civil penalty regulations
On December 23, the Financial Crimes Enforcement Network (FinCEN) published a final rule amending the Bank Secrecy Act civil penalty regulations concerning requirements for reporting foreign financial accounts and transactions with foreign financial agencies. Specifically, the final rule removes civil penalty language that was made obsolete by the American Jobs Creation Act of 2004’s enactment of statutory revisions to the computation of a civil money penalty, which included provisions for increasing the maximum penalty for willful violations. The final rule took effect immediately.
DOJ solicits additional comments on bank mergers
On December 17, the DOJ announced that its Antitrust Division is soliciting additional public comments regarding the potential revision of the 1995 Bank Merger Competitive Review Guidelines (Banking Guidelines) as part of a continuing effort by the federal agencies responsible for banking regulation and supervision. According to the announcement, the division will utilize “additional comments to ensure that the Banking Guidelines reflect current economic realities and empirical learning, ensure Americans have choices among financial institutions, and guard against the accumulation of market power.” The division had previously announced in September 2020 that it was soliciting comments regarding the Banking Guidelines’ potential revision. The call for public comment contained specific questions, including whether: (i) any new guidance should be bank-specific; (ii) any new bank merger guidance should be jointly issued; (iii) the 1800/200 Herfindahl-Hirschman Index screen should be updated; and (iv) there should be a de minimis exception. The announcement also noted that “[b]uilding on the responses, the updated call for comment focuses on whether bank merger review is currently sufficient to prevent harmful mergers and whether it accounts for the full range of competitive factors appropriate under the laws.” The announcement further noted that the division will continue working with the Federal Reserve, OCC, and the FDIC, and will consider comments from the public.
NCUA extends Covid-19 regulatory relief
On December 21, the NCUA unanimously approved an extension to the effective date of a temporary final rule, which granted regulatory relief to federally insured credit unions during the Covid-19 pandemic. In 2020, the NCUA issued the final rule to temporarily raise “the maximum aggregate amount of loan participations that a [federally insured credit union (FICU)] may purchase from a single originating lender to the greater of $5,000,000 or 200 percent of the FICU’s net worth.” The final rule also temporarily suspended certain “limitations on the eligible obligations that a federal credit union [] may purchase and hold.” Required timeframes related to the occupancy or disposition of certain properties not in use for federal credit union business or that were abandoned were also suspended. The temporary final rule’s modifications will remain in effect through December 31, 2022.
OCC updates HMDA examination procedures
On December 17, the OCC released revised interagency HMDA examination procedures for HMDA compliance. The revised examination procedures address changes made to the effective dates for banks meeting or exceeding either the closed-end mortgage loans or the open-end lines of credit loan-volume threshold in each of the two preceding calendar years. Effective July 1, 2020, a bank that “originated at least 100 closed-end mortgage loans in each of the two preceding calendar years, or originated at least 500 open-end lines of credit in each of the two preceding calendar years meets or exceeds the loan-volume threshold.” Effective January 1, 2022, the temporary 500 open-end lines of credit provision expires, and a bank that “originated at least 100 closed-end mortgage loans in each of the two preceding calendar years, or originated at least 200 open-end lines of credit in each of the two preceding calendar years” will now meet or exceed the loan-volume threshold. The revised examination procedures also outline changes to partial exemptions for an application or covered loan. A partial exemption applies to: (i) applications for originations of, and purchases of closed-end mortgage loans when the bank originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years, and (ii) applications for originations of, and purchases of open-end lines of credit provided the bank originated fewer than 500 open-end lines of credit in each of the two preceding calendar years.
Bulletin 2021-63 rescinds OCC Bulletin 2010-8, “Compliance Policy: Revised Home Mortgage Disclosure Act Examination Procedures,” as well as OCC Bulletin 2019-19, “Home Mortgage Disclosure Act: Revised Interagency Examination Procedures.”
OCC solicits feedback on recently released climate-related risk principles
On December 16, the OCC announced draft principles intended to support the identification and management of climate-related financial risks at OCC-regulated institutions with over $100 billion in total consolidated assets. (See also OCC Bulletin 2021-62.) The principles address, among other things: (i) governance; (ii) polices, procedures and limits; (iii) strategic planning; (iv) risk management; (v) data, risk measurement, and reporting; and (vi) scenario analysis. According to the OCC, the principles are meant to support banks’ efforts to focus on key aspects of climate-related financial risk management and to provide a high-level framework for climate-related financial risk management consistent with existing OCC rules and guidance. The OCC also noted that though all banks, regardless of size, could potentially experience material exposures to climate-related financial risks, the principles are targeted at the largest banks. According to the announcement, the OCC intends “to elaborate on these principles in subsequent guidance that would distinguish roles and responsibilities of boards and management, incorporate the feedback received on the principles, and consider lessons learned and best practices from the industry and other jurisdictions.” Comments are due by February 14, 2022.