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Federal and state financial regulatory agencies issue interagency disaster relief guidance for institutions affected by Hurricane Florence
On September 14, the OCC, Federal Reserve Board, FDIC, NCUA, and the Conference of State Bank Supervisors (collectively, the “agencies”) issued a joint statement providing guidance to financial institutions impacted by Hurricane Florence. The agencies encouraged lenders to work with borrowers in impacted communities and to consider, among other things, (i) whether to modify loans based on the facts and circumstances, and (ii) requesting to operate temporary bank facilities if faced with operational difficulties. On the same day, the FDIC also provided guidance for depository institutions assisting affected customers (see FIL-48-2018), which may include “waiving fees, increasing ATM cash limits, easing credit card limits, allowing loan customers to defer or skip payments, and delaying the submission of delinquency notices to credit bureaus.” Furthermore, the FDIC encouraged depository institutions to use Bank Secrecy Act-permitted “non-documentary verification methods” for customers unable to provide standard identification documents.
The agencies also reminded institutions to contact their appropriate federal and/or state regulator should they experience disaster-related difficulties when complying with publishing and regulatory reporting requirements, and further noted that institutions may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The statement also provides links to previously issued examiner guidance for institutions affected by major disasters.
Find continuing InfoBytes coverage on disaster relief here.
Conference of State Bank Supervisors announces single, national exam for mortgage loan originator licensing
On August 8, the Conference of State Bank Supervisors announced that all states and U.S. territories now use a single, common exam to assess mortgage loan originators (MLOs) in order to simplify the licensing process and streamline the mortgage industry. MLSs who pass the National SAFE MLO Test with Uniform State Content (National Test) will no longer be required to take additional state-specific tests in order to be licensed within any state or U.S. territory. The National Test is part of CSBS’ Vision 2020, which is geared towards streamlining the state regulatory system to support business innovation and harmonize licensing and supervisory practices, while still protecting the rights of consumers.
Find continuing InfoBytes coverage on CSBS’ Vision 2020 here.
Buckley Sandler Special Alert: OCC announces it will accept fintech charter applications, following the release of Treasury report on nonbank financial institutions
On July 31, the OCC announced that nondepository financial technology firms engaged in one or more core banking functions may apply for a special purpose national bank (SPNB) charter. The announcement follows a report released the same day by the Treasury Department, which discusses a number of recommendations for creating a streamlined environment for regulating financial technology, and includes an endorsement of the OCC’s SPNB charter for fintech firms (fintech charter).
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Click here to read the full special alert.If you have questions about the report or other related issues, please visit our Fintech practice page, or contact a Buckley Sandler attorney with whom you have worked in the past.
Conference of State Bank Supervisors supports legislation to coordinate federal and state examinations of third-party service providers
On July 12, the Conference of State Bank Supervisors (CSBS) issued a statement to the Senate Banking Committee, offering support for legislation that would “enhance state and federal regulators’ ability to coordinate examinations of, and share information on, banks’ [third-party technology service providers (TSPs)] in an effective and efficient manner.” H.R. 3626, the Bank Service Company Examination Coordination Act, introduced by Representative Roger Williams, R-Texas, would amend the Bank Service Company Act to provide examination improvements for states by requiring federal banking agencies to (i) consult with the state banking agency in a reasonable and timely fashion, and (ii) take measures to avoid duplicating examination activities, reporting requirements, and requests for information. Currently, 38 states have the authority to examine TSPs, however, according to CSBS, amending the Bank Service Company Act would more appropriately define a state banking agency’s authority and role when it comes to examining potential risks associated with TSP partnerships. In its statement, CSBS also references a recent action taken by eight state regulators against a major credit reporting agency following its 2017 data breach that requires, among other things, a wide range of corrective actions, including improving oversight and ensuring sufficient controls are developed for critical vendors. (See previous InfoBytes coverage here.) The House Financial Services Committee advanced H.R. 3626 on June 24 on a unanimous vote.
Conference of State Bank Supervisors releases nationwide list of fintech innovation contacts
On April 10, following a nationwide fintech forum for state banking regulators and financial services executives co-hosted by the New York Department of Financial Services and the Conference of State Banking Supervisors (CSBS), CSBS issued a press release announcing that regulators from all 50 states and the District of Columbia have designated an “Innovation Staff Contact” within each of their offices to facilitate and streamline communications between state regulators and the financial services industry. Fintech topics include money transmissions, payments, lending, and licensing. According to the president of CSBS, “State regulators see how fintech is reshaping the financial services industry. And an Innovation Contact is but the latest step that states are taking to engage with industry and modernize nonbank regulation.” Last year, as previously covered in InfoBytes, CSBS introduced “Vision 2020,” an initiative geared towards streamlining the state regulatory system to support business innovation and harmonize licensing and supervisory practices, while still protecting the rights of consumers. Additionally, this past February, CSBS announced that financial regulators from seven states have agreed to a multi-state compact that will offer a streamlined licensing process for money services businesses, including fintech firms. (See previous InfoBytes coverage here.)
Seven state regulators agree to streamline money service licensing process for fintech companies
On February 6, the Conference of State Bank Supervisors (CSBS) announced that financial regulators from seven states have agreed to a multi-state compact that will offer a streamlined licensing process for money services businesses (MSB), including fintech firms. The seven states initially participating in the MSB licensing agreement are Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington. The CSBS expects other states to join the compact. According to the CSBS, “[i]f one state reviews key elements of state licensing for a money transmitter—IT, cybersecurity, business plan, background check, and compliance with the federal Bank Secrecy Act—then other participating states agree to accept the findings.” CSBS noted that the agreement is the first step in efforts undertaken by state regulators to create an integrated system for licensing and supervising fintech companies across all 50 states.
The announcement of the MSB licensing agreement follows a May 2017 CSBS policy statement, which established the 50-state goal, and—as previously covered by InfoBytes—is a part of previously announced “Vision 2020” initiatives designed to modernize and streamline the state regulatory system to be capable of supporting business innovation while still protecting the rights of consumers.
CSBS announces FTC access to non-confidential NMLS licensing information
On January 18, the Conference of State Bank Supervisors (CSBS) announced it will start sharing non-confidential licensing information obtained through the Nationwide Multistate Licensing System (NMLS) with the FTC. Once implemented, the FTC will have access to regulated companies’ ownership information, and public FTC enforcement actions will be added to the NMLS database and made available to state regulators and to the public. According to the FTC, access to this type of information will improve consumer protection investigation efficiency and coordination with state law enforcement partners. Currently, select NMLS data is shared with the Office of Financial Research, CFPB, Financial Crimes Enforcement Network, and FHA.
CSBS Accepting Licensing Renewal Applications from Non-Depository Financial Institutions
On November 1, the Conference of State Bank Supervisors (CSBS) announced it is accepting state license renewal applications through December 31 from non-depository financial institutions that wish to continue operating in 2018. Institutions can submit licensing renewals through the Nationwide Multistate Licensing System (NMLS)—operated by CSBS on behalf of state regulators. However, CSBS warned institutions to apply early, noting that last year “almost 93 percent of renewal applications submitted by November 30 were approved by December 31, [but] only about 49 percent of license renewals requested after December 15 were approved by the end of the year.”
As previously announced in InfoBytes, the New York Department of Financial Services recently announced that it will transition licensed lenders and sales finance companies to the NMLS, as part of its continued initiative to link with other states and provide enhanced supervision of non-depository institutions.
FDIC Chairman Delivers Remarks Concerning the Strengths and Challenges Facing Community Banks
On October 23, FDIC Chairman, Martin J. Gruenberg, spoke at an event hosted by the Illinois Department of Financial and Professional Regulation and the Conference of State Bank Supervisors about the important role community banks play in the U.S. financial system. Gruenberg noted that comparing the performance of community banks to noncommunity banks in the post-crisis period can be instructive. For instance, “community bank loans have grown faster than loans held at noncommunity banks in: 1- to 4-family mortgages, commercial real estate loans, and commercial and industrial loans.” In fact, Gruenberg stated, “[i]n each of the past three years, annual growth in community bank net income has equaled or exceeded growth at noncommunity banks.” Further, community banks continue to provide more credit for small business and banking services in general in non-metro areas.
Gruenberg went on to highlight some of the challenges facing community banks: (i) fewer resources for burdensome regulatory compliance; (ii) appraiser availability and shortages, especially in rural areas; (iii) complex capital requirements; (iv) the ability to effectively respond to information technology challenges, such as maintaining strong cybersecurity programs; and (v) succession planning and staff recruitment. Beyond agency efforts to address these concerns through advisors and proposed changes, Gruenberg spoke about the FDIC’s Community Banking Initiative, which offers resources and tools to help community banks stay informed of regulatory changes and manage costs.
CSBS Announces Membership of Fintech Advisory Panel
On October 19, the Conference of State Bank Supervisors (CSBS) announced that 33 financial technology companies have agreed to serve on the CSBS Fintech Industry Advisory Panel. The goal of the panel is to identify ways to help modernize the state regulatory system. According to CSBS, the 33 participating companies range from start-ups to national brands and represent differing industry sectors, as well as, geographic locations and business models. The advisory panel will have three working groups, (i) money transmission and payments; (ii) lending; and (iii) community banking and innovation.
A complete list of the panel’s membership is here.