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FINRA provides guidance on whether member firms must disclose reliance on agency relief during Covid-19
On May 21, FINRA updated its frequently asked questions (previously discussed here, here, here, here, here, and here) to provide additional detail on how and when to document that it has relied on temporary relief from FINRA rules during the Covid-19 pandemic. Among other things, the updated FAQs also address Form U4 filings and temporary extensions of time to pass qualification examinations for operations professionals.
Senators question CFPB on student loan servicer examinations
On May 20, several senators, including Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH), sent a letter to CFPB Director Kathy Kraninger requesting information regarding the Bureau’s examination of companies that service student loans guaranteed by the federal government. The senators noted that they are “encouraged to learn that the CFPB recently began its first examination of a servicer of federally-held student loans since 2017,” but they stated that, given the Department’s “record [of] obstructing CFPB oversight and enforcement, [they] are skeptical of the Department’s role in this joint examination and would strongly oppose limitations, restrictions, or other interference with the CFPB’s ability to conduct complete and thorough examinations.” Among other things, the senators also expressed concerns that the Bureau and the Department have not yet finalized the Supervisory Memorandum of Understanding (MOU), which would allow the Bureau to access student borrower loan data that the senators claim is necessary for the Bureau to conduct future examinations. As previously covered by InfoBytes, the agencies signed an MOU to share student loan complaint data last February. The senators requested clarification on measures the Bureau is taking to carry out its statutory mandate to oversee the federal student loan market, including (i) how many examinations the Bureau has planned for 2020; (ii) what progress, if any, has been made on reestablishing the supervisory MOU; (iii) how the Bureau is monitoring student loan servicers’ compliance with the CARES Act, including pausing payments, interest, and collection; and (iv) whether the Bureau has identified any trends in borrower complaints since the Covid-19 pandemic began. The senators asked that the Bureau respond to the questions by June 3.
Louisiana Securities Division extends operations guidance
On May 18, the Louisiana Office of Financial Institutions, Securities Division, updated guidance (previously discussed here) regarding its operations to extend the guidance to June 5, 2020, in light of the Louisiana governor’s extension of the state of emergency until that date. The guidance addresses, among other things, submission of registration and fees, conduct of remote examinations, and processing of licensing and registration applications.
FDIC updates Consumer Compliance Examination Manual
On May 13, the FDIC announced the April updates to its Consumer Compliance Examination Manual (CEM). The CEM includes supervisory policies and examination procedures for FDIC examination staff for evaluating financial institutions’ compliance with federal consumer protection laws and regulations, and is designed to promote consistency and efficiency in the FDIC’s examination process. The recent updates include, among other things, (i) changes to the pre-examination planning process; (ii) incorporation of threshold changes for TILA, HMDA, and the Consumer Leasing Act; and (iii) changes to asset-based definitions for small and intermediate banks for the Community Reinvestment Act.
FINRA provides guidance on qualification examinations
On May 12, FINRA added a new question to its frequently asked questions page regarding the availability of the waiver process for qualification examinations. FINRA has clarified that its waiver process is currently functional and FINRA may, in exceptional cases and where good cause is shown, waive the applicable qualification examinations and accept other standards as evidence of an applicant’s qualification for registration. Guidance is provided regarding how to submit a waiver request.
Tennessee extends timeline for bank examinations and authorizes virtual shareholder meetings during pandemic
On May 12, Tennessee Governor Bill Lee issued Executive Order No. 36 suspending or amending a variety of statutory and regulatory requirements to facilitate the treatment and containment of Covid-19. These include, among other things, extending examination cycles for financial institutions, extending timing requirements for securities registrations, and allowing for virtual shareholder meetings. The order will be in effect until June 30, unless amended or revised.
Arkansas Insurance Department issues bulletin to insurers regarding compliance and licensing
On May 11, the Arkansas Insurance Department issued a bulletin regarding compliance and licensing for admitted and surplus lines insurance carriers doing business in Arkansas. Insurers and other regulated entities are advised that they must continue to expeditiously adjust claims during Covid-19. The bulletin also provides guidance on regulatory filing deadlines, the permissibility of electronic filings and signatures, the status of on-site examinations by the department, license renewals, and continuing education deadlines.
Fed report discusses banking system, cancels non-critical examinations
On May 8, the Federal Reserve Board (Fed) issued its Supervision and Regulation Report, which summarizes banking system conditions and the Fed’s supervisory and regulatory activities. The annual report discusses the safety and soundness of the banking industry, and explains the Fed’s response to Covid-19 pandemic. The report notes that actions taken by the Fed “use existing flexibility in the regulatory and supervisory framework and do not roll back the measures that allowed the banking sector to enter this crisis as a source of strength….” The report emphasizes that the banking system started 2020 in a healthy financial position, which helped enable institutions to “absorb higher credit losses will continuing to lend during times of stress.” The report notes that banks are facing significant operational challenges as a result of social distancing measures, and that during the first quarter of 2020, U.S. bank earnings declined sharply; however, strains in bank funding markets have somewhat eased since their stressed condition in March. As for the Fed’s supervisory activities, the report states that the Fed has deferred or cancelled non-critical examinations at large financial institutions for the remainder of the year. Specifically, the report notes that “examination activity will reflect operating conditions and will continue to target areas of heightened risk due to containment measure-related developments as well as known deficiencies that existed prior to the current crisis.”
Louisiana Office of Financial Institutions, Securities Division, issues update on operations
On May 1, the Louisiana Office of Financial Institutions, Securities Division, issued an update regarding its current operations during the statewide “stay at home” order. In particular, (i) paper copies of registration documents and payment of related fees can be mailed to the LOFI, and certain filings can be submitted electronically; (ii) examinations are being conducted remotely using phone and email correspondence in lieu of traditional on-site examinations; (iii) licensing staff continue to process licensing and registration applications through the CRD/IARD systems; and (iv) enforcement staff are limiting in-person contacts with witnesses and regulatory partners, and are using telecommunications technology to complete tasks remotely.
Maine Real Estate Commission adopt emergency rule regarding sales agent examinations
On May 1, the Maine Department of Professional and Financial Regulation, Real Estate Commission, adopted an emergency rule extending the time period during which applicants for a sales agent license have to pass the sales agent examination after they successfully complete the sales agent course. The time is extended from one year to 180 days after testing sites fully reopen.