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NCUA releases additional guidance to credit unions serving hemp businesses
Recently, the NCUA released updated guidance to federally insured credit unions on serving hemp businesses. As previously covered by InfoBytes, in August 2019, NCUA released interim guidance allowing federally insured credit unions to service hemp businesses. The guidance explained that the Agriculture Improvement Act of 2018 (2018 Farm Bill) removed hemp from Schedule I of the Controlled Substances Act, but noted that hemp could not be produced lawfully under federal law, beyond a 2014 pilot program, until the USDA promulgated regulations and guidelines to implement the hemp production provisions of the 2018 Farm Bill. In October 2019, the USDA issued an interim final rule, which outlined provisions to approve plans submitted by state or Native American tribes that want to retain primary regulatory authority over the production of hemp and a federal licensing plan for producers in states and tribal territories that do not have their own USDA-approved plans.
The newly released guidance reminds credit unions to stay current with the federal, state, and Native American tribal laws and regulations that apply to any hemp-related businesses, as the interim final rule does not preempt or limit any law state or tribal law that that is more stringent than the 2018 Farm Bill. Among other things, the guidance notes that NCUA examiners will collect data concerning the types of services credit unions are providing to hemp-related businesses and states that the NCUA expects credit unions to employ sufficient customer due diligence procedures as part of their BSA/AML compliance program to ensure hemp growers possess a valid state or USDA license.
FDIC Quarterly Banking Profile reports strong loan growth but declining income
On June 16, the FDIC released the first quarter 2020 Quarterly Banking Profile for FDIC-insured institutions, reporting that the aggregate net income for FDIC-insured institutions totaled $18.5 billion in the first quarter of 2020, a decline of $42.2 billion (69.6 percent) from a year ago, reflecting deteriorating economic activity as a result of the Covid-19 pandemic. The FDIC emphasized, however, that total loan and lease balances rose 4.2 percent from the previous quarter, as “[a]lmost all major loan categories reported quarterly increases.” Over the past year, total loan and lease balances increased 8 percent—the highest annual growth rate since the first quarter of 2008, the FDIC reported. According to remarks provided by FDIC Chairman Jelena McWilliams, while several industry sectors and financial markets were adversely affected by the Covid-19 pandemic, “banks effectively supported individuals and businesses during this downturn through lending and other critical financial services.”
OCC bulletin discusses preemption and Covid-19
On June 17, the OCC issued Bulletin 2020-62 discussing Covid-19-related relief programs and preemption, reminding stakeholders that banks are governed primarily by federal standards and generally are not subject to state law limitations. While the OCC recognizes the “well-intended” efforts by state and local governments to respond to the economic disruptions caused by the spread of Covid-19, the Bulletin states the agency is “concerned that the proliferation of a multitude of competing requirements will conflict with banks’ ability to operate effectively and efficiently,” which could harm consumers by risking the banks’ safety and soundness. The Bulletin cites to the 1996 Supreme Court decision in Barnett Bank of Marion County v. Nelson to remind stakeholders that federal law preempts state and local laws that prevent or largely interfere with a national bank’s ability to exercise its powers. The Bulletin provides specific examples of the types of state laws that do not apply to banks’ lending and deposit activities, including limitations on (i) terms of credit; (ii) disbursement and repayments; and (iii) processing, originating, and servicing mortgages. Additionally, the Bulletin notes that any state action that limits banks’ foreclosure activities beyond what is required by the CARES Act is preempted by OCC regulations. Lastly, the OCC reminds stakeholders of Bulletin 2020-43, which details its exclusive visitorial authority of banks (covered by InfoBytes here) and encourages banks to “consult with counsel to determine the applicability of any particular state or local law.”
Washington regulator issues guidance on financial performance representations by franchisors
On June 17, the Securities Division of the Washington Department of Financial Institutions issued a notice to inform franchisors about their obligations regarding representations about historical financial performance. In Washington, franchisors are legally prohibited from selling a franchise using a Franchise Disclosure Document (FDD) that contains an untrue statement of material fact or omits a statement of material fact. The notice indicated that if a franchisor submits FDDs that make historical financial performance representations based on data that predates the Covid-19 pandemic, the division will inquire as to whether this practice complies with federal and Washington requirements.
New York regulator issues guidance to state financial institutions regarding consumer relief
On June 17, the New York State Department of Financial Services issued guidance to state-regulated financial institutions, urging them to support consumers that have been negatively impacted by Covid-19. The department urged furnishers of credit information to, among other things, report accommodations reached under the CARES Act as “current,” unless the credit was delinquent prior to the accommodation; report certain Covid-19 related delinquencies as forborne, deferred, or affected by a natural or declared disaster consistent with the furnisher’s treatment of the account; and promptly conduct reasonable investigations of consumer-disputed credit information.
OFAC sanctions investors supporting Syrian government
On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against 24 individuals and entities for providing significant investment support to the Syrian government. According to OFAC, the designations include Treasury’s “first implementation of sanctions pursuant to the Caesar Syria Civilian Protection Act of 2019,” and involve actions taken against a holding company, a private sector investment venture, and luxury tourism developments. Concurrent with OFAC’s sanctions, the U.S. State Department also designated 15 persons, including President Bashar al-Assad and his wife, pursuant to Executive Order 13984, which focuses on persons identified as “obstructing, disrupting, or preventing a ceasefire or a political solution to the Syrian conflict.” As a result, all property and interests in property belonging to the designated persons and subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or those within (or transiting) the United States that involve any property or interests in property of designated persons,” and warned non-U.S. persons that engage in transactions with the designated persons may expose themselves to designation. OFAC also referenced a previously published Fact Sheet (covered by InfoBytes here), which highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the Iran, Venezuela, North Korea, Syria, Cuba, and Ukraine/Russia-related sanctions programs to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic.
New York regulator issues guidance for state consumer credit reporting agencies
On June 17, the New York State Department of Financial Services issued guidance to state-regulated consumer credit reporting agencies regarding support for New York consumers impacted by Covid-19. The guidance indicates that all state-regulated consumer credit reporting agencies have agreed to take a number of steps to mitigate consumer harm, including permitting consumers at least one free credit report per month for six months, reminding furnishers of information of the appropriate manner to report accommodations reached pursuant to the CARES Act, and posting on their website a link to a page dedicated to Covid-19 information and updates.
VA extends moratorium on foreclosures due to continued impact of Covid-19
On June 17, the Department of Veterans Affairs extended its moratorium on foreclosures until August 31, 2020, due to the continued negative impact of Covid-19 on veterans (see here for previous coverage). The moratorium prohibits loan servicers from initiating or completing any foreclosure on properties secured by VA-guaranteed loans.
FHA extends foreclosure and eviction moratorium for two more months
On June 17, FHA announced that it will extend its foreclosure and eviction moratorium through August 31, 2020, which applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages, excluding legally vacant or abandoned properties (previously discussed here and here). The announcement also reminds servicers of their obligations under the CARES Act.
FHFA: Fannie Mae and Freddie Mac will extend foreclosure and eviction moratorium
On June 17, FHFA announced that Fannie Mae and Freddie Mac will extend their single-family moratorium on foreclosures and evictions until at least August 31, which is currently set to expire on June 30 (previously discussed here). The foreclosure moratorium applies to homeowners with an Enterprise-backed, single-family mortgage.