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Medical company settles with OFAC

OFAC has announced a $515,400 settlement with United Medical Instruments, Inc. (“UMI”), a company incorporated in California. UMI agreed to settle its potential civil liability for 56 alleged violations of the Iranian Transactions and Sanctions Regulations. The alleged violations occurred between 2007 and 2009 when UMI made sales of medical imaging equipment with knowledge or reason to know that the goods were intended specifically for supply or re-exportation to buyers located in Iran, and when it facilitated the sales of medical imaging equipment from a company located in the United Arab Emirates to Iran. For more information, see our OFAC Update.


Mortgage rates increased in January

The January 2017 FHFA index shows that nationally, interest rates on conventional purchase-money mortgages increased from December to January, according to several indices of new mortgage contracts.

  • The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 4.22 percent for loans closed in late January, up 22 basis points from December.
  • The average interest rate on all mortgage loans was 4.17 percent, up 26 basis points from December.
  • The average interest rate on conventional, 30-year, fixed-rate mortgages of $424,100 or less was 4.37 percent, up from 4.08 percent in December.
  • The effective interest rate on all mortgage loans was 4.30 percent in January, up 31 basis points from December. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.


Minutes of Board interest rate meetings

The Federal Reserve Board has released the minutes of its interest rate meetings from January 23 and February 1, 2017.


FDIC posts Q2 CRA exam schedule

The FDIC has issued the public list of institutions that it has scheduled for a Community Reinvestment Act (CRA) examination during the second quarter of 2017.


Insured institutions earned $43.7B in Q4

The FDIC has released the Quarterly Banking Profile for the fourth quarter 2016. Commercial banks and savings institutions insured by the FDIC reported aggregate net income of $43.7 billion in the fourth quarter of 2016, up $3.1 billion (7.7 percent) from a year earlier. The increase in earnings was mainly attributable to an $8.4 billion (7.6 percent) increase in net interest income. Of the 5,913 insured institutions reporting fourth quarter financial results, 59 percent reported year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable in the fourth quarter fell to 8.1 percent from 9.6 percent a year earlier.


McWatters discusses possible closing of stabilization fund

NCUA acting Chairman McWatters, in an address at the CUNA 2017 Governmental Affairs Conference, has informed credit unions they can anticipate a “thoughtful loosening” of regulations, a streamlined agency budget, and the possible closure of the Temporary Corporate Credit Union Stabilization Fund in 2017.


Prohibition notices issued by NCUA

NCUA issued six notices of prohibition in February to individuals who had previously been convicted of crimes of dishonesty and, as a result, are prohibited from participating in the affairs of any federally insured financial institution. When they pleaded guilty or were convicted, the six former credit union employees had been ordered to make restitution payments of from $6,000 to $1.9 million.


CFPB focus on credit reporting complaints

The CFPB's February 2017 Monthly Complaint Report highlights consumer complaints about credit reporting. The report shows that consumers continue to report struggling to resolve errors on their credit reports. This month’s report also highlights trends seen in complaints coming from Louisiana.


California bank gets BSA/AML penalty

FinCEN and the OCC have announced their assessment of civil money penalties totaling $7 million on Merchants Bank of California, Carson, California, for significant willful violations of the Bank Secrecy Act. The OCC imposed a $1 million CMP for violations of previous consent orders and other violations. FinCEN levied a $7 million penalty, accepting the payment of the OCC's penalty as credit toward the FinCEN fine. The $7 million payment represents approximately 40% of the bank's capital, per its September 30, 2016, Call Report. For further information on these enforcement actions against the bank, see "Merchants Bank of California, N.A.," in our penalties pages.


FTC forum on artificial intelligence and blockchain tech

The Federal Trade Commission has released the agenda for its March 9, 2017, FinTech Forum on the consumer implications of two rapidly developing technologies: artificial intelligence and blockchain. The half-day forum will begin at 9 a.m. Pacific time and feature two panel discussions. The first panel will focus on the potential benefits and risks for consumers with the use of artificial intelligence, which involves the capability of machines to mimic human thinking or actions such as learning and problem solving, in consumer products or services, including personalized financial services. The second panel will examine the potential applications and consumer implications of blockchain, a technology for recording electronic transactions utilizing distributed ledger technology, including uses both within and beyond payments services.


College enrollment errors can cause financial problems

A consumer advisory on the CFPB Blog explains how an error in enrollment status can affect a student's finances. Tips are listed on ways to catch errors that can cost hundreds in additional student loan debt.


OCC support of America Saves Week

The OCC has issued a press release with a statement from Comptroller Curry in recognition of America Saves Week. The release included links to a range of resources on saving and financial literacy that can be found on the OCC's website.


FDIC releases January enforcement actions

The FDIC made public its administrative enforcement actions taken against banks and individuals during the month of January 2017. Included were one consent order, six removal and prohibition orders, three Section 19 orders, and four civil money penalties. The larger CMPs included the previously announced $65 million CMP imposed by the FDIC, OCC and Federal Reserve on ServiceLink Holding LLC, and CMPs for Flood Act violations imposed on banks in Albany, Illinois ($58,232) and Lake Mills, Wisconsin ($16,802).


Trump orders agencies to create regulatory reform task forces

The White House has announced that President Trump has signed an Executive Order requiring every Executive Branch agency to establish a Regulatory Reform Task Force to eliminate red tape. The task forces are to be charged with making recommendations to the agency head regarding the repeal, replacement, or modification, consistent with applicable law, of regulations that:

  • eliminate jobs, or inhibit job creation
  • are outdated, unnecessary, or ineffective
  • impose costs that exceed benefits
  • create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies
  • that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility
  • derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified


January residential sales up

HUD and the Census Bureau jointly announced the new residential sales statistics for January 2017. Sales of new single-family houses in January 2017 were at a seasonally adjusted annual rate of 555,000, 3.7 percent above the revised December rate of 535,000 and 5.5 percent above the January 2016 estimate of 526,000.The median sales price of new houses sold in January 2017 was $312,900. The average sales price was $360,900. The seasonally-adjusted estimate of new houses for sale at the end of January was 265,000. This represents a supply of 5.7 months at the current sales rate.


December finance companies data

The Federal Reserve System has released December 2016 G.20 finance companies data.


FDIC recommends automatic savings

The FDIC has issued a press release encouraging consumers to observe America Saves Week by taking advantage of automatic savings to achieve financial goals. Over time, small automatic deposits into a retirement or savings account can add up with compounded interest, helping consumers cover unexpected expenses and build wealth. America Saves Week also is an opportunity for organizations to encourage consumers to make a savings commitment and provide helpful resources. Each day of America Saves Week focuses on a different savings theme: Save Automatically, Save for Emergencies, Family Savings, Save for Retirement, Saving at Tax Time, and Debt and Credit.


NCUA report

The February 2017 issue of The NCUA Report has been posted. The NCUA also announced the newsletter is moving to a quarterly publication schedule. The next issues in 2017 will be available in May, August, and November.


FATF plenary report

The outcomes of the February 22–24, 2017, plenary meeting of the Financial Action Task Force (FATF) have been released. The FATF is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.


FinCEN renews GTOs in six metro areas

The Financial Crimes Enforcement Network (FinCEN) announced yesterday the renewal of existing Geographic Targeting Orders (GTO) that temporarily require U.S. title insurance companies to identify the natural persons behind shell companies used to pay “all cash” (no financing) for high-end residential real estate in six major metropolitan areas. FinCEN reported that about 30 percent of the transactions covered by the GTOs involve a beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report. This corroborates FinCEN’s concerns about the use of shell companies to buy luxury real estate in “all-cash” transactions. The renewed GTOs, which will be effective for 180 days from February 24, include these major U.S. geographic areas (shown with their purchase price thresholds):

  • Borough of Manhattan, NY — $3.0 million
  • All other boroughs of New York City — $1.5 million
  • Miami-Dade, Broward and Palm Beach counties, FL — $1.0 million
  • Broward County, FL — $1.0 million
  • Palm Beach County, FL — $1.0 million
  • San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara counties, CA — $2.0 million
  • Bexar County (which includes San Antonio), TX — $0.5 million


OFAC sanctions al-Nusrah Front leaders

OFAC has announced it has taken action against two al-Nusrah Front (ANF) leadership officials, Iyad Nazmi Salih Khalil (Khalil) and Bassam Ahmad al-Hasri (al-Hasri). Both individuals, based in Syria, are being designated pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. OFAC also designated Syrian-based Metallic Manufacturing Factory (MMF) for acting for or on behalf of a designated entity, Mechanical Construction Factory. Finally, OFAC announced the removal of several listings from the SDN List.

For further information, see our OFAC Update.


Agencies release swap margin guidance

The Federal Reserve Board has issued SR-17-3 and the OCC has issued Bulletin 2017-12 announcing with guidance explaining how supervisors should examine for compliance with the swap margin rule, which established margin requirements for swaps not cleared through a clearinghouse. The guidance explains that the Board and the OCC expect swap entities covered by the rule to prioritize their compliance efforts surrounding the March 1, 2017, variation margin deadline according to the size and risk of their counterparties. The Farm Credit Administration, the FDIC, and the FHFA also administer the final rule for institutions under their jurisdiction, but currently have no swap entities affected by this guidance. However, they support the guidance issued by the Board and the OCC.

The guidance does not apply to community banks with $10 billion or less in total consolidated assets.


NCUA extends interest rate cap

The NCUA Board held an open meeting on February 23, 2017, and unanimously approved a staff recommendation to maintain until September 10, 2018, the current 18-percent maximum loan interest rate for most loans made by federal credit unions. The Federal Credit Union Act caps the interest rate on federal credit union loans at 15 percent; however, the law gives the NCUA Board discretion to raise that limit for 18-month periods if interest-rate levels could threaten the safety and soundness of credit unions. The current 18-percent ceiling has remained in place since May 1987.


Updated Q&A on projected CU resolution costs and assessments

The NCUA has posted updated Questions and Answers about the Corporate Resolution program costs and projected future Temporary Corporate Credit Union Stabilization Fund assessments.


Mortgage relief scammer settles with FTC

The Federal Trade Commission has announced that Gabriel D. Stewart, the final defendant in an alleged mortgage relief scam that preyed upon distressed homeowners, will be banned from selling mortgage or debt relief services under the terms of a settlement. In addition to banning Stewart from those businesses, the stipulated order prohibits him from misrepresenting financial and other products and services. It imposes a judgment of more than $1.7 million that is partially suspended and requires Stewart to pay $105,487, representing the amount of money he received from the scam. The full judgment will become due immediately if Stewart is found to have misrepresented his financial condition.


House prices up in 4th quarter

The Federal Housing Finance Agency reported yesterday that U.S. house prices rose 1.5 percent in the fourth quarter of 2016 according to the agency's House Price Index (HPI). House prices rose 6.2 percent from the fourth quarter of 2015 to the fourth quarter of 2016. FHFA’s seasonally adjusted monthly index for December was up 0.4 percent from November. The top five states in annual cost increases were Oregon (11.0 percent), Colorado (10.6 percent), Florida (10.4 percent), Washington (10.2 percent) and Nevada (8.9 percent).


Bureau proposal to gather student loan servicing data

The CFPB has published in this morning's Federal Register a notice and request for comment on a proposed new information collection, "Student Loan Servicing Market Monitoring." Comments on the proposal will be accepted for 60 days, through April 24, 2017. The notice indicates the Bureau expects the collection will affect only 10 respondents, presumably only the largest student loan servicers.


OFAC offers compressed SDN file

OFAC has posted a compressed version of its SDN.XML file in order to provide bandwidth savings for users that frequently download the information. This new file compresses the SDN.XML file by approximately 92%.


Annual adjustment to Reg I asset-size threshold

The Federal Reserve Board has announced its first annual adjustment to the asset-size threshold in Regulation I that determines the dividend rate that certain member banks earn on their Federal Reserve Bank stock. The updated total consolidated asset threshold is $10,122,000,000.

Update: Published at 82 FR 11501 in the Federal Register on February 24, 2017. It will be effective on March 27, 2016.


January FOMC minutes released

The Federal Reserve Board and the Federal Open Market Committee (FOMC) have released the minutes of the Committee meeting held on January 31–February 1, 2017.


Fourth Quarter 2016 charge-off and delinquency rates

The Federal Reserve has released data on the charge-off and delinquency rates on loans and leases at commercial banks for the fourth quarter 2016.


NCUA Consumer Compliance webinar on ECOA

The NCUA has announced that it has replaced the previously announced discussion on prepaid account rules with a discussion regarding the Equal Credit Opportunity Act (ECOA) and Reg B during the regulator’s February 28, 2017, consumer compliance webinar. Prepaid account rules will be discussed in depth during a future webinar.


FATF roundtable on FinTech and RegTech

The Financial Action Task Force (FATF) held a roundtable on FinTech and RegTech in Paris on February 18, 2017. The session was chaired by the FATF President, Juan Manuel Vega-Serrano. The meedting was a first step to take this initiative forward in order to engage with various stakeholders. The event brought together anti-money laundering/counter-terrorist financing (AML/CFT) professionals, national supervisors, international organizations and other relevant experts, including experts from banks that have partnered with FinTech and RegTech1 firms to discuss issues of common interest.

1RegTech: A blend word created to address regulatory challenges in the financial services sector through innovative technology. RegTech comprises a group of companies that use technology to help businesses comply with regulations efficiently and inexpensively.


MLA website problem revealed

The Department of Defense has posted a notice on its official Military Lending Act (MLA) website that between February 9 and February 15, 2017, there was a problem with MLA Multiple Record Requests that prevented 149 request files from processing. It was suggested that those who submitted a multiple record request file in between those dates, submit the file again for processing.


Full bench to consider Bureau's appeal of PHH case

In October 2016, a three-judge panel of the U.S. Court of Appeals in Washington found that the Bureau's structure is unconstitutional, and ordered that the Director of the CFPB be considered as appointed for five year but serving "at the pleasure of the president" rather than subject to removal only "for cause," as provided in § 1011(c)(3) of the Dodd-Frank Act (See "Court limits CFPB Director's independence," October 12, 2016). The CFPB appealed that ruling, suspending its effect pending the appeal. CNBC has reported that, on Thursday, February 16, the Bureau's request for a hearing by the full panel was granted. Oral arguments on the appeal are scheduled for May 24.


FAC minutes released

The Federal Reserve Board has released the minutes of February 10, 2017, meeting of its Federal Advisory Council (FAC). The FAC is composed of twelve representatives of the banking industry who consult with and advise the Board on all matters within the Board's jurisdiction.


Large commercial banks ranking released

The Federal Reserve Statistical Service has updated the list of insured U.S.-chartered commercial banks that have consolidated assets 
of $300 million or more, ranked by consolidated assets 
as of September 30, 2016.


Minority-owned depository institutions data

The FRB has updated the compiled quarterly data on depository institutions that participate in the Treasury’s Minority Bank Deposit Program and the FDIC’s Minority Depository Institutions Program as of September 30, 2016. The data come from the Board’s National Information Center database and are generally updated about twelve weeks after the end of each quarter.


OCC releases enforcement actions and terminations

The OCC has released new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. Four civil money penalties, one formal agreement, five personal cease and desist orders, and one removal/prohibition order were issued. Among those announced was the January 24, 2017, $65 million CMP issued to ServiceLink Holdings, LLC, of Jacksonvolle, Florida. There were also orders to cease and desist and to pay a total of $55,500 issued to three former directors of a Greenville, South Carolina bank.


FTC sends funds to money-scheme victims

The Federal Trade Commission has announced it is mailing 2,031 checks totaling more than $436,000 to people who lost money to Money Now Funding, a work-at-home scheme that conned people, including many seniors with limited income and savings, into thinking they could make money by referring merchants in their area to a non-existent money-lending service.


FEMA suspending communities from Flood Program

The Federal Emergency Management Agency has published a final rule at 82 FR 10962 in today's Federal Register identifying communities in Colorado, Illinois and Virginia where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension today, February 17, 2017, for noncompliance with the floodplain management requirements of the program.

  • Colorado—portions of Arapahoe County
  • Illinois—portions of Peoria, Tazewell and Whiteside counties
  • Virginia—the City of Norfolk and portions of Loudoun County


Two removed from OFAC list

OFAC has posted a notice that the names of two individuals linked to transnational criminal organizations have been deleted from the OFAC SDN List. See BankersOnline's OFAC update for the details.


Fed to continue testing of Term Deposit Facility

The Federal Reserve has confirmed plans to continue the previously announced periodic testing of its Term Deposit Facility (TDF). These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The Federal Reserve plans to conduct a routine TDF test operation each quarter in 2017, starting with one to be conducted on February 23, 2017, with a floating-rate offering of term deposits with an early withdrawal feature. The schedule and terms for future test operations will be announced later.


OCC revises Licensing Manual booklet

The OCC has issued Bulletin 2017-11 to announce the revision of the “Changes in Directors and Senior Executive Officers” booklet of the Comptroller’s Licensing Manual. The revised booklet updates procedures and requirements following the integration of the Office of Thrift Supervision into the OCC in 2011, and it incorporates revised regulations (12 CFR 5) that became effective July 1, 2015, addressing changes in directors and senior executive officers of national banks, federal savings associations, and federal branches.


NCUA funds receive clean audit opinions

The NCUA has announced that its four permanent funds have again received unmodified, or “clean,” audit opinions for 2016, according to audited financial statements released yesterday by the Office of the Inspector General.


Increasing transparency in student loan servicing

A CFPB Blog article requests comments on a new initiative that would take a closer look at the way consumers repay student debt and track the student loan industry activities that they depend on if they experience financial distress.


New residential construction activity

HUD and the Census Bureau have jointly announced new residential construction statistics for January 2017.


FDIC train-the-trainer webinar next week

The FDIC will present a three-hour Train-the-Trainer webinar on financial education, focusing on the FDIC's Money Smart Program, on Wednesday, February 22, 2017, at 1 p.m. ET.


Bureau exploring alternative data use for credit invisible

In a press release coordinated to coincide with the CFPB's Charleston, West Virginia, February 16 field hearing on Alternative Data, the Bureau announced this morning it has launched an inquiry into ways to expand access to credit for consumers who are credit invisible or who lack enough credit history to obtain a credit score. The Bureau is seeking public feedback on the benefits and risks of tapping alternative data sources such as bills for mobile phones and rent payments to make lending decisions about consumers whose lack of credit history might otherwise block opportunities. Specifically, the Bureau will explore these, and other, topics:

  • Access to credit
  • Complexity of the process
  • Impact on costs and service
  • Implications for privacy and security
  • Impact on specific groups


Miller named Chief of Staff at Treasury

Treasury Secretary Mnuchin has announced the appointment of Eli Miller to serve as the Chief of Staff of the Treasury Department. The Chief of Staff is responsible for managing the day-to-day operations of the Department generally and the office of the Secretary specifically. In this capacity, Miller will operate in direct support of the Secretary and play a key role in advising, coordinating and reviewing policy development within the Department, other agencies, and the White House as well as assisting and planning the overall strategic direction of the Department.


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