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Banker's Toolbox, Inc., leaders in compliance solutions for financial institutions, announced the acquisition of Georgia-based MainStreet Technologies (MST). MST is an industry leader in the loan risk management space. This acquisition adds to a strong and growing portfolio of compliance-related solutions and will continue to enhance the value Banker's Toolbox brings to both their customers and the industry. (Read full press release here.)

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FRBServices announces quality improvement initiative

The January 15 issue of FED360° introduces a quality improvement initiative for Federal Reserve Check Adjustment Services. The Federal Reserve Banks will charge a quality fee to depositing institutions for quality issues within work deposited with the Federal Reserve Banks. Additionally, the Federal Reserve Banks will charge a quality fee for cases submitted with incorrect or incomplete information that resulted in the prevention of automatic resolution of the request. These quality fees are designed to encourage greater efficiency through proper case submission and improved deposit practices.

A per item fee of $0.50 will be charged to a depositing bank when an adjustment case is opened with the Reserve Banks for an item that was either incorrectly encoded or deposited more than once by the same institution. A fee of $2.50 will be imposed on a financial institution that provides incorrect or incomplete information when opening an adjustment case with the Reserve Banks. The $2.50 fee is only applicable to adjustment cases that would have resolved automatically had the case been submitted correctly. The fees apply to items processed on or after January 2, 2019, and any adjustment cases received on or after January 14, 2019.


CFPB blogs on credit score myths

The Bureau has posted an article regarding misleading information concerning ways to improve one's credit score. The myths the Bureau debunked include:

  • Checking one's credit report will hurt one's credit score
  • Individuals have only one credit score
  • Getting loan estimates from multiple lenders will hurt one's score.
  • Carrying a balance on credit cards will improve one's credit score
  • There are companies that can be paid to quickly fix one's score
  • There are only three companies that create the reports lenders use to make loan decisions


NCUA supervisory priorities for 2019

The National Credit Union Administration has outlined its primary areas of supervisory focus for 2019 in its Letter 19-CU-01 to credit unions. The NCUA's extended exam cycle will be fully implemented, and agency examiners will continue using the streamlined small credit union exam program procedures for most credit unions that have assets under $50 million. For all other credit unions, examiners will conduct risk-focused examinations, concentrating on the areas of highest risk, new products and services, and compliance with federal regulations.

NCUA examiners will have increased flexibility to conduct suitable examination work offsite. In the agency’s Flexible Examination Program (FLEX) pilot, examiners were able to conduct as much as 35 percent of examination time offsite. The NCUA expects this increased flexibility will reduce the time impact on credit unions, save on travel costs and increase staff productivity.

The Letter briefly described examiners' focus in several areas.

  • BSA Compliance: Examiners will perform more in-depth reviews of credit unions’ Bank Secrecy Act and anti-money laundering policies, procedures, and processes to assess compliance with regulatory requirements for customer due diligence and for identifying and verifying beneficial owner(s) of legal entity members.
  • Concentrations of Credit: Examiners will have a continued focus on large concentrations of loan products and concentrations of specific risk characteristics.
  • Consumer Compliance: As in 2018, examiners will continue to perform limited reviews of Home Mortgage Disclosure Act (HMDA) quarterly Loan/Application Registers, or full-year Loan/Application Registers when applicable. The reviews will evaluate federal credit unions’ good faith efforts to comply with 2018 HMDA data collection and reporting requirements. These reviews will account for the statutory partial exemptions that took effect on May 24, 2018. The NCUA will continue to focus on Military Lending Act (MLA) compliance, and examiners will evaluate credit unions’ efforts to comply with the MLA. Examiners will review credit unions’ compliance with Regulation B’s notification requirements following adverse action taken on consumer credit applications. They will also review overdraft policies and procedures for compliance with Regulation E.
  • Current Expected Credit Losses (CECL): examiners will inquire about efforts a credit union has taken to prepare for the new accounting standard, and whether a credit union has performed analysis for how CECL would alter the Allowance for Loan and Lease Losses funding needs.
  • Information Systems and Assurance: Examiners will continue conducting information security maturity assessments with the Automated Cybersecurity Examination Toolbox (ACET). Examiners will use the ACET to assess credit unions with over $250 million in assets that have not previously received an assessment. The security, confidentiality, and integrity of credit union member information remains a key supervisory priority for the NCUA. Two additional areas of supervisory focus for 2019 are the assessment of credit union IT risk management to ensure it effectively identifies, remediates, and controls inherent risks to appropriate residual risk levels, and oversight of service provider arrangements to ensure credit unions implement effective risk-based supply chain management.
  • Liquidity and Interest Rate Risks: Examiners will assess liquidity and interest rate risk management in light of upward rate trends.


December discount rate meeting minutes

The Federal Reserve Board has released the minutes of its December 10 and December 19, 2018, discount rate meetings. Overall, Federal Reserve Bank directors reported mostly strong economic conditions in various sectors across their districts.


SEC charges hackers of EDGAR system

The Securities and Exchange Commission has announced charges have been issued against nine defendants for participating in a previously disclosed scheme to hack into the SEC’s EDGAR system and extract nonpublic information to use for illegal trading. The SEC has filed a complaint charging a Ukrainian hacker, six individual traders in California, Ukraine, and Russia, and two entities. The hacker and some of the traders were also involved in a similar scheme to hack into newswire services and trade on information that had not yet been released to the public. In total, the traders traded before at least 157 earnings releases from May to October 2016 and generated at least $4.1 million in illegal profits.


SCOTUS declines case on constitutionality of CFPB

The Hill reports that the U.S. Supreme Court has refused to hear a case challenging the constitutionality of the Consumer Financial Protection Bureau. The case was an appeal from the U.S. Court of Appeals for the District of Columbia decision to reject a challenge by The State National Bank of Big Spring, the Competitive Enterprise Institute and the 60 Plus Association to the constitutionality of the CFPB's structure as an "independent" agency.

The D.C. Circuit's decision to dismiss the case came after the court's full panel of judges had upheld the constitutionality of the Bureau's structure in another case.


Banks encouraged to work with customers during shutdown

The Federal Reserve, FDIC, OCC, NCUA, CFPB and Conference of State Bank Supervisors have issued a joint press release encouraging financial institutions to work with consumers affected by the federal government shutdown.


Regulators post Call Report information

FDIC FIL-02-2019, issued also on behalf of the OCC and Federal Reserve, provides instructions for completion of Call Reports for the quarter ended December 31, 2018. The FIL also reminds banks of pending proposals to modify Call Reports that have not yet been finalized.


McWilliams presentation to American Bar Association committee

FDIC Chairman McWilliams addressed the annual meeting of the American Bar Association Banking Law Committee on Friday on the "Principles of Supervision." McWilliams said supervision should: (1) ensure that insured institutions are safe and sound; (2) provide clear rules of the road; (3) be consistent in its application; (4) be fair, effective, and holistic in the consideration of regulatory issues; (5) be timely and contemporary in providing feedback; (6) respect the business judgment of an institution’s management team; and (7) promote an open, two-way dialogue between the regulated and the regulators.


HUD shutdown information

HUD has posted pay and benefits information for furloughed federal employees and a specific program shutdown Q&A.


Federal Advisory Council meeting minutes

The Federal Reserve Board has posted the minutes of the December 7, 2018, meeting of its Federal Advisory Council.


CFPB assessment of ATR/QM and mortgage servicing rules

The Bureau has released reports assessing the effectiveness of its Ability to Repay and Qualified Mortgage Rule and of its Mortgage Servicing Rule.

The Dodd-Frank Act requires the Bureau to conduct an assessment of each significant rule or order adopted by the Bureau and to publish a report of its assessment no later than five years after the effective date of the significant rule or order. The assessment must address, among other relevant factors, the effectiveness of the rule in meeting the purposes and objectives of the Dodd-Frank Act and the specific goals stated by the Bureau in issuing the rule in question. The Bureau expects that the findings in these reports will inform stakeholders, policy makers, and the general public about developments in the mortgage market and the effects of the rules on consumers.


U.S. and Argentina hold AUDIF meeting

A statement was issued by the Treasury Department after the conclusion of the fifth meeting of the Argentina-United States Dialogue on Illicit Finance (AUDIF) on January 9-10 in Buenos Aires, Argentina. The main objective of the AUDIF is to advance shared goals on countering money laundering, terrorist financing, proliferation financing, corruption and other illicit finance threats and typologies.


Mnuchin on Russia Sanctions

Treasury Secretary Mnuchin issued a statement in advance of yesterday's classified briefing for Members of the House of Representatives on the sanctions against Russian oligarch and Specially Designated National Oleg Deripaska and three companies he controlled at the time sanctions were imposed, En+ Group PLC (En+), United Company RUSAL PLC (Rusal), and EuroSibEnergo (ESE).


2018 Reserve Bank income and expense data

The Federal Reserve Board has released preliminary results indicating that the Reserve Banks provided for payments of approximately $65.4 billion of their estimated 2018 net income to the U.S. Treasury. The payments include two lump-sum payments totaling approximately $3.2 billion, necessary to reduce aggregate Reserve Bank capital surplus to $6.825 billion as required by the Bipartisan Budget Act of 2018 and the Economic Growth, Regulatory Relief, and Consumer Protection Act. The 2018 audited Reserve Bank financial statements are expected to be published in March and may include adjustments to these preliminary unaudited results.


Mnuchin on mortgage relief for federal employees

Treasury Secretary Stephen T. Mnuchin issued a statement yesterday commending the efforts of mortgage lenders, mortgage servicers, and other financial institutions that are working to assist those who may face financial hardships resulting from the federal government shutdown.


Quarles on insurance supervision and international engagement

Federal Reserve Board Vice Chairman for Supervision Randal K. Quarles spoke yesterday at the American Council of Life Insurers Executive Roundtable in Naples, Florida, on Insurance Supervision and International Engagement. Topics covered in Quarles' presentation included —

  • the insurance industry's importance in the economy;
  • the Federal Reserve;s consolidated supervision of insurance firms, as mandated by the Dodd-Frank Act;
  • the Board's approach to a capital standard for insurance holding companies;
  • a preview of the "Building Block" approach that builds upon the regulatory capital rules of subsidiaries' functional regulators--state or foreign insurance regulators for insurance subsidiaries and federal banking regulators for insured depository institutions--to provide a consolidated capital requirement;
  • engagement with the National Association of Insurance Commissioners; and
  • the Federal Reserve's advocacy in international insurance standard setting


A new look at

The NCUA has unveiled redesigned versions of its and websites. NCUA Board Chairman J. Mark McWatters said "Both of these websites are now more intuitive and accessible, and they will improve our ability to communicate with the broader credit union community and the public." Both of the sites now allow users access on a variety of platforms, including smartphones, tablets, laptops and desktops.


Board announces Reserve Banks chairs and deputies for 2019

The Federal Reserve Board has announced the designation of the Chairs and Deputy Chairs of the 12 Federal Reserve Banks for 2019. Each Reserve Bank has a nine-member board of directors. The Board of Governors appoints three of these directors and each year designates one of its appointees as Chair and a second as Deputy Chair.


Minutes of December FOMC meeting released

The Federal Reserve Board and Federal Open Market Committee have released the minutes of the Committee meeting held on December 18-19, 2018, with a summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting.


Chau Do named deputy comptroller

The Office of the Comptroller of the Currency recently appointed Chau Do as Deputy Comptroller for the Risk Analysis Division.

In this role, Ms. Do will oversee the four Risk Analysis divisions in the agency’s Economics Department that provide expertise to the agency on quantitative modeling of credit risk, market risk, compliance risk, and enterprise-wide risk. She also will serve as a key advisor and technical expert on practical and policy issues related to the use of quantitative models by banks and the oversight of banks’ risk models by supervisors. She assumed these duties on December 23, 2018.


NMLS in reinstatement period

The NMLS has posted a notice that the Reinstatement Period began on January 2, 2019, for mortgage loan originators whose registrations lapsed on December 31 because they had not completed the annual renewal process, and will run through midnight ET on February 28. MLOs with lapsed registrations should check the NMLS's Federal Registry annual renewal page for guidance on reactivation.


OFAC targets Venezuela currency exchange network

On Tuesday, January 8, OFAC sanctioned Venezuelan individuals and companies involved in a significant corruption scheme designed to take advantage of the Government of Venezuela’s currency exchange practices, generating more than $2.4 billion in corrupt proceeds. This designation, pursuant to Executive Order (E.O.) 13850, targets seven individuals, including former Venezuelan National Treasurer Claudia Patricia Diaz Guillen (Diaz) and Raul Antonio Gorrin Belisario (Gorrin), who bribed the Venezuelan Office of the National Treasury (ONT, or Oficina Nacional del Tesoro) in order to conduct illicit foreign exchange operations in Venezuela.

In addition to Diaz and Gorrin, OFAC designated or blocked five other individuals and 23 entities, pursuant to E.O. 13850, for their roles in the bribery scheme, and identified one private aircraft as blocked property.

For information on a General License issued in connection to these designations and on the identities of the designated individuals, entities and aircraft, see our OFAC Update.


Texas bank gets C&D for BSA/AML shortcomings

The Federal Reserve Board and the Banking Commissioner of the Texas Department of Banking have issued a Consent Cease and Desist Order to Commercial State Bank, Andrews, Texas, directing that the bank take specified actions following identification in a recent examination of the bank by the Federal Reserve Bank of Dallas and the Department of significant deficiencies in the bank’s risk management and compliance with applicable laws, rules, and regulations relating to anti-money laundering. Those deficiencies resulted in a compliance program violation.

The bank was directed to take action with regard to board oversight; the bank's BSA/AML compliance program; customer due diligence; suspicious activity monitoring and reporting; the bank's transaction monitoring system; and independent testing.


G.19 and household debt/obligation ratios

The FRB has posted November 2018 G.19 Consumer Credit and third- quarter 2018 Household Debt Service and Financial Obligation Ratios data.


Modification of stress testing requirements proposed

The Federal Reserve Board is inviting comments on a proposal that would modify company-run stress testing requirements to conform with the Economic Growth, Regulatory Relief, and Consumer Protection Act. The proposal would raise the threshold requiring state-member banks to conduct their company-run stress tests from $10 billion in total consolidated assets to $250 billion. Additionally, in place of the current annual cycle, the proposal would generally require firms above the threshold to conduct company-run stress tests once every other year. It would also eliminate the hypothetical "adverse" scenario from company-run stress tests for bank holding companies, state member banks, U.S. intermediate holding companies of foreign banking organizations, and any nonbank financial company supervised by the Board. Similarly, the Board would no longer include an "adverse" scenario in its supervisory stress tests. Comments will be accepted until February 19, 2019.


OCC reminder of CRA threshold changes

The OCC's Bulletin 2019-1 reminds OCC-supervised institutions that the agency has published revisions to its Community Reinvestment Act regulations that became effective on January 1, 2019. The revisions adjust the asset-size threshold amounts used to define “small bank,” “small savings association,” “intermediate small bank,” and “intermediate small savings association.” The rulemaking adjusts the threshold amounts based on the annual percentage change in a measure of the consumer price index.

The OCC said that national banks and savings associations with assets between $313 million and $321 million as of December 31, 2016, and December 31, 2017, or between $1.252 billion and $1.284 billion as of either of those dates, should review the revisions to asset thresholds described in the bulletin to determine whether their CRA performance evaluation criteria have changed.


IRS says refunds will be processed and paid

The IRS has announced that tax season will begin on January 28, and the Service will begin accepting paper and electronic returns that day, reports Forbes. Despite the partial government shutdown, IRS Commissioner Chuck Rettig said, "We are committed to ensuring that taxpayers receive their refunds." The Office of Management and Budget has determined that the relevant law allows the IRS to pay refunds during a lapse in annual appropriations.

Other sources report that the IRS has also said it will resume its Income Verification Express Service program, used by many lenders to obtain tax transcripts to support income claims in loan applications.

Notwithstanding the IRS announcements, Forbes also reports the National Treasury Employees Union filed a lawsuit alleging the administration is violating the Fair Labor Standards Act (FLSA) by requiring federal employees to work without pay during the partial government shutdown. The union is asking the court to order the government to pay compensation for these employees plus 100% liquidated damages.


HMDA filing period open

The CFPB announced on Friday to its subscribed email list that the filing period for HMDA data collected in 2018 opened on January 1, 2019. Financial institutions can access the HMDA Platform at With the opening of the live filing period, the beta testing period for 2018 filing is closed, and all test data uploaded during the beta period have been purged.

User accounts created during the 2018 beta test period and during the filing period for 2017 data will be maintained for the 2018 period, and users can use their current credentials to access the HMDA Platform. Financial institutions should continue providing feedback on their experience using the HMDA Platform and to direct any questions regarding the HMDA Platform to


Household and nonprofit balance sheets

The Federal Reserve has posted a FEDS Note on household and nonprofit balance sheets in the financial accounts of the United States. The note describes new supplemental tables in the Financial Accounts of the United States that provide separate balance sheets for households and nonprofit organizations. Traditionally, households and nonprofit organizations have been combined in the Financial Accounts, because data sufficient for breaking out nonprofit organizations into a separate sector have not been available. The recent balance sheet trends were also published.


FDIC lists recent CRA evaluation ratings

The FDIC has issued its monthly list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in October 2018. Of the 83 banks listed, 72 received ratings of "Satisfactory."

The following eleven banks were rated "Outstanding":


USAA to pay $15.3M for Reg E violations

The CFPB has announced a settlement with USAA Federal Savings Bank, a federally chartered savings association headquartered in San Antonio, Texas. Under the terms of a Consent Order, USAA must, among other provisions, provide approximately $12 million in restitution to certain consumers who were denied a reasonable error resolution investigation, and pay a $3.5 million civil money penalty. The Bureau found that USAA violated the Electronic Fund Transfer Act and Regulation E by failing to properly honor consumers’ stop payment requests on preauthorized electronic fund transfers, and by failing to initiate and complete reasonable error resolution investigations. USAA also violated the Consumer Financial Protection Act of 2010 by reopening deposit accounts consumers had previously closed without seeking prior authorization or providing adequate notice. See "USAA FSB to pay $3.5M fine and make restitution" in our Penalties pages for additional information.


December 2018 OCC CRA evaluations

The OCC has released a list of CRA performance evaluations that became public during the month of December 2018. Of the 31 evaluations listed, 28 were rated "Satisfactory."

The three following banks were rated "Outstanding":


OCC releases workshops schedule

The OCC has announced its 2019 schedule of workshops for board directors and bank management of national community banks and federal savings associations. The OCC offers five workshops at a cost of $99 each:

  • Building Blocks: Keys to Success for Directors and Senior Management
  • Risk Governance: Improving Director Effectiveness
  • Compliance Risk: What Directors Need to Know
  • Credit Risk: Directors Can Make a Difference
  • Operational Risk: Navigating Rapid Changes

The OCC offers the workshops nationwide to directors of national community banks and federal savings associations. Senior management and other key executives of institutions supervised by the OCC are also eligible to attend the Building Blocks workshop.

Workshops are limited to 35 participants. Attendees will receive course materials, supervisory publications, and lunch.


G.5 and G.5A rates released

The Federal Reserve has released the January 2019 G.5 foreign exchange rates and 2018 G.5A annual foreign exchange rates reports.


NCUA prohibition notices

The NCUA announced on Monday it had issued one prohibition order and one prohibition notice in December to these individuals formerly employed by federally insured credit unions:

  • a former employee of County & Municipal Employees Credit Union in Edinburg, Texas, who agreed and consented to the issuance of a prohibition order and agreed to comply with all of its terms to settle and resolve the NCUA Board’s claims against her.
  • a former employee of Northwest Baptist Federal Credit Union in Seattle, Washington, who had pleaded guilty to the charge of theft and been sentenced to four months in prison, three years’ supervised release, and ordered to pay $460,485.65 in restitution.

These individuals are prohibited from participating in the affairs of any federally insured financial institution.


Residential land price data

The Federal Housing Finance Agency (FHFA) has posted a working paper on the price of residential land for over 900 counties, 8,000 Zip codes, and 11,000 census tracts between 2012 and 2017, covering 85% of the U.S. population and 83% of all single-family homes.


Wells Fargo fined, exits personal insurance business in California

The California Department of Insurance announced yesterday that Wells Fargo Bank, N.A. and Wells Fargo Insurance, Inc. have agreed to pay a $10 million penalty as part of a settlement agreement with the Department. This settlement resolves the department’s accusation alleging improper insurance sales practices related to Wells Fargo’s online insurance referral program. The improper practices resulted in consumers being signed up and charged for insurance products without their consent.

Wells Fargo has agreed to not transact any new business during the remaining term of its two insurance licenses, which expire in July and September 2020, respectively. The company also agreed to not apply for a license for at least two years following the expiration of their current licenses. Wells Fargo has provided restitution to all California consumers who were charged premiums, bank fees and other direct monetary losses connected to the unauthorized insurance policies. Half of the penalty is due immediately. If the company ever seeks to return to the California insurance marketplace, it will then pay the remaining $5 million penalty. The Department may also decline to issue a new license.


Reminder of changes to Fed Operating Circular 3

FRB Services has posted the January edition of Fed 360°, which includes a reminder of changes to the Fed's Operating Circular 3, Collection of Cash Items and Returned Checks. The revisions, which were effective January 1, 2019:

  • Make the operating circular more focused on electronic processing
  • Update the adjustment provisions
  • Reflect other changes to the way the Reserve Banks provide Check Services
  • Define terms in the operating circular or Regulation CC
  • Reflect proposed Regulation J amendment language explicitly stating that electronically created items, which are essentially images that were not issued as paper checks, are not items

The Revised OC 3 and a complete summary of changes can be found on FRB Services' Operating Circulars page.

The Fed 360° edition also includes a complete FedACH Services schedule for 2019 holidays. Starting this year, FedACH Services will no longer share holiday service notifications via email.


Updated BSA training video

The FDIC has announced the availability of an updated technical assistance video providing an overview of current BSA/AML and OFAC requirements for directors of FDIC-supervised banks and savings associations. The updated video reflects changes in federal laws and regulations since it was originally issued in 2013, including the beneficial ownership and customer due diligence requirements and related exam procedures.


Bureau announces year-end adjustments

The Bureau has announced year-end dollar amount adjustments under Regulations C and Z, and one under the Fair Credit Reporting Act.

  • The asset-size exemption threshold for depository institutions under Regulation C will increase in 2019 from $45 million to $46 million. Banks, savings associations, and credit unions with assets of $46 million or less as of December 31, 2018, are exempt from collection of HMDA data in 2019.
  • The asset-size threshold under Regulation Z for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan will increase from $2.112 billion to $2.167 billion. Therefore, creditors with assets of less than $2.167 billion (including assets of certain affiliates) as of December 31, 2018, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2019. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1 of 2020.
  • The adjustment to the escrows asset-size exemption threshold will also increase a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. Balloon-payment qualified mortgages that satisfy all applicable criteria, including being made by creditors that have (together with certain affiliates) total assets below the threshold, are also excepted from the prohibition on balloon payments for high-cost mortgages.
  • Under section 612(f)(1)(A) of the Fair Credit Reporting Act, the Bureau each year sets a ceiling on the charges a credit reporting agency can charge for making a disclosure to the consumer under section 609 of FCRA. For 2019, that amount will increase to $12.50.


OCC issues updated Handbook booklets

OCC Bulletin 2018-49 announced updates to the “Bank Premises and Equipment,” “Consigned Items and Other Customer Services,” and “Litigation and Other Legal Matters” booklets of the Comptroller’s Handbook.

The revised and updated booklets replace the booklets of the same title previously issued in 2016 and 2015 and rescind OCC Bulletins 2016-42, 2016-44, and 2015-4, which transmitted the previous versions of the booklets.


OCC on private ed loan rehab programs

OCC Bulletin 2018-48 announces an update to the "Student Lending" booklet of the Comptroller's Handbook and outlines the OCC's process for approving EGRRCPA section 602 rehabilitation programs for private education loans. Banks intending to establish a section 602 rehab program should:

  • follow the OCC approval process explained in this bulletin, including making the request to the supervisory office at least 120 days before offering the program.
  • administer section 602 rehabilitation programs consistent with safe and sound banking practices and risk management principles.

The EGRRCPA does not require banks to offer a section 602 rehabilitation program. Banks that choose to do so are entitled to section 602’s safe harbor from claims of inaccuracy for removing a reported default from a borrower’s consumer report.


FDIC releases November enforcement actions

The FDIC has issued a list of 12 enforcement orders issued in November 2018. Included were two Orders of Prohibition from Further Participation and one Notice of Intention to Prohibit from Further Participation.

  • A senior trust officer at First International Bank & Trust, Watford City, North Dakota, was issued an Order of Prohibition from Further Participation after the FDIC determined that he billed his trust clients and paid himself for services that they did not authorize him to perform, and solicited and obtained an unsecured loan from a trust beneficiary to any uncreditworthy LLC he controlled, without disclosing the risks associated with the loan.
  • The FDIC issued a similar order to a former teller at South State Bank (formerly known as SCBT), Columbia, South Carolina, after determining that she processed three cash withdrawals totaling $8,059, from the account of a deceased bank customer.
  • The Notice of Intention to Prohibit was issued to a former teller supervisor at Branch Banking and Trust Company, Winston-Salem, North Carolina, alleging that she embezzled approximately $345,925 from elderly customers of the bank. The former teller pleaded guilty to a count of bank fraud in federal court in December 2017, and was sentenced to 21 months of incarceration and five years supervised release, and ordered to pay restitution to the bank of $345,925. She had 20 days from the date the November 19 notice was served on her to file an answer.


OCC amends recovery planning standards

The Office of the Comptroller of the Currency is amending its enforceable guidelines relating to recovery planning standards (guidelines) for insured national banks, insured federal savings associations, and insured federal branches (banks) in order to limit the application of the guidelines to the largest, most complex banks and thereby provide regulatory burden relief to smaller, less complex institutions. As summarized in OCC Bulletin 2018-47,

  • The final revised guidelines increase the average total consolidated assets threshold for applying the guidelines to banks from $50 billion to $250 billion. This change will reduce the number of banks to which the guidelines apply from 25 to 8, based on the most recent data available.
  • The final revised guidelines decrease from 18 months to 12 months the time within which a bank should comply with the guidelines after the bank first becomes subject to them..

The amendments to the OCC's Safety and Soundness Standards regulations at 12 CFR Part 30, were published on December 27, with an effective date of January 28, 2019.


Making loans without flood insurance - Save this one

On Friday, federal financial institution regulators issued a joint statement to remind lenders that loans can be made during periods when the National Flood Insurance Program (NFIP) administered by the Federal Emergency Management Agency (FEMA) is unavailable. The 2010 guidance issued by the Federal Reserve, FDIC, and OCC on the issue is generally applicable whenever the NFIP is unavailable. However, lenders must continue to make flood determinations, provide timely, complete, and accurate notices to borrowers, and comply with other parts of the flood insurance regulations. In addition, lenders must evaluate safety and soundness and legal risks and prudently manage those risks during the lapse period.

Coming fast on the heels of the joint statement, FEMA announced that it will resume issuing new flood policies during the government shutdown, reports The Hill. FEMA's statement on Friday read, "As of this evening, all NFIP insurers have been directed to resume normal operations immediately and advised that the program will be considered operational since December 21, 2018 without interruption." Of course, on December 21, the president signed a bill extending the authorization for the NFIP through May 31, 2019, a fact that FEMA seemed to ignore Thursday when it announced the program would be suspended during the shutdown.

We recommend that banks tuck the regulators' Friday statement about lending when the NFIP isn't available into their electronic reminders, to pop up just before May 31. Until then, it's business as usual.


Flood insurance availability uncertain

Despite a website statement that the president signed legislation on December 21 extending the National Flood Insurance Program's authorization to May 31, 2019, the Federal Emergency Management Agency is reported by HousingWire to have ruled yesterday that the National Flood Insurance Program can’t be renewed during the ongoing government shutdown. Both the National Association of Realtors and the National Association of Home Builders have strongly protested FEMA's announcement, saying that it conflicts with the will of Congress expressed in the bill signed into law on December 21. Until this apparent government communications snafu is resolved, availability of new flood policies is in limbo.


December SCOOS released

The Federal Reserve Board has released the December Senior Credit Officer Opinion Survey on Dealer Financing Terms (SCOOS), a quarterly survey providing information about the availability and terms of credit in securities financing and over-the counter (OTC) derivatives markets. The SCOOS is modeled after the long-established Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS), which provides qualitative information about changes in supply and demand for loans to households and businesses at commercial banks. The SCOOS collects qualitative information on credit terms and conditions in securities financing and OTC derivatives markets, which are important conduits for leverage in the financial system.


FEMA suspending communities

FEMA has published two final rules in today's Federal Register suspending communities from the National Flood Insurance Program for failure to comply with the floodplain management requirements of the program. Under the first rule, published at 83 FR 67094, the City of Valdez, Alaska, will be suspended as of January 3, 2019. Under the second rule, at 83 FR 67095, the following communities will be suspended as of January 18, 2019:

  • Florida: Inglis (Levy County)
  • Oregon: Sandy and unincorporated areas of Clackamas County
  • South Carolina: Greenville and unincorporated areas of Greenville County
  • Washington: Bellingham, Blaine, Everson, Fernsale, Lummi Indian Reservation, Lynden, Nooksack, Sumas, and unincorporated areas of Whatcom County


FinCEN seeking nominations for BSAAG

FinCEN has published a notice [83 FR 67487] inviting the public to nominate financial institutions, trade groups, and non-federal regulators or law enforcement agencies for membership on the Bank Secrecy Act Advisory Group. New members will be selected for three-year membership terms. The BSAAG is the means by which the Treasury receives advice on the operations of the Bank Secrecy Act. As chair of the BSAAG, the Director of FinCEN is responsible for ensuring that relevant issues are placed before the BSAAG for review, analysis, and discussion. Nominations must be received by January 28, 2018.


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