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OCC Bulletin 2017-44 and FDIC FIL-53-2017, issued yesterday, announced that the OCC and FDIC, with the Federal Reserve Board, have issued frequently asked questions (FAQs) on the liquidity coverage ratio (LCR) rule. The FAQs address:

• Treatment of outflows from liquidity facilities to public sector entities in connection with variable rate demand note programs
• Treatment of outflows for trusts
• Determination of maturity for instruments with remote contingency call options
• Treatment of outflows for trust ledger deposit accounts and custody assets
• Treatment of multicurrency deposit balances
• Treatment of inflows from secured loans to retail clients with open maturities
• Treatment of eligible high-quality liquid assets and monetization in securities lending transactions
• Treatment of certain deposits required to be held at a foreign central bank as foreign withdrawable reserves

The LCR rule applies only to depository institutions with $10 billion or more in total consolidated assets that are consolidated subsidiaries of internationally active banking organizations.

A report that examines the Consumer Financial Protection Bureau’s (CFPB) arbitration rule has been released by the Department of the Treasury. The report delves into the analysis CFPB used to prohibit mandatory arbitration clauses. It outlines important limitations to the data behind CFPB’s rule and argues that the CFPB did not appropriately consider whether prohibiting arbitration clauses would advance consumer protection or serve the public interest. The Treasury report said that:

• The CFPB’s rule will impose extraordinary costs—generating more than 3,000 additional class action lawsuits over the next five years, imposing more than $500 million in additional legal defense fees, and transferring $330 million to plaintiffs’ lawyers;
• The CFPB’s data show that the vast majority of class action lawsuits deliver no relief to the class—and that consumers very rarely claim relief available to them;
• The CFPB did not show that its rule will achieve a necessary increase compliance with the federal consumer financial laws, despite the rule’s high costs; and
• The CFPB failed to consider less onerous alternatives to its ban on mandatory arbitration clauses across market sectors.

OCC Bulletin 2017-43, issued Friday, informs national banks, federal savings associations, and federal branches and agencies of foreign banks (collectively, banks) of the principles they should follow to prudently manage the risks associated with offering new, modified, or expanded products and services. Such changes should be developed and implemented consistently with sound risk management practices and should align with banks’ overall business plans and strategies. New activities should encourage fair access to financial services and fair treatment of consumers and should be in compliance with applicable laws and regulations. This bulletin rescinds and replaces:

• OCC Bulletin 2004-20, “Risk Management of New, Expanded, or Modified Bank Products and Services: Risk Management Process,” issued on May 10, 2004
• Office of Thrift Supervision Examination Handbook section 760, “New Activities and Services."

The FDIC Board has announced personnel changes:

• Howard Whyte has been named Chief Information Officer, replacing Larry Gross Jr., who is retiring in January 2018
• Ricardo Delfin has been appointed as director of the Office of Complex Institutions, replacing Art Murton, who became Special Advisor to the Chairman on October 1
• John Conneely has been appointed regional director for the Chicago Region, effective January 2108, replacing M. Anthony Lowe, who was named ombudsman and director of the Office of the Ombudsman earlier this year

The CFPB is required to produce a new strategic plan which will establish its mission, strategic goals, and strategic objectives for the next five years. A draft strategic plan for fiscal years 2018–2022 has been posted and the Bureau is asking for feedback.

The CFPB has notified those on its mailing lists that it has updated selected implementation tools for its 2017 HMDA Final Rule (effective January 1, 2018):

• Updated Filing Instructions Guide (FIG), found on the Bureau's Resources for HMDA Filers webpage.
• Found on the Bureau's HMDA Implementation webpage:
  • Chart on Collection and Reporting of HMDA Information about Ethnicity and Race
  • New chart, Reportable HMDA Data: A Regulatory and Reporting Overview Reference

Four federal regulatory agencies — the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the National Credit Union Administration — have announced they are exempting real estate-related transactions from FIRREA appraisal requirements in major disaster areas as declared by President Trump. The exemptions will be in effect for a three-year period from the date of declaration. Included are parts of Florida, Georgia, Puerto Rico, Texas, and the U.S. Virgin Islands.
Editor's Note: These exceptions do not affect requirements for appraisals for higher-priced mortgage loans (HPMLs) under Regulation Z § 1026.35(c). The Joint Statement is scheduled for publication, and will be effective, on Tuesday, October 24, 2017.

• OCC Bulletin 2017-42
• Joint press release
• Joint Statement and Order: Temporary Exceptions to FIRREA Appraisal Requirements in Areas Affected by Severe Storms and Flooding Related to Hurricanes Harvey, Irma, and Maria
• FDIC FIL-56-2017, released October 26, 2017

The CFPB has posted an article defending its Arbitration Rule. The article links to a letter from CFPB Director Richard Cordray in response to an inquiry from Senator Sherrod Brown, and to two recent articles written by Cordray addressing criticisms of the rule.

FDIC Chairman Gruenberg issued the opening remarks at the October 13, 2017, Seventh Annual FDIC Consumer Research Symposium in Arlington, Virginia. In addition to welcoming the participants, he described the role of research and analysis in the FDIC’s consumer protection supervision and economic inclusion activities. He said, “research is an integral part of doing our jobs at the FDIC. It enhances our ability to address the risk of consumer harm at supervised institutions and helps us advance economic inclusion. It's key to everything we do.”

The CFPB has filed a complaint in federal court against two companies operating under the name “FDAA,” a service provider, and their owners for falsely presenting FDAA as being affiliated with the federal government. The CFPB also alleges that FDAA’s so-called “debt validation” programs violated the law by falsely promising to eliminate consumers’ debts and improve their credit scores in exchange for thousands of dollars in advance fees. The CFPB’s lawsuit seeks to end these deceptive practices, obtain redress for harmed consumers, and impose civil money penalties.