Top Story Compliance Related

FIL-8-2018, issued Friday, announced that the FDIC will host in conjunction with the Financial Accounting Standards Board (FASB), the U.S. Securities and Exchange Commission (SEC), and the Conference of State Bank Supervisors (CSBS), a webinar to discuss how smaller, less complex community institutions can implement Current Expected Credit Losses Methodology (CECL). The webinar is scheduled for Tuesday, February 27, 2018, at 1:00 pm EST.

Responding to recent and widespread consumer abuses and other compliance breakdowns by Wells Fargo & Company (WFC), the Federal Reserve Board on Friday announced that it has restricted the growth of the firm until it sufficiently improves its governance and controls. Concurrently with the Board's action, Wells Fargo will replace three current board members by April and a fourth board member by the end of the year. In addition to the growth restriction, the Board's consent cease and desist order with Wells Fargo requires the firm to improve its governance and risk management processes, including strengthening the effectiveness of oversight by its board of directors. Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017. The Board required each current director to sign the cease and desist order.

• Federal Reserve letter to WFC directors
• Federal Reserve letter to Stephen Sanger, lead director at WFC, 2012–2016.
• Federal Reserve letter of John Stumpf, former chair of WFC board

On Friday, the U.S. Department of the Treasury’s Office of Foreign Assets Control targeted the business operations of Hizballah by designating six individuals and seven entities pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. As a result of Friday’s designations, all property and interests in property of these persons subject to U.S. jurisdiction were blocked, and U.S. persons are generally prohibited from engaging in transactions with them. For the names and identification information of the targeting individuals and entities, see our OFAC Update.

In a memo to staff released this week, Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, transferred members of the Bureau's Office of Fair Lending and Equal Opportunity into his office and ended the Office's separate enforcement authority, according to Consumer Reports. A Bureau spokesman said the move was made to "gain efficiency and consistency without sacrificing effectiveness." Critics of the move have suggested that the reorganization will reduce the effectiveness of the CFPB's fair lending enforcement efforts.

The CFPB has updated its Resources for HMDA filers page, adding a 2018 LAR Formatting Tool, and making minor updates to the 2018 Filing Instructions. The 2018 LAR Formatting Tool is designed to assist financial institutions create an electronic file that can be submitted to the HMDA platform. It can be used for data collected in 2018 and reported next year.

The Bureau also updated its Reportable HMDA Data: A regulatory and reporting overview reference chart. If you previously downloaded the 2018 Filing Instructions and/or the reference chart, we recommend you replace them with the newer versions.

The NCUA issued one prohibition order and three notices of prohibition in January, 2018. Four former credit union employees are prohibited from participating in the affairs of any federally insured financial institution. The individuals were employed by credit unions in Huntington, West Virginia; Washington, Pennsylvania; Newberry, Michigan and Columbia, Missouri.

The OCC has issued Bulletin 2018-3 to announce an update of the Municipal Securities Rulemaking Board Rules booklet of the Comptroller’s Handbook. The booklet incorporates updated guidance and examination procedures following changes to the Municipal Securities Rulemaking Board’s (MSRB) rules on best execution, transactions with sophisticated municipal market professionals (SMMP), and regular-way settlement for municipal securities transactions. In addition, technical revisions were made to this booklet to incorporate changes to 12 CFR 10 regulatory filing requirements, which now apply to federal savings associations engaged in municipal securities dealer activities.

The CFPB has announced the second in its promised series of requests for information (RFIs) seeking input on the Bureau's activities. This RFI is on administrative adjudications, and seeks input to better inform the CFPB on the benefits and impacts of its use of administrative adjudications, and to help the Bureau improve its existing process. Publication is scheduled for February 5, with a 60-day comment period ending Friday, April 6, 2018.

The Bureau said the next RFI in the series, on the CFPB's enforcement processes, will be issued next week.

An en banc panel of the U. S. Court of Appeals for the District of Columbia Circuit today handed down a 7 - 3 decision to reverse the October 2016 ruling in PHH Corporation, et al. v. Consumer Financial Protection Bureau that would have allowed the president to dismiss the director of the CFPB at will, rather than only for "inefficiency, neglect of duty, or malfeasance in office," as provided in the Dodd-Frank Act. Today's 250-page decision was based, in part, on a 1935 Supreme Court decision that sustained the constitutionality of the independent Federal Trade Commission to protect the agency's leadership from at-will removal by the president.

Today's decision, however, reinstated the October 2016 opinion of a three-judge panel that stayed and remanded to the Bureau for further proceedings then-Director Cordray's order in the PHH case interpreting section 8(c)(2) of RESPA, ignoring RESPA's three-year statute of limitations with regard to the Bureau's administrative enforcement proceeding, and raising the disgorgement recommendation of an administrative law judge from about $6.4 million to more than $109 million. That puts PHH Corporation's fate and Cordray's RESPA interpretations back into the hands of the Bureau -- albeit with some guidance from the Court of Appeals and without Cordray -- for reconsideration.

The CFPB has posted an article regarding its 2018 list of consumer reporting companies. Included with the list is information on requesting a consumer report, tips on specialty reports, information on how the reporting companies verify a consumer's identity before providing a report, a guide to obtaining a free credit report and other useful information.