Top Story Compliance Related

Five federal agencies (Federal Reserve, Farm Credit Administration, FDIC, Federal Housing Finance Agency, and OCC) have issued a proposal to amend swap margin requirements to conform with recent rule changes that impose new restrictions on certain qualified financial contracts (QFCs) of systemically important banking organizations. Under the proposed amendments, legacy swaps entered into before the applicable compliance date would not become subject to the margin requirements if they are amended solely to comply with the requirements of the QFC Rules. The proposed amendments would also harmonize the definition of “Eligible Master Netting Agreement” in the Swap Margin Rule with recent changes to the definition of “Qualifying Master Netting Agreement” in the respective capital and liquidity regulations of the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) by recognizing the restrictions that were adopted by these agencies with respect to the QFC Rules.

Treasury has announced that its Office of Foreign Assets Control has sanctioned four individuals who have engaged in destabilizing activities responsible for prolonging the conflict in the Democratic Republic of Congo (DRC) and contributing to widespread poverty, chronic food insecurity, and population displacement. As a result of yesterday's actions, all of the designated persons' assets within U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. For identifying information on the designated individuals, see our OFAC Update.

The Federal Trade Commission's Bureau of Consumer Protection has published a Staff Perspective, A Closer Look At The Military Consumer Financial Workshop, which examines takeaways from a July 2017 workshop on financial issues that can affect military consumers, including servicemembers, veterans, and their families, when they are purchasing and financing a car, dealing with debt collectors, or making credit decisions, as well as their legal rights and remedies, and strategies to promote financial literacy and capability.

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.