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10/20/2021

Discount rate meeting minutes released

The Federal Reserve Board has released the minutes of its interest rate meetings from August 23 through September 22, 2021.

10/20/2021

CFPB acts against prison financial services company

The CFPB on Tuesday announced it took action against the prison financial services company JPay for violating the Consumer Financial Protection Act by charging consumers fees to access their own money on prepaid debit cards that consumers were forced to use.

JPay also violated the Electronic Fund Transfer Act when it required consumers to sign up for a JPay debit card as a condition of receiving government benefits – in particular, “gate money,” which is money provided under state law to help people meet their essential needs as they are released from incarceration. The consent order severely limits the fees JPay can charge on release cards going forward, allowing only inactivity fees after 90 days without card activity. The order also requires the company to pay $4 million for consumer redress and a $2 million civil money penalty.

JPay, a Delaware company, headquartered in Miramar, Fla., is a dominant provider of financial services to prisons and jails nationwide. JPay is owned by the private equity firm Platinum Equity Partners. Since 2011, JPay has provided approximately 1.2 million debit release cards to consumers. JPay calls itself “a highly trusted name in corrections,” but the company leveraged its relationships with state and local departments of correction to impose fees on consumers exiting the prison or jail system. JPay’s fee-bearing debit release card replaced cash or check options previously offered by state departments of correction. The Bureau's Consent Order states that JPay—

  • Abused its market dominance
  • Illegally required consumers in certain states to receive protected government benefits on debit release cards
  • Charged fees without authorization
  • Misrepresented fees to consumers

The Bureau's Consent Order requires JPay to:

  • Stop charging most fees. JPay cannot charge any fees on release cards, except an inactivity fee after 90 days of inactivity
  • Refund harmed consumers by paying $4 million to the Bureau for monetary relief and damages for injured consumers
  • Pay a civil money penalty of $2 million to the Bureau

10/20/2021

CFPB and FTC file amicus brief in FCRA violation case

The CFPB has announced that the Bureau, the Federal Trade Commission, and the North Carolina Department of Justice have filed an amici curiae brief in support of the consumer plaintiffs in Henderson v. The Source for Public Data, L.P. The case is currently on appeal before the U.S. 4th Circuit Court of Appeals.

The plaintiffs allege The Source for Public Data is a consumer reporting agency that uses the internet to obtain public records and assemble them into consumer background check reports for its customers. The district court ruled The Source for Public Data could not be held liable for violating the Fair Credit Reporting Act’s (FCRA’s) procedural requirements when disseminating consumer reports that included false, incorrect, or misleading consumer information because the plaintiffs’ FCRA claims treat The Source for Public Data as a publisher and speaker of third-party information and are therefore barred under Section 230 of the Communications Decency Act.

The CFPB and its partners contend that Section 230 does not apply to the plaintiffs’ claims because they challenge The Source for Public Data’s failure to abide by the FCRA’s procedural requirements when it disseminated its own reports.

10/20/2021

Credit Suisse pays $474M+ for misleading customers

The Securities and Exchange Commission has announced Credit Suisse Group AG has agreed to pay nearly $475 million to U.S. and UK authorities, including nearly $100 million to the SEC, for fraudulently misleading investors and violating the Foreign Corrupt Practices Act (FCPA) in a scheme involving two bond offerings and a syndicated loan that raised funds on behalf of state-owned entities in Mozambique.

According to the SEC's order, these transactions that raised over $1 billion were used to perpetrate a hidden debt scheme, pay kickbacks to now-indicted former Credit Suisse investment bankers along with their intermediaries, and bribe corrupt Mozambique government officials. The SEC's order finds that the offering materials created and distributed to investors by Credit Suisse hid the underlying corruption and falsely disclosed that the proceeds would help develop Mozambique's tuna fishing industry. Credit Suisse failed to disclose the full extent and nature of Mozambique's indebtedness and the risk of default arising from these transactions.

VTB Capital plc, a London-based subsidiary of Russian bank VTB, separately agreed to pay more than $6 million to settle SEC charges related to its role in misleading investors in a second 2016 bond offering. According to the SEC's order in this case, the second offering as structured by VTB Capital and Credit Suisse allowed investors to exchange their notes in an earlier bond offering for new sovereign bonds issued directly by the government of Mozambique. But the SEC found that the offering materials distributed and marketed by Credit Suisse and VTB Capital failed to disclose the true nature of Mozambique's debt and the high risk of default on the bonds. The offering materials further failed to disclose Credit Suisse's discovery that significant funds from the earlier offering had been diverted away from the intended use of proceeds that was disclosed to investors. Mozambique later defaulted on the financings after the full extent of "secret debt" was revealed.

10/20/2021

FinCEN exceptive relief for casinos with online gambling

FinCEN announced on Tuesday it has granted limited exceptive relief in Ruling FIN-2021-R001 to casinos from certain customer identity verification requirements in the context of online gaming. Specifically, under the terms of this relief, a casino may utilize suitable non-documentary methods to verify the identity of online customers. The suitability or non-suitability of any particular method should be evaluated based on risk. This exceptive relief is effective as of October 19, 2021.

10/19/2021

IRS videoconferences now available to all large businesses

The IRS has announced that, beginning October 18, the IRS's large business division will accept all taxpayer requests to meet with IRS employees using secure videoconferencing. This step extends the practice used during the pandemic to accommodate taxpayers who sought more than meeting with an IRS employee over telephone calls.

A new guidance requires Large Business and International Division (LB&I) employees to grant large business taxpayer requests for a secure video meeting with IRS-approved platforms in lieu of an in-person or telephone discussion with a compliance function. It also includes the expanded use of secure email and the launch of a virtual reading room environment to enable large LB&I taxpayers and IRS agents to share certain privileged taxpayer documents in a read-only capacity. In addition, LB&I also launched and expanded its use of paperless processes so that cases can continue to move swiftly through examination and resolution.

10/19/2021

Appeals court extends stay of Payday Lending Rule

The ABA Banking Journal reports that the U.S. Court of Appeals for the Fifth Circuit has extended the compliance date of the CFPB's Payday Lending Rule (12 CFR Part 1041) until 286 days after resolution of an appeal from the decision of the U.S. District Court for the Western District of Texas to set the compliance date at June 13, 2022.

10/19/2021

FTC annual report on protection of older adults

The Federal Trade Commission has issued its latest report to Congress on protecting older adults, which highlights updated findings from the Commission’s fraud reports showing trends in how older adults report being affected by fraud. It also includes information on the FTC’s efforts to protect older consumers through law enforcement actions and outreach and education programs. This year’s report calls particular attention to the Commission’s work to combat scams related to the COVID-19 pandemic.

10/19/2021

August TIC data released

Treasury has released Treasury International Capital (TIC) data for August 2021. The sum total in August of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $91.0 billion. Of this, net foreign private inflows were $125.0 billion, and net foreign official outflows were $34.0 billion. Foreign residents increased their holdings of long-term U.S. securities in August; net purchases were $71.8 billion. Net purchases by private foreign investors were $80.2 billion, while net sales by foreign official institutions were $8.3 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $7.5 billion.

Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $79.3 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign sales of long-term securities are estimated to have been $60.9 billion in August. Foreign residents increased their holdings of U.S. Treasury bills by $1.9 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $44.6 billion. Banks’ own net dollar-denominated liabilities to foreign residents decreased by $14.5 billion.

10/19/2021

Eligibility for Fannie and Freddie programs expanded

The Federal Housing Finance Agency (FHFA) yesterday announced two measures to sustainably advance the affordability of homeownership for mortgage borrowers across the nation, especially those in underserved communities.

  • First, over the coming months, Fannie Mae and Freddie Mac (the Enterprises) will expand certain eligibility requirements for their RefiNow and Refi Possible refinance programs aimed at assisting low-income borrowers.
  • Second, both Enterprises will incorporate desktop appraisals into their Selling Guides for many new purchase loans starting in early 2022. The use of desktop appraisals by the Enterprises was one of several temporary flexibilities initiated last year in response to the COVID-19 pandemic. This decision is the result of a thorough review of data collected from use of the loan flexibilities, as well as input received from the Request for Input (RFI) and public listening session on appraisal-related policies, practices, and processes.

10/19/2021

OCC updates Libor-transition self-assessment tool

The OCC has issued Bulletin 2021-46, which provides an updated self-assessment tool for banks to evaluate their preparedness for the cessation of the London Interbank Offered Rate (LIBOR). This bulletin rescinds OCC Bulletin 2021-7, “Libor Transition: Self-Assessment Tool for Banks,” published on February 10, 2021, and replaces the tool attached to OCC Bulletin 2021-7. Bank management can use this self-assessment tool to evaluate the bank’s risk management process for identifying and mitigating LIBOR transition risks.

Not all sections or questions in the tool apply to all banks. Bank management should tailor the bank’s risk management process to the size and complexity of the bank's LIBOR exposures. For example, large or complex banks and those with material LIBOR exposures should have a robust, well-developed transition process in place. but small or non-complex banks and those with limited exposure to LIBOR-indexed instruments can consider less extensive and less formal transition efforts. Bank management should consider all applicable risks (e.g., operational, compliance, strategic, and reputation) when scoping and completing LIBOR cessation preparedness assessments.

The OCC expects banks to cease entering into new contracts that use LIBOR as a reference rate as soon as practicable and no later than December 31, 2021. When assessing preparedness, bank management should consider whether the bank’s progress in preparing for the transition is sufficient. LIBOR exposure and risk assessments and cessation preparedness plans should be complete or near completion with appropriate management oversight and reporting in place. Most banks should be working toward resolving replacement rate issues while communicating with affected customers and third parties, as applicable.

10/19/2021

September G.17 data released

The Federal Reserve has released September 2021 G.17 Industrial Production and Capacity Utilization data, which indicates industrial production fell 1.3 percent in September after moving down 0.1 percent in August; output was previously reported to have risen 0.4 percent in August. In September, manufacturing output decreased 0.7 percent: The production of motor vehicles and parts fell 7.2 percent, as shortages of semiconductors continued to hobble operations, while factory output elsewhere declined 0.3 percent. The output of utilities dropped 3.6 percent, as demand for cooling subsided after a warmer-than-usual August. Mining production fell 2.3 percent.

The lingering effects of Hurricane Ida more than accounted for the drop in mining in September; they also contributed 0.3 percentage point to the drop in manufacturing. Overall, about 0.6 percentage point of the drop in total industrial production resulted from the impact of the hurricane.

Despite the decrease in September, total industrial production rose 4.3 percent at an annual rate for the third quarter as a whole, its fifth consecutive quarter with a gain of at least 4 percent.

At 100.0 percent of its 2017 average, total industrial production in September was 4.6 percent above its year-earlier level. Capacity utilization for the industrial sector fell 1.0 percentage point in September to 75.2 percent, a rate that is 4.4 percentage points below its long-run (1972–2020) average.

10/18/2021

Treasury continues campaign against ransomware

The Treasury Department on Friday announced that, building on OFAC's earlier designation of a virtual currency exchange for facilitating transactions for ransomware actors, additional steps have been taken to help the virtual currency industry prevent exploitation by sanctioned persons and other illicit actors. New industry-specific guidance outlines sanctions compliance best practices tailored to the unique risks posed in this dynamic space, while new data from the Financial Crimes Enforcement Network (FinCEN) shows the increasing threat ransomware posed to the U.S financial sector, businesses, and the public during the first half of 2021.

Treasury’s actions underscore the need for a collaborative approach to counter ransomware attacks, including public-private partnerships and close relationships with international partners. The private sector plays a key role by implementing appropriate sanctions and anti-money laundering/countering the financing of terrorism (AML/CFT) controls to prevent sanctioned persons and other illicit actors from exploiting virtual currencies and undermining U.S. foreign policy and national security interests.

10/18/2021

Fourth payment of Advance Child Tax Credits disbursed

Treasury and the IRS have announced that more than $15 billion dollars in payments were made last week to families that include roughly 61 million eligible children. This is the fourth monthly payment of the expanded and advanceable Child Tax Credit provided in the American Rescue Plan. Since the first payments were sent in July, Treasury and the IRS have delivered more than $61 billion dollars to families across the country. Eligible families received a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 to 17. The payments are advances against the Child Tax Credit available to the eligible taxpayers when they file their 2021 tax returns next year.

10/18/2021

OFAC guidance for virtual currency industry

OFAC has posted a notice that it has published a brochure, "Sanctions Compliance Guidance for the Virtual Currency Industry," as a resource to help members of the virtual currency industry navigate and comply with OFAC sanctions. It provides an overview of OFAC sanctions requirements and procedures, including licensing and enforcement processes, and highlights sanctions compliance best practices tailored for the virtual currency industry.

10/18/2021

OCC releases FY2022 Bank Supervision Plan

The OCC has released its bank supervision operating plan for fiscal year 2022.The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC staff members use this plan to guide their supervisory priorities, planning, and resource allocations.

Supervisory strategies for FY 2022 will focus on—

  • strategic and operational planning to ensure banks maintain stable financial positions
  • credit risk management, allowances for loan and lease losses, and allowances for credit losses
  • cybersecurity and operational resilience
  • oversight of third parties and related concentrations
  • Bank Secrecy Act/anti-money laundering (BSA/AML) compliance management
  • consumer compliance management systems and fair lending risk
  • Community Reinvestment Act performance
  • the impact of a low-rate environment and the transition to alternative reference rates given the cessation of LIBOR
  • payment systems products and services
  • fintech partnerships for potential cryptocurrency-related activities and other services
  • climate change risk management

10/18/2021

FinCEN issues ransomware report

FinCEN has issued a financial trend analysis on ransomware trends in Bank Secrecy Act reports filed between January 2021 and June 2021. This report, issued pursuant to the Anti-Money Laundering Act of 2020, focuses on pattern and trend information pertaining to ransomware, in line with FinCEN’s issuance of government-wide priorities for anti-money laundering and countering the financing of terrorism policy.

10/18/2021

Two whistleblowers get $40M from SEC

The Securities and Exchange Commission has announced awards of approximately $40 million to two whistleblowers whose information and assistance contributed to the success of an SEC enforcement action.

The first whistleblower, whose information caused the opening of the investigation and exposed difficult-to-detect violations, will receive an award of approximately $32 million. The first whistleblower also provided substantial assistance to the staff, including identifying witnesses and helping the staff to understand complex fact patterns. The second whistleblower, who submitted important new information during the course of the investigation but waited several years to report to the Commission, will receive an award of approximately $8 million.

The SEC has awarded approximately $1.1 billion to 218 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10–30 percent of the money collected when the monetary sanctions exceed $1 million.

10/18/2021

IRS updates FAQ process

The IRS has announced it is updating its process for managing certain frequently asked questions (FAQs) on newly enacted tax legislation. The IRS is updating this process to address concerns regarding transparency and the potential impact on taxpayers when these FAQs are updated or revised. At the same time, the IRS is addressing concerns regarding the potential application of penalties to taxpayers who rely on FAQs by providing clarity to taxpayers as to their ability to rely on FAQs for penalty protection.

Significant FAQs on newly enacted tax legislation, as well as any later updates or revisions to these FAQs, will now be announced in a news release and posted on IRS.gov in a separate Fact Sheet. These Fact Sheet FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Additionally, prior versions of Fact Sheet FAQs will be maintained on IRS.gov to ensure that, if a Fact Sheet FAQ is later changed, taxpayers can locate the version they relied on if they later need to do so. In addition to significant FAQs on new legislation, the IRS may apply this updated process in other contexts, such as when FAQs address emerging issues.

10/15/2021

FedPayments Improvement blog on B2B payments

The Federal Reserve's FedPayments Improvement task force has posted a blog article, "A New Era: Modernizing B2B Payments," discussing the risk of leaving business-to-business payments behind in the movement toward faster payments. As the U.S. payments landscape rapidly evolves, consumer payments are increasingly being completed faster, but B2B payments processes are still fragmented, often requiring manual processing with multiple steps and the opportunity for error. This lack of digitalization makes B2B payments more prone to fraud and more costly than other payments.

The Federal Reserve is coordinating with the industry to propel B2B payments toward modernized, electronic solutions that reduce manual intervention. To catalyze this evolution, the Fed and Business Payments Coalition (BPC) have organized work groups dedicated to change: optimizing efficiency in electronic invoicing and remittance delivery. These work groups are on the front line of B2B payments modernization, and their work will drive innovation in the United States.

The article announces a new YouTube promotional video, the first in a three-part series, on how the Fed’s collaboration with the industry today will transform B2B payments tomorrow.

10/15/2021

New Money Smart educational tool

The FDIC has released How Money Smart Are You?, a suite of 14 self-paced games and related resources and the newest addition to FDIC’s Money Smart product family. This new educational tool provides practical knowledge to help consumers manage their finances with confidence. Users play games to learn more about borrowing money, managing debt, saving and investing. How Money Smart Are You? complements other Money Smart products that can be used in in conjunction with financial literacy activities, including webinars or workshops, in local communities. These products include resources to engage K-12 students, adults, older adults, and small businesses.

10/15/2021

SEC reopens comment period on clawbacks proposal

The Securities and Exchange Commission has reopened the comment period on proposed rules for listing standards for the recovery of erroneously awarded compensation. The reopened comment period permits interested parties to submit further comments and data on rule amendments the Commission first proposed in 2015 as well as comments in response to questions being raised by the Commission now in its reopening release. In addition, interested parties may comment on developments since 2015 when the proposing release was issued, including trends in accounting practices and the potential economic and other effects of the proposal in light of any such developments.

“I support today’s action to reopen comment on the Dodd-Frank Act rule regarding clawbacks of incentive-based executive compensation,” said SEC Chair Gary Gensler. “I believe we have an opportunity to strengthen the transparency and quality of corporate financial statements, as well as the accountability of corporate executives to their investors.”

The public comment period will remain open for 30 days following publication of the release in the Federal Register.

10/14/2021

FHFA sets 2022 multifamily caps for Fannie/Freddie

The Federal Housing Finance Agency on Wednesday announced that the 2022 multifamily loan purchase caps for Fannie Mae and Freddie Mac (the Enterprises) will be $78 billion for each Enterprise, for a combined total of $156 billion to support the multifamily market. The 2022 caps, which increased from $70 billion for each Enterprise in 2021, are based on FHFA's projections of the overall growth of the multifamily originations market.

FHFA will require that at least 50 percent of the Enterprises' multifamily business be mission-driven affordable housing. FHFA will also require at least 25 percent of the Enterprises' multifamily business be affordable to residents at or below 60 percent of area median income (AMI), up from 20 percent in 2021. In 2022, FHFA will allow loans on affordable units in cost-burdened renter markets and loans to finance energy or water efficiency improvements with units affordable at or below 60 percent of AMI to be classified as mission-driven.

10/14/2021

FTC warns advertisers: honest opinions only

Last week, for-profit colleges and universities received warnings from the Federal Trade Commission. Yesterday, the FTC delivered a shot across the bow of advertisers. The Commission sent a warning letter with a Notice of Penalty Offenses Concerning Endorsements and Testimonials to more than 700 companies with the message that they could incur significant civil penalties—up to $43,792 per violation—if they use endorsements in ways that run counter to prior FTC administrative cases.

The Notice sent to the companies outlines a number of practices that the FTC determined to be unfair or deceptive in prior administrative cases. These include, but are not limited to:

  • falsely claiming an endorsement by a third party
  • misrepresenting whether an endorser is an actual, current, or recent user
  • using an endorsement to make deceptive performance claims
  • failing to disclose an unexpected material connection with an endorser
  • misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience

The Commission's press release included a disclaimer that a company's inclusion on the list of letter recipients does not suggest it has engaged in deceptive or unfair conduct.

10/14/2021

Study on impact of climate change

Treasury has announced it has launched a new effort to study the impact of climate change on households and communities. The Financial Literacy and Education Commission (FLEC) convened a meeting chaired by Under Secretary for Domestic Finance Nellie Liang to begin to explore the financial risks to households and communities, especially low-income and historically disadvantaged communities, of climate change and climate transition. FLEC will work to develop an understanding of:

  • how households, communities, and the smallest businesses experience financial resilience in the face of climate change and climate transition, supported by resilience-supporting financial products and financial infrastructure supporting environments.
  • how to map climate-related financial risks, and identify which groups and regions will be most impacted; and
  • what tools and best practices could be effective at addressing risks and vulnerabilities and how to implement them equitably.

10/14/2021

September FOMC minutes released

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the minutes of the Committee meeting held on September 21–22, 2021.

Regarding the outlook for monetary policy, market participants noted policymaker communications suggesting that tapering of asset purchases could begin this year and end by mid-2022. Around half of respondents to the Desk's surveys of primary dealers and market participants viewed December as the most likely timing of the first reduction in the net pace of purchases, al­though respondents also attached significant probability to the first reduction coming in November. Median expectations for the pace of net purchases were consistent with a gradual tapering of net purchases being completed in July of next year, about one to two months earlier than in the previous surveys. Expectations for the target federal funds rate based on survey responses and interest rate futures moved up slightly since the previous meeting.

Inflation, as measured by either the PCE (Personal Consumption Expenditures) price index or the consumer price index (CPI), had been boosted by a surge in demand as the economy reopened further, along with the effects of production bottlenecks and supply constraints. Total PCE price inflation was 4.2 percent over the 12 months ending in July, and core PCE price inflation, which excludes changes in consumer energy prices and many consumer food prices, was 3.6 percent over the 12 months ending in July. In contrast, the trimmed mean measure of 12‑month PCE inflation constructed by the Federal Reserve Bank of Dallas was 2.0 percent in July. In August, the 12-month change in the CPI was 5.3 percent, while the core CPI rose 4.0 percent over the same period.

Members agreed that the Federal Reserve was committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals. All members reaffirmed that, in accordance with the Committee's goals to achieve maximum employment and inflation at the rate of 2 percent over the longer run, and with inflation having run persistently below this longer-run goal, they would aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. Members expected to maintain an accommodative stance of monetary policy until those outcomes were achieved.

All members agreed to keep the target range for the federal funds rate at 0 to 1/4 percent, and they expected that it would be appropriate to maintain this target range until labor market conditions had reached levels consistent with the Committee's assessments of maximum employment and inflation had risen to 2 percent and is on track to moderately exceed 2 percent for some time.

10/14/2021

Fed Board joins Central Bank Network for Indigenous Inclusion

The Federal Reserve Board announced on Wednesday that it has joined the Central Bank Network for Indigenous Inclusion, which will foster ongoing dialogue, research, and education to raise awareness of economic and financial issues and opportunities around Indigenous economies. The Board's participation will be supported by the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis and the Economic Education Partnership with Indian Country the at the Federal Reserve Bank of St. Louis. The network is a collaboration with Te Pūtea Matua (the Reserve Bank of New Zealand), the Bank of Canada, and the Reserve Bank of Australia.

10/14/2021

SEC amends filing fee disclosure and payment methods

The SEC has adopted amendments to modernize filing fee disclosure and payment methods. Operating companies and investment companies (funds) pay filing fees when engaging in certain transactions, including registered securities offerings, tender offers, and mergers and acquisitions. The amendments revise most fee-bearing forms, schedules, and related rules to require companies and funds to include all required information for filing fee calculation in a structured format. The amendments also add new options for ACH and debit and credit card payment of filing fees and eliminate infrequently used options for filing fee payment via paper checks and money orders. The amendments are intended to improve filing fee preparation and payment processing by facilitating both enhanced validation through filing fee structuring and lower-cost, easily routable payments through the ACH payment option.

The amendments generally will be effective on January 31, 2022, but the changes adding options for filing fee payment via ACH and debit/credit card and eliminating the option for payment by paper checks and money orders will be effective May 31, 2022. The Commission's Fact Sheet on the changes includes additional implementation details.

10/14/2021

Key CFPB senior leadership changes announced

The CFPB has announced leadership changes within the Bureau.

  • Zixta Q. Martinez will serve as Deputy Director, and in that role will oversee the Bureau’s Operations Division
  • Karen Andre will serve as Associate Director for Consumer Education & External Affairs
  • Jan Singelmann will serve as Chief of Staff
  • Erie Meyer will serve as Chief Technologist

10/14/2021

HUD announces $15.7 million in research grants

HUD has announced the awarding of $15.7 million to 18 universities, public health, and housing organizations to conduct housing-related hazard and energy efficiency research studies. Provided through HUD’s Office of Lead Hazard Control and Healthy Homes (OLHCHH), the research grants aim to identify and improve methods for detecting and controlling lead and other housing-related health and safety hazards and will incorporate weatherization into residential lead and healthy homes interventions.

10/13/2021

Fed bans former Banco Popular manager

The Federal Reserve Board of Governors has issued an Order of Prohibition Upon Consent to Ileana Acevedo Diaz after finding that, between 2017 and 2019, while employed as a branch manager of Banco Popular de Puerto Rico (San Juan), Acevedo Diaz made unauthorized transactions in a customer's individual retirement accounts, causing a loss of approximately $32,000 for the bank.

The bank terminated Acevedo Diaz on August 12, 2020, and she is no longer involved in banking. The Order bars her from participating in any manner in the business of banking.

10/13/2021

Victims of tech support scheme to receive checks

The Federal Trade Commission is sending 31,075 checks totaling nearly $300,000 to people who were deceived by Elite IT Partners Inc. into paying for costly and unnecessary computer repair services.

In a complaint filed in 2019, the FTC alleged that Elite IT used Internet ads to target consumers looking for help recovering their email passwords. Consumers who responded to Elite’s ads were encouraged to provide their names, email addresses, and phone numbers. Elite’s telemarketers then reached out to consumers—often pretending to be associated with well-known companies like Microsoft and Yahoo!—and pressured consumers to provide access to their computers. The telemarketers ran bogus “diagnostic” tests, claimed consumers’ computers and personal information were in imminent danger, and convinced many consumers to pay large sums for immediate cleaning of their computers, antivirus software, and ongoing technical support services. The FTC alleged that the scheme affected tens of thousands of consumers.

10/13/2021

IRS awards $41M in TCE and VITA grants

The IRS has announced it has awarded over $41 million in Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grants to organizations that provide free federal tax return preparation.

The TCE program, established in 1978, provides free tax counseling and federal return preparation to individuals who are age 60 or older. Volunteers receive training and technical assistance to provide assistance at community locations across the nation. The VITA program, created in 1969, assists underserved communities, such as low- and moderate-income individuals and limited English proficient taxpayers. VITA grant recipients provide free federal tax return preparation and electronic filing. The grant program helps to expand VITA services to underserved populations.

10/13/2021

DHS enforcement strategy to protect workers

DHS Secretary Mayorkas has directed U.S. Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and Citizenship and Immigration Services (USCIS) to take actions to promote a fair labor market by supporting more effective enforcement of wage protections, workplace safety, labor rights, and other employment laws and standards. He has issued a memorandum to ICE, CBP, and USCIS to develop and update policies to enhance the Department’s impact in supporting the enforcement of employment and labor standards. The agencies must also develop strategies for prioritizing workplace enforcement against unscrupulous employers and, through the exercise of prosecutorial discretion, facilitate the participation of vulnerable workers in labor standards investigations.

10/12/2021

Final payments made to CERTS recipients

Treasury announced on Friday it has sent the final payments to recipients of funding provided through the Coronavirus Economic Relief for Transportation Services (CERTS) program. Over 1,400 motorcoach, school bus, passenger vessel and pilotage companies representing all 50 states received grants – 93% of which are small businesses and more than 33% of which are minority-owned businesses.

10/12/2021

FTC orders repeat offender to pay

The Federal Trade Commission has announced Resident Home LLC and owner Ran Reske will pay $753,000 to settle Commission charges that they made false, misleading, or unsupported advertising claims that their imported DreamCloud mattresses were made from 100% USA-made materials.

Resident Home LLC is the parent of Nectar Brand LLC (better known as Nectar Sleep), a company that had previously agreed to a 2018 FTC administrative order resolving allegations that it falsely advertised imported mattresses as “Assembled in USA.” Following the 2018 order, Reske, under penalty of perjury, stated that Resident had never made U.S.-origin claims about its DreamCloud mattress. This proved to be untrue. The proposed order entered into on Friday incorporates the terms of the 2018 order, orders the payment of $753,000, and expands the application of the 2018 order to all the entities under Reske's control.

10/12/2021

CFPB files against American Advisors Group

The CFPB on Friday announced it has filed a complaint and proposed consent order alleging that American Advisors Group (AAG) used inflated and deceptive home estimates to lure consumers into taking out reverse mortgages. The CFPB also alleges that AAG’s deceptive conduct violated a 2016 administrative consent order that addressed AAG’s deceptive advertising of reverse mortgages. If entered by the court, the proposed consent order would prohibit AAG from future unlawful conduct and require AAG to pay $173,400 in consumer redress and a $1.1 million civil money penalty.

American Advisors Group, based in Irvine, California, is one of the nation’s leading providers of reverse mortgages. A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The loan proceeds are generally provided to the borrowers as lump-sum payments, monthly payments, or as lines of credit. Homeowners remain responsible for paying taxes, insurance, and home maintenance, among other obligations.

10/08/2021

Victims of phantom debt collector to receive refunds

The Federal Trade Commission has announced it is returning $772,512 to consumers who were targeted by a debt collector who unlawfully brokered and collected fake debts that the consumers did not owe.

According to the complaint filed by the FTC and the New York Attorney General, Hylan Asset Management, LLC, and its owners, Andrew Shaevel and Jon E. Purizhansky, bought, placed for collection, and sold lists of phantom debts, including debts that were fake or imposed on consumers without their knowledge or consent. Hylan referred the fake debts to several collection agencies, including Worldwide Processing Group, LLC, which then illegally collected on them. Hylan continued to buy the portfolios and distribute them to third parties for collection even though it was repeatedly notified that consumers did not owe many of the debts, the FTC alleged. The defendants agreed to settle the case in 2019. As part of the settlement, they agreed to be banned permanently from the debt collection industry and surrendered funds to the FTC. The agency is using that money to send checks averaging $539 to 1,432 consumers.

10/08/2021

Consumer credit increases

The Federal Reserve has released G.19 Consumer Credit data showing that in August, consumer credit increased at a seasonally adjusted annual rate of 4 percent. Revolving credit increased at an annual rate of 3.6 percent, while nonrevolving credit increased at an annual rate of 4.1 percent.

10/08/2021

FCC sets interim fees for Reassigned Numbers Database

The Federal Communication Commission has issued Public Notice DA 21-1240 announcing interim usage charges for the Commission's Reassigned Numbers Database (RND). Callers and caller agents will be able to use the Database to determine whether a telephone number has been reassigned from the consumer they intend to reach, thus allowing them to avoid calling consumers with reassigned numbers who may not wish to receive their call. The system is in beta test; the Database is expected to be available for full use on November 1, 2021.

The RND will offer six subscription tiers: Extra Small, Small, Medium, Large, Extra Large, and Jumbo. Those wishing to use the RND may sign up for a one-month subscription, a three-month subscription, or a six-month subscription. The RND Administrator expects to offer an annual subscription option in the future, as well.

The notice includes a table of each subscription size and duration. It ranges from $10 for a one-month subscription to the extra small tier (up to 1,000 queries) to $210,600 for a six-month subscription to the jumbo tier (up to 180 million queries).

10/08/2021

Fed Board announces enforcement actions

The Federal Reserve Board yesterday announced it had issued two enforcement actions.

  • Pioneer Bank, Mapleton, Minnesota, was ordered to pay a, $11,000 civil money penalty for a pattern or practice of unspecified violations of the National Flood Insurance Act and section 208.25 of Regulation H.
  • A former employee of Pacific Premier Bank, Irvine, California, was issued an order of prohibition and restitution in the amount of $18,700 for her improper involvement and personal financial interests in extensions of credit by the bank.

10/07/2021

China strengthens AML/CFT measures

The Financial Action Task Force (FATF) has issued a follow-up report on China’s measures to tackle money laundering and terrorist financing. China has been in an enhanced follow-up process following the adoption of its mutual evaluation in 2019. In line with the FATF Procedures for mutual evaluations, the country has reported back to the FATF on the action it has taken since its mutual evaluation. Consequently, to reflect China’s progress, the FATF has now re-rated the country.

Today, China is compliant on 9 of the 40 Recommendations and largely compliant on 22 of them. It remains partially compliant on 3 Recommendations and non-compliant on 6 Recommendations.

10/07/2021

Treasury targets CJNG members

Yesterday, Treasury announced that OFAC had designated Mexican nationals Aldrín Miguel Jarquín Jarquín, José Jesús Jarquín Jarquín, César Enrique Díaz de León Saucedo, and Fernando Zagal Antón under the the Foreign Narcotics Kingpin Designation Act (Kingpin Act). These four individuals are members of the Cártel de Jalisco Nueva Generación (CJNG) operating through the port of Manzanillo in Colima, Mexico and the surrounding areas. CJNG, a violent Mexico-based organization, is responsible for trafficking a significant proportion of the fentanyl and other deadly drugs that enter the United States.

As a result of OFAC’s action, all property and interests in property of the designated individuals or entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all transactions by U.S. persons or persons within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.

Since June 2000, more than 2,200 entities and individuals have been sanctioned pursuant to the Kingpin Act for their role in international narcotics trafficking. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,548,075 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

For identification details on the four designated individuals, see the BankersOnline October 6, 2021 OFAC Update.

10/07/2021

Renters in HUD programs to get time and notices before eviction

HUD has published [86 FR 55693] in this morning's Federal Register an interim final rule that will allow the Secretary, upon making the requisite findings and providing the requisite notice, to require housing providers participating in selected HUD programs to provide tenants facing eviction for non-payment of rent with notification of and information about the opportunity to secure emergency funding and additional time to secure such funding prior to eviction.

The rule, which becomes effective November 8, 2021, covers tenants facing eviction for nonpayment of rent in housing and properties in these programs:

  • Section 8
  • Section 8 Moderate Rehabilitation
  • Section 202/152 Project Assistance Contract
  • Section 202 Project Rental Assistance Contract (PRAC)
  • Section 811 PRAC
  • Section 236 Rental Housing Assistance Program and Rent Supplement

Comments on the rule are due by November 8, 2021.

10/07/2021

ComE-IN meeting today

The FDIC will convene at 1:00 p. m. ET today a meeting of its Advisory Committee on Economic Inclusion (ComE-IN). The FDIC Board of Directors established ComE-IN in November 2006 to provide the agency with advice and recommendations on important initiatives to expand access to banking services for underserved populations.

Today's meeting agenda includes three panels of experts discussing the topics of innovation, recent housing market trends, and the opportunity to expand account access during tax season. The innovation panel will feature team members from the FDITECH Financial Inclusion Tech Sprint – “Breaking Down Barriers: Reaching the Last Mile of the Unbanked." The committee will also report out on key challenges and opportunities for inclusion in their communities.

This virtual meeting is open to the public via live webcast.

10/07/2021

FTC puts for-profit colleges on notice

The Federal Trade Commission has announced it has put 70 for-profit higher education institutions on notice that the agency is cracking down on any false promises they make about their graduates’ job and earnings prospects and other outcomes and will hit violators with significant financial penalties.

The Commission is resurrecting its Penalty Offense Authority, found in Section 5 of the Federal Trade Commission Act, to ensure that bad actors pay a price when they break the law. By sending a Notice of Penalty Offenses to the institutions, which represent the largest for-profit colleges and vocational schools across the country, the companies operating these colleges will be on notice that they could incur significant sanctions for engaging in certain unlawful practices.

The notice outlines a number of practices that the FTC has previously found to be unfair or deceptive, and notes that these practices could lead to civil penalties of up to $43,792 per violation.

A full list of the institutions that received the Notice from the FTC is available on the FTC’s website. A school’s presence on this list does not reflect any assessment as to whether they have engaged in deceptive or unfair conduct.

10/06/2021

Hemp company charged with fraud by SEC

The Securities and Exchange Commission has announced it has charged CanaFarma Hemp Products Corp. and its co-founders with fraudulently raising approximately $15 million from investors, and misappropriating a significant portion of the investor funds for personal use and other unrelated purposes.

The SEC’s complaint alleges that in 2019 and 2020, CanaFarma, a Canadian startup hemp company with offices in Vancouver and New York City, and its co-founders Vitaly Fargesen and Igor Palatnik raised millions of dollars from investors. According to the complaint, while raising these funds, the defendants made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its own farm when in fact it had not processed any of this hemp and its products used hemp supplied by third parties. The complaint also alleges that financial information provided to investors misstated historical revenue numbers and included baseless projections about future revenues. In addition, according to the complaint, Fargesen and Palatnik misappropriated at least $4 million and used the funds for their personal use and purposes unrelated to CanaFarma.

The SEC seeks permanent injunctions, disgorgement and prejudgment interest, and civil penalties against the defendants, and also seeks officer-and-director and penny stock bars against them.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Fargesen and Palatnik.

10/06/2021

Changes to CSS board structure

The Federal Housing Finance Agency has announced that Common Securitization Solutions (CSS) is undertaking a series of actions to better align its corporate governance structure with its core mission of supporting the infrastructure for Fannie Mae and Freddie Mac (the Enterprises) mortgage-backed securities issuance. Matthew Feldman has been named chairman of the Board of Managers at CSS to assist in this transition on an interim basis. After a nearly two-year review, FHFA determined that CSS should focus on maintaining the resiliency of the Enterprises’ mortgage-backed securities platform. This decision allows CSS to stay focused on the safety and soundness of the housing finance market and reduce unnecessary expenses as the Enterprises rebuild capital.

10/06/2021

Hsu on promoting diversity on bank boards

In remarks yesterday at the Women in Housing & Finance Public Policy Luncheon in Washington, D.C., Acting Comptroller of the Currency Michael J. Hsu discussed the importance of promoting diversity and inclusion in the financial services sector. "Without diverse leadership," said Hsu, "banks and their regulators may develop blind spots or suffer from groupthink. These blind spots can lead to the kinds of nasty surprises that threaten safety and soundness – and possibly the financial sector as a whole. There is a growing body of empirical evidence that companies that address these blind spots by having diverse boards of directors have stronger earnings, more effective corporate governance, better reputations, and less litigation risk.”

Hsu said the OCC is considering requiring banks “to either diversify their boards or explain why they have not.” He mentioned several models for implementing such requirements, including new Nasdaq rules, recently approved by the Securities and Exchange Commission, that require companies listed on the stock exchange to publicly disclose consistent transparent diversity statistics regarding their board composition; and diversity rules adopted by the California state legislature.

10/06/2021

Quarles on the end of LIBOR

On October 5, Federal Reserve Board Vice Chair for Supervision Randal K. Quarles spoke at The Structured Finance Association Conference in Las Vegas on "Goodbye to All That: The End of LIBOR."

Quarles reminded his audience that while LIBOR will no longer be a functional index after June 30, 2023, it will not be available for use in any new contracts after the end of 2021 — just 85 days from today. The Federal Reserve and other regulators have made it clear they will focus clearly on whether their supervised institutions stop new use of LIBOR by the end of this year. After that date, the only use for LIBOR will be as an index for older contracts, which should be maturing by June 2023. "Otherwise," said Quarles, "many banks would have had to re-negotiate hundreds of thousands of loan contracts before December 31, an almost impossible task."

"But the whole process only works", Quarles added, "if no new LIBOR contracts are written while the legacy contracts are allowed to mature. So, those new LIBOR contracts will not be made. Change is difficult, but it is inescapable."

Driving his point home, Quarles said, "A handful of firms have said that they may want more time to evaluate potential alternative rates. There is no more time, and banks will not find LIBOR available to use after year-end no matter how unhappy they may be with their options to replace it. I would note that the [Alternative Reference Rates Committee (ARRC)] has been publishing tools to facilitate the use of [the Secured Overnight Financing Rate (SOFR)] for almost four years. SOFR is a broad measure of the cost of borrowing cash overnight, collateralized by Treasury securities. It rests on one of the deepest and most liquid markets in the world. It is calculated transparently by the Federal Reserve Bank of New York, engendering market confidence. And it can be used for all types of transactions. Notably, the ARRC recently recommended SOFR term rates, which will facilitate the transition from LIBOR to SOFR for market participants who wish to use a forward-looking rate. Given the availability of SOFR, including term SOFR, there will be no reason for a bank to use LIBOR after 2021 while trying to find a rate it likes better."

As for loans, Quarles offered, "Loans, however, are different from derivatives and capital markets products, and raise different issues. With respect to loans, the Federal Reserve, OCC, and FDIC issued a letter last year explaining that we have not endorsed a specific replacement rate. We have not changed that guidance. A bank may use SOFR for its loans, but it may also use any reference rate for its loans that the bank determines to be appropriate for its funding model and customer needs. But a bank will not find LIBOR available after year-end, even if it doesn't want to use SOFR for loans and hasn't chosen a different alternative reference rate. Reviewing banks' cessation of LIBOR use after year-end will be one of the highest priorities of the Fed's bank supervisors in the coming months. If market participants do use a rate other than SOFR, they should ensure that they understand how their chosen reference rate is constructed, that they are aware of any fragilities associated with that rate, and—most importantly—that they use strong fallback provisions."

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