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03/06/2024

Another FDIC update to RMS Manual

The FDIC has announced another update of its Risk Management Manual of Examination Policies (RMS Manual). This update affects Section 15.1 (Formal Administrative Actions).

03/06/2024

Bowman on tailoring and fidelity to the rule of law

Federal Reserve Board Governor Michelle W. Bowman spoke yesterday at the Harvard Law School Faculty Club on "Tailoring, Fidelity to the Rule of Law, and Unintended Consequences."

Governor Bowman said, in her opening remarks, "I would like to frame the discussion by offering my views on a key element underpinning the U.S. bank regulatory framework: the role of tailoring. While the principle itself is simple—setting regulatory priorities and allocating supervisory resources in a risk-based way—the consequences of tailoring (or not) can reverberate throughout the banking system, the broader U.S. financial system, and the economy. I see a clear nexus between tailoring and fidelity to the law, including a targeted focus within our statutorily mandated prudential responsibilities."

Bowman added, "Both the pending capital reform proposals and the final climate guidance illustrate how regulatory actions can deviate from the principle of tailoring without any express recognition of this effect." She noted that "the federal banking agencies have proposed several reforms to the capital framework, among them the Basel III "endgame" and new long-term debt requirements that would apply to all banks with over $100 billion in assets. I have expressed concern with both of these proposals on the merits, in terms of striking the right balance between safety and soundness and efficiency and fairness, and out of concern for potential unintended consequences. Another concern is whether these proposals show fidelity to the law, which requires regulatory tailoring above the $100 billion asset threshold."

03/06/2024

Reserve Banks released 15 CRA evaluations in February

Our monthly check of the Federal Reserve Board's archive of CRA evaluation ratings reveals that the Reserve Banks made public 15 evaluations of member banks in February 2024. Thirteen of those evaluations were rated "Satisfactory." We congratulate Charles Schwab Bank, SSB, and Charles Schwab Premier Bank, SSB, both of Westlake, Texas, for receiving ratings of "Outstanding."

03/05/2024

U.S. sanctions Zimbabwe president and key actors

Yesterday, the Department of the Treasury announced that OFAC has designated 11 individuals, including Zimbabwe’s President Emmerson Mnangagwa, and three entities for their involvement in corruption or serious human rights abuse pursuant to E.O. 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act.

Concurrently, President Biden signed an Executive Order terminating the national emergency with respect to Zimbabwe and revoking the Executive Orders that have authorized Zimbabwe-specific sanctions. As a result, the economic sanctions administered by OFAC pursuant to the Zimbabwe sanctions program are no longer in effect.

The president’s Executive Order of March 4, 2024, “Termination of Emergency With Respect to the Situation in Zimbabwe,” terminated the national emergency declared in E.O. 13288 and built upon in E.O. 13391 and E.O. 13469. As a result:

  • All persons blocked solely pursuant to Executive Order 13288, 13391, or 13469 (the authorities of the Zimbabwe Sanctions Program) are being removed from OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List;
  • All property and interests in property blocked solely pursuant to the Zimbabwe Sanctions Program is now unblocked; and
  • OFAC will remove the Zimbabwe Sanctions Regulations from the Code of Federal Regulations.

For details on the new, removed, and updated SDN listings and a link to the Executive Order, see BankersOnline's March 4, 2024, OFAC Update.

03/05/2024

FDIC updates RMS Manual

The FDIC has has updated its Risk Management Manual of Examination Policies (RMS Manual). This month's update affects Section 3.3 (Securities).

03/05/2024

FDIC issues list of recently released CRA evaluation ratings

The FDIC has released a list of 56 recently released CRA evaluation ratings of state non-member FDIC-insured financial institutions. Three banks (located in Camden, SC; Doylestown, PA; and Sewell, NJ) were assigned "Needs to Improve" ratings. Forty-six received "Satisfactory" ratings. We congratulation seven institutions whose evaluations were rated "Outstanding":

03/05/2024

CFPB finalizes rule reducing credit card late fees to $8 for larger issuers

This morning, the CFPB announced it has finalized a rule to cut excessive credit card late fees. The rule will curb fees that cost American families more than $14 billion a year. The CFPB estimates that American families will save more than $10 billion in late fees annually once the final rule goes into effect by reducing the typical fee from $32 to $8 for card issuers that together with their affiliates have one million or more open credit card accounts.

The final rule reduces the current maximum late fees from $30 for the first late payment and $41 for subsequent late payments to $8 and ends automatic inflation adjustments for that amount for issuers that have one million or more open accounts. Specifically, the final rule:

  • Lowers the immunity provision dollar amount for late fees to $8
  • Ends the automatic annual inflation adjustment. The CFPB will instead monitor market conditions and adjust the $8 late fee immunity threshold as necessary.
  • Requires credit card issuers to show their math. Larger card issuers will be able to charge fees above the threshold so long as they can prove the higher fee is necessary to cover their actual collection costs.

The rule does not change the credit card issuer’s ability to raise interest rates, reduce credit lines, and take other actions to deter consumers from paying late.

The final rule does not adopt these revisions for “Smaller Card Issuers” (i.e., card issuers that together with their affiliates had fewer than one million open credit card accounts for the entire preceding calendar year). For Smaller Card Issuers, the final rule revises the safe harbor threshold amounts for late fees to $32 for the initial violation and $43 for each subsequent violation that occurs in one of the next six billing cycles.

The effective date of the final rule will be 60 days after publication of the rule in the Federal Register.

  • Statement of CFPB Director Rohit Chopra
  • Executive summary
  • Key changes chart
  • Unofficial redline of the final rule
  • UPDATE:Updated 3/5/2024 to clarify that the reduced fee cap applies only to larger card issuers
  • PUBLICATION AND EFFECTIVE DATE UPDATE: Published at 89 FR 19128 on 3/15/2024, with an effective date of 5/14/2024. However, the U.S. Chamber of Commerce has filed a suit in the Northern District of Texas seeing a preliminary injunction to stop the CFPB from implementing the rule.

03/05/2024

Court blocks FinCEN's CTA (BOI reporting) rule for specific plaintiffs

FinCEN reported yesterday that on Friday, in the case of National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), a federal district court in the Northern District of Alabama, Northeastern Division, entered a final declaratory judgment, concluding that the Corporate Transparency Act exceeds the Constitution’s limits on Congress’s power and enjoining the Department of the Treasury and FinCEN from enforcing the Corporate Transparency Act against the plaintiffs.

FinCEN will comply with the court’s order for as long as it remains in effect. As a result, the government is not currently enforcing the Corporate Transparency Act against the plaintiffs in that action: Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024). Those individuals and entities are not required to report beneficial ownership information to FinCEN at this time.

Update: On March 11, 2024, the Defendants (Yellen, et al) filed a Notice of Appeal of the Court's Final Judgment to the U.S. Court of Appeals for the Eleventh Circuit.

03/05/2024

SBA updates Lender Match tool for small businesses

Yesterday, SBA Administrator Isabel Casillas Guzman announced the next generation of the SBA’s Lender Match tool for businesses to connect to capital through SBA’s network of approved banks and private lenders. The enhanced Lender Match will provide Americans seeking funding to start and grow their businesses with a simple, online tool that will more effectively match them with the SBA’s competitive lending products and additional offerings from a trusted network of banks and private lenders.

On the enhanced Lender Match platform, small business owners benefit from an improved, mobile-first user interface that ensures better access and usability. Borrowers will now be able to easily view all of their matched lenders in one place, allowing the borrower to find and compare lenders to help them decide where to apply for a loan. The enhanced tool will also verify borrowers and screen for fraud to streamline the process for both lenders and borrowers. Importantly, with Lender Match, small businesses that are not matched to lenders will be connected to the SBA’s local network of free advisors to help them get capital-ready.

03/04/2024

HUD charges Georgia landlords with housing discrimination

The U.S. Department of Housing and Urban Development has announced it is charging PadSplit, Inc., a property management company, Kevin Lee Forrestal and Lydia Forrestal, the property owners, in Decatur, Georgia, with discrimination against a tenant because of her disability. HUD’s Charge of Discrimination alleges that respondents failed to grant a reasonable accommodation when a hearing-impaired complainant requested to have a service animal to assist with her disability.

HUD’s Charge of Discrimination alleges that the property’s management company and its employees, and the condominium unit’s owners, prohibited a hearing-impaired resident from using a service animal in their unit, and refused to install a visual doorbell and smoke detector, preventing her full use of her unit. Ultimately, their actions resulted in the resident’s decision to move out of the unit.

03/04/2024

OCC releases CRA evaluations for 31 banks

The OCC has released a list of Community Reinvestment Act (CRA) performance evaluations that became public in February. Of the 31 evaluations made public this month, one (in Kentland, Indiana) is rated needs to improve, 24 are rated satisfactory, and the following six are rated outstanding:

03/01/2024

Agencies to host 2024 interagency Community Reinvestment Conference

The FDIC, Federal Reserve Board, and OCC have jointly announced they and the Federal Reserve Banks of San Francisco and Chicago will host the 2024 National Interagency Community Reinvestment Conference in Portland, Oregon, March 4 to 7.

The biennial conference offers participants the opportunity to learn about the Community Reinvestment Act (CRA) and to discuss best practices, innovations, and emerging challenges in community development with experts from around the country. The 2024 program will focus on the agencies’ new CRA rule, and will include regulator-led sessions on the rule and panels on community development policy and activities. There will be pre-conference tours of local community development organizations and projects.

The conference will also include a panel discussion with Federal Reserve Vice Chair for Supervision Michael J. Barr, FDIC Chairman Martin J. Gruenberg, and Acting Comptroller of the Currency Michael J. Hsu. The panel discussion will be livestreamed.

To register for the conference and view the full agenda, visit the National Interagency Community Reinvestment Conference website.

03/01/2024

FATF IDs jurisdictions with AML/CFT/CPF deficiencies

FinCEN has reported that the Financial Action Task Force (FATF), an intergovernmental body that establishes international standards for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF), issued an additional public statement at the conclusion of its plenary meeting this month reiterating how the Russian Federation’s war of aggression against Ukraine continues to run counter to FATF’s principles, and, thus, the suspension of the membership of the Russian Federation continues to stand. The FATF highlighted the potential risks to the international financial system, including growing financial connectivity of Russia with the Democratic People’s Republic of Korea (DPRK) and Iran, and risks of proliferation financing, malicious cyber activities, and ransomware attacks. In order to protect the international financial system, the FATF continues to urge all jurisdictions to remain vigilant to these risks.

The FATF also updated its lists of jurisdictions with strategic AML/CFT/CPF deficiencies. U.S. financial institutions should consider the FATF’s stance toward these jurisdictions when reviewing their obligations and risk-based policies, procedures, and practices.

On February 23, 2024, the FATF added Kenya and Namibia to its list of Jurisdictions Under Increased Monitoring and removed Barbados, Gibraltar, Uganda, and the United Arab Emirates from that list.

The FATF’s list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with Iran, DPRK, and Burma subject to calls for action. Iran and DPRK are still subject to the FATF’s countermeasures, while Burma is still subject to the application of enhanced due diligence, but not countermeasures.

03/01/2024

Updated plan for implementation of Enterprise credit score requirements

The Federal Housing Finance Agency has announced updates to the implementation of new credit score requirements for single-family loans acquired by Fannie Mae and Freddie Mac (the Enterprises).

The FHFA is aligning the implementation date of the bi-merge credit reporting requirement with the transition from the Classic FICO credit score model. This aligned transition is expected to occur in the fourth quarter of 2025.

To better support market participants with this transition, the Enterprises will accelerate the publication of VantageScore 4.0 historical data, originally expected to be published in the first quarter of 2025, to early in the third quarter of 2024. FHFA and the Enterprises continue to work towards providing similar data to support the transition to the FICO 10T model, contingent upon achieving the necessary conditions for acquisition and publication of this data. FHFA will provide further details on implementation timing for FICO 10T once this process is complete.

03/01/2024

CFPB guidance on comparison-shopping results for financial products

The CFPB has announced it has issued Consumer Financial Protection Circular 2024-01 regarding preferencing and steering practices by digital intermediaries for consumer financial products or services. The circular was issued to law enforcement agencies and regulators to explain "how companies operating comparison-shopping tools can break the law when they steer consumers to certain products or lenders because of kickbacks."

03/01/2024

OCC and FDIC release CRA evaluation schedules

The FDIC and OCC have issued their Community Reinvestment Act examination schedules for the second and third quarters of 2024.

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