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03/30/2020

FDIC releases February enforcement orders

The FDIC has released a list of enforcement orders issued in February:

  • An institution affiliated party of Sunrise Bank Dakota, Onida, South Dakota, was assesses a civil money penalty of $15,000 after the FDIC determined (and the party neither admits nor denies), that, in 2017, he allowed bank customers to continuously overdraw their accounts, resulting in unsecured loans in excess of the bank's legal lending limit and financial loss to the bank.
  • An institution affiliated party of United Commercial Bank, San Francisco, California (now in receivership), was issued an order of prohibition and an order to pay a civil money penalty of $150,000, for having engaged or participated in violations, reckless unsafe or unsound banking practices, and breaches of fiduciary duty resulting in financial loss or other damage to the bank and prejudicing the interests of the bank's depositors.
  • Additional orders of prohibition from further participation were issued to:
    • a former employee of Louisa Community Bank, Louisa, Kentucky, for violations of law or regulation and unsafe or unsound banking practices, including embezzlement of $45,450 from the bank;
    • a former customer service manager of OneUnited Bank, Boston, Massachusetts, for having misappropriates funds from certificate of deposit accounts of various elderly customers of the bank, resulting in a loss to the bank of $71,425.36;
    • a former branch manager at PeoplesBank, A Codorus Valley Company, York, Pennsylvania, for having embezzled approximately $139,000 from the bank and its customers; and
    • a former institution affiliated party of The Fahey Banking Company, Marion, Ohio, who, while also treasurer of a public library in Mt. Giliad, Ohio, deprived the library of funds totaling $19,720, using the funds for his personal benefit.

03/30/2020

Regulators' actions to support lending

On Friday, the federal bank regulatory agencies announced to actions to support the U.S. economy and allow bankign organizations to continue lending to households and businesses:

  • Allowing early adoption of a new methodology on how certain banking organizations are required to measure counterparty credit risk derivatives contracts; and
  • Providing an optional extension of the regulatory capital transition for the new credit loss accounting standard.

The "standardized approach for measuring counterparty credit risk" rule, also known as SA-CCR, was finalized by the agencies in November 2019, with an effective date of April 1. It reflects improvements made to the derivatives market since the 2007-2008 financial crisis, such as central clearing and margin requirements. To help improve current market liquidity and smooth disruptions, the agencies will SA-CCR for the reporting period ending March 31.

Additionally, the agencies issued an interim final rule that allows banking organizations to mitigate the effects of the "current expected credit loss," or CECL, accounting standard in their regulatory capital. Banking organizations that are required under U.S. accounting standards to adopt CECL this year can mitigate the estimated cumulative regulatory capital effects for up to two years. This is in addition to the three-year transition period already in place. Alternatively, banking organizations can follow the capital transition rule issued by the banking agencies in February 2019.

The changes will be effective immediately and the agencies will accept comments on the CECL interim final rule for 45 days following publication.

03/30/2020

FDIC to accept annual reports delayed by COVID-19

The FDIC has issued FIL-30-2020 to provide additional information and guidance to insured depository institutions (IDIs) subject to Part 363 of the FDIC's regulations that have been affected by COVID-19. Highlights of the statement: As noted in the statement, the FDIC:

  • Recognizes that an IDI may not be able to file its Part 363 Annual Report in a timely manner due to the effects of COVID-19.
  • Provides that the FDIC will not take supervisory action against any IDI for submitting its Part 363 Annual Report or its written notification of late filing as long as the annual report or notification of late filing is submitted within 45 days of the 90- or 120-day report filing deadline.
  • Encourages IDIs to contact the FDIC in advance of the official filing date if the IDI anticipates a delayed submission.
  • Affirms that the staff of the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the state banking regulators have confirmed the FDIC's treatment of the annual report required by Part 363.

03/30/2020

NCUA to host COVID-19 webinar

Federally insured credit unions can learn more about the agency’s response to the COVID-19 outbreak by participating in a webinar hosted by the NCUA on Tuesday, March 31, beginning at 2 p.m. ET. During the webinar, NCUA staff will also discuss recently issued guidance and changes to the agency’s examination program. Registration is limited to no more than 2,500 participants on a first-come, first-served basis. Participants will be able to log into the webinar and view it on their computers or mobile devices using the registration link.

03/30/2020

FDIC updates steps to protect banks and continue operations

FDIC FIL-29-2020, issued Friday, updates the steps announced on March 16, 2020, to protect banks and consumers and to continue operations. Highlights:

  • All FDIC employees in all FDIC facilities are now engaged in mandatory telework through at least April 12.
  • Supervisory and other FDIC activities at financial institutions will be conducted off-site for an additional two weeks through April 12, and staff has individually contacted institutions with ongoing or upcoming examination activities about their communication preferences during this period.
  • The FDIC will evaluate the necessity of continuing off-site work as we approach April 12.
  • The FDIC recognizes that institutions may have operational or staffing challenges associated with the pandemic that limit the ability of management to respond to normal supervisory requests. Institutions faced with these challenges should contact their Examiner-in-Charge or Regional Director to coordinate the timing of any response so it does not inhibit critical operations at the institution at this difficult time.
  • Despite the challenges presented by the coronavirus, the FDIC remains prepared to carry out its mission to insure deposits, promote financial stability, protect consumers, and ensure the safe and sound operation of FDIC-supervised institutions.

03/30/2020

NCUA proposes to amend corporate CU reg

The National Credit Union Administration has published at 85 FR 17288 a proposed rule that would amend the NCUA's corporate credit union regulation. The proposed rule would update, clarify, and simplify several provisions of the NCUA's corporate credit union regulation, including:

  • permitting a corporate credit union to make a minimal investment in a credit union service organization (CUSO) without the CUSO being classified as a corporate CUSO under the NCUA's rules;
  • expanding the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union's board;
  • amending the minimum experience and independence requirement for a corporate credit union's enterprise risk management expert; and
  • requiring a corporate credit union to deduct certain investments in subordinated debt instruments issued by natural person credit unions.

Comments on the proposal are due by May 26, 2020.

03/27/2020

CFPB offers flexibility to financial companies

The Consumer Financial Protection Bureau has announced that it is providing needed flexibility to enable financial companies to work with customers in need as they respond to the COVID-19 pandemic. The Bureau is postponing some data collections from industry on Bureau-related rules to allow companies to focus on responding to consumers in need and making changes to its supervisory activities to account for operational challenges at regulated entities. The Bureau will not expect quarterly information reporting by certain mortgage lenders as required under the Home Mortgage Disclosure Act (HMDA) and Regulation C. The Bureau also will not expect the reporting of certain information related to credit card and prepaid accounts under the Truth in Lending Act, Regulation Z, and Regulation E.

The Bureau is also postponing data collections for:

  • a survey of financial institutions that seeks information on the cost of compliance in connection with pending rulemaking on Section 1071 of the Dodd-Frank Act; and
  • a survey of firms providing Property Assessed Clean Energy (PACE) financing to consumers for the purposes of implementing Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

03/27/2020

Regulators encourage making small-dollar loans in response to COVID-19

Yesterday, the Federal Reserve, CFPB, FDIC, NCUA, and the OCC issued a joint statement encouraging banks, savings associations and credit unions to offer responsible small-dollar loans to consumers and small businesses in response to COVID-19. The statement of the agencies recognizes that responsible small-dollar loans can play an important role in meeting customers' credit needs because of temporary cash-flow imbalances, unexpected expenses, or income disruptions during periods of economic stress or disaster recoveries. Such loans can be offered through a variety of structures including open-end lines of credit, closed-end installment loans, or appropriately structured single payment loans.

In addition to yesterday's statement, the agencies are working on future guidance and lending principles for responsible small-dollar loans to facilitate the ability of banks, credit unions, and saving associations to more effectively meet the ongoing credit needs of their customers, members, and communities.

03/27/2020

OFAC designates networks of officials and companies in Iraq and Iran

The Treasury Department has announced that OFAC has designated 20 Iran- and Iraq-based front companies, senior officials, and business associates that provide support to or act for or on behalf of the Islamic Revolutionary Guards Corps-Qods Force (IRGC-QF) in addition to transferring lethal aid to Iranian-backed terrorist militias in Iraq such as Kata’ib Hizballah and Asa’ib Ahl al-Haq. For identification information, see BankersOnline's OFAC Update.

03/27/2020

Bureau extends comment period on FDCPA proposal

On March 3, 2020, the CFPB published a Supplemental Notice of Proposed Rulemaking requesting comment on a proposal to amend Regulation F, which implements the Fair Debt Collection Practices Act (FDCPA) to require debt collector to make certain disclosures when collecting time-barred debts (see our earlier Top Story). The comment period was set to close on May 4, 2020. The Bureau has published a notice in the March 27, 2020, Federal Register extending the comment period through June 5, 2020.

03/27/2020

Student Loans and the coronavirus pandemic

The CFPB has posted an article reporting that the U.S. Department of Education announced that all borrowers with federally-held student loans will automatically have their interest rates set to 0% for at least 60 days. All borrowers with federally-held loans may also request to suspend their payments for at least two months, and delinquent borrowers will have their payments automatically suspended. The Department of Education also announced that they have stopped the collection of defaulted federal student loans for at least 60 days. A list of other things of interest to borrowers regarding a federal-held loans was also provided.

03/27/2020

Victims of student loan debt scheme to receive $3.1M

The Federal Trade Commission is mailing checks totaling more than $3.1 million to consumers who were victims of a student loan debt relief and credit repair scheme. Strategic Student Solutions (also doing business under other names) and its owner, Dave Green, settled FTC allegations that they charged consumers illegal upfront fees and falsely promised to reduce their student loan debt or monthly payments by enrolling them in student loan forgiveness or other programs. The FTC also alleged that the defendants falsely promised to apply monthly payments to consumers’ student loans and to improve their credit scores and histories. The FTC is mailing 20,988 checks—averaging $148 each—to victims of the scheme.

03/27/2020

FDIC issues COVID-19-related FILs

The FDIC issued four COVID-19-related Financial Institution Letters yesterday.

  • FIL-25-2020: Identification of Essential Critical Infrastructure Workers During the COVID-19 Response Efforts
  • FIL-26-2020: Statement encouraging responsible small dollar lending to consumers and small businesses in response to COVID-19
  • FIL-27-2020: Temporary alternative procedures for sending supervision-related mail and email to FDIC
  • FIL-28-2020: 30 day grace period for First Quarter Call Report

03/27/2020

SEC relief to market participants affected by COVID-19

The Securities and Exchange Commission has announced it is providing additional temporary regulatory relief to market participants in response to the effects of the Coronavirus Disease 2019 (COVID-19). The actions announced today involve (1) parties needing to gain access to make filings on the EDGAR system, (2) certain company filing obligations under Regulation A and Regulation Crowdfunding, and (3) a filing requirement for municipal advisors.

03/27/2020

CDFI certification process begins March 29

The NCUA has announced federally insured, low-income credit unions that want to become certified Community Development Financial Institutions can apply to use the National Credit Union Administration’s qualification process for streamlined CDFI certification beginning March 29.The intake period closes May 31. See the NCUA’s online program guide for instructions.

03/27/2020

First quarter SCOOS posted

The March 2020 Senior Credit Officer Opinion Survey (SCOOS) on Dealer Financing Terms has been posted by the Federal Reserve Board. It collected qualitative information on changes over the previous three months in credit terms and conditions in securities financing and over-the-counter (OTC) derivatives markets. In addition to the core questions, the survey included a set of special questions related to bifurcation of spreads in corporate bond and collateralized loan obligations markets during the second half of 2019. The 22 institutions participating in the survey account for almost all dealer financing of dollar-denominated securities to nondealers and are the most active intermediaries in OTC derivatives markets. The survey was conducted during the period between February 11, 2020, and February 25, 2020, and closed before the recent period of high market volatility related to COVID-19. The core questions asked about changes between December 2019 and February 2020.

03/27/2020

Fed offers small institutions COVID-19 reporting relief

The Federal Reserve announced yesterday that it recognizes that small financial institutions may need additional time to submit certain regulatory reports in light of staffing priorities and disruptions caused by COVID-19. The Fed will not take action against a financial institution with $5 billion or less in total assets for submitting its March 31, 2020, Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) or Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies (FR Y-11) after the official filing deadline, as long as the applicable report is submitted within 30 days of the official filing due date.

Institutions were encouraged to contact their Reserve Bank in advance of the official filing deadline if they anticipate a delayed submission. Institutions anticipating difficulty submitting their reports within the 30 days following the official filing due date, or experiencing challenges in obtaining director attestations, should likewise contact their Reserve Bank.

03/26/2020

$40M in HUD grants to fight housing discrimination

HUD has awarded $40 million to fair housing organizations working to confront violations of the Fair Housing Act and help end housing discrimination. The grants are being awarded through HUD’s Fair Housing Initiatives Program (FHIP) and the Fair Housing Assistance Program (FHAP) to help people who believe they have been victims of housing discrimination and to educate the public and housing providers on fair housing laws.

03/26/2020

New IRS People First Initiative and COVID-19 tax adjustments

The IRS has announced a new IRS People First Initiative to help people facing the challenges of COVID-19 issues a sweeping series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions. These new changes include issues ranging from postponing certain payments related to Installment Agreements and Offers in Compromise to collection and limiting certain enforcement actions. The IRS will be temporarily modifying the following activities as soon as possible; the projected start date will be April 1 and the effort will initially run through July 15. During this period, to the maximum extent possible, the IRS will avoid in-person contacts. However, the IRS will continue to take steps where necessary to protect all applicable statutes of limitations.

03/26/2020

Agencies to host webinar on working with COVID-19-affected customers

The FDIC has issued FIL-24-2020 announcing it will jointly host with the Federal Reserve, OCC, NCUA and CFPB a 45-minute webinar for bankers to raise awareness of the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. The webinar is scheduled for Friday, March 27, 2020, at 2:00 p.m. EDT.

03/26/2020

IRA and HSA/MSA deadlines extended to July 15

The IRS has posted an FAQ on Filing and Payment Deadlines that reflects revised deadlines in accordance with IRS Notice 2020-18. The answers to questions 17 and 21 indicate that the deadline for contributing money to an IRA, Health Savings Account (HSA) or Archer Medical Savings Account (MSA) for tax year 2019 follows the deadline for filing returns for 2019, which was postponed to July 15.

03/26/2020

SEC extends exemptions due to COVID-19

The Securities and Exchange Commission announced yesterday that it is extending the filing periods covered by its previously enacted conditional reporting relief for certain public company filing obligations under the federal securities laws, and that it is also extending regulatory relief previously provided to funds and investment advisers whose operations may be affected by COVID-19. In addition, the SEC’s Division of Corporation Finance issued its current views regarding disclosure considerations and other securities law matters related to COVID-19.

03/26/2020

House prices increase

The Federal Housing Finance Agency has reported that U.S. house prices rose in January, up 0.3 percent from the previous month, according to the FHFA House Price Index. House prices rose 5.2 percent from January 2019 to January 2020. The previously reported 0.6 percent increase for December 2019 was revised upward to 0.7 percent. For the nine census divisions, seasonally adjusted monthly house price changes from December 2019 to January 2020 ranged from -0.2 percent in the Mountain division to +0.7 percent in the South Atlantic divisions. The 12-month changes were all positive, ranging from +4.1 percent in the Middle Atlantic division to +6.4 percent in the South Atlantic division.

03/25/2020

CFPB lists COVID-19 protection resources for consumers

03/25/2020

FTC and Justice to expedite antitrust procedures for public health efforts

The Federal Trade Commission and Justice Department have announced a joint statement detailing an expedited antitrust procedure and providing guidance for collaborations of businesses working to protect the health and safety of Americans during the COVID-19 pandemic.

Under the expedited procedure for COVID-19 public health projects, the agencies will respond to all COVID-19-related requests, and resolve those addressing public health and safety within seven calendar days of receiving all information necessary to vet these proposals. The statement sets out the instructions for businesses wishing to take advantage of this procedure.

03/25/2020

Fed delays implementation of changes to policy

The Federal Reserve Board announced Tuesday a six-month delay in the planned implementation of policy changes to procedures governing the provision of intraday credit to U.S. branches and agencies of foreign banks (FBOs) (see our April 1, 2019 Top Story), which was due to be implemented April 1, 2020. In light of the challenges posed by the coronavirus, the Board is delaying implementation until October 1, 2020. This additional time will allow FBOs and the Federal Reserve Banks to focus on heightened priorities rather than establishing new arrangements for accessing intraday credit.

03/25/2020

Fannie and Freddie prevent more foreclosures

The Federal Housing Finance Agency (FHFA) has released its fourth quarter 2019 Foreclosure Prevention and Refinance Report, which shows that Fannie Mae and Freddie Mac completed 25,930 foreclosure prevention actions in the fourth quarter of 2019, bringing to 4.407 million the number of troubled homeowners who have been helped during the conservatorships of the Enterprises. The report also shows that nearly 40 percent of loan modifications completed in the fourth quarter reduced borrowers' monthly payments by more than 20 percent. The Enterprises' serious delinquency rate remained unchanged from the third quarter at 0.65 percent at the end of the fourth quarter. This compares with 3.47 percent for FHA loans, 1.92 percent for VA loans and 1.76 percent for all loans (industry average). The report also showed a jump in refinances from the third quarter of 540,578 to 728,842 in the fourth quarter.

03/25/2020

Mnuchin statement regarding essential financial services workers

Treasury has released a statement from Secretary Mnuchin on financial services sector essential critical infrastructure workers:

  • “I strongly support the Department of Homeland Security’s recent guidance identifying financial services sector workers as essential critical infrastructure workers during the COVID-19 response emergency. The guidance provides information to State and local officials, as they work to protect their communities, to ensure the continuity of functions that are critical to public health and safety, as well as economic and national security. Consistent with the President’s guidelines, ‘if you work in a critical infrastructure sector, as defined by the Department of Homeland Security, you have a special responsibility to maintain your normal work schedule.’

    "The financial services sector is identified as a Critical Infrastructure Sector by the Department of Homeland Security. The Essential Critical Infrastructure Workforce for the financial services sector includes workers who are needed to process (and maintain systems for processing) financial transactions and services, such as payment, clearing, and settlement services, wholesale funding, insurance services, and capital markets activities. Essential financial services workers provide consumer access to banking and lending services, including ATMs and the movement of currency (e.g., armored cash carriers). They support financial operations, including data and security operations centers. Essential workers also include key third-party providers who deliver core services."

03/25/2020

Fed adjusting supervision in light of COVID-19

The Federal Reserve Board has provided additional information to financial institutions on how its supervisory approach is adjusting in light of the coronavirus pandemic, issuing a Statement on Supervisory Activities. In particular:

  • The Federal Reserve will focus on monitoring and outreach to help financial institutions of all sizes understand the challenges and risks of the current environment;
  • To minimize disruption and to focus on outreach and monitoring, the Federal Reserve will temporarily reduce its examination activities, with the greatest reduction in activities occurring at the smallest banks;
  • Large banks should still submit their capital plans that they have developed as part of the Board's Comprehensive Capital Analysis and Review, or CCAR, by April 6. The plans will be used to monitor how firms are managing their capital in the current environment; and
  • To allow firms to focus on heightened risks in this current environment and assist consumers, additional time will be granted for resolving non-critical existing supervisory findings.

The Board recognizes that the current situation is significantly affecting areas of the country in different ways and will work with financial institutions to understand the specific issues they are facing.

03/25/2020

G7 Finance ministers and central bank governors response to COVID-19

The Treasury Department has released a statement of the G7 finance ministers and central bank governors. Excerpts: "Consistent with the direction from G7 Leaders, we are taking action and enhancing coordination on our dynamic domestic and international policy efforts to respond to the global health, economic, and financial impacts associated with the spread of the coronavirus disease 2019 (COVID-19). Collectively, G7 nations have already enacted a wide-ranging set of health, economic, and financial stability measures. We will do whatever is necessary to restore confidence and economic growth and to protect jobs, businesses, and the resilience of the financial system. We also pledge to promote global trade and investment to underpin prosperity....The G7 is committed to deliver the fiscal effort necessary to help our economies rapidly recover and resume the path towards stronger and more sustainable economic growth....Consistent with the direction from the G7 Leaders, finance ministries will coordinate on a weekly basis on the implementation of these measures and take further timely and effective actions."

03/24/2020

Fed adds new measures to support economy under COVID-19 attack

The Federal Reserve Board announced Monday morning extensive new measures to support the economy. These actions include—

  • Support for critical market functioning. The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy. The FOMC had previously announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. In addition, the FOMC will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases.
  • Supporting the flow of credit to employers, consumers, and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing. The Department of the Treasury, using the Exchange Stabilization Fund (ESF), will provide $30 billion in equity to these facilities.
  • Establishment of two facilities to support credit to large employers – the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.
  • Establishment of a third facility, the Term Asset-Backed Securities Loan Facility (TALF), to support the flow of credit to consumers and businesses. The TALF will enable the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration (SBA), and certain other assets.
  • Facilitating the flow of credit to municipalities by expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities, including municipal variable rate demand notes (VRDNs) and bank certificates of deposit.
  • Facilitating the flow of credit to municipalities by expanding the Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities. In addition, the pricing of the facility has been reduced.

In addition to the steps above, the Federal Reserve expects to announce soon the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the SBA.

03/24/2020

$6.9M sent to victims of office supply scam

The Federal Trade Commission (FTC) is sending refunds totaling more than $6.9 million to small businesses, non-profits, and government agencies targeted by an office supply telemarketing scam that charged them for products they did not order. The FTC alleged that defendants’ victims included child care centers, schools, and police and fire departments. The FTC has begun mailing 13,181 refund checks averaging $525 each to the victims of the scam. Refund recipients should deposit or cash their checks within 60 days, as indicated on the check.

03/24/2020

FHFA actions in response to COVID-19

The Federal Housing Finance Agency has announced has authorized Fannie Mae and Freddie Mac (the Enterprises) to enter into additional dollar roll transactions. Eligible collateral is limited to Agency mortgage-backed securities and the transactions must be undertaken via an auction or similar mechanism to ensure that they occur at a fair market price. Dollar roll transactions provide mortgage-backed securities investors with short-term financing of their positions, providing liquidity to these investors.

This FHFA's action was taken to ensure the Enterprises fulfill their mission of providing market liquidity during the coronavirus national emergency.

The FHFA also announced it has directed the Enterprises to provide alternative flexibilities to satisfy appraisal and employment verification requirements through May 27.2020.

  • To allow for homes to be bought, sold, and refinanced as our nation deals with the challenges of the coronavirus, the Enterprises will leverage appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages.
  • In the event lenders cannot obtain verbal verification of the borrower's employment before loan closing, the Enterprises will allow lenders to obtain verification via an e-mail from the employer, a recent year-to-date paystub from the borrower, or a bank statement showing a recent payroll deposit. Lenders should continue to utilize sound underwriting judgment to ensure these alternatives are appropriate to the borrower's circumstances.

In a third announcement, the FHFA said the Enterprises will offer multifamily property owners mortgage forbearance with the condition that they suspend all evictions for renters unable to pay rent due to the impact of coronavirus. The eviction suspensions will be in place for the entire duration of time that a property owner remains in forbearance. The forbearance is available to all multifamily properties with an Enterprise-backed performing multifamily mortgage negatively affected by the coronavirus national emergency.

03/24/2020

FDIC's OMWI requests diversity self-assessments

The FDIC's Office of Minority and Women Inclusion (OMWI) has issued FIL-23-2020 requesting diversity self-assessments from FDIC-regulated financial institutions for 2019 in accordance with Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The FDIC's Financial Institution Diversity program is responsible for assessing the diversity policies and practices of its regulated financial institutions per the Standards identified in the Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies (Policy Statement). Participation in the self-assessment program by a regulated institution is voluntary.

03/24/2020

COVID-19-related fraud scams increasing

A Federal Bureau of Investigation public service announcement warns that scammers are leveraging the COVID-19 pandemic to steal money and personal identification information. The agency warned consumers and businesses to do research before clicking on links purporting to provide information on the virus; donating to a charity online or through social media; contributing to a crowdfunding campaign; purchasing products online; or giving up personal information in order to receive money or other benefits.

Specifically, the FBI urges people to watch out for:

  • Emails claiming to be from the Centers for Disease Control and Prevention (CDC) or other organizations claiming to offer information on the virus. Emails from scammers posing as such organization may contain malware-delivering links. Internet users should also be wary of websites and apps claiming to track COVID-19 cases worldwide.
  • Phishing emails asking the recipient to verify personal information in order to receive an economic stimulus check from the government. Phishing emails may also claim to be related to charities, general financial relief, airline carrier refunds, fake cures and vaccines, or fake testing kits.
  • Counterfeit treatments or equipment, which some scammers claim will prevent, diagnose or cure COVID-19. The obvious list of counterfeits includes sanitizing products and personal protective equipment including masks, goggles, face shields, gowns and gloves.

03/24/2020

Urgent needs grants available from NCUA

The NCUA has posted a press release announcing that federally insured, low-income designated credit unions that experience unexpected costs as a result of COVID-19 can request urgent needs grants. The NCUA’s Office of Credit Union Resources and Expansion can provide grants up to $7,500 to low-income credit unions for:

  • Hardware, software, or other equipment to help them provide financial products and services from remote locations;
  • Consulting services to develop programs and partnerships to assist those affected by COVID-19, such as small businesses or schools; and
  • Developing marketing materials to assure members their insured deposits are safe.

Eligible credit unions also may apply for loans supported by the Community Development Revolving Loan Fund and for grants or loans through the NCUA’s CyberGrants portal.

03/23/2020

DHS Form I-9 flexibility

The Department of Homeland Security has announced that, due to precautions being implemented by employers and employees related to physical proximity associated with COVID-19, it will exercise discretion to defer the physical presence requirements associated with Employment Eligibility Verification (Form I-9) under Section 274A of the Immigration and Nationality Act (INA). Employers with employees taking physical proximity precautions due to COVID-19 will not be required to review the employee’s identity and employment authorization documents in the employee’s physical presence.

03/23/2020

Federal Tax Day delayed

Treasury and the IRS previously announced that tax payments due April 15 may be paid without penalty by July 15, 2020. The agencies have now announced that both tax filings and payments for all federal income taxes (including self-employment tax) due on April 15, 2020, regardless of amount, will now be due on July 15, 2020.

03/23/2020

Coronavirus-related leave and tax credits for workers and businesses

Treasury, the IRS and the Labor Department announced on Friday that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act, enacted on March 18, 2020. The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members.

  • Paid sick leave for workers
    For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable
  • Complete coverage
    Employers receive 100% reimbursement for paid leave pursuant to the Act.
    • Health insurance costs are also included in the credit.
    • Employers face no payroll tax liability.
    • Self-employed individuals receive an equivalent credit
  • Fast funds
    Reimbursement will be quick and easy to obtain
    • An immediate dollar-for-dollar tax offset against payroll taxes will be provided
    • Where a refund is owed, the IRS will send the refund as quickly as possible
  • Small business protection
    Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed or child care is unavailable in cases where the viability of the business is threatened.
  • Easing compliance
    Requirements subject to 30-day non-enforcement period for good faith compliance efforts

The IRS has established a Coronavirus Tax Relief page.

03/23/2020

Capital rule modified to accommodate MMLF participation

The OCC, Fed and FDIC have published an interim final rule at 85 FR 16232 in today's Federal Register to allow banking organizations to neutralize the effects of purchasing assets through the Federal Reserve's Money Market Mutual Fund Liquidity Facility (MMLF). This treatment will extend to the community bank leverage ratio. The interim rule is effective today, with comments accepted through May 7, 2020.

03/23/2020

FTC and CFPB report FDCPA enforcement activities

The Federal Trade Commission has provided the CFPB with an annual summary of the Commission’s activities enforcing the Fair Debt Collection Practices Act (FDCPA). The FTC shares enforcement responsibility for the FDCPA with the CFPB, which provides an annual report to Congress about debt collection enforcement activities The annual report highlights both agencies’ efforts to stop unlawful debt collection practices, including law enforcement, education and public outreach, and policy initiatives.

The CFPB also released its annual report to Congress.

03/23/2020

Electronic filings encouraged by OCC

OCC Bulletin 2020-20, issued Friday, strongly recommends the use of electronic methods for submitting licensing filings to the OCC during the COVID-19 pandemic. Submission of a licensing filing in paper form may result in delays in processing. To avoid any such delays, the OCC strongly recommends that licensing filings be submitted through the Central Application Tracking System (CATS) or through the agency’s secure email system.

03/23/2020

Statement on working with borrowers affected by COVID-19

The Fed, CFPB, FDIC, NCUA, OCC, and the Conference of State Bank Supervisors have issued an interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications.

The agencies encourage financial institutions to work with borrowers, will not criticize institutions for doing so in a safe and sound manner, and will not direct supervised institutions to automatically categorize loan modifications as troubled debt restructurings (TDRs). The joint statement also provides supervisory views on past-due and nonaccrual regulatory reporting of loan modification programs.

The agencies view prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk.

The statement reminds institutions that not all modifications of loan terms result in a TDR. Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term—for example, six months—modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.

The agencies' examiners will exercise judgment in reviewing loan modifications, including TDRs, and will not automatically adversely risk rate credits that are affected, including those considered TDRs. Regardless of whether modifications are considered TDRs or are adversely classified, agency examiners will not criticize prudent efforts to modify terms on existing loans for affected customers.

03/23/2020

Fed enhances MMLF availability

The Federal Reserve Board has announced it has enhanced its new Money Market Mutual Fund Liquidity Facility (MMLF) by make loans available to eligible financial institutions secured by certain high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds. Additional information on the MMLF were provided in an updated term sheet.

03/23/2020

OCC revises short-term investment fund rule

The OCC has announced an interim final rule revising its short-term investment fund (STIF) rule for national banks acting in a fiduciary capacity. The interim rule allows the OCC to authorize banks to temporarily extend maturity limits of these funds. The change is being made because financial markets are in a period of significant stress negatively affecting the ability of banks to operate in compliance with maturity limits identified in the existing rule. The change is effective immediately. UPDATE: Published at 85 FR 16888 on 3/25/2020, with comments accepted through 5/11/2020.

The OCC has also announced an order extending the maturity limits for STIFs affected by the market effects of COVID-19. The order provides that a bank will be deemed in compliance with the rule if--

  • The STIF maintains a dollar-weighted average portfolio maturity of 120 days or less, as determined in the same manner as is required by the Securities and Exchange Commission SEC) pursuant to Rule 2a-7 for money market mutual funds (17 CFR 270.2a-7);
  • The STIF maintains a dollar-weighted average portfolio life maturity of 180 days or less, as determined in the same manner as is required by the SEC pursuant to Rule 2a-7 for money market mutual funds (17 CFR 270.2a-7).;
  • The bank is acting in the best interests of the STIF under applicable law in connection with using these temporary limits; and
  • The bank makes any necessary amendments to the written plan for the STIF to reflect these temporary changes.

UPDATE: The order was published at 85 FR 16887 on 3/25/2020, effective 3/23/2020, and applicable 3/21/2020.

The OCC has established a single webpage with all of its COVID-19-related information.

03/23/2020

International banks act to aid U.S dollar liquidity

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank have announced a coordinated action to further enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements. To improve the swap lines' effectiveness in providing U.S. dollar funding, these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily operations will commence on Monday, March 23, 2020, and will continue at least through the end of April. The central banks also will continue to hold weekly 84-day maturity operations. The swap lines among these central banks are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad.

03/20/2020

OCC announces enforcement actions

The OCC has released a list of enforcement actions recently taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations.

  • A civil money penalty of $50,000 was imposed on Michael S. Fontaine, former chief operational risk officer of U.S. Bank, N.A., Cincinatti, Ohio. This penalty is in addition to the previously reported $450,000 penalty imposed by FinCEN. The Comptroller found that Fontaine failed to take action to address inadequate staffing in the bank's BSA/AML program, allowing them to remain deficient for at least five years; and allowing the bank to implement alert suppression techniques to maintain suspicious activity alert volumes at a level commensurate with those inadequate staffing levels.
  • A formal agreement with Mutual Savings Bank, Hartsville South Carolina, to address concerns relating to board and management oversight, credit oversight and administration, internal controls, internal audit, and liquidity risk management.
  • Removal/prohibition orders were issued to:
    • a former teller at Bank of America, N.A., Charlotte, North Carolina (misappropriation of funds for her own use);
    • a former employee of Bank of America, N. A., Charlotte, North Carolina (misappropriation of at least $29,500 from bank customers for his own use);
    • a former service manager of Wells Fargo Bank, N.A. Sioux Falls, South Dakota (misappropriation of approximately $9,000 from her teller drawer); and
    • a former regional banking private banker at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, who opened an account on behalf of a customer without authorization or knowledge of the customer and designated himself as sole owner and signer for the account. He collected funds as charitable contributions, deposited the funds into the account, and made repeated unauthorized transfers to his personal account.

03/20/2020

FDIC demands California gold trader halt misleading ads

The FDIC reported yesterday it has demanded that a California-based precious metals trader immediately stop and correct its misleading advertising that falsely claims consumers' FDIC-insured deposits are at risk of forfeiture. The FDIC asserts that Monetary Gold of Woodland Hills, California, is engaging in a marketing campaign to sell gold products by falsely indicating that consumer insured bank deposits can be legally seized by banks.

The FDIC is separately calling upon Newsmax.com to stop publishing these misleading ads and to issue a correction to its readers following its publication of "Walls Street's Worst Nightmare." In this sponsored ad for Newsmax.com, Monetary Gold falsely asserts that Federal law permits banks to "take its depositors' funds (i.e. your checking, savings, CDs, IRA and 401(k) accounts) and use those funds when necessary to keep itself, the bank, afloat." The FDIC says these assertions are false. Federal law is clear that in the unlikely event of a bank failure, customers' insured deposits would be fully protected up to the $250,000 limit.

03/20/2020

Discount window borrowing up

The Federal Reserve Board is encouraged by the notable increase in discount window borrowing this week with banks demonstrating a willingness to use the discount window as a source of funding to support the flow of credit to households and businesses. This uptick follows the recent changes to the discount window announced by the Federal Reserve and the federal banking regulators' recent statement encouraging financial institutions to use the discount window.

03/20/2020

McWilliams urges FASB to delay accounting rules

FDIC Chairman McWilliams has sent a letter to the Financial Accounting Standards Board (FASB) urging a delay in transitions to and exclusions from certain accounting rules, including:

  • Excluding COVID-19-related modifications from being considered a concession when determining a troubled debt restructuring (TDR) classification;
  • Permitting financial institutions currently subject to the current expected credit losses (CECL) methodology an option to postpone implementation of CECL given the current economic environment; and
  • Imposing a moratorium on the effective date for those institutions that are not currently required to implement CECL to allow these financial institutions to focus on immediate business challenges relating to the impacts of the current pandemic and its effect on the financial system.

"Today we are confronting new and uncertain challenges in view of the worldwide pandemic," Chairman McWilliams wrote. "The nation's banking industry is responding to rapidly evolving business conditions that are unprecedented in our history. To support the industry's efforts to focus on their employees and customers, I encourage FASB to take these much needed actions to allow banks to help their communities at this time of need."

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