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04/09/2020

PPP FAQ updated again

The Treasury/SBA FAQ document for PPP loans was updated yesterday. Two changes addressed lender concerns in additions to the FAQ:

  • Question 19: SBA clarified that lenders may use their own note or an SBA form. The agency has released its own form, but it may be revised to address industry feedback to meet lenders’ operational needs.
  • Question 20: The lender must make the first disbursement of the loan no later than 10 calendar days after the loan is approved.

04/09/2020

Temporary relief for business development companies

The Securities and Exchange Commission has announced that it is providing temporary, conditional exemptive relief for business development companies (BDCs) to enable them to make additional investments in small and medium-sized businesses, including those with operations affected by COVID-19. BDCs were created to provide capital to smaller domestic operating companies that otherwise may not be able to readily access the capital markets. The relief announced Wednesday will provide additional flexibility for BDCs to issue and sell senior securities in order to provide capital to such companies, and to participate in investments in these companies alongside certain private funds that are affiliated with the BDC. The relief is subject to investor protection conditions, including specific requirements for obtaining an independent evaluation of the issuances’ terms and approval by a majority of a BDC’s independent board members.

04/09/2020

Victims of online selling scam to receive $1M+

The FTC is mailing checks totaling more than $1 million to individuals targeted by a business opportunity scheme that promised consumers big profits from selling on Amazon. The FTC and the Minnesota Attorney General’s Office alleged that Sellers Playbook, Inc. lured consumers into believing that they were likely to earn thousands of dollars a month selling products on Amazon. In marketing their “system” for selling on Amazon, the defendants made false and unsubstantiated claims, such as make “$20,000 a month” and “Potential Net Profit: $1,287,463.38.” The FTC is mailing 350 checks averaging $2,954 each to victims of the scheme who previously filed a complaint with law enforcement.

04/09/2020

FOMC minutes

The Federal Reserve Board and the Federal Open Market Committee have released the minutes of the Committee meeting held on March 15, 2020, and of the conference call held on March 2, 2020.

04/09/2020

Fed makes temporary change to Wells Fargo restrictions

The Federal Reserve Board announced Wednesday that it will temporarily and narrowly modify the growth restriction on Wells Fargo & Company so that it can provide additional support to small businesses. The change will only allow the firm to make additional small business loans as part of the Paycheck Protection Program, or PPP, and the Federal Reserve's forthcoming Main Street Lending Program.

The Board will require benefits from the PPP and the Main Street Lending Program to be transferred to the U.S. Treasury or to non-profit organizations approved by the Federal Reserve that support small businesses. The change will be in place as long as those facilities are active.

The Board's growth restriction was implemented in February 2018 because of widespread compliance and operational breakdowns at Wells Fargo that resulted in harm to consumers and because the company's activities were ineffectively overseen by its board of directors. The growth restriction provides an overall cap on the size of the firm's balance sheet. The change announced Wednesday provides additional support to small businesses hurt by the economic effects of the coronavirus by allowing activities from the PPP and the Main Street Lending Program to not count against the cap.

04/09/2020

OFAC adjusts penalties for inflation

​OFAC has published a final rule at 85 FR 19884 in today's Federal Register amending its regulations to adjust certain civil monetary penalties for inflation as required by law. The rule is effective upon publication.

04/08/2020

Fed CRA evaluations released in March

Our monthly review of the Federal Reserve's Community Reinvestment Act performance evaluation releases reveals that 16 evaluations were made public in March, all with ratings of Satisfactory or better. We congratulate two Missouri banks that received ratings of Outstanding (links are to their evaluation reports):

04/08/2020

Revised interagency statement on COVID-19-related loan modifications

The federal financial institution regulatory agencies (the agencies), in consultation with state financial regulators, have issued a revised interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications. The revised statement also provides the agencies' views on consumer protection considerations.

The revised statement—

  • Clarifies the interaction between the interagency statement issued on March 22, 2020, and the temporary relief provided by Section 4013 of the CARES Act signed into law on March 27, 2020. Section 4013 allows financial institutions to suspend the requirements to classify certain loan modifications as troubled debt restructurings (TDRs).
  • Provides supervisory interpretations on past due and nonaccrual regulatory reporting of loan modification programs and regulatory capital.

The agencies encourage financial institutions to work with borrowers and will not criticize institutions for doing so in a safe-and-sound manner. 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 agencies' examiners will exercise judgment in reviewing loan modifications, including TDRs, and will not automatically adversely risk rate credits that are affected by COVID-19, 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.

The FDIC issued FIL-36-2020 repeating the information in the joint press release, and noting that it has moved its FIL-22-2020, dated March 22, 2020, to inactive status.

04/08/2020

OCC supports FinCEN’s responses to COVID-19

Bulletin 2020-34 has been issued by the OCC in support of FinCEN’s regulatory relief and risk-based approach for financial institution compliance to COVID-19. The FinCEN BSA Notice provides for certain regulatory relief under the risk-based approach to BSA compliance, including exempting from beneficial ownership requirements new loans extended to existing customers under the CARES Act Paycheck Protection Program (under certain conditions). The OCC supports this approach and encourages all banks to follow a risk-based approach to managing their BSA compliance programs. When evaluating a bank’s BSA compliance program, the OCC will consider the actions taken by banks to protect and assist employees, customers, and others in response to the COVID-19 pandemic, including any reasonable delays in BSA report filings, beneficial ownership verification or re-verification requirements, and other risk management processes. Banks are encouraged to contact their examiners if they anticipate delays.

04/08/2020

SEC publishes risk alerts regarding inspections

The SEC office of Compliance Inspections and Examinations (OCIE) has issued two risk alerts: Examinations that Focus on Compliance with Regulation Best Interest and Examinations that Focus on Compliance with Form CRS. These risk alerts provide broker-dealers and investment advisers with advance information about the expected scope and content of the initial examinations for compliance with Regulation Best Interest and Form CRS. Regulation Best Interest and Form CRS are key components of a broader package of rules and interpretations, adopted contemporaneously on June 5, 2019, to enhance the quality and transparency of retail investors’ relationships with broker-dealers and investment advisers. The compliance date for Regulation Best Interest and Form CRS is June 30, 2020.

04/08/2020

Treasury has updated its PPP FAQs

The Treasury Department has updated its FAQ document on Paycheck Protection Program Loans. Participating banks should "bookmark" that page and check it regularly for updates.

The changes to the FAQs as of April 6 provide these clarifications:

  1. That lenders may rely on borrower certifications as to the applicability of affiliation rules (question 4).
  2. That lenders do not need to re-verify beneficial ownership information for existing customers. (If participating depository institutions have not yet collected beneficial ownership information on an existing customer, they are not required to do so when that customer applies for PPP loans, unless the lender's risk-based BSA compliance program indicates otherwise.) (question 18)
  3. How payroll is defined under the CARES Act, including the calculation of non-cash benefits and coverage of paid leave. (Various questions)
  4. Methods for determining payroll to calculate maximum loan amounts. (various questions)
  5. That lenders who processed applications based on the April 2 interim final rule may rely on the laws, rules and guidance available at the time. (question 17)

Also, the SBA has approved and made available a promissory note that can be used for PPP loans. The agency has also established a new lender gateway at connect.sba.gov to be used for submitting loan authorization requests. For updated lender information on the SBA's Paycheck Protection Program, access the Lender Forms and Guidance section of its Paycheck Protection Program webpage.

04/08/2020

CFPB tips for older adults and caregivers on avoiding scams during quarantine

The CFPB has posted a blog article, "Avoid scams while finding help during quarantine," offering advice to older individuals and their caregivers on how to protect themselves or their clients from scammers who are taking advantage of the added vulnerabilities older adults are exposed to during the COVID-19 pandemic. One of the latest scams involves scammers who offer to help with errands, and run off with the money.

The article also offered suggestions to those entrusted to manage someone else's money.

04/08/2020

G.19 consumer credit

The Federal Reserve has posted February 2020 G.19 Consumer Credit data. In February, consumer credit increased at a seasonally adjusted annual rate of 6-1/2 percent. Revolving credit increased at a 4-1/2 percent annual rate, while nonrevolving credit increased at a 7 percent annual rate.

04/07/2020

PPP information for lenders

The SBA has published Form 3506, which non-SBA lenders must submit to receive delegated authority to issue 7(a) loans under the Paycheck Protection Program. Completed forms should be submitted via email to delegatedauthority@sba.gov.

During the weekend, the SBA issued an FAQ confirming that faith-based organizations (including churches, mosques, synagogues and other houses of worship) may apply for PPP loans. Treasury also issued an FAQ document on the PPP, which will be updated from time to time, and guidance on applicable PPP affiliation rules.

04/07/2020

Russian white supremacist group and leaders designated

The State Department announced yesterday the designation of Russian Imperial Movement, or RIM, and members of its leadership as specially designated global terrorists – the first time in the history that the department has designated a racially or ethnically motivated terrorist group.

Coordinator for Counterterrorism Ambassador Nathan Sales said that RIM is a "terrorist group that provides paramilitary-style training to neo-Nazis and white supremacists, and it plays a prominent role in trying to rally likeminded Europeans and Americans into a common front against their perceived enemies." He went on to say "this designation denies RIM and its leaders and its members access to the United States financial system. Any assets that they had in the United States or that are subject to U.S. jurisdiction are now frozen. We think that that’s going to make it substantially more difficult for them to move money throughout the international financial system."

For further identification information, see BankersOnline's OFAC Update

04/07/2020

FBI lists COVID-19 scams

The head of the FBI’s Financial Crimes Section posted a Q&A regarding schemes and tips on how consumers can protect themselves:

  • Why is this pandemic an opportunity for scammers and criminals?
  • What are some of the most common fraud schemes?
    • Government impoersonators
    • Fraudulent cures or medical equipment
    • Work-from-home fraud
    • Investment fraud
  • What potential scams should people be aware of regarding government financial benefits?
  • What is the FBI doing about the scammers?
  • What can people do to protect themselves from scammers?

04/07/2020

Fed soliciting applications for Community Advisory Council membership

The Federal Reserve Board has announced that it is accepting applications for membership on the Community Advisory Council (CAC). The Council was formed in 2015 to advise the Board on issues affecting consumers and communities and complements two of the Board's other advisory councils whose members represent depository institutions — the Federal Advisory Council and the Community Depository Institutions Advisory Council.

The CAC is made up of a diverse group of experts and representatives of consumer and community development organizations and interests, including affordable housing, community and workforce development, small business, and asset and wealth building. CAC members meet semiannually with members of the Board in Washington to provide a range of perspectives on the economic circumstances and financial services needs of consumers and communities, with a particular focus on the concerns of low- and moderate-income consumers and communities. The Board expects to announce the appointment of CAC members in the fall of 2020. Applicants from previous years are encouraged to re-apply in 2020.

04/07/2020

Fed to establish facility for lending to small businesses

The Federal Reserve Board has announced that, to facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program (PPP), the Federal Reserve will establish a facility to provide term financing backed by PPP loans. Additional details will be announced this week.

04/07/2020

Fed encourages participation in SBA and Treasury relief programs

The Federal Reserve Board has issued SR 20-10 to inform supervised financial institutions about several forms of relief available to small businesses affected by COVID-19 as a result of the CARES Act. The Federal Reserve encouraged financial institutions to consider participating in programs administered by the SBA and Treasury. The programs include:

  • The Economic Injury Disaster Loan program under Section 7(b) of the Small Business Act, which provides funds to small businesses to cover economic injury resulting from the disaster, such as a loss of revenue; and
  • The Paycheck Protection Program, which provides loans to encourage certain qualified small businesses to retain employees through the COVID-19 pandemic and includes loan forgiveness subject to certain conditions

The letter includes links to the SBA and Treasury websites on their COVID-19-related programs. Consistent with Federal Reserve statements on institutions working with borrowers affected by COVID-19, Federal Reserve examiners will not criticize supervised institutions that prudently use these programs. Information on the Federal Reserve’s COVID-19 supervisory and regulatory actions, as well as responses to questions from financial institutions, is available on the Board’s public website, which is updated on a regular basis.

04/07/2020

Cantor Fitzgerald pays $3.2M to settle SEC charges

The SEC has reported that Cantor Fitzgerald & Co. has agreed to pay $3.2 million to settle charges for providing the SEC with incomplete and inaccurate securities trading information known as “blue sheet data.” According to the SEC’s order, for almost five years, Cantor Fitzgerald made numerous deficient blue sheet submissions containing missing or inaccurate data for approximately 35 million transactions, largely due to inadequate processes designed to validate the accuracy of its submissions and undetected coding errors. Broker-dealers are required to provide this information, which the SEC uses to carry out its enforcement and regulatory obligations, including investigations of insider trading and other fraudulent activity.

04/07/2020

Temporary reduction of Community Bank Leverage Ratio

The Federal Reserve Board, FDIC and OCC announced yesterday they have issued two interim final rules to provide temporary relief to community banking organizations. The changes implement Section 4012 of the CARES Act, which requires the agencies to temporarily lower the community bank leverage ratio to 8 percent. The two rules will modify the community bank leverage ratio framework so that:

  • Beginning in the second quarter 2020 and until the end of the year, a banking organization that has a leverage ratio of 8 percent or greater and meets certain other criteria may elect to use the community bank leverage ratio framework; and
  • Community banking organizations will have until January 1, 2022, before the community bank leverage ratio requirement is re-established at greater than 9 percent.

Under the interim final rules, the community bank leverage ratio will be 8 percent beginning in the second quarter and for the remainder of calendar year 2020, 8.5 percent for calendar year 2021, and 9 percent thereafter. The interim final rules also maintain a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls no more than 1 percent below the applicable community bank leverage ratio.

The agencies are providing community banking organizations with a clear and gradual transition back to the 9 percent leverage ratio requirement previously established by the agencies. This transition will allow community banking organizations to focus on supporting lending to creditworthy households and businesses given the recent strains on the U.S. economy caused by the coronavirus.

The changes will be effective as of the publication of the rules in the Federal Register and the agencies will accept comments on the interim final rules for 45 days after publication.

04/06/2020

Comment period for revisions to Brokered Deposit Rules extended

The FDIC is extending the public comment period for its Notice of Proposed Rulemaking for brokered deposits by 60 days (from April 10 to June 9, 2020) to provide bankers and other interested parties additional time in light of challenges associated with COVID-19.

04/06/2020

West Virginia bank fails

The FDIC has announced that The First State Bank, Barboursville, West Virginia, was closed on April 3, 2020, by the West Virginia Division of Financial Institutions. The FDIC was named Receiver. MVB Bank, Inc., of Fairmont, West Virginia, acquired all deposit accounts.

The First State Bank had experienced longstanding capital and asset quality issues, operating with financial difficulties since 2015. The bank's December 31, 2019 financial reports indicated capital levels were too low to allow continued operations under federal and state law.

04/06/2020

FDIC CRA compliance exam ratings

The FDIC has issued a list of sixty-seven state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in January 2020. Sixty-three were rated Satisfactory. Congratulations to the four bank that were rated Outstanding (links are to their evaluations):

04/06/2020

FinCEN updates COVID-19 info

FinCEN has posted a notice updating its March 16, 2020 COVID-19 Notice to provide additional information to assist financial institutions in complying with their Bank Secrecy Act (BSA) obligations during the COVID-19 pandemic, and announces a direct contact mechanism for urgent COVID-19-related issues.

FinCEN recognizes financial institutions face challenges related to the COVID-19 pandemic. In addition, FinCEN is committed to promoting the success of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including the need to facilitate expeditious disbursal of CARES Act funds. Accordingly, FinCEN will issue further information, as appropriate, as the CARES Act is implemented and questions arise.

FIN-2020-R001 implementation suspended
FinCEN has suspended implementation of its February 10, 2020, Ruling (FIN-2020-R001) on CTR filing obligations related to transactions of sole proprietorships and entities operating under a DBA name until further notice. Institutions that have already made the necessary changes to implement the Ruling need not revert to prior practice, and may report CTRs in accordance with the suspended ruling. Other institutions should continue to file CTRs involving sole proprietorships and DBAs under the prior practice.

04/06/2020

CFPB OSA annual report

The Bureau has released its annual report about the work of its Office of Servicemember Affairs (OSA) over the past fiscal year to help servicemembers, veterans, and their families achieve financial well-being which has included education, outreach, coordination with other federal and state agencies, and monitoring complaints submitted by servicemembers, veterans, and their families.

04/06/2020

Agencies encourage mortgage services to work with homeowners

The Federal Reserve Board, Conference of State Bank Supervisors, CFPB, FDIC, NCUA and OCC have issued a joint policy statement providing needed regulatory flexibility to enable mortgage servicers to work with struggling consumers affected by the Coronavirus Disease (COVID-19) emergency. The actions announced Friday by the agencies inform servicers of the agencies' flexible supervisory and enforcement approach during the COVID-19 pandemic regarding certain communications to consumers required by the mortgage servicing rules. The policy statement and guidance issued Friday will facilitate mortgage servicers' ability to place consumers in short-term payment forbearance programs such as the one established by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

  • Under the CARES Act, borrowers in a federally backed mortgage loan experiencing a financial hardship due, directly or indirectly, to the COVID-19 pandemic, may request forbearance by making a request to their mortgage servicer and affirming that they are experiencing a financial hardship during the COVID–19 pandemic. In response, servicers must provide a CARES Act forbearance, that allows borrowers to defer their mortgage payments for up to 180-days and possibly longer.
  • The policy statement clarifies that the agencies do not intend to take supervisory or enforcement action against mortgage servicers for delays in sending certain early intervention and loss mitigation notices and taking certain actions relating to loss mitigation set out in the mortgage servicing rules, provided that servicers are making good faith efforts to provide these notices and take these actions within a reasonable time.
  • To further enable short-term payment forbearance programs or short-term repayment plans, mortgage servicers offering these programs or plans will not have to provide an acknowledgement notice within 5 days of receipt of an incomplete application, provided the servicer sends the acknowledgment notice before the end of the forbearance or repayment period.
  • The guidance also reminds servicers that there is existing flexibility in the rules with respect to the content of certain notices.
  • Finally, to assist servicers experiencing high call volumes from consumers seeking help, the policy statement also confirms that the agencies do not intend to take supervisory or enforcement action against mortgage servicers for delays in sending annual escrow statements, provided that servicers are making good faith efforts to provide these statements within a reasonable time.

04/06/2020

HUD COVID-19 funding for Native American communities

HUD Secretary Carson announced on Friday $200 million in Indian Housing Block Grants to American Indian Tribes and Tribally Designated Housing Entities across the country to respond to COVID-19. This funding will be used to help Tribes and TDHEs carry out affordable housing activities to protect the safety and health of their tribal members and communities.

04/06/2020

Temporary rule under FFCRA published

The Wage and Hour Division of the Department of Labor has published [85 FR 19326] temporary regulations to implement public health emergency leave under Title I of the Family and Medical Leave Act (FMLA), and emergency paid sick leave to assist working families facing public health emergencies arising out of Coronavirus Disease 2019 (COVID-19) global pandemic. The leave is created by a time-limited statutory authority established under the Families First Coronavirus Response Act, Public Law 116-127 (FFCRA), and is set to expire on December 31, 2020. The FFCRA and this temporary rule do not affect the FMLA after December 31, 2020. The rule is effective from April 2 through December 31, 2020, and became operational on April 1, 2020.

Gerard Panero will present a BOL Learning Connect webinar, Alternatives to Layoffs During COVID-19, on April 23, 2020.

04/06/2020

Fed delays Payment System Risk policy changes

The Federal Reserve Board has published a notification of delay [85 FR 19077] of the implementation date of changes to part II of the Federal Reserve Policy on Payment System Risk (“PSR policy”) related to procedures for determining the net debit cap and maximum daylight overdraft capacity of a U.S. branch or agency of a foreign banking organization. The original implementation date of April 1, 2020, has been changed to October 1, 2020.

04/06/2020

Fed posts FAQ on elimination of reserve requirements

Federal Reserve Bank Services has posted an FAQ explaining the March 15 elimination of reserve requirements by the Federal Reserve Board as part of its response to the COVID-19 pandemic. Banks can refer to questions 7 through 16 in particular to get information on how the elimination of reserve requirements may impact a bank's compliance program for limiting depositors' transfers and payments from savings and money market deposit accounts.

04/06/2020

COVID-19 info for small business lenders

The FDIC has created a page on its website with Coronavirus (COVID-19) Information for Small Business Lenders.

The FDIC is working with the SBA to help ensure that FDIC-supervised banks have the information they need to become SBA-certified lenders and start making loans to small businesses through the SBA’s recently launched Paycheck Protection Program (PPP).

One of the resources listing on the page is an FAQ on the SBA's Paycheck Protection Program, which was most recently updated on April 5, 2020. Lenders should return to the FAQ for updates, because Treasury and the SBA continue to fine-tune aspects of the program.

04/03/2020

Agencies extend comment period on Volcker Rule modifications

The OCC has announced that the Fed, CFTC, FDIC, OCC, and SEC have extended the comment period on their proposal to modify the Volcker Rule's general prohibition on banking entities investing in or sponsoring hedge funds or private equity funds ("covered funds") from April 1 to May 1, 2020.

04/03/2020

SBA programs for small business relief

The OCC has issued Bulletin 2020-31 encouraging banks to consider providing loans under available SBA relief programs to small businesses.

  • The Paycheck Protection Program (PPP), an expansion of the SBA’s 7(a) loan program, allows borrowers to obtain loans that are fully guaranteed by the SBA and that may be fully or partially forgiven if certain conditions are satisfied. The PPP is available beginning April 3, 2020.
  • The Economic Injury Disaster Loan and Loan Advance Program expands the SBA’s existing disaster assistance loan program and waives certain requirements. Economic Injury Disaster Loans can provide a small business with a working capital loan of up to $2 million. In addition, small businesses may request a loan advance from the SBA of up to $10,000, which does not have to be repaid.
  • The Debt Relief Program will pay the principal, interest, and fees for six months on existing 7(a) loans and new 7(a) loans originated before September 27, 2020.

04/03/2020

IRS warning of COVID-19 related scams

The Internal Revenue Service yesterday urged taxpayers to be on the lookout for a surge of calls and email phishing attempts about the Coronavirus, or COVID-19. These contacts can lead to tax-related fraud and identity theft. "We urge people to take extra care during this period. The IRS isn't going to call you asking to verify or provide your financial information so you can get an economic impact payment or your refund faster," said IRS Commissioner Chuck Rettig. "That also applies to surprise emails that appear to be coming from the IRS. Remember, don't open them or click on attachments or links. Go to IRS.gov for the most up-to-date information." Taxpayers should watch not only for emails but also for text messages, websites and social media attempts that request money or personal information.

04/03/2020

SBA releases interim final rule on Paycheck Protection Program

The U.S. Small Business Administration has released an interim final rule to implement sections 1102 and 1106 of the CARES Act, which temporarily adds a new product, the "Paycheck Protection Program," to the SBA's 7(a) Loan Program. It will be effective on publication, and SBA-approved lenders can start accepting applications under the program April 3, 2020.

04/03/2020

$3B for COVID-19 relief from HUD

HUD is making available $3.064 billion through its Community Development Block Grant, Emergency Solutions Grant, and Housing Opportunities for Persons With AIDS programs. After the President signed the CARES Act, Secretary Ben Carson directed HUD to immediately begin allocating $3.064 billion to help America’s low-income families and most vulnerable citizens. These funds will be awarded quickly by using existing grant formulas; they will also be accompanied by new guidance that cuts red tape so grantees can quickly help their communities.

04/02/2020

OCC publishes March proposal to amend licensing rules

The OCC has published at 85 FR 18728 its March 2020 proposal (see our Top Story) to amend its rules relating to policies and procedures for corporate activities and transactions involving national banks and Federal savings associations to update and clarify the policies and procedures, eliminate unnecessary requirements consistent with safety and soundness, and make other technical and conforming changes. Comments will be accepted through May 4, 2020.

04/02/2020

Temporary change to Fed's supplementary leverage ratio rule

To ease strains in the Treasury market resulting from the coronavirus and increase banking organizations' ability to provide credit to households and businesses, the Federal Reserve Board announced yesterday a temporary change to its supplementary leverage ratio rule. The change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies, and will be in effect until March 31, 2021.

The supplementary leverage ratio generally applies to financial institutions with more than $250 billion in total consolidated assets. It requires them to hold a minimum ratio of 3 percent, measured against their total leverage exposure, with more stringent requirements for the largest and most systemic financial institutions. The change would temporarily decrease tier 1 capital requirements of holding companies by approximately 2 percent in aggregate.

The change will be effective immediately and the public comment period will be 45 days.

04/02/2020

OCC CRA evaluations released

The OCC has released a list of Community Reinvestment Act performance evaluations that were made public in March.. Of the 28 evaluations made public this month, 22 were rated satisfactory and the following six were rated outstanding (links are to the evaluation reports):

04/02/2020

NCUA bans three from industry

The National Credit Union Administration has reported it issued one prohibition notice and two prohibition orders in March. The orders prohibit these individuals from participating in the affairs of any federally insured financial institution.

  • Stephanie Joyce-Benne Beauford, a former employee of Michigan First Credit Union in Lathrup Village, Michigan
  • Jennifer N. Zanassi and Melissa M. Mosher, former institution-affiliated parties of Western Heritage Federal Credit Union in Alliance, Nebraska

04/02/2020

CFPB settles with short-term lender

The CFPB has announced a settlement with Cottonwood Financial, Ltd., which does business under the name Cash Store. Cash Store is based in Irving, Texas, and owns and operates roughly 340 retail lending outlets in Idaho, Illinois, Michigan, New Mexico, Texas, Utah, and Wisconsin. The Bureau found that in the course of marketing, servicing, and collecting on high-interest payday, auto-title, and unsecured consumer-installment loans Cash Store violated the Consumer Financial Protection, Fair Credit Reporting, and Truth in Lending Acts. The consent order requires Cash Store to pay over $1.3 million in redress and penalties.

04/02/2020

CFPB COVID-19 credit reporting guidance

The Consumer Financial Protection Bureau yesterday released a policy statement outlining the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic. In response to the pandemic, many lenders are being flexible when it comes to consumers’ making payments. The Bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.

In addition, in response to staffing and resources constraints on lenders and credit bureaus due to the pandemic, the Bureau’s statement also provides flexibility for lenders and credit bureaus in the time they take to investigate disputes. The Bureau specifically states that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible.

04/01/2020

Employee Retention Credit program launched

Treasury and the IRS have launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Qualifying employers must fall into one of two categories:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter
  2. The employer’s gross receipts are below 50 percent of the comparable quarter in 2019. Once the employer’s gross receipts go above 80 percent of a comparable quarter in 2019 they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

Updates on the implementation of the credit, a fact sheet and other information can be found on the IRS Coronavirus Tax Relief page.

04/01/2020

More tax and reporting deadlines delayed

Treasury has announced it is delaying tax payment due dates for wine, beer, distilled spirits, tobacco products, firearms, and ammunition excise taxes, to provide flexibility for businesses that have been negatively affected by COVID-19. The postponement of due dates applies to any tax payment or operational report with an original due date falling on or after March 1, 2020, through July 1, 2020. Interest and penalties will not apply when payments are made within 90 days of the original due date. Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB) will re-evaluate the terms of this immediate relief as circumstances warrant.

04/01/2020

SEC to hold COVID-19 video conference

The Securities and Exchange Commission Small Business Capital Formation Advisory Committee will host a meeting via video conference on April 2, 2020, in response to the challenges small businesses are facing in coping with COVID-19. The meeting will take place from noon to 1:30 p.m. ET. Members of the public may watch the live webcast of the meeting on the Committee’s website.

04/01/2020

FATF reports on U.S. progress in tackling ML

The Financial Action Task Force has issued a report on the United States' progress in strengthening measures to tackle money laundering and terrorist financing.

The United States has been in an enhanced follow-up process following the adoption of its mutual evaluation in 2016. In line with the FATF Procedures for mutual evaluations, the country has reported back to the FATF on the actions it has taken since then. To reflect the United States' progress, the FATF has changed its rating of the country on Recommendation 10 (Customer Due Diligence) from Partially Compliant to Largely Compliant

The report also looks at whether the United States' measures meet the requirements of FATF Recommendations that have changed since the 2016 mutual evaluation. The FATF agreed to maintain the rating of Compliant for Recommendation 2 (National cooperation and coordination), Recommendation 5 (Terrorist financing offense) and Recommendation 21 (Tipping-off and confidentiality). The FATF also maintained the rating of Largely Compliant for Recommendation 7 (Targeted financial sanctions related to proliferation), Recommendation 8 (Non-profit organizations) Recommendation 15 (New technologies) and Recommendation 18 (Internal controls and foreign branches and subsidiaries).

The United States is now compliant on 9 of the 40 Recommendations and largely compliant on 22 of them. It remains partially compliant on 5 of the 40 Recommendations and not compliant on 4 of them. The United States remains in enhanced follow-up and will report back to the FATF on progress to strengthen its implementation of Anti-Money Laundering / Countering the Financing of Terrorism measures.

04/01/2020

CFPB Guide to coronavirus mortgage relief options

04/01/2020

Comment period for sellers/servicers eligibility rules

A 30-day extension to the comment period for the proposed update to the minimum financial eligibility requirements for Fannie Mae and Freddie Mac Seller/Servicers has been announced by the Federal Housing Finance Agency (FHFA). Comments will now be accepted through April 30. 2020.

04/01/2020

FEMA to suspend communities in CT, MD, NJ and RI

FEMA has published a notice at 85 FR 18129 in today's Federal Register listing communities in Connecticut, Maryland, New Jersey and Rhode Island that are scheduled for suspension on April 3, 2020, from the National Flood Insurance Program due to noncompliance with the floodplain management requirements of the program. The affected communities are:

  • CT: North Stonington, Stonington, and Voluntown
  • MD: Barton, Cumberland, Frostburg, Lonaconing, Midland, and Westernport
  • NJ: Belleville, Bloomfield, Caldwell, Cedar Grove, East Orange, Essex Fells, Glen Ridge, Newark, North Caldwell, Nutley, Orange Township, Roseland, and Verona
  • RI: Charlestown, Coventry, Exeter, Hopkinton, Narragansett, Narragansett Indian Tribe, North Kingstown, Richmond, South Kingstown, West Greenwich, and Westerly

If FEMA receives documentation that a listed community has adopted the required floodplain management measures before April 3, the community won't be suspended. Information on the current participation status of a community can be found in FEMA's Community Status Book.

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