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Top Stories

07/30/2021

Federal Reserve 2020 Annual Report

The Board of Governors of the Federal Reserve System have released their 2020 Annual Report, which covers the calendar-year operations and activities carried out by the Board in its five key functional areas: (1) monetary policy, (2) financial stability, (3) supervision and regulation, (4) payment system and Reserve Bank oversight, and (5) consumer and community affairs. The appendix of the report contains additional information on Federal Reserve leadership, policy actions, budgets, updated historical data, and other supporting activities.

07/30/2021

$2.3M in refunds to victims of debt relief schemes

The Federal Trade Commission is sending refund checks totaling nearly $2.3 million to people who lost money to credit card debt relief schemes. A complaint was filed by the FTC in July 2019 alleging that Educare Centre Services, Inc. and Tripletel, Inc. made false and unfounded promises that they would significantly reduce the interest rates on consumers’ credit cards, and also promised a 100 percent money-back guarantee if the promised rate reduction failed to materialize or if consumers were otherwise dissatisfied.

In December 2019, the FTC and Ohio amended the complaint and added Voice over Internet Protocol (VoIP) service provider Globex Telecom, Inc. as a defendant. The amended complaint alleged that Globex knowingly provided the Educare scheme with the means to make calls to U.S. consumers, including illegal robocalls, to market Educare’s phony credit card interest rate reduction services.

The FTC and Ohio filed a separate complaint in 2019 that alleged that Madera Merchant Services and B&P Enterprises generated and processed remotely created payment orders or checks that allowed dishonest merchants to withdraw money from their victims’ bank accounts. Madera and B&P Enterprises supported many unscrupulous merchants, including Educare’s deceptive telemarketing scheme.

As a result of the settlements reached with these defendants, the FTC is mailing 7,786 refund checks averaging about $293 each.

07/30/2021

Paid sick and family leave tax credits

The IRS has updated its frequently asked questions (FAQs) regarding the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARP). The updates clarify that eligible employers can claim the credits for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the immunization.

This new reason for paid sick or family leave also applies to the comparable credits for self-employed individuals.

07/30/2021

Libor transition capital rule FAQs

The OCC has issued Bulletin 2021-32 announcing frequently asked questions (FAQs). concerning the regulatory capital treatment of capital instruments whose terms reference the London Interbank Offered Rate (Libor). The Board of Governors of the Federal Reserve System (SR 21-12) and the Federal Deposit Insurance Corporation (FIL-54-2021) are issuing similar FAQs.

There are two FAQs on the topic, addressing:

  • Redemption or reissuance of regulatory capital instruments
  • Regulatory capital instruments with changing distribution rates

07/30/2021

FTC settles auto group case

The Federal Trade Commission has announced it has an agreement with Richard Berry, the owner and manager of a group of bankrupt auto dealerships in Arizona and New Mexico, to resolve charges that he and the dealerships deceived consumers and falsified information on vehicle financing applications. Many of the affected consumers were members of the Navajo Nation.

A complaint filed by the FTC in 2018 alleged that the defendants falsified consumers’ income and down payment information to get vehicles financed and engaged in unlawful advertising. In an earlier ruling in the case, the judge found that the defendants violated the Truth in Lending Act (TILA) and Consumer Leasing Act (CLA) by failing to disclose legally required information in their advertisements.

If approved by the district court, the present settlement against Berry, would result in a $450,000 payment to the FTC and conclude the FTC’s case. It would also prohibit Berry from misrepresenting information in documents associated with a consumer’s purchase, financing, or leasing of a motor vehicle, and misrepresenting the costs or any other material fact related to vehicle financing. The proposed order also requires Berry to provide consumers sufficient time to review and obtain a copy of the relevant vehicle financing documents and prohibits him from violating the TILA and CLA.

07/30/2021

NSMO data updated

The FHFA and CFPB have published updated loan-level data for public use collected through the National Survey of Mortgage Originations (NSMO). The data provide insights into borrowers' experiences obtaining residential mortgages.

Key highlights of the data include:

  • The percent of survey respondents who reported not being concerned about qualifying for a mortgage during the application process increased somewhat from 2018 to 2019 (from 48 to 51 percent for home purchase mortgages and 57 to 66 percent for refinances.
  • The percent of survey respondents who reported a paperless online mortgage process being important in choosing the mortgage lender/broker remained relatively high and unchanged from 2018 to 2019 (40 percent for home purchase mortgages and 44 percent for refinances.
  • The percent of survey respondents who reported applying for a mortgage through a mortgage broker increased from 2018 to 2019 (from 42 to 46 percent for home purchase mortgages and 30 to 38 percent for refinances). On the other hand, the percent of survey respondents who applied directly through a bank or credit union decreased from 2018 to 2019 (from 54 to 49 for home purchase mortgages and 67 to 61 for refinances.

07/29/2021

FHFA announces multifamily tenant protections

The Federal Housing Finance Agency announced yesterday that tenants of multifamily properties with mortgages backed by Fannie Mae or Freddie Mac who are subject to eviction for nonpayment of rent must be given 30 days’ notice to vacate before the tenant can be required to leave the unit. This requirement applies to all Enterprise-backed multifamily properties, regardless of whether the loan is in forbearance.

FHFA is working closely with the Enterprises to communicate the 30-day notice requirement to landlords of and tenants living in Enterprise-backed properties.

FHFA also said that Emergency Rental Assistance funds made available by federal legislation are available to tenants who are behind on rent or continuing to experience hardship due to the COVID-19 pandemic, and tenants can learn more about Emergency Rental Assistance programs by visiting the Consumer Financial Protection Bureau’s online Rental Assistance Finder, described in another Top Story today.

07/29/2021

OFAC sanctions Syrian regime prisons, officials and armed group

On Wednesday, The Treasury Department announced that OFAC had sanctioned eight Syrian prisons run by the Assad regime’s intelligence apparatus that have been sites of human rights abuses against political prisoners and other detainees. OFAC also designated five senior security officials of regime entities that control these detention facilities.

OFAC also sanctioned Syrian armed group Ahrar al-Sharqiya, which operates in northern Syria, and two of the group's leaders, for abuses against civilians.

For identification information on the designated individuals and entities, see our BankersOnline OFAC Update for July 28, 2021.

07/29/2021

Update on SBA PPP forgiveness application portal

The Small Business Administration formally announced the launch of its streamlined application portal to allow borrowers with Paycheck Protection Program loans $150,000 or less through participating lenders to apply for forgiveness directly through the SBA. This new change will help rush relief to over 6.5 million smallest of small businesses. The new forgiveness platform will begin accepting applications directly from borrowers August 4, 2021.

Lenders are required to opt in to this program. In addition to the technology platform, the SBA is setting up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. Borrowers that need assistance or have questions should call (877) 552-2692, Monday – Friday, 8 a.m. – 8 p.m. (Eastern Time).

[Earlier story]

07/29/2021

Statements from the Federal Open Market Committee

The Federal Reserve has issued its latest Federal Open Market Committee Statement. which states the Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. It also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.

The FOMC also announced the establishment of two standing repurchase agreement (repo) facilities—a domestic standing repo facility (SRF) and a repo facility for foreign and international monetary authorities (FIMA repo facility). These facilities will serve as backstops in money markets to support the effective implementation of monetary policy and smooth market functioning.

07/29/2021

IRS to send 1.5 million more refunds

The IRS has announced that another 1.5 million taxpayers will receive refunds averaging more than $1,600 as it continues to adjust unemployment compensation from previously filed income tax returns.

The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000. Since May, the IRS has issued over 8.7 million unemployment compensation refunds totaling over $10 billion. The IRS will continue reviewing and adjusting tax returns in this category this summer.

Payments by direct deposit in this fourth round of refunds began yesterday (July 28) and refunds by paper check will begin tomorrow (July 30).

07/29/2021

CFPB releases online tool for renters and landlords

The Consumer Financial Protection Bureau has released an online tool to help renters and landlords impacted by the pandemic easily find and apply for payment assistance for rent, utilities and other expenses. The Rental Assistance Finder connects renters and landlords with the state and local programs that are distributing billions of dollars in federal assistance nationwide to help renters stay housed during the pandemic.

07/28/2021

Credit apps recover from pre-COVID levels

The CFPB yesterday reported it has published an issue brief showing that consumer applications for auto loans, new mortgages and revolving credit cards had mostly returned to pre-pandemic levels by May 2021.

Prime and near-prime consumers are driving this recovery as applications remain down from borrowers with subprime and deep subprime for all types of credit and, for borrowers with superprime credit scores, applications are down for all types of credit but mortgages. The report also provides a state-by-state analysis of the change in credit applications for auto loans, new mortgages, and revolving credit cards and shows wide geographic variability in the demand for auto loans. Key findings in the brief include:

  • Auto loan inquiries saw a drop of 52 percent by the end of March 2020 and returned to their usual pre-pandemic trend by January 2021.
  • New mortgage credit inquiries saw a smaller drop in March 2020 compared to other types of inquiries and then surged. Subsequently, inquiries have exceeded their usual, seasonally adjusted volume by 10 to 30 percent, reflecting the unusually high activity in the mortgage market throughout the pandemic.
  • Revolving credit card inquiries took the longest to recover from the initial March 2020 decline, until March 2021, when the level of these inquiries reached back to their usual levels.
  • Consumers with deep subprime credit scores showed the largest decline in auto loan inquiries compared to prior years, followed by inquiries from consumers with subprime credit scores. These consumers also showed declines in new mortgage and revolving credit card inquiries.
  • Changes in auto loan and new mortgage applications were quite varied across the states while changes in credit card applications were generally uniform.

07/28/2021

SVOG programs awarded $7.5M+

The SBA has announced it has reached a new milestone with the awarding of over $7.5 million in Shuttered Venue Operators Grants (SVOGs) to more than 10,000 hard-hit live entertainment small businesses, nonprofits, and venues. The SVOG program is designed to assist in getting the nation’s cultural institutions, which are critical to the economy and were among the first to shutter, back on track. The SVOG portal remains open and funding is still available for all eligible applicants. SBA’s Office of Disaster Assistance Customer Service Center is available from 8 a.m. to 8 p.m. ET to provide technical assistance with the SVOG application portal and can be reached at 1-800-659-2955 or, for persons who are hearing-impaired, 1-800-877-8339.

07/28/2021

House prices up 18 percent from May 2020

House prices rose nationwide in May, up 1.7 percent from the previous month, according to the latest Federal Housing Finance Agency House Price Index. House prices rose 18.0 percent from May 2020 to May 2021. The previously reported 1.8 percent price change for April 2021 was unrevised.

For the nine census divisions, seasonally adjusted monthly house price changes from April 2021 to May 2021 ranged from +1.0 percent in the Middle Atlantic division to +2.4 percent in the Pacific division. The 12-month changes ranged from +15.4 percent in the West South Central division to +23.2 percent in the Mountain division.

07/28/2021

OCC joins 'greening' group

The OCC has announced its membership in the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) and the appointment of Darrin Benhart as its Climate Change Risk Officer.

As the primary prudential regulator of approximately 70 percent of the assets in the U.S. commercial banking system, the OCC is joining NGFS to collaborate with central banks and peer supervisors to share best practices and contribute to the development of climate risk management in the financial sector. Mr. Benhart’s appointment is part of the agency’s holistic efforts to ensure the federal banking system proactively manages the financial risks of climate change and its efforts to improve its energy efficiency and reduce its overall carbon footprint, which align with broader efforts across the federal government. This position will report to the Senior Deputy Comptroller for Supervision Risk and Analysis.

07/28/2021

IRS pushing PIN program as tax ID theft protection

The IRS Security Summit partners have called on tax professionals to increase efforts to inform clients about the Identity Protection PIN Opt-In Program that can protect against tax-related identity theft.

The IRS, state tax agencies and the nation's tax industry working together as the Security Summit are requesting assistance from tax professionals to spread the word to clients that the IP PIN is now available to anyone who can verify their identity. "An Identity Protection PIN prevents someone else from filing a tax return using your Social Security number," said IRS Commissioner Chuck Rettig. "We've now made the IP PIN available to anyone who can verify their identity. This is a free way for taxpayers to protect themselves, but we need the help of tax professionals to make sure more people know about it."

For more info see IRS Publication 5367, IP PIN Opt-In Program for Taxpayers.

07/28/2021

SBA to offer direct PPP forgiveness applications

Politico News reports the Small Business Administration, in an effort to wind down the popular Paycheck Protection Program that has suffered bureaucratic snags and notorious fraud cases, will announce today a new initiative aimed at encouraging borrowers with loans of $150,000 or less (more than 90 percent of the program) to apply for loan forgiveness. The SBA, reports Politico, has notified banks that the agency is setting up its own online, direct-access forgiveness platform.

Applications will be accepted from small borrowers directly via an easy-to-use portal. While lenders will still be involved in deciding whether individual PPP loans should be forgiven, the SBA will take on much of the time and effort that banks currently have to invest in the process. SBA Associate Administrator Patrick Kelley, in a webinar on Tuesday about the agency's plan, urged lenders to opt in to the new platform, saying "give it over to the government and get your life back."

The SBA reportedly plans to launch the program as a pilot today and have it go live in about a week.

07/27/2021

Bureau flowchart on MLA applicability

In observance of Military Consumer Month, the CFPB's Office of Servicemember Affairs has released an updated Military Lending Act—Applicability flow chart to help servicemembers better understand their rights under the MLA.

07/27/2021

Bureau advisory on SCRA rights

The CFPB has posted a Consumer Advisory, "Know Your Rights Under the Servicemember Civil Relief Act (SCRA)," with an explanation of the protections afforded servicemembers under the Act. The Advisory notes that the SCRA was amended this year to allow qualified individuals the ability to terminate residential and vehicle lease agreements electronically by sending a notice of termination along with a copy of their orders – or a letter from their commanding officer via email or through a communications portal designated by the lender or agent.

The Advisory advises servicemembers to check with a military legal assistance attorney or private legal counsel before signing any waiver of SCRA rights, and suggests options available to servicemembers who believe their SCRA rights have been violated. There are also links to several resources that can help servicemembers better understand the full range of legal protections available under the SCRA.

07/27/2021

Call Report revisions proposed

FDIC FIL-53-2021, issued yesterday, reports that the FDIC, FRB, and OCC are requesting comment on a proposal to revise and extend the Consolidated Reports of Condition and Income (Call Reports). The proposed changes would clarify instructions for reporting of deferred tax assets (DTAs) consistent with a proposed rule on tax allocation agreements (see FIL-29-2021) and a new item related to the final rule on the standardized approach for counterparty credit risk (see FIL-74-2019).

Comments must be submitted on or before September 20, 2021. The proposed changes would be effective with the December 31, 2021, Call Report.

07/26/2021

Additional COVID recovery options for homeowners

The Federal Housing Authority on Friday announced additional streamlined COVID-19 recovery options to help homeowners with FHA-insured mortgages who have been financially impacted by the COVID-19 pandemic bring their mortgage current and remain in their homes. The simplified COVID-19 Recovery waterfall allows mortgage servicers to offer eligible homeowners who cannot resume making their mortgage payments a reduction in the principal and interest portion of their monthly payments. The simple two-step waterfall options intended for properties that are occupied as the homeowner’s primary residence are:

  • COVID-19 Recovery Standalone Partial Claim: for homeowners who can resume making their current mortgage payments, the COVID-19 Recovery Standalone Partial Claim allows mortgage payment arrearages to be placed in a zero-interest subordinate lien against the property that is repaid when the mortgage terminates, usually when the homeowner refinances or sells the home.
  • COVID-19 Recovery Modification: for homeowners who cannot resume making their current monthly mortgage payments, the COVID-19 Recovery Modification extends the term of the mortgage to 360 months at a fixed rate and targets reducing the borrower’s monthly principal and interest portion of their monthly mortgage payment. The COVID-19 Recovery Modification must include a Partial Claim if the homeowner has Partial Claim funds available.

The changes announced on Friday work in tandem with the pre-waterfall FHA COVID-19 Advance Loan Modification (COVID-19 ALM) announced on June 25, 2021. The COVID-19 ALM requires mortgage servicers to review their FHA mortgage servicing portfolio and offer the COVID-19 ALM to eligible homeowners. Homeowners who choose to accept the COVID-19 ALM need to only review and sign and return the mortgage modification documents sent to them by their mortgage servicer.

07/26/2021

Nacha opt-in program for returning bogus unemployment benefits

Nacha has created an Opt-In Program to better facilitate the return and recovery of potentially fraudulent unemployment benefits originally paid by ACH credits. The program is designed to help improve the recovery of funds that may have been disbursed to inappropriate parties. The Opt-In Program is beginning with two participating Originating Depository Financial Institutions (ODFIs), participating on behalf of eight states: Florida, Idaho, Kansas, Minnesota, Montana, Nebraska, Utah and Wisconsin. Receiving Depository Financial Institutions (RDFIs) do not need to opt in to return funds to the participating states.

  • An RDFI can return a partial or full amount to a state unemployment agency via a "Program Return."
  • Program Returns are treated as an ODFI Request for Return under the Nacha Rules, in which the ODFI indemnifies the RDFI for the return of funds.
  • A Program Return may be sent via a new, forward CCD Credit Entry, using a data format specified by the opt-in rules. Such a CCD credit can be for the full amount or for a partial amount of the original ACH credit.
  • An RDFI may also send the full amount of the original ACH credit via an R06 return if the participating ODFI has indicated acceptance.
  • Program Returns, in accordance with program rules, may be sent for two years after the settlement date of the original ACH credit.

For additional information and program documents, visit Nacha's Unemployment Benefits Return Opt-In Program webpage.

07/26/2021

Payoneer settles with OFAC

OFAC has announced a settlement with Payoneer Inc., a publicly traded New York-based online money transmitter and provider of prepaid access. Payoneer agreed to remit $1,400,301.40 to settle its potential civil liability for 2,260 apparent violations of multiple sanctions programs. Payoneer processed payments for parties located in the Crimea region of Ukraine, Iran, Sudan, and Syria, and also processed payments on behalf of sanctioned persons on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”).

According to OFAC's Enforcement Release, Payoneer’s sanctions compliance program deficiencies at the relevant times—including with respect to screening, testing, auditing, and transaction review procedures—enabled persons in these jurisdictions and regions and on the SDN List to engage in approximately $802,117.36 worth of transactions. The settlement amount reflects OFAC’s determination that 2,241 of Payoneer’s apparent violations were not voluntarily self-disclosed, 19 were voluntarily self-disclosed, and all transactions were non-egregious.

07/26/2021

Weather damage relief for areas of Michigan

FDIC FIL-52-2021, issued Friday, announced steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Michigan affected by severe storms, flooding, and tornadoes June 25–26, 2021. The FDIC is encouraging banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by the severe weather. Banks that extend repayment terms, restructure existing loans, or ease terms for new loans in a manner consistent with sound banking practices can contribute to the health of the local community and serve the long-term interests of the lending institution. Banks may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.

07/23/2021

NCUA to propose simplified capital adequacy measure

The National Credit Union Administration Board has approved a proposed rule that would create a simplified measure of capital adequacy for complex credit unions, and a request for information on the use of digital assets and related technologies by federally insured credit unions.

07/23/2021

Fraudulent websites use Walmart logo

The U.S. Attorney’s Office for the District of Maryland has seized fraudulent websites that contained numerous uses of the legitimate Walmart trademarked logo and appeared to mimic a legitimate Walmart website. The fraudulent websites allegedly offer a number of drugs for sale for the experimental and unapproved treatment or prevention of COVID-19. Instead, the domains were allegedly used to collect the personal information of individuals visiting the sites in order to use their information for nefarious purposes, including fraud, phishing attacks and/or deployment of malware.

07/23/2021

OFAC sanctions Cuban defense minister and special forces unit

Yesterday, OFAC sanctioned one Cuban individual and one Cuban entity, targeting the Cuban Minister of Defense, Alvaro Lopez Miera, and the Brigada Especial Nacional del Ministerio del Interior of the Cuban Ministry of the Interior in connection with the repression of peaceful, pro-democratic protests in Cuba that began on July 11.

For identification information, see BankersOnline's July 22, 2021, OFAC Update.

07/23/2021

Fed increases interest rate on reserve balances

The Federal Reserve Board has published at 86 FR 38905 in today's Federal Register an amendment to its Regulation D to increase the rate of interest paid on balances maintained to satisfy reserve balance requirements (“IORR”) and the rate of interest paid on excess balances (“IOER”) maintained at Federal Reserve Banks by or on behalf of eligible institutions.

The final amendments, which are effective today, specify that IORR is 0.15 percent and IOER is 0.15 percent, a 0.05 percentage point increase from their prior levels. The amendments are intended to enhance the role of IORR and IOER in maintaining the Federal funds rate in the target range established by the Federal Open Market Committee.

07/23/2021

$27M for HUD AIDS program

HUD has announced more than $27 million in assistance to thousands of low-income persons living with HIV/AIDS and their families over a three-year period. The funding announced today is offered through HUD’s Housing Opportunities for Persons with AIDS Program (HOPWA) and will renew HUD's support of 31 local programs. These grants provide a combination of housing assistance and supportive services for this vulnerable population.

07/23/2021

If You See Something, Say Something campaign materials

Homeland Security's “If you See Something, Say Something “ campaign is committed to educating the American public about how to recognize and report the signs of suspicious activity. Campaign materials are now available in ten additional languages: Arabic, Chinese (Simplified), French, Haitian, Korean, Portuguese, Russian, Spanish, Thai, and Vietnamese. They can be downloaded from the DHS website.

“If You See Something, Say Something” is a national campaign that raises public awareness about the indicators of terrorism, terrorism-related crime, and domestic violent extremism, as well as the importance of reporting suspicious activity to state and local law enforcement. The campaign regularly works with state, local, tribal and territorial partners across the country to distribute public awareness messaging throughout local communities, organizations, and on social media.

07/22/2021

Agencies extend review period on credit risk retention

The OCC, Federal Reserve, FDIC, FHFA, SEC, and HUD have published [86 FR 38607] a notice in today's Federal Register of the extension of the period for the review, and publication of determination of the review, of the definition of qualified residential mortgage; the community-focused residential mortgage exemption; and the exemption for qualifying three-to-four unit residential mortgage loans, in each case as currently set forth in the Credit Risk Retention Regulations (12 CFR Parts 43, 244, 373, and 1234; 17 CFR 246; and 24 CFR 267) as adopted by the agencies.

The period for completion of the review of the subject residential mortgage provisions and publication of notice disclosing the determination of this review is extended until December 20, 2021.

07/22/2021

CFPB celebrates its first ten years

The CFPB yesterday celebrated its 10th anniversary.

07/22/2021

Treasury: Significant increase in Emergency Rental Assistance

Treasury reports the grantee performance data for June on the Emergency Rental Assistance (ERA) program shows a significant increase in the number of households served and the amount of funds provided to households as state and local programs continued to ramp up their efforts. More than $1.5 billion in assistance was delivered to eligible households in the month of June, more than the assistance provided all three previous reporting periods combined. The number of households served in June grew by about 85% over the previous month and nearly tripled since April. This represents significant progress, but there is still much further work to go to ensure tenants and landlords take advantage of the historic funding available to help cover rent, utilities, and other housing costs and keep people in their homes.

07/22/2021

$19.4M to fight housing discrimination

HUD has announced it is making $19.4 million available to help HUD Fair Housing Initiatives Program (FHIP) agencies conduct activities that will address discriminatory housing practices related to the COVID-19 pandemic. The funds may also be used to address fair housing issues affecting individuals and families experiencing housing instability, including those who may face displacement due to discriminatory evictions and foreclosures.

07/22/2021

FTC amends rules of practice

The Federal Trade Commission has published a final rule [86 FR 38542] amending its rules of practice in 16 CFR parts 0 and 1. The revised rules, effective today, modernize procedures for rulemakings to define unfair or deceptive acts or practices under the FTC Act to provide for more efficient conduct of rulemaking proceedings. The Commission is also revising these rules to better reflect the agency's organizational structure and authority.

The Commission is also making conforming edits to make the rule language more gender-neutral; use active voice instead of passive voice; replace ambiguous uses of “shall” with “may”, “will”, or “must” as appropriate; make nonsubstantive grammatical changes; and add and standardize citations to the U.S. Code where appropriate.

07/22/2021

Tandy Leather and former CEO settle SEC charges

The Securities and Exchange Commission has announced that Fort Worth, Texas, specialty retailer Tandy Leather Factory Inc. and its former chief executive officer, Shannon Greene, have agreed to settle charges for accounting, reporting, and control failures that led to a multi-year restatement of the company’s financial statements.

According to the order filed by the SEC, Tandy’s inventory tracking system was incapable of supporting its disclosed inventory accounting methodology because it did not properly maintain historical cost information for its inventory. Data from this system populated Tandy’s financial statements with inaccurate financial information, which in turn impacted the company’s calculations for, among other things, inventory, net income, and gross profit for years. Greene and others at the company were aware of the inventory tracking system’s limitations, but did not adequately remedy them, and failed to design and maintain proper accounting controls to reasonably ensure that Tandy’s transactions were recorded in accordance with generally accepted accounting principles. Tandy also failed to properly design, maintain, and evaluate its disclosure controls and procedures (DCP) and internal control over financial reporting (ICFR), and Greene failed to properly assess and evaluate the effectiveness of the same. As a result, Greene inaccurately certified that Tandy’s DCP and ICFR were properly designed and effective. On June 22, 2021, Tandy issued restated financial statements for fiscal years 2017 and 2018, each quarter in fiscal year 2018, and the first quarter of fiscal year 2019.

Without admitting or denying the order’s findings, Tandy and Greene each consented to cease and desist from further committing or causing these violations and pay civil money penalties of $200,000 and $25,000, respectively. In accepting Tandy’s settlement offer, the SEC took into account remedial actions the company took promptly after learning of the issues detailed in the SEC’s order.

07/21/2021

FDIC proposes changes to deposit insurance for trusts

The FDIC has announced a proposed rule to simplify aspects of the agency's deposit insurance coverage rules.

First, the proposed rule would simplify deposit insurance coverage for deposits held in connection with revocable and irrevocable trusts by merging these two deposit insurance categories and applying a simpler, common calculation to determine coverage for all trust accounts. The proposal would make the trust rules consistent and easier to understand for bankers and depositors, and also would facilitate prompt payment of deposit insurance by the FDIC in the event of an insured depository institution’s failure.

Additionally, the proposal would amend the rule that governs coverage for mortgage servicing accounts to allow principal and interest funds advanced by a mortgage servicer to be included in the deposit insurance calculation.

Comments on the proposal will be accepted for 60 days following publication in the Federal Register.

07/21/2021

OFAC issues Venezuela-related license

OFAC has issued a Venezuela-related General License and updated a related FAQ. See the July 20, 2021, BankersOnline OFAC Update for details.

07/21/2021

Agencies to act jointly on CRA rules modernization

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency on Tuesday issued an interagency statement on Community Reinvestment Act (CRA) Joint Agency Action. The agencies said they are "committed to working together to jointly strengthen and modernize regulations implementing" the CRA. "Joint agency action will best achieve a consistent, modernized framework across all banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods."

The OCC announced it will propose rescinding the Community Reinvestment Act (CRA) rule issued in May 2020 and is committed to working with the Federal Reserve Board and the FDIC to put forward a joint rulemaking that strengthens and modernizes the CRA. The decision to propose rescinding the 2020 rule follows the completion of a review initiated by Acting Comptroller of the Currency Michael Hsu shortly after he took office.

07/21/2021

PrivacyCon 2021 agenda released

The Federal Trade Commission has released the final agenda for its sixth annual PrivacyCon event, which will be held online on July 27 and will include a focus on the privacy and security risks associated with algorithms, online advertising, and the Internet of Things.

PrivacyCon 2021 will highlight exciting new research and build on discussions in the United States and around the globe on trends related to consumer privacy and data security. Commissioner Rebecca Kelly Slaughter and Chief Technologist Erie Meyer will give opening remarks followed by six panels focused on algorithms, privacy considerations and understanding, advertising technology, the Internet of Things, privacy issues related to children and teens, and privacy and the pandemic. The event will also feature a presentation on the Algorithmic Bias Playbook by Ziad Obermeyer, Professor of Health Policy and Management at the Berkeley School of Public Health.

07/20/2021

Large bank resolution plans released

The Federal Reserve Board and FDIC have released the public sections of eight large domestic firms' resolution plans, which are required by the Dodd-Frank Act and commonly known as living wills. Resolution plans describe the company's strategy for rapid and orderly resolution under the Bankruptcy Code in the event of material financial distress or failure. Eight firms were required to submit targeted resolution plans by July 1: Bank of America Corporation; The Bank of New York Mellon Corporation; Citigroup Inc.; The Goldman Sachs Group, Inc.; JPMorgan Chase & Co.; Morgan Stanley; State Street Corporation; and Wells Fargo & Company.

The public sections of the resolution plans are available on the FDIC's and the Federal Reserve's websites.

07/20/2021

FHFA cancels Adverse Market Refinance fee

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac will eliminate their controversial Adverse Market Refinance Fee for loan deliveries effective August 1, 2021.

To allow families to save more money, lenders will no longer be required to pay the Enterprises a 50-basis point fee when they deliver refinanced mortgages. The fee was designed to cover losses projected as a result of the COVID-19 pandemic. The success of FHFA and the Enterprises' COVID-19 policies reduced the impact of the pandemic and were effective enough to warrant an early conclusion of the Adverse Market Refinance Fee. FHFA's expectation is that those lenders who were charging borrowers the fee will pass cost savings back to borrowers.

07/20/2021

Proposed guidance published

The OCC, FDIC, and Federal Reserve have published [86 FR 38182] their proposed Interagency Guidance on Third-Part Relationships Risk Management, which was announced last week. Comments on the proposal are due by September 17, 2021.

07/20/2021

President announces nominations

Yesterday, President Biden announced his intent to nominate the following three individuals to serve in key roles:

  • Tamara Cofman Wittes, Nominee for Assistant Administrator for Middle East, United States Agency for International Development
  • Judith D. Pryor, Nominee for First Vice President of the Export-Import Bank
  • Graham Steele, Nominee for Assistant Secretary for Financial Institutions, Department of the Treasury

07/20/2021

SEC orders $8.1M returned to investors

The Securities and Exchange Commission yesterday filed a settled action against UBS Financial Services Inc. for compliance failures relating to sales of a volatility linked exchange-traded product (ETP). The Order filed by the SEC indicates the ETP at issue is designed to track short-term volatility expectations in the market as measured against derivatives of a volatility index. According to the order, the issuer of the product warned UBS that it was not appropriate to hold the product for extended periods, and the product’s offering documents made clear that the product was more likely to decline in value when held over a longer period.

The SEC order finds that UBS:

  • prohibited brokerage representatives from soliciting sales of the product and placed other restrictions on sales of the product to brokerage customers, but did not place similar restrictions on certain financial advisers’ use of the product in discretionary managed client accounts
  • adopted a concentration limit on volatility-linked ETPs, but failed to implement a system for monitoring and enforcing that limit for five years
  • prohibited the financial advisers from making additional recommendations of this ETP prior to being contacted by the Commission staff

The order also finds that between January 2016 and January 2018, certain financial advisers:

  • had a flawed understanding of the appropriate use of the volatility-linked ETP
  • failed to take sufficient steps to understand risks associated with holding the product for extended periods
  • purchased and held the product in client accounts for lengthy periods, including hundreds of accounts that held the product for over a year, resulting in meaningful losses

Without admitting or denying the SEC’s findings, UBS agreed to cease and desist from violations of Rule 206(4)-7 of the Investment Advisers Act of 1940, a censure, and disgorgement and prejudgment interest of $112,274 and a civil penalty of $8 million, which will be distributed to investors harmed by the conduct at issue.

07/19/2021

Advisory highlights growing Hong Kong risks

On Friday, the U.S. Departments of State, Commerce, Homeland Security and the Treasury issued an advisory to highlight growing risks associated with actions undertaken by the Government of the People’s Republic of China and the Government of the Hong Kong Special Administrative Region (SAR) that could adversely impact U.S. companies that operate in the Hong Kong SAR of the People’s Republic of China.

Businesses, individuals, and other persons, including academic institutions, research service providers, and investors that operate in Hong Kong, or have exposure to sanctioned individuals or entities, should be aware of changes to Hong Kong’s laws and regulations. This new legal landscape, including the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, could adversely affect businesses and individuals operating in Hong Kong. As a result of these changes, they should be aware of potential reputational, regulatory, financial, and, in certain instances, legal risks associated with their Hong Kong operations.

These risks fall into four categories: risks for businesses following the imposition of the NSL; data privacy risks; risks regarding transparency and access to critical business information; and risks for businesses with exposure to sanctioned Hong Kong or PRC entities or individuals.

OFAC also designated seven individuals under its Hong Kong Executive Order 13936 sanctions. The July 16, 2021, BankersOnline OFAC Update has identification details.

07/19/2021

Robocalling septic tank cleaner company down the drain

The Federal Trade Commission has announced that the owners of a New Jersey-based company that sells septic tank cleaning products agreed to a permanent ban on telemarketing and will pay more than $1.6 million to settle Federal Trade Commission charges that the company and its telemarketer made illegal robocalls to consumers, including tens of millions of calls to numbers listed on the agency’s Do Not Call Registry. In addition, the defendants will turn over a residential property as part of the settlement.

The FTC's complaint indicted Environmental Safety International, Inc. or ESI; ESI officers brothers Joseph Carney and Sean Carney; and their brother Raymond Carney, who acted together to initiate more than 45 million illegal telemarketing calls to consumers nationwide between January 2018 and March 2019 to promote ESI’s “Activator 1000” line of septic tank cleaning products. The FTC alleges that 31 million of those calls were made to numbers on the DNC Registry. The Department of Justice filed the complaint and proposed orders on the FTC’s behalf.

The complaint also alleges that ESI sent letters to consumers who agreed to buy their products but had unpaid invoices, falsely claiming that they would be referred to a “national collection agency” or to an attorney. However, ESI never took either of these actions.

In addition to the bans on telemarketing, the settlement orders impose $10.2 million civil penalty judgments against all defendants, which will be partially suspended after Joseph and Sean Carney pay $1,646,210 to the U.S. Treasury, and Raymond Carney pays $15,000.

In addition, Joseph and Sean Carney are prohibited from making material misrepresentations to consumers, including that they would be referred to an attorney or collection agency. They are prohibited from billing or attempting to collect payments from any consumers in connection with the sale of their septic tank cleaning products, and are required to notify all ESI customers with unpaid balances that they no longer have to pay ESI because their balances have been cancelled. Joseph and Sean Carney must also apply for ESI’s dissolution within 30 days.

07/19/2021

Open meeting on community banking

The FDIC has announced its Minority Depository Institutions (MDI) Subcommittee to the Advisory Committee on Community Banking will hold an open meeting at 1:00 p.m. EDT on Wednesday, July 21, 2021, which will be webcast live. During the public portion of the meeting, subcommittee members will share insights into key challenges and opportunities facing their communities and financial institutions, including the work to connect unbanked consumers to safe, affordable bank accounts. Following the public meeting, MDI Subcommittee members will provide feedback on the FDIC's strategies to preserve and promote MDIs, including a dialogue with the FDIC's Chief Innovation Officer; an update on the Mission-Driven Bank Fund; and an update on other MDI program initiatives.

There are two other FDIC meetings scheduled to be webcast this week:

07/19/2021

Procedural notice on PPP guarantee purchases and charge-offs

The Small Business Administration has issued Procedural Notice 5000-812316, "PPP Guaranty Purchases, Charge-Offs, and Lender Servicing Responsibilities," on how lenders can apply to have SBA purchase and charge off Paycheck Protection Program loans for which the borrower has not applied for forgiveness or made payment on the loan.

The notice became effective July 15, 2021.

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