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Reserve Banks issue 3 Outstanding CRA ratings

Our monthly review of the Federal Reserve Board's data on Community Reinvestment Act evaluations reveals that the Federal Reserve Banks made 15 evaluations public in July 2021, with three member banks receiving evaluation ratings of "Outstanding":

The twelve other banks whose evaluation ratings were released in July received ratings of "Satisfactory."


OCC removes 'True Lender' Rule

The OCC has published [86 FR 42686] in today's Federal Register a final rule removing its "True Lender" Rule (National Banks and Federal Savings Associations as Lenders — 12 CFR § 7.1031) from the Code of Federal Regulations.

The U.S. Senate and House of Representatives passed a joint resolution (S.J. Res. 15) under the Congressional Review Act, and the president signed it into law on June 30, 2021, declaring the "True Lender" Rule to have no legal force or effect. The OCC cannot implement any similar rule in the future without the consent of Congress.


Bureau updates mortgage servicing guide

The CFPB has posted an updated version of its Mortgage Servicing Small Entity Compliance Guide. The August 4, 2021, version of the Guide incorporates references to the most recent Mortgage Servicing Rules. The updates provide an overview of the 2021 Mortgage Servicing COVID-19 Final Rule and 2020 Mortgage Servicing COVID-19 Interim Final Rule provisions, and identify the areas of the underlying Mortgage Servicing Rules that are impacted by these Rules.

The latest version of the guide also updates the discussion of the servicing file requirements under the existing Mortgage Servicing Rules to provide guidance about compliant use of multiple electronic systems.


Three banks receive Outstanding FDIC CRA ratings

The FDIC has released its August 2021 List of Banks Examined for CRA Compliance. Three of the 57 institutions listed received ratings of "Outstanding":

A bank in Crowley, Texas, received a "Needs to Improve" rating. The remaining 53 banks received "Satisfactory" ratings.


Fed issues two enforcement actions

The Federal Reserve Board announced on Tuesday that it had issued two enforcement orders:

  • Commercial Bank, Harrogate, Tennessee, was assessed a $26,500 civil money penalty for a pattern or practice of unspecified violations of Regulation H, section 208.25, which implements the requirements of the National Flood Insurance Act.
  • Kristyn Kelly, a former employee of Regions Bank, Birmingham, Alabama, was issued a prohibition order, for making unauthorized transactions in a customer account.


OCC lists 3 Outstanding CRA evaluations

The OCC has released a list of 14 Community Reinvestment Act performance evaluations that were made public in July. We congratulate these three institutions, which received "Outstanding" ratings:

The remaining eleven institutions received "Satisfactory" ratings.


Hsu testifies before Senate

Acting Comptroller of the Currency Michael J. Hsu yesterday testified at a hearing before the U.S. Senate Committee on Banking, Housing and Urban Affairs. He discussed the agency’s priorities, review of key regulatory standards, and efforts to promote fairness and inclusion in the federal banking system. He stated “I see four urgent problems requiring immediate attention: (1) guarding against complacency, (2) reducing inequality, (3) adapting to digitalization, and (4) acting on climate change.


McWilliams statement to Senate Banking Committee

FDIC Chairman McWilliams yesterday testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs about the FDIC’s efforts, activities, objectives, and plans with respect to consumer protection and the conduct of supervision and regulation of insured depository institutions. McWilliams stated, “we have made tremendous strides in these areas under my chairmanship and especially during an unprecedented shock caused by the COVID-19 pandemic and the ensuing economic stress. These efforts include a number of novel initiatives to promote and preserve the nation’s minority depository institutions, provide flexibility to banks to assist their communities during historic economic stress, and encourage responsible use of technology and innovation to reach the “last mile” of unbanked Americans, while maintaining our supervisory activities, regulatory process, and resolution preparedness.” Chairman McWilliams also provided an update on six areas of focus:

  • The state of the banking system and the return to the “new normal;”
  • Consumer protection;
  • Financial inclusion;
  • The supervisory process and regulatory actions;
  • Resolution readiness; and
  • Diversity, equity, and inclusion.


New acting director for FinCEN

Financial Crimes Enforcement Network (FinCEN) Acting Director Michael Mosier announced yesterday he will depart FinCEN at the end of the week for a new opportunity, after serving as the organization’s acting director.

Himamauli "Him" Das, a national security expert with experience at the White House, National Security Council, National Economic Council, and Departments of State and the Treasury, will assume the role of acting director of FinCEN. Treasury has launched a public search for a permanent FinCEN director.


NCUA names new inclusion director

The NCUA has announced it has named Miguel A. Polanco as its Director for the Office of Minority and Women Inclusion. In this role, Mr. Polanco will report to NCUA Chairman Todd M. Harper and oversee the agency’s requirements under the Dodd-Frank Act to develop and promote standards for workforce diversity, supplier diversity, and equal employment opportunity, and assess the diversity policies and practices throughout the credit union industry.


Fed issues second brief in authentication fraud series

Following the recently published research brief on remote authentication fraud, the Federal Reserve has now published the second brief in the series: Fraud Types and Authentication for Remote Payment Use Cases.

This brief takes a closer look into several remote payment use cases and authentication methods that can help prevent the most common types of remote authentication fraud. It discusses the specifics of data breaches, “phishing” attacks and malware infusion resulting in new account and/or account takeover fraud. and some of the authentication tools the industry applies to help prevent fraud depending on the use case, such as effective Know Your Customer (KYC) compliance for new accounts, risk-based authentication (RBA) tools, payment tokenization and two-factor or multi-factor authentication.


Update on Payday Lending Rule status

Consumer Finance Monitor reports the Texas federal district court hearing the lawsuit filed by two trade groups challenging the CFPB’s 2017 final payday/auto title/high-rate installment loan rule (2017 Rule) has entered an order directing the parties to files briefs regarding a compliance date for the 2017 Rule’s payment provisions. The order states that the court requests the additional briefing “concerning what would be the appropriate compliance date if the court were to deny Plaintiffs’ motion for summary judgment and grant [CFPB's] motion for summary judgment.” The order calls for briefs to be filed by August 6 and allows responses to be filed by August 16.

The Rule was to become effective August 19, 2019, but the court's stay has barred the rule from taking effect. The court's latest order suggests it may lift the stay after hearing what the new effective date is likely to be.


Fed extends comment period on FedNow funds transfer rule

The Federal Reserve Board announced on Tuesday that it will extend until September 9, 2021, the comment period for its proposal to govern funds transfers over the Federal Reserve Banks' FedNow Service.

The Board extended the comment period to allow interested persons more time to analyze the proposal and prepare their comments. Originally, comments were due by August 10, 2021.


SEC charges Ernst & Young with unprofessional conduct

The Securities and Exchange Commission has charged the accounting firm Ernst & Young LLP, one of its partners, and two of its former partners with improper professional conduct for violating auditor independence rules in connection with the firm's pursuit to serve as the independent auditor for a public company issuer with nearly $5 billion in revenue. Separately, the Commission brought charges against the issuer's then-chief accounting officer for his role in the misconduct. All respondents have agreed to settle the charges and will collectively pay more than $10 million in monetary relief.

The SEC's order against the auditors finds that E&Y, E&Y partner James Herring, CPA, and former E&Y partners James Young, CPA, and Curt Fochtmann, CPA, improperly interfered with the issuer's selection of an independent auditor by soliciting and receiving confidential competitive intelligence and confidential audit committee information from the issuer's then-chief accounting officer, William Stiehl, during the request for proposal process.


3,000+ scammed consumers to receive checks

The Federal Trade Commission has announced it is sending checks totaling more than $1.5 million to more than 3,000 consumers who were deceived into buying worthless Internet-based marketing products and services by two companies called Position Gurus, LLC, and Top Shelf Ecommerce, LLC.

A Complaint filed by the FTC in May 2020 indicated the companies and their owners targeted consumers looking to start retail businesses on the Internet. The complaint alleged that the defendants falsely represented that their services would drive more customers to consumers’ new online stores and drastically increase sales and earnings. The complaint also alleged the defendants falsely claimed to be associated with unrelated coaching companies that consumers had prior dealings with; collected consumers’ personal financial information under false pretenses; and illegally restricted consumers’ ability to review or complain about the defendants’ products, services, or conduct.

JND Legal Administration, the refund administrator for this case, mailed checks yesterday.


OCC updates exam procedures on remittance transfers

The OCC has posted Bulletin 2021-33 to announce supplemental examination procedures on remittance transfers. The examination procedures are prepared for use by OCC examiners as a supplement to the Federal Financial Institutions Examination Council's interagency Electronic Fund Transfer Act (EFTA) procedures that the OCC adopted in 2019. In addition, this bulletin summarizes the CFPB's Regulation E amendments regarding remittance transfers that became effective in July 2020.

The following OCC documents have been rescinded:

  • The "Electronic Fund Transfer Act" booklet of the Comptroller's Handbook, which is replaced by the 2019 interagency EFTA examination procedures. The procedures are listed on the Comptroller's Handbook page on as "Electronic Fund Transfer Act (Interagency)."
  • OCC Bulletin 2019-16, "Consumer Compliance: Revised Interagency Examination Procedures," which conveyed the 2019 interagency examination procedures for the EFTA and for the Truth in Lending Act.
  • OCC Bulletin 2014-43, "Electronic Fund Transfer Act: Comptroller's Handbook Booklet Revision and Rescission."


Fed posts July SLOOS

The Federal Reserve Board has posted the July 2021 Senior Loan Officer Opinion Survey (SLOOS) on Bank Lending Practices, which addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the second quarter of 2021.

Regarding loans to businesses, respondents to the July survey, on balance, reported easier standards and stronger demand for commercial and industrial (C&I) loans to firms of all sizes over the second quarter. For commercial real estate (CRE), standards on multifamily and construction and land development loans eased, while standards on loans secured by nonfarm nonresidential properties remained basically unchanged. Banks reported stronger demand for all CRE loan categories.

For loans to households, banks eased standards across most categories of residential real estate (RRE) loans, on net, and reported stronger demand for most types of RRE loans over the second quarter. Banks also eased standards and reported stronger demand across all three consumer loan categories—credit card loans, auto loans, and other consumer loans.

The survey included an additional set of special questions inquiring about the current level of lending standards relative to the midpoint of the range over which banks’ standards have varied since 2005. Banks, on balance, reported that their lending standards on C&I loans are currently at the easier end of the range of standards between 2005 and the present. For subprime consumer loans and most categories of commercial or residential mortgages, banks reported currently having relatively tighter levels of lending standards on net. However, the reported levels of lending standards eased for all loan categories relative to the July 2020 survey.

Additionally, banks were asked to report when standards reached their easiest and tightest points since 2005. Most banks reported that standards were easiest between 2005 and 2007 and tightest between 2008 and 2010, indicating that the ranges of standards in consideration have not changed significantly since 2011—the first year that special questions on the levels of standards were asked.


National Small Business Week virtual summit announced

The SBA has announced it will host its 2021 National Small Business Week Virtual Summit September 13–15, 2021. It will spotlight the resilience of America’s entrepreneurs and the renewal of the small business economy as they build back better from the economic crisis brought on by a once-in-a-lifetime pandemic. The virtual summit will honor the nation’s 30 million small businesses for their perseverance, ingenuity, triumphs, and creativity.   

The event will include representatives from Fortune 500 companies who will discuss their paths to success and share resources to help businesses on their entrepreneurial journey. Highlights of the summit will include virtual booths to develop one-on-one connections with public and private sector partners to create opportunities for collaboration and information-sharing in real-time.  In addition, small business participants can learn more about new business strategies, meet other business owners, and talk with industry experts. Speakers will be announced at a later date.


FDIC releases enforcement actions

The FDIC has released a list of enforcement actions taken in June 2021.

  • Reliabank Dakota (Estelline, South Dakota) and Limebank (Schell City, Missouri) were assessed $30,000 and $1,000, respectively, for violations of the Flood Disaster Protection Act
  • Natalie Arnemann, former managing director and senior vice president of Renasant Bank (Tupelo, Mississippi), was assessed a civil money penalty of $5,000 and issued an order of prohibition, after the FDIC found that she repeatedly wrote checks on accounts with insufficient funds that she controlled at the bank, approved without authorization many of these overdrafts, and wrote additional NSF checks to cover the prior overdrafts she had approved.
  • Briget Boyd, former operations clerk at Premier Bank of the South (Cullman, Alabama), was assessed a civil money penalty of $35,000 and issued an order of prohibition, after the FDIC found that she knowingly and willfully made 151 unauthorized journal entries that resulted in funds being transferred from the bank's general ledger to accounts owned or controlled by her or bank checks being issued that were later negotiated by her, resulting in losses to the bank of at least $33,020.28.
  • Alejandro Hector Hernandez, former employee of Luther Burbank Savings (Santa Rosa, California), was issued a prohibition order after the FDIC determined he stole more than 300 new laptops from the bank.
  • Hyun Jung Kim, former universal banker at Bank of Hope (Los Angeles, California), was issued a prohibition order, after the FDIC determined that the respondent misappropriated funds provided by a customer to open a certificate of deposit.
  • Kendra Richardson, former branch manager of Guaranty Bank (Springfield, Missouri), received an order of prohibition after the FDIC determined that she has taken approximately $158,000 from the bank vault and converted the funds to her personal use.
  • Karen Farrell-Tigler, former multi-service banker/teller at Hancock Whitney Bank (Gulfport, Mississippi), received a prohibition order after the FDIC determined she had misappropriated more than $200,000 from a bank customer's deposit account.


Agencies extend eviction moratoria

On Friday, the secretaries of the USDA, HUD, VA, and Treasury and the acting director of the FHFA released a joint statement on agency actions to prevent evictions.

At the request of the president, the agencies have extended their foreclosure-related eviction moratoria until September 30, 2021. The agency heads also said the owners and operators of federally-assisted and financed rental housing should make every effort to access Emergency Rental Assistance (ERA) resources to avoid evicting a tenant for non-payment of rent. These resources are available in every state, and many counties and cities are also running local programs. Owners and operators of federally-assisted housing are stewards of important public resources and should access rental assistance both to prevent unnecessary human suffering and to protect the public investment in affordable housing.


SBA celebrates 68 years of service

The SBA on Friday marked 68 years of service as a voice for America’s 30 million small businesses and innovative startups. For nearly seven decades, the SBA has been a part of the small business journey for business owners and entrepreneurs, helping them start, grow, expand, and recover from disasters.


OFAC sanctions Cuban police force and leaders

On Friday, OFAC sanctioned two Cuban individuals and one Cuban entity under the authority of Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world. Friday’s sanctions expand upon Treasury’s July 22, 2021 designations by sanctioning additional persons in connection with actions to suppress peaceful, pro-democratic protests in Cuba that began on July 11. The targets of Friday’s designations are OSCAR CALLEJAS VALCARCE, EDDY SIERRA ARIAS, and the POLICIA NACIONAL REVOLUCIONARIA (PNR) of the Cuban Ministry of the Interior.

Identification information on Callejas, Sierra, and the PNR can be found in the July 30, 2021, BankersOnline OFAC Update.


Treasury meets with Bank Policy Institute CEOs

The Treasury Department has published a readout of Deputy Secretary of the Treasury Wally Adeyemo's July 30, 2021, meeting with three CEOs from the Bank Policy Institute (BPI) Board of Directors to discuss issues related to economic inclusion.

Adeyemo emphasized the pivotal role the banking industry plays in ensuring the successful implementation of Treasury programs. He highlighted the expanded Child Tax Credit as an area where public-private partnership is key to delivering critical tax relief to working families, because the majority of eligible families receive the benefit via direct deposit and checks. Adeyemo and BPI CEOs also promoted continued investment in underserved communities through partnerships with Community Development Financial Institutions and minority depository institutions and direct investment, including investing in technology infrastructure and providing advisory services for these critical institutions.

Also discussed was the need for banks to continue working to improve access to low-cost accounts through Bank On and utilize financial literacy education programs as a way to build economic inclusion and foster an equitable economic recovery. Adeyemo highlighted the need to expand access to financial services for unbanked and underbanked populations and discussed with the BPI CEOs additional options to provide low-cost services to populations in need, especially through digital tools.


Reminder to update EIN information

The IRS has issued a press release urging entities with Employer Identification Numbers (EINs) to update their applications if there has been a change in the responsible party or contact information. IRS regulations require EIN holders to update responsible party information within 60 days of any change by filing Form 8822-B, Change of Address or Responsible Party - Business. It is critical that the IRS have accurate information in cases of identity theft or other fraud issues related to EINs or business accounts.

The data around the "responsible parties" for business-type entities is often outdated or incorrect, meaning that the IRS does not have accurate records of whom to contact for identity theft issues. This means a time-consuming process to identify the point of contact so the IRS can inquire about a suspicious filing. As a result, the IRS intends to step up its awareness efforts aimed at businesses, partnerships, trusts and estates, charities and other entities that are EIN holders.

Starting in August, the IRS will begin sending letters to approximately 100,000 EIN holders where it appears the responsible party is outdated. All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (Social Security number, Individual Taxpayer Identification Number or EIN) of the true principal officer, general partner, grantor, owner or trustor. The IRS defines the responsible party as the individual or entity who "controls, manages, or directs the applicant entity and the disposition of its funds and assets."


NCUA prohibition orders

The National Credit Union Administration has announced it issued two prohibition orders in July. The orders were issued to:

  • a former manager of William Newton Memorial Hospital Credit Union, Winfield, Kansas
  • a former employee of White Sands Federal Credit Union, Las Cruces, New Mexico


CFPB announces effective date for FDCPA final rules

The CFPB announced on Friday that two final rules issued under the Fair Debt Collection Practices Act (FDCPA) will take effect as planned, on November 30, 2021.

The first rule issued in October 2020, focuses on debt collection communications and clarifies the FDCPA’s prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.

The second rule issued in December 2020, clarifies disclosures debt collectors must provide to consumers at the beginning of collection communications, and prohibits debt collectors from suing or threatening to sue consumers on time-barred debt. Additionally, the second rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency.

The Bureau will publish a formal notice in the Federal Register withdrawing its April 2021 proposal that would have postponed the effective date to January 29, 2022. The CFPB's statement said that nothing in its decision not to change the effective date precludes the CFPB from reconsidering the debt collection rules at a later date.


Freddie and Fannie extend REO eviction moratorium

On Friday morning, July 30, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac (the Enterprises) are extending the moratorium on single-family real estate owned evictions until September 30, 2021. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratorium was set to expire on July 31, 2021.

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