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Top Story Lending Related

08/10/2020

Consumer credit falls again in second quarter

The Federal Reserve Board's G.19 data indicate that consumer credit decreased at a seasonally adjusted annual rate of 6-3/4 percent during the second quarter of 2020. Revolving credit decreased at an annual rate of 31-3/4 percent, while nonrevolving credit increased at an annual rate of 2 percent. In June, revolving credit decreased at an annual rate of 2-3/4 percent, while nonrevolving credit increased at an annual rate of 4-1/4 percent.

08/10/2020

HUD physical inspections to resume

Secretary Carson has announced HUD will resume Real Estate Assessment Center (REAC) inspections of HUD multifamily and public housing properties and units under strict safety protocols during the national recovery from the COVID-19 pandemic. REAC inspections are the assessment tool that ensures HUD-assisted properties meet federal standards of health, safety, and accessibility. The inspections were paused due to the Coronavirus outbreak in March of 2020.

08/07/2020

Consumer loan company pays $21.7M for FCPA violations

The Securities and Exchange Commission has announced that World Acceptance Corporation, a South Carolina-based consumer loan company, has agreed to pay $21.7 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA).

The SEC Order in the matter states the Commission found that from at least December 2010 through June 2017, World Acceptance Corporation’s former Mexican subsidiary, WAC de Mexico S.A. de C.V., paid more than $4 million in bribes to Mexican government officials and union officials to secure the ability to make loans to government employees and ensure that those loans were repaid in a timely manner. According to the order, WAC Mexico paid the bribes in a variety of ways, including by depositing money into bank accounts linked to the officials and by hiring an intermediary to distribute large bags of cash among the officials. The SEC found that the bribes were inaccurately recorded in World Acceptance Corporation’s books and records as legitimate business expenses. The order also states that World Acceptance Corporation lacked internal accounting controls sufficient to detect or prevent the payments of such bribes and that management lacked the appropriate tone at the top regarding internal audit and compliance, thereby undermining the effectiveness of those functions.

The order requires that the company cease and desist from violating the anti-bribery, books and records, and internal controls provisions of the FCPA, and pay $17.826 million in disgorgement, $1.9 million in prejudgment interest, and a $2 million penalty.

08/07/2020

Update on Fed's COVID-19 lending facilities

The Federal Reserve Board has released a report with an update concerning lending facilities established by the Board under section 13(3) of the Federal Reserve Act in response to the COVID-19 pandemic.

08/06/2020

Flood Insurance Program suspensions published

The Federal Emergency Management Agency has published a final rule at 85 FR 47673 in today's Federal Register identifying 21 communities in Lackawanna County, Pennsylvania, and one in Randolph County, Illinois, that were scheduled for suspension from the National Flood Insurance Program on August 5, 2020, for noncompliance with the floodplain management requirements of the program.

  • PA: Benton, Blakely, Covington, Dalton, Dunmore, Elmhurst, Fell, Glenburn, Greenfield, Jefferson, Jessup, Mayfield, Newton, North Abington, Old Forge, Scott, Scranton, South Abington, Taylor, Throop, and Waverly
  • IL: Prairie du Rocher

If any of the communities met the floodplain management requirements prior to August 5, they were not suspended.

08/05/2020

NMLS posts update to Policy Guidebook

An updated version of the NMLS Policy Guidebook has been posted to the NMLS Resource Center and the Regulator Resource Center. A summary of the update indicates that there was a single change adding language stating that NMLS requires each entity under a series LLC to have its own unique EIN for licensing purposes.

08/05/2020

SBA FAQs on PPP loan forgiveness

The Small Business Administration has issued a collection of "Frequently Asked Questions (FAQs) on PPP Loan Forgiveness." The FAQs were issued in consultation with the Department of the Treasury to address borrower and lender questions concerning forgiveness of PPP loans.

The FAQs are grouped in these categories:

  • General Loan Forgiveness
  • Loan Forgiveness Payroll Costs
  • Loan Forgiveness Nonpayroll Costs
  • Loan Forgiveness Reductions

08/05/2020

FDIC releases CRA evaluation ratings

The FDIC has released a list of 64 banks recently evaluated for compliance with the Community Reinvestment Act whose evaluation ratings were made public in August. Sixty of the banks received a Satisfactory rating. One was rated Needs to Improve, and the following three were rated Outstanding:

08/05/2020

July 2020 SLOOS on bank lending practices

The Federal Reserve Board has posted the results of the July 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS), which addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the previous three months, roughly corresponding to the second calendar quarter.

Respondents indicated that, on balance, they tightened their standards and terms on commercial and industrial (C&I) loans to firms of all sizes. Banks reported weaker demand for C&I loans from firms of all sizes. Meanwhile, banks tightened standards and reported weaker demand across all three major commercial real estate (CRE) loan categories—construction and land development loans, nonfarm nonresidential loans, and multifamily loans—over the second quarter of 2020.

Banks tightened standards across all categories of residential real estate (RRE) loans and across all three consumer loan categories—credit card loans, auto loans, and other consumer loans—over the second quarter of 2020 on net. Banks reported stronger demand for all categories of RRE loans and weaker demand for all categories of consumer loans.

Banks also responded to a 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 across all loan categories are currently at the tighter end of the range of standards between 2005 and the present.

Paycheck Protection Program loans were not mentioned in the survey.

08/04/2020

FFIEC statement on COVID-19-related loan accommodations

The Federal Financial Institutions Examination Council (FFIEC) has issued a statement providing prudent risk management and consumer protection principles for financial institutions to consider while working with borrowers as initial coronavirus-related loan accommodation periods come to an end and they consider additional accommodations.

As initial loan accommodation periods come to an end, some borrowers may be able to resume contractual payments, and others may be unable to meet their obligations due to continuing financial challenges. The agencies encourage financial institutions to consider, when appropriate, prudent options for additional accommodations that can ease cash flow pressures on affected borrowers, improve their capacity to service debt, and facilitate the financial institution’s prudent management of its loans, consistent with applicable laws and regulations.

The statement also addresses issues relative to accounting and regulatory reporting and internal control systems.

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