Top Story Lending Related

The CFPB has posted an article discussing the percentage of fourth-year undergraduate students age 18 to 24 with student loan debt by race. The article reports federal government data shows that over 90 percent of African-American and 72 percent of Latino students leave college with student loan debt, compared to 66 percent of white students and 51 percent of Asian-American students. While Asian-American students may be less likely to borrow federal student loans, separate research has shown that Asian-American students who need to borrow more than $30,000 may be more likely to rely on private student loans to finance their higher education—loans that offer fewer consumer protections for borrowers.

The FDIC has announced the publication of The Affordable Mortgage Lending Guide, Part I: Federal Agencies and Government Sponsored Enterprises, and launched an online resource center to help community bankers learn more about single-family housing products offered by federal agencies and government-sponsored enterprises. The Guide describes federal programs for single-family housing lending that support home purchase, refinance, manufactured housing, and some home improvements. It covers programs that are intended to assist a variety of communities, including rural areas and Native American communities, as well as low- and moderate-income individuals, first-time homebuyers, and veterans. The FDIC's Affordable Mortgage Lending Center is an online resource center featuring data, fact sheets, and mortgage lending studies from the FDIC and other federal resources. The center includes the full version of the guide and also provides links that take the reader directly to the program.

• Related document: FIL-60-2016

In a remarks at the Harvard Kennedy School, Comptroller Curry discussed how the financial system has progressed since the Great Recession, its present strengths, and the need to remain vigilant against risks. Curry stated, “I want to conclude by noting that lessons from 2008 were not really new lessons. Rather, the crisis reminded us of basic principles that have been around since the very first Comptroller of the Currency, Hugh McCulloch, provided sage advice to bankers in 1863. His advice included:

• Let no loans be made that are not secured beyond a reasonable contingency.
• Distribute your loans rather than concentrate them in a few hands.
• Treat your customers liberally, bearing in mind a bank prospers as its customers prosper.
• The capital of a bank should be a reality, not a fiction.”

The Federal Reserve Board has released the September 15, 2016, G.17 Industrial Production and Capacity Utilization Report. Industrial production decreased 0.4 percent in August after rising 0.6 percent in July. Manufacturing output also declined 0.4 percent in August, reversing its increase in July; the level of the index in August is little changed from its level in March. Following two consecutive monthly increases, the index for utilities fell back 1.4 percent in August. Even so, the index was 1.7 percent above its year-earlier level, as hot temperatures this summer boosted the usage of air conditioning. The output of mining moved up 1.0 percent in August, its fourth consecutive monthly increase following an extended downturn; the index, however, was still about 9 percent below its year-ago level. At 104.4 percent of its 2012 average, total industrial production in August was 1.1 percent lower than its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in August to 75.5 percent, a rate that is 4.5 percentage points below its long-run (1972–2015) average.

HUD has announced the issuance of “Limited English Proficiency” (LEP) guidance that addresses how the Fair Housing Act would apply to claims of housing discrimination brought by people because they do not speak, read, or write English proficiently. More than 25 million people in the United States do not communicate proficiently in English. Housing providers are prohibited from using limited English proficiency selectively or as an excuse for intentional housing discrimination. The law also prohibits landlords from using limited English proficiency in a way that causes an unjustified discriminatory effect.

The NCUA has released the NCUA Quarterly U.S. Map Review for the second quarter 2016. The Review tracks performance indicators for federally insured credit unions in all 50 states and the District of Columbia. It also includes information on two key state-level economic indicators: unemployment rates and home price changes. Nationally, median loan growth in federally insured credit unions was 4.3 percent during the year ending in the second quarter. In the same period, median asset growth was 3.2 percent, the median rate of growth in deposits and shares was 3.3 percent, and the median loans-to-shares ratio rose to 62 percent.

The Office of the Comptroller has released its bank supervision operating plan for fiscal year (FY) 2017. Supervisory strategies for FY 2017 will focus on:

• Commercial and retail loan underwriting;
• Business model sustainability and viability;
• Operational resiliency;
• Bank Secrecy Act/anti-money laundering compliance management; and
• Change management to address new regulatory requirements.

The Los Angeles Times and other media outlets report that the U.S. Senate Banking Committee will hold a hearing on September 20 on the sales tactics used by Wells Fargo Bank employees that led to the recently-announced $185 million in penalties (see our September 9 Top Story) assessed by federal regulators and Los Angeles County. Five members of the committee had released a letter asking that committee chair Senator Richard Shelby investigate the matter. The Times said it first revealed the bank's sales practices in 2013.

The CFPB has posted an article with information for consumers who incurred fees as a result of an unauthorized Wells Fargo account. The CFPB suggests that customers of any bank or credit union should always closely monitor their accounts to make sure they don’t see unauthorized products or account activity. If they suspect that they had an unauthorized account opened, they should visit their local bank branch or call their financial institution. If they continue to have an issue, they can submit a complaint to the CFPB, either online or by calling toll-free (855) 411-2372. Wells Fargo customers should not have to contact the bank to receive a refund of fees they incurred as a result of the bank's recently revealed illegal conduct. Wells Fargo has already been ordered to identify affected consumers and make the required refunds.

In a presentation at the Marketplace Lending Policy Summit, Comptroller Curry discussed marketplace lending’s risks and associated policy questions. He noted, “Marketplace lending may use new technology or techniques, but it’s still about extending credit to borrowers—something that’s been done for more than 3,000 years. Technology has been part of banking since the beginning. Let’s not forget that the Sumerians' invention of coinage and cuneiform writing were revolutionary technological feats.” Curry indicated the OCC Innovation Framework Development Team will complete a framework this fall which will enable the OCC to assess responsible innovation that encourages and promotes advances in products, services, and processes that serve consumers, communities, and businesses better and more fairly.