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09/21/2020

FDIC Oregon wildfire and wind relief

The FDIC has issued FIL-91-2020 with guidance on steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Oregon affected by wildfires and straight-line winds starting September 7, 2020.

The Federal Emergency Management Agency declared a federal disaster for selected areas affected in Oregon on September 15, 2020. FEMA may make additional designations after damage assessments are completed in the affected areas. A current list of designated areas is available at www.fema.gov.

The FDIC encouraged banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by the wildfires and straight-line winds. 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 and may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The FDIC also will consider regulatory relief from certain filing and publishing requirements.

09/21/2020

Main Street Lending Program FAQs updated

The Federal Reserve Board has updated its frequently asked questions (FAQs) to clarify the Board and Department of Treasury's expectations regarding lender underwriting for the Main Street Lending Program. The revised FAQs emphasize that lender underwriting should look back to the borrower's pre-pandemic condition and forward to their post-pandemic prospects. The FAQs also clarify supervisory expectations for lenders originating Main Street loans.

The updated FAQs may have to be downloaded to be opened.

09/21/2020

FTC requests comments on Prescreen Opt-Out Notice Rule

The Federal Trade Commission has published [86 FR 59226] a notice of proposed rulemaking and request for public comment concerning its Prescreen Opt-Out Notice Rule. The Commission seeks public comment on the Rule and proposes to amend the Rule to conform to changes made to the Fair Credit Reporting Act by the Dodd-Frank Act, and to reinstate a model prescreen opt-put notice.

Comments are due by December 7, 2020.

09/21/2020

FEMA suspends communities in AK, AZ, IA and WA

FEMA published [85 FR 58294] in Friday's Federal Register a notice that it was suspending, as of September 18, communities in Alaska, Arizona, Iowa and Washington from the National Flood Insurance Program for noncompliance with the floodplain management requirements of the program.

  • Alaska: Fairbanks Northstar Borough and the City and Borough of Juneau
  • Arizona: Goodyear
  • Iowa: Harpers Ferry, Lansing, Postville, Waterville, and unincorporated areas of Allamakee County
  • Washington: Chehalis Reservation, Elma, Montesano, Oakville, and unincorporated areas of Grays Harbor County

09/18/2020

Fed releases hypothetical stress test scenarios

The Federal Reserve Board has released its hypothetical scenarios for a second round of bank stress tests. Earlier this year, the Board's first round of stress tests found that large banks were well capitalized under a range of hypothetical events. An additional round of stress tests is being performed due to the continued uncertainty caused by the COVID event. Large banks will be tested against two scenarios featuring severe recessions to assess their resiliency under a range of outcomes. The Board will release firm-specific results from banks' performance under both scenarios by the end of this year.

The two hypothetical recessions in the scenarios feature severe global downturns with substantial stress in financial markets. The first scenario—the "severely adverse"—features the unemployment rate peaking at 12.5 percent at the end of 2021 and then declining to about 7.5 percent by the end of the scenario. Gross domestic product declines about 3 percent from the third quarter of 2020 through the fourth quarter of 2021. The scenario also features a sharp slowdown abroad.

The second scenario—the "alternative severe"—features an unemployment rate that peaks at 11 percent by the end of 2020 but stays elevated and only declines to 9 percent by the end of the scenario. Gross domestic product declines about 2.5 percent from the third to the fourth quarter of 2020.

The two scenarios also include a global market shock component that will be applied to banks with large trading operations. Those banks, as well as certain banks with substantial processing operations, will also be required to incorporate the default of their largest counterparty.

09/18/2020

Assistance for Oregon wildfire victims announced

HUD has announced federal disaster assistance for the State of Oregon to provide support to homeowners and low-income renters displaced from their homes in areas affected by wildfires and straight-line winds. A Presidential declaration allows HUD to offer foreclosure relief and other assistance to impacted families living in these counties.

09/17/2020

FOMC maintains course

The Federal Reserve Board has released the Federal Open Market Committee Statement following the September 15–16 meeting of the Committee. The FOMC agreed to continue to "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" and "expects to maintain an accommodative stance of monetary policy until these outcomes are achieved." It also intends to keep the target range for the federal funds at 0 to 1/4 percent "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."

09/17/2020

FinCEN proposes amending AML program requirements

FinCEN has published [85 FR 58023] an advance notice of proposed rulemaking in today's Federal Register seeking public comment on potential regulatory amendments to establish that all covered financial institutions subject to an anti-money laundering program requirement must maintain an “effective and reasonably designed” anti-money laundering program.

The ANPRM says any such amendments would be expected to further clarify that such a program assesses and manages risk as informed by a financial institution’s risk assessment, including consideration of anti-money laundering priorities to be issued by FinCEN consistent with the proposed amendments; provides for compliance with Bank Secrecy Act requirements; and provides for the reporting of information with a high degree of usefulness to government authorities.

The regulatory amendments under consideration are intended to modernize the regulatory regime to address the evolving threats of illicit finance, and provide financial institutions with greater flexibility in the allocation of resources, resulting in the enhanced effectiveness and efficiency of anti-money laundering programs.

The ANPRM also seeks comment on proposals to impose an explicit requirement for a risk assessment process and for the Director of FinCEN to issue a list of national AML priorities, to be called FinCEN’s Strategic Anti-Money Laundering Priorities, every two years.

Comments on the ANPRM will be accepted for 60 days following publication, through Monday, November 16, 2020.

09/16/2020

$3.7M COVID-19 grants awarded to credit unions

The NCUA has awarded $3.7 million in grants and no-interest loans to 162 low-income credit unions, helping them provide affordable financial services to their members and communities during the COVID-19 pandemic. The grants and loans fell into four categories:

  • Rental, mortgage, and utility payment assistance to members such as entrepreneurs, small business owners, and hospitality and service industry employees;
  • Loan payment relief to affected members;
  • New products or services for affected members; and
  • Covering costs associated with moving credit union operations to remote locations, such as laptops, software, and short-term rentals.

09/16/2020

CFPB and states settle with owner of ITT Private Loans

The Consumer Financial Protection Bureau has filed on Tuesday a proposed stipulated judgment against PEAKS Trust 2009-1, along with Deutsche Bank National Trust Company, Deutsche Bank Trust Company Delaware, and Deutsche Bank Trust Company Americas, in their capacity as trustees to PEAKS Trust 2009-1.

In its complaint, the Bureau alleged that PEAKS provided substantial assistance to ITT Educational Services, Inc. in engaging in unfair acts and practices in violation of the Consumer Financial Protection Act of 2010 (CFPA). PEAKS owned and managed private loans for students at ITT Technical Institute. PEAKS allegedly knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of those loans, could not afford them, or in some cases did not even know they had them. If entered by the court, the proposed judgment will require PEAKS to forgive all of its outstanding loans—approximately $330 million in debt– for about 35,000 borrowers who currently have outstanding principal balances. Forty-seven states plus the District of Columbia have also settled with PEAKS Tuesday.

The complaint alleges that ITT arranged for the PEAKS loans to be serviced and collected on after ITT had induced its students to take out the loans by a variety of unfair practices, including rushing students through financial aid appointments, using aggressive tactics, and in some cases, gaining unauthorized access to student accounts to sign students up for loans without permission. The Bureau alleged that PEAKS was actively involved in servicing and managing the PEAKS loan program, including the collection of the loans, and that PEAKS’s conduct constituted substantial assistance of ITT’s unfair acts and practices in violation of the CFPA.

If entered by the court, the proposed stipulated judgment would require PEAKS to stop collecting on all outstanding PEAKS loans, discharge all outstanding PEAKS loans, and ask all consumer reporting agencies to which PEAKS furnished information to delete information relating to PEAKS loans. The order would also require PEAKS to provide notice to all consumers with outstanding PEAKS loans that their debt has been discharged and is no longer owed and that PEAKS is seeking to have the relevant consumer reporting information deleted. The total amount of loan forgiveness is currently estimated to be $330 million, for about 35,000 consumers with outstanding balances owed on their PEAKS loans.

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