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Top Story Lending Related

02/05/2020

Fed CRA evaluation ratings

Our monthly check of the Federal Reserve Board's CRA evaluation ratings reveals that the Board made public 20 ratings in January, including one "Substantial Non-Compliance" rating for a bank in West Memphis, Arkansas, and 17 ratings of "Satisfactory." Our congratulations to the following two banks, which received "Outstanding" ratings (links are to their evaluations):

02/05/2020

FDIC lists banks examined for CRA compliance

The FDIC has released a list of 74 banks examined for compliance with the Community Reinvestment Act whose evaluation ratings were assigned in November 2019. Sixty-nine of the banks received ratings of "Satisfactory." Two were rated "Needs to Improve." Our congratulations to the following three banks, which received a rating of "Outstanding" (links are to their evaluation reports):

02/04/2020

CFPB and ED ink MOU to better serve student loan borrowers

The CFPB has announced that the Bureau and the U.S. Department of Education have announced a new coordination agreement in order to better serve student loan borrowers. Under the newly signed Memorandum of Understanding, the agencies will share complaint information from borrowers and meet quarterly to discuss observations about the nature of complaints received, characteristics of borrowers, and available information about resolution of complaints. The MOU also provides for the sharing of complaint data analysis, recommendations, and analytical tools.

02/04/2020

Leveraged loans risk remains elevated

A joint release by the FDIC, Federal Reserve, and OCC reports the share and amount of loan commitments with the lowest supervisory ratings rose slightly between 2018 and 2019, according to the Shared National Credit (SNC) Program Review. Total commitments with low ratings remain elevated compared to lows reached during prior periods of strong economic performance. The agencies conduct SNC reviews in the first and third calendar quarters with some banks receiving two reviews and others receiving a single review each year.

02/04/2020

January SLOOS

The Rederal Reserve Board's January 2020 Senior Loan Officer Opinion Survey (SLOOS) on Bank Lending Practices addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally corresponds to the fourth quarter of 2019.

Banks in the January survey indicated that, on balance over the fourth quarter, they left standards on commercial and industrial loans basically unchanged, while demand weakened from firms of all sizes. Also, banks reported that lending standards and demand were unchanged for all commercial real estate loan categories except construction and land development loans, for which standards tightened and demand weakened over the fourth quarter of 2019.

For loans to households, banks reportedly left their lending standards unchanged for all types of residential real estate loans over the fourth quarter, while demand strengthened for most categories of closed-end mortgage loans and weakened for home equity lines of credit. However, banks reportedly tightened their lending standards on credit card and auto loans, while demand remained unchanged for credit cards and weakened for auto loans

02/04/2020

FHFA engages financial advisor

Houlihan Lokey Capital, Inc. (Houlihan Lokey) has been selected as a financial advisor by the Federal Housing Finance Agency to assist in the development and implementation of a roadmap to responsibly end the conservatorships of Fannie Mae and Freddie Mac. While developing the roadmap, Houlihan Lokey will consider business and capital structures, market impacts and timing, and available capital raising alternatives, among other items.

02/03/2020

FDIC lists enforcement actions

The FDIC has released a a list of orders of administrative enforcement actions taken against banks and individuals in December.

  • The Bancorp Bank, Wilmington, Delaware, was ordered to pay a $7.5 million civil money penalty for BSA/AML violations
  • A former market president and director of Frontier Bank, Omaha, Nebraska, was assessed a civil money penalty of $25,000 and issued a prohibition order for making loans to uncreditworthy borrowers, diverting funds loaned to one customer to the use of another bank customer, and extending credit in excess of his authority.
  • a former branch president and loan officer of People's Bank and Trust Company, McPherson, Kansas, was issued a cease and desist order after the FDIC determined she manipulated payment due dates on loans and overdraft lines to herself and immediate family members, concealing delinquencies from senior management of the bank.

02/03/2020

SNC review - leveraged loan risk remains elevated

The federal bank regulatory agencies (Fed, FDIC, and OCC) have released the results of their Shared National Credit (SNC) program review. The report reflects reviews primarily covering SNC loans originated on or before June 30, 2019. It finds that credit risk associated with leveraged lending remains elevated. Lenders have fewer protections and risks have increased in leveraged loan terms through the current long period of economic expansion since the last recession. Most banks have adopted credit risk-management practices to monitor and control this evolving risk. However, some of these controls have not been tested in an economic downturn. The agencies require banks to have risk-management processes that can identify and adapt to changing market conditions.

02/03/2020

FHFA proposes changes to Seller/Servicer requirements

The Federal Housing Finance Agency (FHFA) has announced proposed updated minimum financial eligibility requirements for Fannie Mae and Freddie Mac seller/servicers. The updated requirements will further strengthen the Enterprises' seller/servicer requirements and provide transparency and consistency of capital and liquidity required for seller/servicers with different business models. A key improvement from the minimum financial requirements established in 2015 is that the new Enterprise standards establish financial requirements for the servicing of Ginnie Mae mortgages.

The FHFA will receive input on these requirements for 60 days at ServicerEligibility@fhfa.gov. An FAQ with 15 questions and answers plus definitions was also released.

01/31/2020

Bureau sues Citizens Bank, N.A.

The CFPB has announced it has filed a complaint against Citizens Bank, N.A. (Citizens), headquartered in Providence, Rhode Island. The Bureau’s complaint alleges violations of the Truth in Lending Act and its implementing Regulation Z, including violations of amendments to TILA contained in the Fair Credit Billing Act and the Credit Card Accountability Responsibility and Disclosure (CARD) Act.

The complaint alleges that Citizens automatically denied consumers’ billing error notices and claims of unauthorized use in certain circumstances. The complaint further alleges that Citizens failed to fully refund finance charges and fees when consumers asserted meritorious disputes or fraud claims, and failed to send consumers required acknowledgment letters and denial notices in response to billing error notices. It also alleges that Citizens failed to provide credit counseling referrals to consumers who called Citizens’ toll-free number designated for that purpose.

The complaint is not a finding or ruling that the defendant has violated the law.

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