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Top Stories


Fake IRS emails to taxpayers

The IRS has issued a warning to taxpayers about a new IRS impersonation scam campaign spreading nationally on email. The IRS does not send unsolicited emails and never emails taxpayers about the status of refunds.


OCC schedules Chicago workshops

The OCC will host two workshops at the OCC Central District Office in Chicago, October 1 and 2, for directors of institutions supervised by the OCC.

  • The Risk Governance: Improving Director Effectiveness workshop on October 1 provides practical information for directors to effectively measure and manage risks. The workshop also focuses on the OCC's approach to risk-based supervision and major risks in the financial industry.
  • The Credit Risk: Directors Can Make a Difference workshop on October 2 focuses on credit risk within the loan portfolio, such as identifying trends and recognizing problems. The workshop also covers the roles of the board and management, how to stay informed of changes in credit risk, and how to effect change.

This is the last scheduled offering of each of these workshops for 2019.


Flood exam procedures revised

The Federal Reserve Board has issued Consumer Affairs Letter CA-19-10 announcing the update of Interagency Exam Procedures for the Flood Disaster Procedures Act (FDPA), with the addition of these new sections:

  • mandatory acceptance of a private insurance policy to satisfy the flood insurance purchase requirement if the policy meets the statutory and regulatory definition of “private flood insurance;”
  • discretionary acceptance of a flood insurance policy issued by a private insurer, even if the policy does not meet the statutory and regulatory definition of “private flood insurance;” and
  • discretionary acceptance of a plan issued by a mutual aid society in satisfaction of the flood insurance purchase requirement, if certain criteria are met.


Results of Fed's term deposits offering

The Federal Reserve has announced the results of its August 22, 2019 offering of seven-day term deposits. Eighteen participants deposited $1.668 billion under the offering. The deposits will earn one basis point above the rate paid by the Fed for excess reserves.


HUD awards $5.2M for safety and security improvements

HUD has announced it is awarding $5.2 million to 23 public housing authorities in 15 states to make needed improvements to their safety and security systems:


Bureau and AR AG settle with high-rate credit broker

The CFPB has announced that the Bureau and the Office of the Arkansas Attorney General have filed a proposed settlement with Andrew Gamber, Voyager Financial Group, LLC, BAIC, Inc., and SoBell Corp. The companies, owned and operated by Gamber, were brokers of contracts offering high-interest credit to veterans, many of whom are disabled, and to other consumers.

Gamber and his companies are alleged in the Complaint to have misrepresented to consumers that the contracts the companies facilitate are valid and enforceable when, in fact, the contracts are void under federal and state law; misrepresented to consumers that the product is a sale of payments and not a high-interest credit offer; misrepresented to consumers when they will receive their funds; and failed to inform consumers of the applicable interest rate on the credit offer.

Under the proposed settlement, Gamber and the companies are permanently banned from brokering, offering, or arranging agreements between pension recipients and third parties under which the consumer purports to sell a future right to an income stream from the consumer’s pension. The proposed settlement would also impose a judgment for redress of $2.7 million, a civil money penalty of $1 to the Bureau, and a payment of $75,000 to the Arkansas Attorney General’s Consumer Education and Enforcement Fund in lieu of a civil money penalty to the State of Arkansas. Full payment of redress would be suspended upon Gamber's paying $200,000 for redress, $1 to the Bureau and $75,000 to Arkansas, unless information in sworn financial statements proves false .


OFAC and FinCEN attack the opiod crisis

Treasury has announced coordinated OFAC and FinCEN actions to bring additional financial pressure upon those who manufacture, sell, or distribute synthetic opioids or their precursor chemicals.

OFAC identified Chinese national Fujing Zheng (Zheng) and the Zheng Drug Trafficking Organization (DTO) as significant foreign narcotics traffickers pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). OFAC also designated one additional Chinese national, Guanghua Zheng, for his support to the Zheng DTO’s drug trafficking activities, as well as one Chinese entity, Qinsheng Pharmaceutical Co. Ltd., for being owned or controlled by Fujing Zheng. OFAC is also identifying Xiaobing Yan (Yan) as a significant foreign narcotics trafficker pursuant to the Kingpin Act. Further identification information can be found in BankersOnline's OFAC Update.

FinCEN has issued Advisory FIN-2019-A006, "Advisory to Financial Institutions on Illicit Financial Schemes and Methods Related to the Trafficking of Fentanyl and Other Synthetic Opioids," to alert financial institutions and assist them in detecting and reporting related criminal activity.


HUD overhaul of inspection process continues

The Department of Housing and Urban Development has announced another step to overhaul the Department’s 20-year-old inspection process to ensure taxpayer-supported housing is healthy and safe. HUD is launching a new demonstration to test innovative new approaches for making certain thousands of public housing agencies and private owners provide housing that is “decent, safe and sanitary." The test is part of a wholesale reexamination of the inspection process used by Department’s Real Estate Assessment Center, which is responsible for inspecting properties owned and operated by approximately 3,700 local public housing authorities and approximately 23,000 privately owned apartment buildings nationwide. Combined, approximately 96 percent of these properties pass their inspections.


FOMC minutes released

The Federal Reserve Board and the Federal Open Market Committee have released the minutes of the FOMC meeting held on July 30-31, 2019. The Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent.


Federal Reserve statistical releases

The Federal Reserve has updated two of its statistical releases:


Defense CUs leading way on financial inclusion

In a presentation at the Defense Credit Union Council’s Annual Meeting in Chicago, NCUA Chairman Hood noted that defense credit unions are well positioned to lead the way on improving access to affordable financial services in underserved communities.


Fed enforcement actions

The Federal Reserve Board has announced three enforcement actions:

  • a $20,000 civil money penalty to be paid by First Ipswich Bank, Ipswich, Massachusetts, for flood insurance violations
  • a $36,000 civil money penalty to be paid by Brookline Bank, Brookline, Massachusetts, for flood insurance violations
  • a Notice of Intent to prohibit from banking, seeking restitution, and assessing a civil money penalty, issued to a former employee of Farmers & Merchants Bank, Baldwyn, Mississippi

A Notice of Intent is not a final action. It notifies the respondent of the Board's intent and provides the respondent an opportunity for a hearing on the allegations made in the Notice and on the Board's intended action. In this case, the respondent is charged with embezzling over $441,000 by taking cash from the bank's vault and making unauthorized withdrawals from customers' certificate of deposit accounts, and with forging bank records and lying to bank personnel about her actions. The Board intends to bar the respondent from the banking industry, require her to make restitution to the bank of $20,264.27, and assess a civil money penalty of $10,067.


Treasury designates Dominican Republic-based organization

The Department of the Treasury has announced that OFAC has identified Dominican national Cesar Emilio Peralta and the Peralta Drug Trafficking Organization (Peralta DTO) as significant foreign narcotics traffickers under the Foreign Narcotics Kingpin Designation Act. OFAC designated eight additional Dominican nationals for providing material support to, or acting for or on behalf of, Peralta and the Peralta DTO. OFAC also designated six entities in Santo Domingo, Dominican Republic, including a number of nightclubs owned or controlled by Cesar Emilio Peralta. For identification details on the individuals and entities designated by OFAC, see BankersOnline's OFAC Update.


OCC amends assessments rule

The OCC has published [84 FR 43475] in today's Federal Register a final rule to revise its assessment regulation to provide partial refunds to banks under the jurisdiction of the OCC that exit the OCC's jurisdiction within the first half of each six-month period beginning the day after the date of the second or fourth quarterly Call Report. The final rule will not change the current payment due dates for assessments nor will it change the way assessments are calculated for banks that remain under the OCC's jurisdiction. The final rule will also make technical changes to the assessments rules. The rule will become effective September 20, 2019.


$28M to clean up public housing lead hazards

HUD has announced it is awarding $27.8 million to 38 Public Housing Agencies (PHAs) in 24 states and the District of Columbia to identify and reduce lead-based paint hazards in thousands of older public housing units.


Two agencies approve easing of Volcker Rule

Yesterday, Comptroller of the Currency Otting and the Board of Directors of the FDIC approved a final rule tailoring and simplifying the “Volcker Rule” while maintaining core protections for the safety and soundness of the federal banking system. Once approved by the Federal Reserve Board, the amendments, which will be effective January 1, 2020, will:

  • tailor the rule's compliance requirements based on the size of a firm's trading assets and liabilities, with the most stringent requirements applied to banking entities with the most trading activity;
  • retain the short-term intent prong of the "trading account" definition from the 2013 rule only for banking entities that are not, and do not elect to become, subject to the market risk capital rule prong;
  • replace the rebuttable presumption that instruments held for fewer than 60 days are covered under the short-term intent prong with a rebuttable presumption that instruments held for 60 days or longer are not covered;
  • clarify that banking entities that trade within internal risk limits set under the conditions in this final rule are engaged in permissible market making or underwriting activity;
  • streamline the criteria that apply when a banking entity seeks to rely on the hedging exemption from the proprietary trading prohibition;
  • limit the impact of the rule on the foreign activities of foreign banking organizations; and
  • simplify the trading activity information that banking entities are required to provide to the agencies.


FDIC NPR on interest rate restrictions for less than well capitalized institutions

The FDIC has issued a notice of proposed rulemaking related to interest rate restrictions that apply to less than well capitalized insured depository institutions. Under the proposed rule, the FDIC would amend the methodology for calculating the national rate and national rate cap for specific deposit products to provide a more balanced, reflective, and dynamic national rate cap. The national rate would be the weighted average of rates offered on a given deposit product by all reporting institutions weighted by domestic deposit share. The national rate cap for particular products would be set at the higher of (1) the 95th percentile of rates paid by insured depository institutions weighted by each institution's share of total domestic deposits, or (2) the proposed national rate (i.e., the weighted average) plus 75 basis points. The proposed rule would also greatly simplify the current local rate cap calculation and process by allowing less than well capitalized institutions to offer up to 90 percent of the highest rate paid on a particular deposit product in the institution's local market area. Additionally, the proposed rule seeks comment on alternative approaches to setting the national rate caps, including setting the national rate cap at the higher of the current rate cap or the previous rate cap.

Comments will be accepted for 60 days following publication in the Federal Register.


FDIC proposes assessment credits changes

The FDIC has announced its approval of a notice of proposed rulemaking that would amend the deposit insurance assessment regulations that govern the use of small bank assessment credits and one-time assessment credits. Small bank credits were awarded to insured depository institutions that had less than $10 billion in assets, and that contributed to the growth in the Deposit Insurance Fund reserve ratio at some point between July 1, 2016, and September 30, 2018, when the reserve ratio was between 1.15 percent and 1.35 percent. The proposal would require the FDIC to automatically apply small bank credits to quarterly assessments when the reserve ratio is at least 1.35 percent, rather than 1.38 percent, as required under current regulation. After applying credits for eight quarters, the FDIC would remit to insured institutions the nominal value of any remaining small bank credits.

Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register.


Otting tours D.C. CRA projects

In his ongoing campaign promoting a planned overhaul of Community Reinvestment Act regulations, Comptroller Otting led a tour of Washington, D.C., areas that have benefited from CRA activity and discussed how CRA regulations can be strengthened to promote more lending, investment, and services where they are needed most. He was joined by more than 50 community advocates, community development professionals, and bankers engaged in CRA activity in the district.


CFPB posts consumer mortgage loan guides

The Bureau has posted English and Spanish loan estimate and closing disclosure guides to help consumers choose the right home loan.


NCUA guidance for CUs servicing hemp businesses

The NCUA has released interim guidance on ways credit unions may provide certain financial services to lawfully operating hemp businesses. This guidance will be updated as needed and once forthcoming regulations and guidelines are finalized by the U.S. Department of Agriculture.


ID thief stopped by alert banker

The FBI has reported that an alert bank employee in Georgia helped catch a prolific thief who defrauded banks and individuals using multiple stolen identities. The thief had in his possession at the time of arrest a bag with 20 cellular phones, 13 different identifications, a number of credit cards, and about $11,000 in cash. The bank employee had responded to an alert issued when bank staff members followed up on internal "red flags" warning of suspicious activity.


Fed issues prohibition letters

The Federal Reserve Board issued 13 "Section 19" letters during the second quarter of 2019. The letters notified individuals they are legally prohibited under Section 19 of the Federal Deposit Insurance Act and Section 205 of the National Credit Union Act from becoming or continuing as an institution-affiliated party with respect to any federally-insured financial organization (and certain other organizations) without permission, and that violation of the prohibition can result in daily criminal fines of up to $1 million or up to five years imprisonment.

The letters were issued to former institution-affiliated parties of:

  • East West Bank, Pasadena, CA (conviction for conspiracy to launder money instruments and making false entries in bank records)
  • Bank of New York Mellon (pleaded guilty to one count of wire fraud)
  • Copiah Bancshares (pleaded guilty to "aiding and abetting the attempt to evade or defeat tax")
  • Regions Bank (pleaded guilty to a charge of theft)
  • Regions Bank (pleaded guilty to a charge of grand theft)
  • Regions Bank (pleaded guilty to a charge of embezzlement)
  • Compass Bank, Mansfield, TX (entry into pretrial diversion program to resolve indictment for property theft)
  • Clear Mountain Bank (pleaded guilty to bank fraud)
  • Regions Bank (entry into pretrial diversion program to resolve indictment for exploitation of the elderly involving $50,000 or more)
  • First Citizens Community Bank (pleaded guilty to theft by unlawful taking or disposition)
  • Fifth Third Bank (pleaded guilty to criminal conversion)
  • Fifth Third Bank (pleaded guilty to grand theft (more than $7,500 but less than $150,000), ID fraud (elderly/disabled adult), ID fraud, and telecommunications fraud
  • Fifth Third Bank (pleaded guilty to bank fraud)


    SEC continues pursuit of ADR violations

    The SEC has announced that broker Cantor Fitzgerald & Co. will pay more than $647,000, and broker BMO Capital Markets Corporation will pay over $3.9 million to settle charges of improper handling of "pre-released" American Depositary Receipts (ADRs). "The SEC continues to hold accountable parties that abused the ADR markets over an extended period of time," said Sanjay Wadhwa, Senior Associate Director for Enforcement in the SEC's New York Regional Office. "U.S. investors who invest in foreign companies through ADRs have a right to expect that market professionals aren't gaming the system."


    CFPB private ed loan ombudsman appointed

    The CFPB has announced the appointment of Robert G. Cameron to serve as the Bureau’s private education loan ombudsman. The ombudsman is responsible for receiving, reviewing, and attempting to resolve complaints from private student loan borrowers. The ombudsman is also responsible for compiling and analyzing complaint data on private education loans and making appropriate recommendations to the Secretary of the Treasury, the Bureau Director, the Secretary of Education, and Congress.


    Maryland insurer pays $345K to settle OFAC liability

    OFAC has announced that Atradius Trade Credit Insurance, Inc., of Hunt Valley, Maryland, a trade credit insurer licensed to operate in the state of Maryland, has agreed to remit $345,315 to settle its potential civil liability for two apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations.


    HUD proposes Disparate Impact rule

    HUD has published a proposed rule at 84 FR 42854 in today's Federal Register that would amend HUD's interpretation of the Fair Housing Act's disparate impact standard to better reflect the Supreme Court's 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., and to provide clarification regarding the application of the standard to state laws governing the business of insurance. Comments on the proposal are due by October 18, 2019.


    FEMA to suspend communities from flood program

    The Federal Emergency Management Agency has published a rule identifying communities in Colorado, New Jersey, and Ohio that are scheduled for suspension from the National Flood Insurance Program on August 28, 2019, for noncompliance with the floodplain management requirements of the program.

    • Colorado: Aguilar and unincorporated areas of Las Animas County
    • New Jersey: Creskill, Demarest, Dumont, Edgewater, Elmwood Park, Englewood, Fairview, Garfield, Glen Rock, Hackensack, Harrington Park, Hasbrouck Heights, Leonia, Little Ferry, Moonachie, Mount Laurel, New Jersey Meadowlands Commission, New Milford, North Arlington, Norwood, Oakland, Oradell, Palisades Park, Paramus, Park Ridge, Ramsey, Ridgefield, Ridgewood, Rutherford, Saddle Brook, South Hacksack, Teaneck, Tenafly, Uppder Saddle River, Waldwick, Wallington, Westwood, Wood-ridge, Woodcliff Lake, and Wycoff
    • Ohio: Ashtabula, Conneaut, North Kingsville, and unincorporated areas of Ashtabula County


    June TIC data

    Treasury has released Treasury International Capital (TIC) data for June 2019:

    • The sum total in June of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $1.7 billion. Of this, net foreign private inflows were $6.1 billion, and net foreign official outflows were $4.5 billion.
    • Foreign residents increased their holdings of long-term U.S. securities in June; net purchases were $63.8 billion. Net purchases by private foreign investors were $63.2 billion, while net purchases by foreign official institutions were $0.5 billion.
    • U.S. residents decreased their holdings of long-term foreign securities, with net sales of $35.3 billion.


    Fannie and Freddie stress test results

    The Federal Housing Finance Agency has released a report providing the results of the annual stress tests Fannie Mae and Freddie Mac are required to conduct under the Dodd-Frank Act.


    Industrial production and manufacturing down

    August 15, 2019, G.17 Industrial Production and Capacity Utilization data indicate industrial production declined 0.2 percent in July. Manufacturing output decreased 0.4 percent last month and has fallen more than 1-1/2 percent since December 2018.


    OCC enforcement actions announced

    The OCC has released a list of enforcement actions taken recently against OCC-supervised institutions and individuals affiliated with them. Among those actions were:

    • an Order for Removal and Prohibition and to pay a Civil Money Penalty in the amount of $100,000 issued to the former president, director, and senior trust officer of the Northumberland National Bank, Northumberland, Pennsylvania, who caused the Bank to execute thousands of trades of fixed income securities from April 2002 to May 2014 between customer trust accounts at face or par value, without consideration of the actual market value of the securities being traded, which caused the Bank to suffer losses of approximately $1.21 million (with interest) when it reimbursed 561 trust customers for their losses.
    • a previously announced Order for Removal and Prohibition and to pay a Civil Money Penalty in the amount of $50,000 issued to the former general counsel of Rabobank, N.A., Roseville, California
    • an Order of Prohibition issued to a former customer care representative of First Niagara Bank, N.A., Buffalo, New York
    • an Order of Prohibition issued to a former employee of Bank of America, N.A., Charlotte, North Carolina
    • an Order of Prohibition issued to a former Customer Service and Sales Representative of Wells Fargo Bank, N.A., Sioux Falls, South Dakota
    • an Order to pay a Civil Money in the amount of $15,000 issued to an executive vice president and director of Beauregard Federal Savings Bank, DeRidder, Louisiana
    • an Order to pay a Civil Money Penalty in the amount of $9,500 issued to a former senior vice president and commercial lender of Simmons First National Bank, Pine Bluff, Arkansas
    • an Order to pay a Civil Money Penalty in the amount of $5,000 issued to the president and director of Beauregard Federal Savings Bank, DeRidder, Louisiana
    • a Formal Agreement with the First National Bank of Hope, Hope, Kansas
    • a Formal Agreement with Sterling Bank and Trust, FSB, Southfield, Michigan
    • a Notice of Charges for Order of Prohibition, Cease-And-Desist Order Requiring Restitution, and Assessment of a Civil Money Penalty issued to a former senior vice president of Firstar Bank, N.A., Sallisaw, Oklahoma (now known as Firstar Bank)
    • Orders for payment of Civil Money Penalties for violations of the National Flood Insurance Act issued to MUFG Union Bank, N.A., San Francisco, California ($109,667), and Wilmington Savings Fund Society, FSB, Wilmington, Delaware ($85,264.50).


    Fedwire Payment Systems quarterly data

    The Federal Reserve System has posted second quarter 2019 data for its National Settlement Service, Fedwire Funds Services, and Fedwire Securities Services.


    OCC updates accounting advisory series

    The Office of the Comptroller of the Currency (OCC) has released an updated edition of the Bank Accounting Advisory Series (BAAS). The BAAS covers a variety of topics and promotes consistent application of accounting standards among national banks and federal savings associations.


    Fed offering seven-day term deposit

    The Federal Reserve will conduct a floating-rate offering of term deposits with an early withdrawal feature through its Term Deposit Facility on August 22, 2019.


    New FHA condo approval rule

    The FHA has issued a new condominium approval rule which will allow certain individual condominium units to be eligible for FHA mortgage insurance even if the condominium project is not FHA approved. The policies set out in the new rule become effective October 15, 2019. The rule:

    • introduces a new single-unit approval process to make it easier for individual condominium units to be eligible for FHA-insured financing;
    • extends the recertification requirement for approved condominium projects from two to three years; and
    • allows more mixed-use projects to be eligible for FHA insurance.


    Venezuelans added to ICE's most wanted list

    U.S. Immigration and Customs Enforcement has posted a notice that it has added former Venezuelan Vice President and current Minister of Industry and National Production Tareck Zaidan El Aissami Maddah and his co-conspirator, Venezuelan businessman Samark Jose Lopez Bello, to its Most Wanted list for international narcotics trafficking and money laundering. The action followed an ICE HSI New York investigation that led to their special designations as narcotics traffickers as well as sanctions imposed by the U.S. Treasury Department in 2017 and criminal charges filed by the U.S. Attorney’s Office for the Southern District of New York earlier this year.


    Registration open for OFAC Fall Symposium

    Registration is now open for the OFAC 2019 Fall Symposium at the Walter E. Washington Convention Center in Washington, DC on Tuesday, November 12, 2019. The event is free, but advance registration is required.


    IRS waiving estimated tax penalty

    The IRS has announced it is automatically waiving the estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their 2018 federal income tax returns but did not claim the waiver.


    NCUA and NASCUS agree to cooperate

    National Credit Administration (NCUA) Chairman Hood and National Association of State Credit Union Supervisors (NASCUS) President Kolhoff have signed a Document of Cooperation pledging continued coordination between state and federal regulators within the credit union dual chartering system.


    FHFA issues credit score model validation rule

    The Federal Housing Finance Agency (FHFA) reported yesterday it has issued a final rule on the validation and approval of third-party credit score models that can be used by Fannie Mae and Freddie Mac (the Enterprises). The rule implements the requirements in Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act enacted on May 24, 2018. The rule will become effective 60 days after publication in the Federal Register, which took place on 8/16/2019 [84 FR 41886], with an effective date of 10/15/2019.


    Blanco addresses AML Conference

    In prepared remarks delivered yesterday at the 12th annual Las Vegas Anti-Money Laundering Conference, FinCEN Director Blanco discussed:

    • His perspective on how new technologies are impacting AML/CFT and financial crime detection, particularly sports betting and mobile gaming;
    • How FinCEN’s recent guidance on Convertible Virtual Currency is something that casinos need to pay attention to;
    • The importance of a strong culture of compliance within casinos; and
    • An overview of FinCEN’s ongoing work related to regulatory reform, innovation, and BSA value.


    SEC freezes $8M in fraud scheme assets

    The Securities and Exchange Commission has filed fraud charges against a Brooklyn individual and two entities under his control who allegedly engaged in a fraudulent scheme to sell digital securities to investors and to manipulate the market for those securities. On August 12, 2019, the court entered an emergency freeze to preserve at least $8 million of the $14.8 million the defendants raised in 2017 and 2018 in an offering of digital securities.


    FDIC Board agenda released

    The FDIC has posted a notice of a meeting of its Board of Directors on Tuesday, August 20. Among other business listed on the agenda for the meeting, the Board will consider:

    • a final rule to Increase the Appraisal Threshold for Residential Real Estate Transactions, Implement the Rural Residential Appraisal Exemption, and Require Appropriate Appraisal Review.
    • a final rule to Increase the Major Assets Threshold Under the Depository Institutions Management Interlocks Act.
    • a final rule on Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds.
    • a Notice of Proposed Rulemaking: Removal of Transferred OTS Regulation at Part 390, Subpart M–Deposits.
    • a Notice of Proposed Rulemaking Regarding the Use of Certain Assessment Credits.
    • a Notice of Proposed Rulemaking on Interest Rate Restrictions Applicable to Less than Well Capitalized Banks.
    • a Proposed Interagency Policy Statement on Allowances for Credit Losses.


    U.S. bank offices of foreign entities

    The Federal Reserve Board has posted its March 2019 report of the structure and share data for the U.S. offices of foreign entities. There are two reports showing the same structure and asset information for each U.S. office, one sorted by institution type and the other by home country. Offices located in Puerto Rico, American Samoa, Guam, the Virgin Islands and other U.S.-affiliated insular areas are excluded.


    CFPB settles ITT Ed Services loan program suit

    The CFPB has announced a proposed settlement with ITT Educational Services, Inc., to resolve the Bureau’s lawsuit, which alleges that ITT engaged in unfair and abusive practices in connection with its private loan program in violation of the Consumer Financial Protection Act of 2010. The suit, which was brought in 2014, alleges that ITT helped to create private loan programs for students at ITT Technical Institute, the school run by ITT until it filed for bankruptcy and ceased operations in 2016. The Bureau also alleges that ITT improperly induced students to take out those loans to pay the tuition amounts not covered by loans or other tuition assistance from the federal government. The Bureau’s complaint also alleges that ITT knew that the student borrowers did not understand the terms and conditions of the loans and could not afford them, resulting in high default rates and other negative consequences.

    The proposed settlement includes a judgment against ITT for $60 million and an injunction barring ITT from offering or providing student loans in the future.

    In a separate action filed by the Bureau on June 14, 2019 (see our June 17 Top Story), a final stipulated judgment was entered against the entity holding the private loans at issue, Student CU Connect CUSO, LLC. Under the terms of that judgment all collection on such loans must cease, all outstanding loans must be discharged, and all negative credit reporting must be corrected.


    GSEs delay URLA implementation

    Fannie Mae and Freddie Mac have announced that the Federal Housing Finance Agency (FHFA) directed the GSEs Fannie Mae and Freddie Mac to state in June 2019 that the optional use period for the redesigned Uniform Residential Loan Application (URLA) and automated underwriting system (AUS) implementations would be postponed. FHFA has now directed the GSEs to make specific modifications to the URLA form. The deadlines for implementation of the URLA and AUS datasets will now be delayed further; the mandatory use of the redesigned form and data will no longer begin on February 1, 2020.

    The changes to be made to the URLA form include:

    • Removal of the language preference question in section 1a and the homeownership education and housing counseling question in section L5. A voluntary consumer information form, not part of the URLA, will be developed to collect this information.
    • In the Borrower Information, Section 6: Acknowledgments and Agreements, the statement on "Use and Sharing of Information" will be revised to address specific uses of borrower data.
    • The Military Service question (Borrower Information, Section 1a.) will be moved to a new section adjacent to Section 7: Demographic Information.
    • Minor edits for consistency and usability will be made throughout the URLA form.

    The impact of those changes to the timeline will be assessed and more information about the new implementation dates will be disseminated as soon as it is available.


    Fed Payment Systems updates

    The FRB has posted the Second Quarter 2019 updates of its Check Services and Automated Clearing House Services.


    OCC schedules Innovation Office Hours in D.C.

    The OCC will hold Innovation Office Hours October 8–10, in Washington, D.C. Office Hours are hour-long one-on-one meetings with Office of Innovation staff to discuss financial technology (fintech), new products or services, partnering with a bank or fintech company, or other matters related to responsible innovation in the federal banking system.


    OCC Bulletin on host-state LTD ratios

    OCC Bulletin 2019-41, issued Friday, reminds national banks of the host state loan-to-deposit ratios released May 28, 2019 by the OCC, Fed and the FDIC, and provides information on how those ratios are used by the agencies to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA). Section 109 does not apply to federal savings associations.


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