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E.g., Jun 16 2022
E.g., Jun 16 2022


Hsu discusses diversity, inclusion and minority homeownership

On May 12, Acting Comptroller of the Currency Michael J. Hsu discussed the OCC’s efforts to reduce barriers to homeownership and promote financial inclusion in remarks at the Asian Real Estate Association of America Diversity and Fair Housing Summit. Hsu highlighted the work of Project REACh to support affordable homeownership, expand alternative credit, and revitalize minority depository institutions. He also discussed the growing interest in cryptocurrency investments and other digital assets.


Powell confirmed for second term as Fed chair

The U.S. Senate yesterday confirmed Jerome Powell for a second term as chairman of the Federal Reserve Board of Governors. Earlier this week, Lisa Cook and Phillip Jefferson were confirmed as members of the Board.


FDIC Board to meet May 17

The FDIC has published [87 FR 29314] a notice of a meeting of its Board to be held at 10 a.m. on Tuesday, May 17, 2022. The meeting will be open to the public by webcast only, and available on-demand about one week later. Matters to be considered include:

  • a memorandum and resolution regarding amendments to the Guidelines for Appeals of Material Supervisory Determinations
  • a memorandum and resolution regarding a final rule on False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC's Name or Logo


FHFA joins group greening the financial system


Revised interagency Q&As on flood insurance

Five federal agencies — the Federal Reserve Board, Farm Credit Administration, FDIC, NCUA, and OCC — on Wednesday announced jointly issued Questions and Answers Regarding Flood Insurance (Q&As) on federal flood insurance law and the agencies’ implementing regulations. These Q&As replace those originally published by the agencies in 2009 and 2011 and consolidate Q&As proposed by the agencies in 2020 and 2021. The revised Q&As reflect significant changes to the flood insurance requirements made by federal law in recent years.

The Q&As cover a broad range of technical flood insurance topics, including the escrow of flood insurance premiums, the detached structure exemption to the flood insurance purchase requirement, force placement procedures, and private flood insurance.

In addition, the agencies reorganized the Q&As by topic to make it easier for users to find and review information related to flood insurance.


CFPB bans scammers and orders them to pay $11M+

The CFPB announced Wednesday it had finalized an enforcement action against debt-relief payment-processors RAM Payment and Account Management Systems (AMS), as well as AMS’s co-founders, Gregory Winters and Stephen Chaya, for collecting debt-relief fees from consumers, lying to consumers about when the fees would be paid to debt-relief companies, and sending illegal advance fees to debt-relief companies before they were legally allowed to do so. The Bureau also said AMS failed to return funds to consumers who cancelled student-loan debt relief agreements, as required by law. The CFPB is ordering RAM Payment, AMS, Winters, and Chaya to pay more than $11 million in consumer redress and civil money penalties.

Knoxville, Tennessee-based AMS and RAM Payment provided account maintenance and payment-processing services to about 270,000 consumers across the U.S. who were enrolled in debt relief programs. Winters and Chaya co-founded AMS. RAM Payment acquired AMS in 2019. After the acquisition, Winters and Chaya continued to manage AMS and RAM Payment, and they exercised substantial control over the companies’ business practices.

Providers of account-maintenance and payment-processing services to debt-relief companies are supposed to be independent, third-party companies that hold fees until debt-relief companies are entitled to them under the law. The CFPB’s investigation found that the respondents violated the Telemarketing Sales Rule and the Consumer Financial Protection Act. The respondents substantially assisted student-loan and traditional debt-relief companies in requesting or accepting advance fees for debt-relief services, misrepresented their payment-processing actions to consumers before disbursing fees to student-loan debt-relief companies, and unfairly disbursed unearned fees for student-loan debt-relief services after consumers had unenrolled from or canceled the services.

Additionally, Winters and Chaya sought to enrich themselves through illegal relationships with an affiliated financing company and debt-relief companies. Winters and Chaya owned a financing company, Account Connect Limited (ACL). For certain debt-relief companies, ACL advanced about 65% of the fees that the companies expected to receive from consumers. ACL recouped these advances from payments consumers made into accounts maintained by AMS and RAM Payment. The respondents deceived consumers by failing to disclose this conflict-of-interest between the respondents and ACL. Instead, the respondents falsely represented that AMS and RAM Payment provided services as independent third-party companies. They also illegally kept money held in consumers’ accounts when consumers cancelled or unenrolled from ACL-funded student-loan debt-relief services with companies.

The CFPB's consent order:

  • Requires the respondents to refund $8.7 million to consumers enrolled in student-loan debt-relief services
  • Issues industry bans against AMS, Winters, and Chaya and requires RAM Payment to stop providing services to both student-loan debt-relief companies and debt-relief companies receiving funding from or owned by an affiliated company, stop paying commissions to third-party marketing companies for consumer referrals, and consent to the CFPB’s supervisory authority.
  • Requires the respondents to pay a $3 million fine


NMLS posts updated Policy Guidebook

The NMLS has posted an updated version of the NMLS Policy Guidebook to the NMLS Resource Center and the Regulator Resource Center. Also posted was a summary of the updates.


Hsu discusses bank mergers

Acting Comptroller of the Currency Michael J. Hsu recently discussed the need to update the framework used to analyze bank merger applications before the Brookings Institution. In his remarks, the Acting Comptroller discussed proposed mergers in the context of bank competition, financial stability, and facilitating the needs of communities.


Federal Reserve adds to FEDS series

The Federal Reserve Board has added two new papers to its Finance and Economics Discussion Series (FEDS).

Cyberattacks and Financial Stability: Evidence from a Natural Experiment studies the effects of a unique multi-day cyberattack on a technology service provider, and identifies first- and second-round effects of the event. For banks using relevant services of the TSP, the attack impaired their ability to send payments over Fedwire, even though the Federal Reserve extended the time they had to submit payments. This impairment (first-round effect) caused other banks to receive fewer payments (second-round effect), leaving them at risk of having too few reserves to send their own payments (a potential third-round effect). These innocent-bystander banks responded differently depending on their size and reserve holdings. Those with sufficient reserves drew down their reserves. Of the others, smaller banks borrowed from the discount window, while larger banks borrowed in the federal funds market. These significant adjustments to operations and funding prevented the second-round effect from spilling over into third-round effect and broader financial instability. These findings highlight the important role for bank contingency planning, liquidity buffers, and the Federal Reserve in supporting the financial system’s recovery from a cyberattack.

The Collateral Channel and Bank Credit studies the role of the collateral channel for bank credit using confidential bank-firm-loan data. The authors estimate that for a 1 percent increase in collateral values, firms pledging real estate collateral experience a 12 basis point higher growth in bank lending with higher sensitivities for more credit constrained firms. Higher real estate values boost firm capital expenditures and lead to lower unemployment and higher employment growth and business creation. These estimates imply that as much as 37 percent of employment growth over the period from 2013 to 2019 can be attributed to the relaxation of borrowing constraints.

FEDS are Federal Reserve staff working papers that investigate a broad range of issues in economics and finance, with a focus on the U.S. economy and domestic financial markets.


CFPB Advisory Opinion on coverage of ECOA

On Monday, the CFPB published an advisory opinion to affirm that the Equal Credit Opportunity Act (ECOA) bars lenders from discriminating against customers after they have received a loan, not just during the application process.

ECOA bans credit discrimination on the basis of race, color, religion, national origin, sex, marital status, and age. It also protects those who are receiving money from any public assistance program or exercising their rights under certain consumer protection laws. The CFPB issued Monday’s advisory opinion and accompanying analysis to clarify that ECOA protects people from discrimination in all aspects of a credit arrangement. The advisory opinion is consistent with a recent legal brief filed by the CFPB, the Federal Trade Commission, the Federal Reserve Board of Governors, and the U.S. Department of Justice.


OFAC targets network supporting ISIS in Syria

Treasury has announced that OFAC has designated a network of five Islamic State of Iraq and Syria (ISIS) financial facilitators operating across Indonesia, Syria, and Turkey. For names and identification information, see our May 9, 2022, OFAC Update.


SEC extends comment period on climate-related disclosures proposal

The Securities and Exchange Commission has announced that it has extended the public comment period on the proposed rulemaking to enhance and standardize climate-related disclosures for investors until June 17, 2022. The proposal, originally published on April 11, 2022, had a comment period that would have ended on May 20.


Regulatory relief for New Mexico banks

FDIC FIL-19-2022, issued Monday, provides guidance to help financial institutions and facilitate recovery in areas of New Mexico affected by wildfires and straight-line winds beginning on April 5, 2022, and continuing. FEMA declared a federal disaster for selected areas of New Mexico on May 4. A current list of designated areas is available at Currently, the list comprises Colfax, Lincoln, San Miguel, and Valencia counties.

The FDIC is encouraging 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. Banks 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.


OCC Customer Assistance Group address change

The OCC has issued Bulletin 2022-15 announcing a final rule to update the mailing address of its Customer Assistance Group (CAG) in the appendix of 12 CFR Part 14.

The final rule amends Appendix A to 12 CFR 14 by removing the prior physical mailing address for the OCC’s CAG (1301 McKinney Street, Suite 3450, Houston, Texas 77010-3031) and replacing it with the current mailing address (P.O. Box 53570, Houston, Texas 77052).

The OCC's Bulletin 2021-35, issued August 5, 2021, updated the CAG address information with respect to the Community Reinvestment Act, Fair Housing Act, and Equal Credit Opportunity Act. No change was made at that time to 12 CFR Part 14, which governs consumer protection in sales of insurance.


HUD expands eviction/diversion program with $20M

The U.S. Department of Housing and Urban Development (HUD) on Monday announced $20 million in new grants for its Eviction Protection Grant Program, doubling the amount originally allocated for the launch of the Program in November 2021.

HUD has offered grants to 11 organizations, in addition to the 10 organizations selected in November, to help non-profits and government entities provide legal assistance to low-income tenants at risk of or subject to eviction. Legal services are integral in helping individuals and families, especially people of color who are disproportionately represented among those evicted, people with limited English proficiency and people with disabilities, avoid eviction or minimize the disruption and damage caused by the eviction process.


April 2022 SLOOS posted

The Federal Reserve Board has posted the results of the April 2022 Senior Loan Officer Opinion Survey, which addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the first quarter of 2022.

Regarding loans to businesses, respondents to the survey reported, on balance, unchanged standards for commercial and industrial loans to firms of all sizes, after having eased them over the previous four quarters, while demand strengthened over the first quarter. Meanwhile, banks reported unchanged standards and demand for most commercial real estate (CRE) loan categories except for those secured by multifamily residential properties, for which they eased standards and demand strengthened on net.

Banks also responded to a set of special questions about changes in lending policies and demand for CRE loans over the past year. Banks reportedly eased some lending terms across all CRE loan categories, including the maximum loan size and maturity, the spread of loan rates over their cost of funds, the length of interest-only periods, and the market areas served.

For loans to households, banks eased standards across most categories of residential real estate (RRE) loans and home equity lines of credit (HELOCs) over the first quarter, while also reporting weaker demand for all types of RRE loans but stronger demand for HELOCs on net. In addition, banks eased standards for card loans and auto loans, while demand reportedly strengthened for all consumer loan types over the first quarter.


FTC shuts down 'The Credit Game' as scam

At the request of the Federal Trade Commission, a federal court has temporarily halted a bogus credit repair scheme known as The Credit Game for promoting a series of lies and deceptions. The FTC alleged the scheme’s operators lied to credit reporting agencies regarding information on consumers’ credit reports and pitched consumers a supposed business opportunity that was essentially starting their own bogus credit repair scheme.

In a complaint filed against The Credit Game and its owners, Michael and Valerie Rando, the FTC alleged that the company has illegally charged consumers hundreds and even thousands of dollars for credit repair services of little to no value and told consumers to “invest” their COVID-19 governmental benefits on their unlawful services. In some cases, the company’s “services” included filing false identity theft reports with the FTC and encouraging consumers to take actions that were unlawful. The FTC asked the court to immediately halt the company’s illegal operations, appoint a receiver, and freeze the defendants’ assets. The court issued a temporary restraining order doing so on May 3, 2022.

In addition to the core credit repair scheme, the defendants have also taken advantage of the ongoing pandemic by telling consumers to “invest” pandemic tax benefits into their credit repair schemes. One advertisement used the headline “Free Credit Repair From The Government.”


U.S. takes wide-ranging action against Russia's war efforts

In a rare Sunday press release, Treasury yesterday announced OFAC has designated individuals and entities critical to Russia’s ability to wage war against Ukraine. These include the board members of two of Russia’s most important banks, a Russian state-owned bank and 10 of its subsidiaries, a state-supported weapons manufacturer, and three of Russia’s state-controlled television stations that generate revenue for the state.

OFAC also acted to cut off access to services that are used by the Russian Federation and Russian elites to evade sanctions. On Sunday, OFAC identified accounting, trust and corporate formation, and management consulting as categories of services that are subject to a prohibition on the export, reexport, sale, or supply, directly or indirectly, from the United States, or by a U.S. person, wherever located, to any person located in the Russian Federation. OFAC also determined that these same services sectors of the Russian Federation economy are subject to sanctions pursuant to E.O. 14024.

OFAC had previously designated the CEO and Chairman, and the First Deputy Chairman of the Executive Board of Public Joint Stock Company Sberbank of Russia (Sberbank). On Sunday, it designated eight other current and recent members of the Executive Board of Sberbank.

In addition, OFAC yesterday designated 27 members of Gazprombank's Board of Directors.

Also designated were Joint Stock Company Moscow Industrial Bank and ten of its subsidiaries, plus Limited Liability Company Promtekhnologiya, a private defense company that supplies Russia's military and intelligence services with rifles, and three of Russia's top state-owned television stations.

Treasury also took action to cut off Russia’s access to certain key services from U.S. companies, which Russian Federation companies and Russian elites use to build wealth, generating revenue for Putin’s war machine, and evade sanctions. OFAC issued a determination pursuant to E.O. 14071 prohibiting the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of accounting, trust and corporate formation, and management consulting services to any person located in the Russian Federation. This prohibition will take effect June 7, 2022. In conjunction with this determination, OFAC issued new guidance and general licenses authorizing certain transactions related to these services. Yesterday’s action means that the Russian Federation and Russian elites will no longer benefit from U.S. companies’ valuable accounting, trust and corporate formation, and management consulting services.

For further information and a list of yesterday's additions to OFAC's SDN List, see the May 8, 2022, BankersOnline OFAC Update.


FTC and CFPB oppose liability shield for sloppy credit reports

The Federal Trade Commission has joined the CFPB in an amicus brief filed with the U.S. Court of Appeals for the Second Circuit in the case of Sessa v. TransUnion. The brief asks the court to overturn a lower court decision, which held that TransUnion was not liable for failing to investigate a wrongfully reported debt because the inaccuracy was “legal” and not “factual.”

The joint brief argues that the lower court’s legal inaccuracy exemption is neither based on any textual language in the law, nor is it workable. The invented defense invites consumer reporting agencies and furnishers to skirt their legal obligations by arguing that inaccurate information is only legally, and not factually, inaccurate. For any number of obviously inaccurate factual mistakes that might appear on a consumer’s credit report, consumer reporting agencies might be able to manufacture some supposed legal interpretation to insulate itself from liability.


OFAC targets virtual currency mixer and targets DPRK cyber threats

Treasury has announced that OFAC has sanctioned virtual currency mixer, which is used by the Democratic People’s Republic of Korea (DPRK) to support its malicious cyber activities and money-laundering of stolen virtual currency. On March 23, 2022, Lazarus Group, a DPRK state-sponsored cyber hacking group, carried out the largest virtual currency heist to date, worth almost $620 million, from a blockchain project linked to the online game Axie Infinity; Blender was used in processing over $20.5 million of the illicit proceeds.

OFAC also updated the SDN List to identify additional virtual currency addresses used by the Lazarus Group to launder illicit proceeds.

See the May 6, 2022, BankersOnline OFAC Update for the new and updated listings.


Federal Reserve posts Supervision and Regulation Report

The Federal Reserve System has posted its May 6, 2022, Supervision and Regulation Report, which summarizes banking conditions and the Federal Reserve’s supervisory and regulatory activities, in conjunction with semiannual testimony before Congress by the Vice Chair for Supervision.


Agencies schedule CRA update webinar

On Wednesday, May 11, 2022 3:00 p.m. ET, policy experts from the FDIC, OCC, and Federal Reserve System will host a special Ask the Regulators webinar on their notice of proposed rulemaking to strengthen and modernize CRA regulations. During the webinar, the agencies will provide an overview of the proposal and its objectives. Topics will include assessment areas, qualified activities, evaluation framework, ratings, and data collection and reporting.


FTC acts against Frontier Communications

The Federal Trade Commission has announced it has moved to stop internet service provider Frontier Communications from lying to consumers and charging them for high-speed internet speeds it fails to deliver. Under a proposed order with the FTC and two California law enforcement agencies, Frontier will be prohibited from tricking consumers about its slow internet service and required to support its speed claims. Frontier must also provide current customers with free and easy cancellations when it fails to deliver the promised speeds.

Connecticut-based Frontier advertises and sells digital subscriber line (DSL) internet service in several plans, or tiers, based on download speed. In a complaint first filed in May 2021, the FTC alleged that Frontier advertised that it could provide various speeds of DSL internet service based on the type of plan consumers purchased. Many of the subscribers to Frontier’s DSL service are in rural areas where they may only have one choice, or very limited choices, for internet service. The FTC alleged, however, that Frontier failed to provide many consumers with the maximum speeds they were promised and the speeds they actually received often fell far short of what was touted in the plans they purchased. Some customers complained that it was difficult to engage in typical online activities that should have been possible under the plan they purchased.

The proposed order will:

  • require Frontier to substantiate its internet speed claims at a customer-by-customer level for new and complaining customers and notify customers when it is unable to do so;
  • require Frontier to ensure it can provide the internet service speeds it advertises before signing up, upgrading, or billing new customers;
  • prohibit Frontier from signing up new customers for its DSL internet service in areas where the high number of users sharing the same networking equipment causes congestion resulting in slower internet service; and
  • require the company to notify existing customers who are receiving DSL internet service at speeds lower than was advertised and allow those customers to change or cancel their service at no charge.

Frontier also will be required to pay $8.5 million in civil penalties and costs to the Los Angeles County and Riverside County District Attorneys’ offices on behalf of California consumers as well as $250,000 that will be distributed to Frontier’s California customers harmed by the company’s practices. In addition, the company must discount the bills of California customers who have not been notified that they are receiving DSL service that is much slower than the highest advertised speed. Frontier is required to deploy fiber-optic internet service, which is generally much faster than DSL, to 60,000 residential locations in California over four years—at an estimated cost of $50 million to $60 million.


FHA acts to expand affordable housing supply

The Federal Housing Administration (FHA) announced on Thursday that it published Mortgagee Letter 2022-08, "Expanding Affordable Housing Supply Through FHA’s Claims Without Conveyance of Title."

The Mortgagee Letter adds an initial 30-day exclusive sales period for Claims Without Conveyance of Title (CWCOT) post-foreclosure sales for owner-occupants, HUD-approved nonprofits, and governmental entities. The 30-day exclusive period gives these specified buyers an opportunity to bid on foreclosed properties before investors are allowed to bid during the CWCOT post-foreclosure sales period. The ML also extends the mortgagee’s conveyance timeframe to provide these buyers additional time to obtain financing and complete the sale.

CWCOT is an FHA claim option through which insurance benefits are paid to a mortgagee after the sale of the property to a third-party purchaser at foreclosure of the FHA-insured mortgage or through post-foreclosure sales efforts. This means there is no conveyance of the property to HUD in exchange for payment of the mortgage insurance benefit.


HUD charges 4 in Puerto Rico with illegal discrimination

The Department of Housing and Urban Development has announced that it has charged Josefina Amparo De La Fuente-Mundo, Alicia De La Fuente-Mundo, and Rosalia De La Fuente-Mundo, owners and manager of an apartment building in San Juan, Puerto Rico, and Maria Trini Menendez, the real estate agent hired to rent a unit in the building, with housing discrimination for allegedly refusing to rent to a person with disabilities because she uses a service animal.

HUD's charge of discrimination alleges that the complainant, who is legally blind, attempted to rent a unit at the subject property for herself and her partner. During the tour of the property, the complainant told Ms. Menendez of her disability and of her need for a guide dog as a service animal. In response, Ms. Menendez told the complainant that she could not have a pet in the unit because the owners have a no pet policy at the subject property. According to the Charge, the complainant explained that refusing to permit a service animal could be grounds for a lawsuit and suggested that Ms. Menendez speak to the owner of the property. When Ms. Menendez raised the issue with Josefina De La Fuente-Mundo, Ms. De La Fuente-Mundo reiterated that pets are not permitted in the building. Ms. Menendez relayed this to the complainant and suggested other potential rentals.


Federal Reserve Board bans former Georgia banker

The Federal Reserve Board has announced its has executed a consent order of prohibition against Angela Garcia, former senior vice president and residential loan servicing director at Synovus Bank, Columbus, Georgia. The Board found that, between 2020 and 2021, Garcia embezzled $69,039 from a bank general ledger account, deposited the funds in accounts belonging to her relatives, and made fraudulent entries in the bank’s records regarding these transactions.

The order states that Garcia was terminated by the bank in June 2021, is no longer involved in banking, and has agreed to reimburse the bank in full for its loss.


FDIC terminates receiverships

The FDIC has published a notice [87 FR 27147] in today's Federal Register that it has wound up the affairs of two institutions and liquidated all assets. The two receiverships terminated as of May 1, 2022 are:

  • Florida Community Bank, Immokalee, Florida
  • Tennessee Commerce Bank, Franklin, Tennessee


Agencies jointly propose modernized CRA regulations

The Federal Reserve Board, FDIC, and OCC yesterday announced a joint proposal to strengthen and modernize regulations implementing the Community Reinvestment Act to better achieve the purposes of the law.

Building on feedback from stakeholders and research, the agencies are inviting public comment on their joint proposal, which has the following key elements:

  • Expand access to credit, investment, and basic banking services in low- and moderate-income communities. Under the proposal, the agencies would evaluate bank performance across the varied activities they conduct and communities in which they operate so that CRA is a strong and effective tool to address inequities in access to credit. The proposal would promote community engagement and financial inclusion. It would also emphasize smaller-value loans and investments that can have high impact and be more responsive to the needs of LMI communities.
  • Adapt to changes in the banking industry, including internet and mobile banking. The proposal would update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models.
  • Provide greater clarity, consistency, and transparency. The proposal would adopt a metrics-based approach to CRA evaluations of retail lending and community development financing, which includes public benchmarks, for greater clarity and consistency. It also would clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities.
  • Tailor CRA evaluations and data collection to bank size and type. The proposal recognizes differences in bank size and business models. It provides that smaller banks would continue to be evaluated under the existing CRA regulatory framework with the option to be evaluated under aspects of the new proposed framework.
  • Maintain a unified approach. The proposal reflects a unified approach from the bank regulatory agencies and incorporates extensive feedback from stakeholders.

The agencies also released a fact sheet on the proposal. Comments will be accepted through August 5, 2022.


OCC scheduling virtual Innovation Office Hours

The Office of the Comptroller of the Currency has announced that it will host virtual Innovation Office Hours on June 14–15, 2022, to promote responsible innovation in the federal banking system.

Office hours are one-on-one meetings with representatives from the OCC Office of Innovation to discuss financial technology (fintech), new products or services, partnering with a bank or fintech company, or other matters related to responsible innovation in financial services. Each meeting will last no longer than one hour.

Interested parties should request a virtual office hours session by May 20, 2022, and are asked to provide information on the topic(s) they are interested in discussing with the Office of Innovation. The OCC will determine specific meeting times and arrangements after it receives and accepts the request.


Federal Reserve lists 10 CRA ratings

The Federal Reserve Board has posted the ratings assigned by the Reserve Banks in April 2022 to the Community Reinvestment Act evaluations of ten banks. All ten were rated Satisfactory.


Intuit to pay $141M for TurboTax overcharges

New York Attorney General Letitia James on Wednesday announced a record multistate Assurance of Voluntary Compliance agreement with Intuit, Inc., the owner of TurboTax, for deceiving millions of low-income Americans into paying for tax services that should have been free. As a result of Attorney General James’ agreement, Intuit will pay $141 million in restitution to millions of consumers across the nation who were unfairly charged. In addition, Intuit must suspend TurboTax’s “free, free, free” ad campaign that lured customers with promises of free tax preparation services, only to deceive them into paying. All 50 states and the District of Columbia have signed onto the agreement.

A multistate investigation found that Intuit engaged in several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program. The company used confusingly similar names for both its IRS Free File product and its commercial “freemium” product. Intuit bid on paid search advertisements to direct consumers who were looking for the IRS Free File service to the TurboTax “freemium” product instead. Intuit also purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, effectively shutting out eligible taxpayers from filing their taxes for free. Moreover, TurboTax’s website included a “Products and Pricing” page that stated it would “recommend the right tax solution,” but never displayed or recommended the IRS Free File program, even when consumers were ineligible for the “freemium” product.

Intuit will pay $141 million in restitution, of which roughly $2.5 million will be used for administrative fund costs.

Under the agreement, Intuit will provide restitution to nearly 4.4 million consumers who started using TurboTax’s Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible to file for free using the IRS Free File program offered through TurboTax. Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Impacted consumers will automatically receive notices and a check by mail.

Intuit has also agreed to reform its business practices, including:

  • Refraining from making misrepresentations in connection with promoting or offering any online tax preparation products;
  • Enhancing disclosures in its advertising and marketing of free products;
  • Designing its products to better inform users whether they will be eligible to file their taxes for free; and
  • Refraining from requiring consumers to start their tax filing over if they exit one of Intuit’s paid products to use a free product instead.

Intuit withdrew from the IRS Free File program in July 2021.


FOMC statement released; Fed funds move up 1/2 percent

The Federal Reserve Board has released the Federal Open Market Committee Statement following the committee's meeting on Wednesday, May 4.

The Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent [a 1/2 percent increase] and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in conjunction with the statement.

The Implementation Note issued with the Statement reports that the Board of Governors voted unanimously to increase the interest rate paid on reserve balances to 0.9 percent, effective May 5. 2022. The Board also voted unanimously to approve a 1/2 percentage point increase in the primary credit rate to 1 percent, effective May 5, 2022.


Bank of America pays $10M+ for garnishment procedures

The Consumer Financial Protection Bureau on Wednesday announced it has finalized an enforcement action against Bank of America for processing illegal, out-of-state garnishment orders against its customers’ bank accounts. The CFPB's press release states the bank unlawfully froze customer accounts, charged garnishment fees, garnished funds, and sent payments to creditors based on out-of-state garnishment court orders that should have been processed under the laws and protections of the states where the consumers lived. Bank of America also violated the law by inserting unfair and unenforceable language into customer contracts that purported to limit customers’ rights to challenge garnishments.

The CFPB’s consent order requires Bank of America to refund or cancel imposed fees from unlawful garnishments, review and reform its system for processing garnishments, eliminate unenforceable clauses from its contracts, and pay a $10 million civil penalty.

Since August 1, 2011, says the CFPB's release, Bank of America unlawfully garnished at least 3,700 out-of-state accounts, and the customers whose accounts were garnished have paid at least $592,000 in garnishment fees. The CFPB found that the bank engaged in unfair and deceptive acts and practices that resulted in money from customers’ bank accounts being frozen or taken when the garnishments were not permissible under the state laws where the accounts were located. In addition to the $592,000 in unlawful fees, the company harmed consumers by:

  • Deceiving customers about their rights.
  • Imposing unenforceable clauses in customer account contracts
  • Failing to adhere to consumer protections governing customer' bank accounts

For additional information on the CFPB's enforcement action, see "BofA fined $10 million for illegal garnishment procedures," in the BankersOnline Penalty pages.


FDIC releases CRA evaluation ratings

The FDIC has issued a list of 46 banks recently evaluated for compliance with the Community Reinvestment Act that were assigned evaluation ratings in February 2022. We congratulate three of those banks that received a rating of Outstanding:

One Oklahoma bank received a Needs to Improve rating due to substantive violations of the Equal Credit Opportunity Act and the Fair Housing Act described in its evaluation as "redlining." The remaining 42 banks were rated Satisfactory.


FDIC Small Business Lending Survey

The FDIC and the Census Bureau have asked about 2,000 U.S. banks to participate in a nationally representative online survey about their small business lending practices and volumes.

Sponsored by the FDIC and administered by Census, the 2022 Small Business Lending Survey (SBLS) provides a comprehensive view of small business lending by banks and will significantly expand the FDIC’s and the public’s understanding of the impact banks have on the nation’s small businesses. The last SBLS occurred in 2016 and the 2022 survey aims to fill gaps in the understanding of current bank lending to this sector.

The Census selected approximately 2,000 banks of all sizes and from all geographic areas in the U.S. to participate in the survey, including institutions primarily regulated by the FDIC, the Federal Reserve System and the Office of the Comptroller of the Currency. The selected banks include all FDIC-insured institutions with assets of $3 billion or more as well as a random sample of banks with assets of less than $3 billion. All survey responses will be confidential and anonymous and the FDIC will only report the aggregated results.

Informational sessions
To answer any questions that bankers may have about the 2022 SBLS, the FDIC will host four informational sessions for bankers on May 11, 12, 16 and 17. Bankers may attend multiple sessions and are encouraged to invite other staff to attend. Advance registration is required.


OCC CRA evaluation ratings released

The OCC has released a list of 23 Community Reinvestment Act performance evaluations that became public in April. We offer our congratulations to six national banks whose evaluations were rated Outstanding:

The remaining 17 national banks and federal savings associations received Satisfactory ratings.


FHFA mandates use of supplemental information form

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac (the Enterprises) will require lenders to use the Supplemental Consumer Information Form (SCIF) as part of the application process for loans that will be sold to the Enterprises. The purpose of the SCIF is to collect information about the borrower's language preference, if any, and on any homebuyer education or housing counseling the borrower received, so lenders can better understand borrower needs during the home buying process.

Specifically, the Enterprises will require lenders to present the SCIF questions to borrowers and to report any data collected from the SCIF to the Enterprise purchasing the loan. Lenders will be required to adopt these changes and reporting requirements for loans with application dates on or after March 1, 2023. Response by borrowers to the preferred language question in the SCIF will remain voluntary.

The SCIF will be available on FHFA's Mortgage Translations page later this summer.


Nacha guide on voice payments contract issues

Nacha has announced its Payments Innovation Alliance has created a legal and risk mitigation resource guide for financial institutions seeking to implement voice payments capabilities and applications (skills) through smart devices, such as the Amazon Echo and Google Nest.

As part of the series of Alliance Executive Briefings addressing conversational payments, Voice Payments Contractual Considerations for Financial Institutions provides background on the importance of Terms and Conditions (T&Cs) when offering voice payments services and how terms may be modified to best fit their skill. This guide also offers an overview of use cases, best practices for risk mitigation and a glossary of terms. Written by the Alliance's Conversational Payments and Cybersecurity Response Project Teams, it complements their other titles including Voice Payments: An Introduction and Overview; A Deep Dive into the Technology Behind Voice Payments; and Unwrapping Smart Speakers.


FSB report on approaches to climate-change risks

The Financial Stability Board on Friday announced its publication of an interim report, Supervisory and Regulatory Approaches to Climate-related Risks, that aims to assist supervisory and regulatory authorities in developing their approaches to monitor, manage and mitigate cross-sectoral and system-wide risks arising from climate change and to promote consistent approaches across sectors and jurisdictions. Its recommendations focus on three areas:

  • Supervisory and regulatory reporting and collection of climate-related data from financial institutions
  • System-wide supervisory and regulatory approaches to assessing climate-related risks
  • Early consideration of other potential macroprudential policies and tools to address systemic risks

The FSB is inviting comments on its recommendations through June 30, 2022. The report includes a set of questions for this purpose. The final recommendations, incorporating feedback from the public consultation, will be published in the fourth quarter of 2022.

The Financial Stability Board is an international body that monitors and makes recommendations about the global financial system. Its decisions are not legally binding on its members. However, members of the FSB commit to pursue the maintenance of financial stability, maintain the openness and transparency of the financial sector, implement international financial standards, and agree to undergo periodic peer reviews, using among other evidence IMF/World Bank public Financial Sector Assessment Program (FSAP) reports.

The U.S. is represented on the FSB by Lael Brainard, Vice Chair of the Federal Reserve Board; Gary Gensler, Chairman of the Securities and Exchange Commission, and Andy Baukol, acting Under Secretary for International Affairs, Department of the Treasury.


FedNow pilot announces milestone

The Federal Reserve yesterday announced it has officially started onboarding pilot participants onto the FedNow Service, signaling that the initial testing phase of the FedNow Pilot Program is underway. A few organizations have now successfully connected and delivered test messages over a pilot version of the FedNow Service, marking a key milestone for the service, which remains on course to launch in 2023.

“The FedNow Service pilot participants, including financial institutions of all sizes, processors and correspondents, have been working hard at every step of this journey,” said Nick Stanescu, senior vice president and business executive of the FedNow Service. “Though much work remains, this progress sets the stage for thousands of financial institutions to be up and running with instant payments in the near future, including those that work with third-party payment providers.”


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