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E.g., Jul 14 2020
E.g., Jul 14 2020


Federal Reserve Bank prohibition letters

The Federal Reserve Board's record of Section 19 (Prohibition) letters issued during the first three months of 2020 includes eight such letters.


Another "Outstanding" CRA rating released

Our review of the Federal Reserve Board's publication of CRA evaluation ratings in June revealed that eleven evaluations were made public, with ten banks garnering Satisfactory ratings. Our congratulations to Goldman Sachs Bank USA, New York, for its Outstanding rating.


OCC names senior deputy for economics

The OCC has named Charles W. Calomiris to be the agency's next Senior Deputy Comptroller for Economics. He will oversee the OCC's Economics Department, providing economic, risk, and policy analysis to enhance the agency's mission of bank supervision as well as its policy development and will lead staff who directly support bank supervision, conduct analysis and research on bank-related issues, and provide regular reports to OCC executives and personnel. He will be a member of the OCC's Executive Committee and begin his new role on July 20, 2020.


CFPB study on credit builder loans

The CFPB yesterday released a report indicating that a credit builder loan could increase the likelihood of establishing a credit record for consumers without one, and could help improve the credit scores of those with no current outstanding debt. The Bureau issued “Targeting Credit Builder Loans: Insights from a Credit Builder Loan Evaluation” report and an accompanying practitioner’s guide to broaden insight for community-based organizations and financial institutions working toward expanding financial inclusion.

In a typical credit builder loan agreement, the lender advances the loan funds to a locked savings account. The consumer then makes payments to the lender over 6 to 24 months. Funds are advanced from the locked account to the consumer's savings account either as payments are made or when the program has been completed. The lender reports the consumer's payment record to a credit reporting agency.

Among the report's findings:

  • For participants without an existing loan, opening a CBL increased their likelihood of having a credit score by 24 percent. Almost all participants with existing debt already had a credit score, so the CBL had minimal effect on their likelihood of having score.
  • Participants without existing debt saw their credit scores increase by 60 points more than participants with existing debt.
  • The CBL was associated with an average increase in participants’ savings balances of $253.


OCC repeal of employment contracts rule published

The OCC has published [85 FR 42630] its final rule, announced on June 10, repealing its employment contracts rule for federal savings associations. The rule will become effective August 13, 2020.


Student-loan debt-relief operator and attorneys sued by CFPB

The Consumer Financial Protection Bureau yesterday filed a complaint in the U.S. District Court for the Central District of California against GST Factoring, Inc., which runs a student-loan debt-relief business in Texas, and two of its owners, Rick Graff and Gregory Trimarche, as well as Champion Marketing Solutions, LLC, a customer service and marketing company, and its owner, Scott Freda. The Bureau also filed suit against four attorneys, California attorneys Amanda Johanson and Jacob Slaughter, Arizona attorney David Mize, and Florida attorney Daniel Ruggiero. The Bureau alleges that the companies, their owners, and the attorneys were part of a nationwide student-loan debt-relief operation that charged thousands of consumers saddled with private student-loan debt approximately $11.8 million in illegal upfront fees in violation of the Telemarketing Sales Rule. Concurrent with the complaint, the Bureau and four of the defendants filed proposed stipulated final judgments and orders to resolve the claims against them. If entered by the court, the orders will ban Trimarche, Slaughter, Mize, and Ruggiero from participating in certain activities, impose monetary judgments to provide consumer redress totaling approximately $11.8 million, and impose a civil money penalty.


SEC charges app developer

The SEC reportedyesterday it had charged California-based Abra and a related firm in the Philippines for offering and selling security-based swaps to retail investors without registration and for failing to transact those swaps on a registered national exchange. According to the SEC’s order, Abra developed and owns an app that enabled users to bet on price movements of U.S.-listed equity securities. Using the app, individuals were able to enter into contracts that provide synthetic exposure to price movements of stocks and exchange-traded fund (ETF) shares trading in the U.S. through blockchain-based financial transactions with Abra or with related company Plutus Technologies Philippines Corp.

The order finds that Abra told users they could choose securities whose performance they wanted to mirror, and the value of their contract would go up or down the same amount as the price of the underlying security. The order further finds that these contracts were security-based swaps subject to U.S. securities laws.

As part of the settlement included in the order, Abra and Plutus agreed to cease and desist, and to jointly and severally pay a civil money penalty of $150,000.


Amendments to SEC Form 13F proposed

The Securities and Exchange Commission has announced it has proposed to amend Form 13F to update the reporting threshold for institutional investment managers and make other targeted changes. The threshold has not been adjusted since the Commission adopted Form 13F over 40 years ago.

Form 13F was adopted to comply with a 1975 statutory directive designed to provide the Commission with data from larger managers about their investment activities and holdings, so that their influence and impact could be considered in maintaining fair and orderly securities markets.

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


OCC launches Project REACh

The Office of the Comptroller of the Currency has announced the launch of Project REACh to promote financial inclusion through greater access to credit and capital. REACh stands for Roundtable for Economic Access and Change and brings together leaders from the banking industry, national civil rights organizations, business, and technology to identify and reduce barriers that prevent full, equal, and fair participation in the nation’s economy.


FATF Business Bulletin issued

The latest edition of the FATF Business Bulletin provides a summary of the decisions taken during the June 2020 Virtual Plenary and presents the objectives of the new FATF President, Marcus Pleyer, for the first two-year Plenary period.


CFPB report on debt settlements and credit counseling

The CFPB has released a report examining recent trends in debt settlement and credit counseling. The report documents changes over time in how consumers have used these debt relief options for unsecured debt.

The report shows that nearly one in thirteen consumers with a credit record had at least one account reported by the creditor as settled or with payments managed by a credit counseling agency from 2007 through 2019. It also shows debt settlements rose dramatically during the Great Recession to a peak of $11.4 billion. More than half of these settlements occurred within a year of the account first becoming delinquent. Debt settlement and credit counseling became less common after that recession, but recently settlements have been on the rise following changes in delinquencies and credit tightness.


Second quarter 2020 Call Report instructions

FDIC FIL-69-2020, distributed Friday, July 10, included links to supplemental instructions and June 2020 COVID-19- related supplemental instructions to the Consolidated Reports of Condition and Income (Call Report) for the June 30, 2020, report date.

Filers are asked to plan to complete as early as possible the preparation, editing, and review of their institution’s Call Report data and the submission of these data to the agencies’ Central Data Repository (CDR). Starting preparation early will help identify and resolve any edit exceptions before the submission deadline. If later they find that certain information needs to be revised, they should make the appropriate changes to the Call Report data and promptly submit the revised data file to the CDR.


PA communities on FEMA suspension list

The Federal Emergency Management Agency has published [85 FR 41195] a notice identifying communities in Pennsylvania scheduled for suspension from the National Flood Insurance Program for noncompliance with the program's floodplain management requirements on Wednesday, July 8. The notice lists the communities of Bethel, Cleona, Cornwall, East Hanover, Heidelberg, Jonestown, Lebanon, Millcreek, Mount Gretna, Myserstown, North Cornwall, North Londonderry, Palmyra, South Lebanon, South Londonderry, Swatara, and West Cornwall.

If a listed community took the required floodplain management measures before the July 8 effective date, it was not suspended. Lenders should verify the status of the listed communities before proceeding with any loan to be secured by real estate in those areas.


$1M in refunds mailed to victims of student loan scam

The Federal Trade Commission reports it is mailing checks totaling more than $1 million to individuals who lost money to a student loan debt relief scam. American Student Loan Consolidators and BBND Marketing, which did business under other names including United Processing Center, settled FTC allegations that the companies’ operators pretended to be affiliated with the U.S. Department of Education or with loan servicers to trick consumers into paying hundreds of dollars in illegal upfront fees for help with their student loans. The FTC alleged that the defendants falsely promised to forgive student loans, lower monthly payments, and reduce interest rates. The FTC is mailing 41,048 checks to victims of the scam.


Some outstanding EIP checks cancelled by IRS

FRB Services has posted a notice that, effective July 6, 2020, the Treasury Department’s Internal Revenue Service has announced the cancellation of outstanding Economic Impact Payment (EIP) checks issued to recipients who may not be eligible for such program payments, including those that may be deceased.

The Bureau of the Fiscal Service encourages financial institutions to determine the status of EIP checks by using either the Treasury Check Verification Application (TCVA) for single queries, or the Treasury Check Verification Service (TCVS) for bulk queries using an automated programming interface (API).

If a financial institution inadvertently negotiates a cancelled EIP check, Treasury will not request or demand recovery from financial institutions, unless there is an additional reason to do so, for example the check was not properly endorsed. Similarly, Treasury will not reclaim from financial institutions ACH payments made to recipients who may not be eligible for such payments under program specifications.


Chinese entity and officials sanctioned

The Treasury Department has announced that OFAC has sanctioned one Chinese government entity and four current or former government officials in connection with serious rights abuses against ethnic minorities in the Xinjiang Uyghur Autonomous Region (XUAR). The entity and officials are being designated for their connection to serious human rights abuse against ethnic minorities in Xinjiang, which reportedly include mass arbitrary detention and severe physical abuse, among other serious abuses targeting Uyghurs, a Turkic Muslim population indigenous to Xinjiang, and other ethnic minorities in the region. These designations are the latest U.S. government actions in an ongoing effort to deter human rights abuses in the Xinjiang region.

For identification of the designated entity and individuals, see BankersOnline's OFAC Update.


Not too late for 2019 IRA contributions

The IRS has issued a reminder that contributions to traditional Individual Retirement Arrangements (IRAs) made by the postponed tax return due date of July 15, 2020, are deductible on a 2019 tax return. Taxpayers can file their 2019 tax return now and claim the deduction before the contribution is actually made. But the contribution must then be made by the July 15 due date of the return, not including extensions.


FDIC proposes changes to branch applications rules

The FDIC has published [85 FR 41442] a proposal to amend its rules at 12 CFR Parts 303 and 347 to eliminated the requirements for statements regarding the compliance of applications for establishment and relocation of offices and branches with the National Historic Preservation Act (NHPA) and the National Environmental Policy Act (NEPA). The proposal would also rescind the FDIC's statements of policy regarding the NHPA and NEPA .

Comments are due by August 10, 2020.


FHA home retention measures expanded

Yesterday the FHA announced additional home retention measures to help homeowners with FHA-insured single family mortgages who are financially impacted by the COVID-19 pandemic to bring their mortgage current at the end of their COVID-19 forbearance. Effective immediately, mortgage servicers will be able to use an expanded menu of loss mitigation tools, known as a “waterfall,” to assess homeowners’ eligibility for other options to bring their mortgages current if they do not qualify for FHA’s COVID-19 National Emergency Standalone Partial Claim. These options are available for homeowners whose mortgages were current or less than 30 days past due as of March 1, 2020.


Fed lists MSLP lenders

The Federal Reserve Bank of Boston has posted on its Main Street Lending Program Information for Borrowers webpage an interactive map with a listing of lenders participating in the MSLP who are currently accepting applications from new customers.

Registered lenders wishing to be added to the lender list or change their status can contact for such requests.


Consumer credit down in May

The Federal Reserve Board has posted the G.19 Consumer Credit Report for May 2020, which indicates consumer credit decreased at a seasonally adjusted annual rate of 5-1/4 percent. Revolving credit decreased at an annual rate of 28-1/2 percent, while nonrevolving credit increased at an annual rate of 2-1/4 percent.


Amazon settles with OFAC

OFAC has announced a $134,523 settlement with​m, Inc. to settle Amazon's potential civil liability for apparent violations of multiple OFAC sanctions programs.

As a result of deficiencies related to Amazon’s sanctions screening processes, Amazon provided goods and services to persons sanctioned by OFAC; to persons located in the sanctioned region or countries of Crimea, Iran, and Syria; and to individuals located in or employed by the foreign missions of countries sanctioned by OFAC. Amazon also failed to timely report several hundred transactions conducted pursuant to a general license issued by OFAC that included a mandatory reporting requirement, thereby nullifying that authorization with respect to those transactions. The settlement amount reflects OFAC’s determination that Amazon’s apparent violations were non-egregious and voluntarily self-disclosed, and further reflects the significant remedial measures implemented by Amazon upon discovery of the apparent violations.​​


HUD eviction prevention and stability toolkit

HUD Secretary Carson has announced the Eviction Prevention and Stability Toolkit, to encourage public housing authorities and housing choice voucher landlords to plan for and implement strategies to keep families stably housed and mitigate economic hardships due to the COVID-19 pandemic. The toolkit comprises a public housing authority best practices guide, a tenant brochure with tips to avoid eviction, a housing choice voucher landlord flyer to encourage engagement with tenants before the moratorium expires, and repayment agreement guidance in addition to sample documents to provide increased clarity for landlords and renters utilizing the resources. The elements of the toolkit are linked on HUD's Public and Indian Housing COVID-19 Resources webpage.


Student-loan debt-relief business settles with CFPB

The CFPB has reported that it has settled with Timemark, Inc., a company based in Deerfield Beach, Florida, that provides debt-relief services to consumers with federal student-loan debt, and with its owners and officers, Timothy Lenihan Sr., Mark Nagler, and Casey Gassaway. The Bureau alleged that the defendants charged illegal advance fees in violation of the Telemarketing Sales Rule (TSR) to consumers who were seeking to renegotiate, settle, reduce, or alter the terms of their loans. A complaint filed by the CFPB alleged that from 2016 through October 2019, the defendants used telemarketing campaigns to convince more than 7,300 consumers to pay up to $699 in fees to file paperwork to reduce or eliminate their monthly payments for their federal student loans, through loan consolidation, forgiveness, or income-driven repayment plans.

If the proposed stipulated judgment is approved, the defendants would be permanently banned from providing debt-relief services. The order would impose a judgment on the defendants, jointly and severally, in the amount of about $3.8 million for consumer redress. Full payment of this amount will be suspended if, within 10 days after the order is entered, Timemark pays $5,000, Nagler pays $7,000, and Gassaway pays $10,000. The full amount of redress was suspended because of defendants’ purported limited ability to pay more based on sworn financial statements. The defendants would also be required to each pay a $1 civil money penalty, in light of their financial circumstances.


Hood address on financial inclusion

In the keynote address at the Institute of International Bankers’ Virtual Summit on Diversity, Equality, and Inclusion: How Foreign Banks Can Support Inclusive Growth, NCUA Chairman Hood said, “It’s time to start telling a new story about the financial service industry’s contributions to society. … And, just to be clear, I’m not suggesting another shiny marketing or public relations campaign. Rather, I’m talking about taking action to realize what’s best in this industry through service to your clients and stakeholders. That story, and that action, must focus on the values of financial inclusion — bringing more people into the mainstream financial system.”

Specifically, Hood outlined three steps the financial industry should do to encourage and incentivize financial inclusion:

  • Making a real institutional commitment to the values of diversity, equity, and inclusion;
  • Continuing to explore the promise of financial technology to create the conditions that will nurture greater financial inclusion; and
  • Creating innovative financial products that promote greater inclusion.


Deceptive acts and practices suit filed by CFPB

The CFPB has filed a lawsuit against My Loan Doctor LLC — a Delaware financial-services company operating in West Palm Beach, Florida and New York City and doing business as Loan Doctor (Loan Doctor) — and its founder, Edgar Radjabli. The Bureau's complaint alleges that Loan Doctor and Radjabli made several false, misleading, and inaccurate marketing representations in advertising Loan Doctor’s “Healthcare Finance Savings CD Account,” in violation of the Consumer Financial Protection Act’s prohibition against deceptive acts or practices. It also alleges, starting in August 2019, Loan Doctor took more than $15 million from at least 400 consumers who opened and deposited money into Loan Doctor’s deceptively advertised product.


Minutes of Fed Board interest rate meetings

The Federal Reserve Board has released the minutes of its interest rate meetings from May 18 through June 10, 2020.


CFPB deputy director named

CFPB Director Kathleen Kraninger has announced that Thomas Pahl will serve as the Deputy Director of the Bureau.


FATF report on stablecoins

At the request of the G20, the FATF has issued a "Report on So-Called Stablecoins" that sets out the FATF’s views on stablecoins and addresses:

  • the characteristics of stablecoins
  • the money laundering and terrorist financing risks of stablecoins
  • how the FATF Standards apply to stablecoins and the different businesses involved in the stablecoin; and
  • how the FATF plans to enhance the global anti-money laundering and counter-terrorism financing framework for virtual assets and stablecoins.


Final rule on small dollar lending issued

The CFPB has issued a final rule amending its Payday, Vehicle Title, and Certain High-Cost Installment Loans regulations at 12 CFR part 1041. The final rule, which will be effective 90 days after its Federal Register publication, rescinds the mandatory underwriting provisions of the 2017 rule but does not rescind or alter the payments provisions of the 2017 rule.

The Bureau had received a petition to commence a rulemaking to exclude debit and prepaid cards from the payments provisions of the small dollar lending rule, and the agency has denied that petition. The Bureau has also issued guidance clarifying the payments provisions’ scope and assisting lenders in complying with those provisions. In addition, today the Bureau released a ratification of the payment provisions in light of the Supreme Court’s recent decision in Seila Law. Although the payments provisions are currently stayed by court order, the Bureau will seek to have them go into effect with a reasonable period for entities to come into compliance.


FinCEN COVID-19 scams advisory

FinCEN has issued Advisory FIN-2020-A003 to alert financial institutions to potential indicators of imposter scams and money mule schemes, which are two forms of consumer fraud observed during the COVID-19 pandemic. The advisory contains descriptions of these scams and schemes, financial red flag indicators for both, and information on reporting suspicious activity.


Bureau updates guide to COVID-19 relief

The CFPB has added additional information to its Guide to Covid-19 economic stimulus relief information originally posted on April 10, 2020.


Bureau ratifies prior regulatory actions

The CFPB has reported it has issued a ratification of the large majority of its existing regulations and certain other actions, to provide the financial marketplace with certainty that the rules are valid in light of the Supreme Court decision in Seila Law. The ratification relates back to the original date of each identified action.

PUBLICATION UPDATE: Published at 85 FR 41330 and officially issued on Friday, July 10, 2020.


Consumer Financial Protection Week announced

The Bureau has announced the launch of Consumer Financial Protection Week, which will take place from July 14–17, 2020. During the week, activities will focus on how the CFPB is protecting consumers in the financial marketplace, the issues consumers are confronting, and how consumers can communicate to the Bureau any issues they may have with a financial services provider.


PPP loan data released

The SBA, in consultation with Treasury, yesterday announced it was releasing detailed loan-level data regarding the loans made under the Paycheck Protection Program (PPP). This disclosure covers each of the 4.9 million PPP loans that have been made. The release includes loan-level data, including business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender, jobs supported, and loan amount ranges.

The data release also includes overall statistics regarding dollars lent per state, loan amounts, top lenders, and distribution by industry. The loans have reached diverse communities proportionally, across all income levels and demographics.


Credit union CLF borrowing capacity exceeds $25M

The NCUA announced yesterday that the Central Liquidity Facility (CLF) has experienced a significant increase in its membership and borrowing capacity. In total, 3,797 credit unions, or 73 percent all federally insured credit unions, have access to the CLF, either as a regular member or through their corporate credit union. Under the temporary authority granted by the CARES Act, the CLF can borrow sixteen times its total capital. As of May 31, the facility’s borrowing authority stood at $25.8 billion, an increase of $15.3 billion since April.


PPP extended to August 8

The president has signed S.4116 into law, extending the deadline for applications for Paycheck Protection Program loans to August 8, 2020, and separating the program from the SBA 7(a) program to ensure that 7(a) loans will continue to be available after the PPP deadline.


CFPB proposes EGRRCPA-required HPML escrow exemption

The CFPB has issued a notice of proposed rulemaking that would amend Regulation Z to provide a new exemption available to certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs), to implement an amendment to Regulation Z made by section 108 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

The proposed amendment generally would exempt from the Regulation Z HPML escrow requirement any loan made by an insured depository institution or insured credit union and secured by a first lien on the principal dwelling of a consumer if

  • the institution has assets of $10 billion or less;
  • the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year;
  • the institution meets the requirement in § 1026.35(b)(2)(iii)(A) relating to making a covered transaction secured by a first lien on a property located in a "rural" or "underserved" area; and
  • the institution and its affiliates do not maintain an escrow account other than those established for HPMLs at a time when the creditor may have been required by the regulation to do so or those established after consummation as an accommodation to distresses consumers.

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


OCC CRA evaluations released

The OCC has released CRA evaluations for 21 national banks and federal savings associations that became public in June. Of the 21 evaluations, 11 are rated satisfactory, nine are rated outstanding, and one is rated needs to improve.

The nine institutions with outstanding ratings are (with links to their evaluation reports):


Tribes get $15M to address COVID-19

HUD yesterday awarded $15 million to tribes in Alaska, Arizona, California, New Mexico, Oklahoma, and Utah as part of HUD's Indian Community Development Block Grant (ICDBG) Imminent Threat program, which provides funding to help address problems that pose an imminent threat to public health or safety of tribal residents. This funding will specifically be used to help tribes prevent, prepare for, and respond to COVID-19. This initial distribution is the first $15 million of $100 million that will be going to tribes.


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