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The OCC has reported strategic, credit, operational, and compliance risks remain top concerns for the federal banking system in its Semiannual Risk Perspective for Spring 2017. Highlights from the report include:

• Strategic risk remains elevated as banks make decisions to expand into new products or services or consider new delivery channels and continue merger and acquisition activity. Banks face competition from nonfinancial firms, including financial technology companies entering the traditional banking industry. This competition is causing changes in the way customers and financial institutions approach banking.
• Credit underwriting standards and practices across commercial and retail portfolios remain an area of OCC emphasis. Over the past two years, commercial and retail credit underwriting has loosened, showing a transition from a conservative to an increasing risk appetite as banks strive to achieve loan growth and maintain or grow market share.
• Operational risk continues to challenge banks because of increasing cyber threats, reliance on concentrations in significant third-party service providers, and the need for sound governance over product service and delivery.
• Compliance risk remains high as banks continue to manage money-laundering risks and implement changes to comply with the amended customer protection requirements under the Military Lending Act and integrated mortgage disclosure rules.

Remarks from Acting Comptroller Noreika were also released.

The following products have been released by the FFIEC:

• The FFIEC Online Census Data System (formerly FFIEC Census Reports) provides census data for Metropolitan and Non-Metropolitan areas, counties, and census tracts.

• The FFIEC Census Information Sheets are summaries of how the census data have changed from previous years and guidance on how to combine the census data with the appropriate year(s) of HMDA and CRA data.

• The FFIEC Census Windows Application is a downloadable Windows-based tool that allows you to search and export data, and to create reports using the census data that are published in the HMDA and CRA aggregate and disclosure reports.

• The FFIEC Estimated Median Family Income Report is a list of FFIEC Estimated Median Family Incomes for each MSA and for the non-metropolitan areas of each state.

In addition to the data available from the links above, certain census data are included in the HMDA LAR & TS Raw Data Application. Included with the raw data are Population, Minority Population Percent, MSA Median Family Income, Census Tract MFI to MSA MFI Percent, Number of Owner Occupied Housing Units, and Number of One to Four Family Units. Also, the 2017 Geocoding System has been updated with the 2017 Census demographic data based on the 2011–2015 five year estimated American Community Survey (ACS).

The Treasury Department's Office of Foreign Assets Control has taken action against two groups of individuals and entities. OFAC designated eight individuals involved in organizing or supporting the creation of Venezuela's Constituent Assembly. Those designated include seven current and former officials of the Venezuelan Government and one individual who has participated in actions or policies that undermine democratic processes or institutions in Venezuela. As a result of today's actions, all assets of these individuals subject to U.S. jurisdiction are frozen, and U.S. persons are prohibited from dealing with them.

OFAC also identified Mexican national Raul Flores Hernandez and the Flores Drug Trafficking Organization (Flores DTO) as Significant Foreign Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). In addition to Flores and the Flores DTO, OFAC also designated 21 Mexican nationals and 42 entities in Mexico for providing support to the narcotics trafficking activities of Raul Flores Hernandez and the Flores DTO and/or for being owned or controlled by the Flores DTO, its members, and trusted associates. As a result of today's action, all assets of the individuals and entities designated that are under U.S. jurisdiction or are in the control of U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them.

For identification of the individuals and entities targeted in these two actions, see our OFAC Update.

FinCEN published a Notice of Proposed Rulemaking in the July 7, 2017, Federal Register under Section 311 of the USA PATRIOT Act, that would prohibit the opening or maintaining of a correspondent account in the United States (the fifth special measure in Section 311) for, or on behalf of, Bank of Dandong. Comments on the proposal will be accepted through September 5, 2017. FinCEN has found that Bank of Dandong, located in China, is a financial institution of primary money laundering concern because it serves as a conduit for North Korea to access the U.S. and international financial systems, including by facilitating millions of dollars of transactions for companies involved in North Korea’s weapons of mass destruction and ballistic missile programs.

Speaking at the American Enterprise Institute in Washington yesterday, Federal Reserve Governor Jerome H. Powell made a case for basic reform of the U.S. system of housing finance. Asserting that a "robust, well-capitalized, well-regulated housing finance system is vital to achieving" the goals of safe and sound banking institutions and a stable financial system, Powell argued that it is time to move from the status quo in which the federal government, via Fannie Mae, Freddie Mac, the FHA and the VA hold a combined 80 percent of the purchase mortgage market toward a market in which private capital takes a broader role.

The Federal Reserve Board has issued a report to Congress on the profitability of depository institutions' credit card operations. The report analyzes the profitability over time of depository institutions' credit card activities by examining the performance of larger institutions that specialize in such activities and of a sample of smaller commercial banks that offer a range of credit services. The report also reviews trends in credit card pricing, including changes in interest rates.

Federal Reserve Bank Services has posted the July 2017 issue of FedFocus, which features an article relating how FedLine Command helped a Colorado credit union save time and stay compliant. Other topics include the Fed’s Check Adjustment webinars, building the Federal Reserve Banks with a blueprint for success, and response plans for a cyberattack.

NCUA Chairman McWatters has sent a letter to CFPB Director Cordray requesting that the CFPB provide a conditional exemption for credit unions with assets of more than $10 billion from its examination and enforcement authority. Citing credit unions’ unique role in the financial system by virtue of their being not-for-profit institutions owned and controlled by members, McWatters said shifting examination and enforcement authority to NCUA offers numerous benefits from the current system, in which credit unions face unnecessary examination burdens and aggressive punitive fines. Six federally insured credit unions—Navy Federal Credit Union, State Employees’ Credit Union, Pentagon Federal Credit Union, Boeing Employees Credit Union, Schools First Federal Credit Union, and The Golden 1 Credit Union—have assets of $10 billion or more.

The FATF published its report ‌to the July 2017 G20 Leaders’ Summit on strengthening the FATF's institutional basis, governance and capacity; tackling terrorist financing and improving transparency and availability of beneficial ownership information.

The Federal Housing Finance Agency (FHFA) has published [82 FR 31514] a proposed rule with request for comments on the housing goals for Fannie Mae and Freddie Mac (the Enterprises) for 2018 through 2020. The housing goals include separate categories for single-family and multifamily mortgages on housing that is affordable to low-income and very low-income families, among other categories. Comments on the proposal are due by September 5, 2017.

The U.S. Department of Housing and Urban Development (HUD) has announced the awarding of more than $50 million in housing counseling grants to hundreds of national, regional and local organizations to help families and individuals with their housing needs and to prevent future foreclosures. The agency's press release stated that the grants and the additional funding they leverage will assist more than 1.4 million households find housing, make more informed housing choices, or keep their current homes.

The Federal Reserve Board has released the statement and minutes of the June 13-14, 2017, meeting of the Federal Open Market Committee (FOMC). A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the meeting is also included as an addendum to the minutes. Included in the minutes is a statement of the FOMC's plan to gradually trim the size of the Federal Reserve's balance sheet by systematically shrinking the approximately $4.5 trillion in securities holdings amassed early in the recent economic recession to help stabilize the economy.

The OCC has released the list of Community Reinvestment Act (CRA) performance evaluations that became public during the month of June. Five were rated outstanding and 20 rated satisfactory. The FDIC has issued its list of state nonmember banks recently evaluated for compliance with the CRA and the ratings that the FDIC assigned to institutions in April 2017. Four were rated outstanding, 52 rated satisfactory, two needs to improve, and 1 was found to be in substantial noncompliance.

The OCC has released a notice to be published in the Federal Register that it will host a public meeting of the Mutual Savings Association Advisory Committee (MSAAC) on Tuesday, July 25, 2017, beginning at 8:30 a.m. EDT at its Washington, D.C. office. The meeting is open to the public. Members of the public who plan to attend or require assistance should contact the OCC by 5:00 p.m. EDT on Tuesday, July 18, 2017, by e-mailing MSAAC@occ.treas.gov or by calling (202) 649-5420.

The OCC has issued Bulletin 2017-25 announcing the revision of the “General Policies and Procedures” booklet of the Comptroller’s Licensing Manual. The revised booklet

• describes how to file applications and notices with the OCC
• outlines general filing requirements
• outlines the OCC’s review and decision processes for licensing filings

The new booklet updates procedures and requirements to reflect the integration of the Office of Thrift Supervision into the OCC in 2011 and the issuance of revised regulations (12 CFR 5) that became effective July 1, 2015.

The Federal Reserve Board and the FDIC have announced the posting of the public portions of annual resolution plans for eight large financial firms. Resolution plans, required by the Dodd-Frank Act and commonly known as "living wills," must describe the company's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company. Eight firms were required to submit plans on July 1— Bank of America Corporation, Bank of New York Mellon Corporation, Citigroup Inc., Goldman Sachs Group, JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, and Wells Fargo & Company. The Board and FDIC also announced that two non-bank financial firms, American International Group, Inc., and Prudential Financial, Inc., will be required to submit their next resolution plans by December 31, 2018.

The Federal Reserve has released June 2017 G.5 exchange rate data, which show the average rates of exchange in June 2017 together with comparable figures for other months. Averages are based on daily noon buying rates for cable transfers in New York City certified for customs purposes by the Federal Reserve Bank of New York.

The Federal Reserve has posted the rankings of insured U.S.–chartered commercial banks with consolidated assets of $300 million or more. The Fed also posted a listing of minority-owned depository institutions and their branches. Both listings are as of December 31, 2016.

The Federal Reserve Board reported on Monday that Board Chair Yellen was treated for a minor infection at King Edward VII hospital in London over the weekend. She was admitted Friday and released Monday. She is returning to Washington, D.C., and expects to resume her schedule as planned this week.

The OCC has released the its First Quarter 2017 Quarterly Report on Bank Trading and Derivatives Activities, which indicates the trading revenue of U.S. commercial banks and savings associations increased to $7.1 billion in the first quarter 2017, $1.5 billion, or 26 percent, higher than the first quarter of 2016. The OCC also noted that trading revenue in the first quarter 2017 grew 18 percent compared with the $6 billion reported in the fourth quarter 2016. While there seems to be a seasonality to the revenue increase in the first quarter 2017, the largest driver of the year-over-year increase in trading revenue was interest rate and foreign exchange trading. he OCC also reported that trading risk, as measured by value-at-risk (VaR), increased in the first quarter 2017. Total average VaR across the top five dealer banking companies increased $10 million from the previous quarter, or 3.7 percent, to $277 million.

The Department of Labor has announced it will publish a Request for Information (RFI) related to its Fiduciary Rule. The RFI will be an opportunity for the public to provide data and information that may be used to revise the rule and associated exemptions. There will be a 15-day comment period on extending the January 1, 2018, applicability data of certain aspects of the rule, and a 30-day comment period on all other issues in the RFI, each period starting with publication of the RFI in the Federal Register.

UPDATE: The Request for Information was published on July 6, 2017, at 82 FR 31278. The comment period on question 1 (relating to extending the January 1, 2018, applicability date of certain provisions) expires on July 21, 2017. Comments on all other questions in the RFI are due by August 7, 2017.

The Federal Trade Commission recently released updated guidance for businesses on complying with the Children's Online Privacy Protection Rule. The FTC's updated "COPPA Compliance Plan" adds new business models, expands the products covered by the COPPA Rule, and explains new methods for obtaining parental consent.

The Federal Deposit Insurance Corporation (FDIC) released on Friday a list of orders of administrative enforcement actions taken against banks and individuals in May. The administrative enforcement actions in those orders consisted of one consent order; six removal and prohibition orders; six Section 19 orders; 14 civil money penalties (CMPs); one order modifying a previous order of removal from office and prohibition from further participation, three orders of restitution; and six terminations of consent orders.

Three of the CMPs were for violations of the Flood Disaster Protection Act and related FDIC regulations by banks in West Virginia ($52,750), Illinois ($8,000) and Wisconsin ($1,600). An Iowa banker was issued an order of prohibition and for payment of a $12,500 CMP. Seven institution-affiliated parties of Bank of Mingo, Williamson, West Virginia, received orders assessing each of them a $1,000 CMP.

The Department of the Treasury has posted a reminder that financial institutions are required to provide the Office of Foreign Assets Control (OFAC) a comprehensive list of all blocked property held as of June 30 of the current year by September 30. The annual reports must be filed using Form TD F 90-22.50.

The 2016 Federal Reserve Payments Study has been released. It reveals that consumers wrote nearly two-thirds fewer checks per household in 2015 than in 2000, while total noncash payments per household, which includes not only checks but also card payments and electronic transfers via the automated clearinghouse (ACH) system, expanded almost 95 percent. The number of checks written per household fell from 19.3 per month in 2000 to 7.1 in 2015, while total noncash payments increased from 40.3 to 78.6 per month, reflecting fundamental shifts in consumer behavior such as changes in shopping, purchasing, and bill payment habits. At the same time, businesses also increasingly replaced check payments with other noncash payments.

The NCUA issued six notices of prohibition during the month of June to individuals who had been convicted of crimes of dishonesty and, as a result, are prohibited from participating in the affairs of any federally insured financial institution. The individuals were formerly employees of credit unions in Tulsa, Oklahoma; Eden Prairie, Minnesota; Pleasanton, California; Altoona, Pennsylvania; Oklahoma City, Oklahoma; and Corry, Pennsylvania. Five of the individuals had been ordered to pay restitution in amounts ranging from $39,100 to $741,363.

The CFPB published in today's Federal Register policy guidance concerning early compliance with its 2016 amendments to the Servicing Rules under Regulations X and Z. Responding to industry concerns about mid-week effective dates (both the October 19, 2017, and April 19, 2018, effective dates of the 2016 amendments fall on Thursday), the Bureau's guidance says the agency won't take action for violations of existing Regulation X or Regulation Z resulting from compliance with the amendments up to three days early. That will allow servicers to update their systems over the weekend prior to the effective dates, rather than mid-week.

The U.S. Department of the Treasury took multiple actions yesterday regarding North Korea. Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a finding that Bank of Dandong, a Chinese bank that acts as a conduit for illicit North Korean financial activity, is a foreign bank of primary money laundering concern, and FinCEN has proposed to sever the bank from the U.S. financial system. In addition, Treasury’s Office of Foreign Assets Control (OFAC) designated two Chinese individuals and one Chinese company in response to North Korea’s ongoing WMD development and continued violations of UN Security Council resolutions. See our OFAC Update for identification of the designated individuals and entity.

• Treasury Department press release
• FinCEN Notice of proposed rulemaking

The Federal Housing Finance Agency (FHFA) index for May 2017 shows that, nationally, interest rates on conventional purchase-money mortgages decreased from April to May, according to several indices of new mortgage contracts.The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 3.87 percent for loans closed in late May, down 10 basis points from 3.97 percent in April. The average interest rate on all mortgage loans was 3.90 percent, down 8 basis points from 3.98 in April. The average interest rate on conventional, 30-year, fixed-rate mortgages of $424,100 or less was 3.97 percent, down 7 basis points from 4.04 in April. The effective interest rate on all mortgage loans was 4.02 percent in May, down 8 basis points from 4.10 in April. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage. The average loan amount for all loans was $315,500 in May, up $3,900 from $311,600 in April.

The Federal Reserve Board has released its annual determination of the aggregate consolidated liabilities of financial companies as required by section 622 of the Dodd-Frank Act. The act prohibits a financial company from combining with another company if the resulting company's liabilities would exceed 10 percent of the aggregate consolidated liabilities of all financial companies. Financial companies subject to the limit include insured depository institutions, bank holding companies, savings and loan holding companies, foreign banking organizations, companies that control insured depository institutions, and nonbank financial companies designated for Board supervision by the Financial Stability Oversight Council.

The OCC has named three new members to its Minority Depository Institutions Advisory Committee (MDIAC):

• Lucilio Couto, Member of the Board of Directors, American Plus Bank, N.A., Arcadia, California
• Jesse Jackson, Senior Vice President, Texas Capital Bank, Dallas, Texas
• Valerie Mann, Senior Vice President, First National Bank of Gordon, Gordon, Nebraska

The MDIAC advises the OCC on steps it can take to ensure the continued health and viability of minority depository institutions and other issues of concern to these institutions.

The OCC has issued Bulletin 2017-24 announcing the issuance of a new "Branch Closings" booklet of the Comptroller’s Licensing Manual. The revised booklet:

• provides an overview of the requirements for a bank to provide the OCC and the customers of a branch a 90-day advance notice of a branch closing, and any exceptions that may apply.
• details the different requirements of a "branch closing" for a national bank or Federal savings association
• clarifies policies and procedures that a bank should follow if a branch must be closed temporarily due to an emergency or factors beyond the control of the bank
• lists references and links to informational resources and sample forms and documents that banks may find useful during the branch closing process

The Financial Action Task Force (FATF) is currently developing guidance to promote information sharing within financial institutions (part of the same financial group) as well as between financial institutions not belonging to the same financial group. The guidance is also intended to provide country examples on how to promote information sharing, including through public-private partnerships. The FATF is consulting private sector stakeholders before the guidance is finalized, and wishes to receive views on and specific proposals for the text.

The CFPB has published in today's Federal Register its previously-announced proposal to amend its Prepaid Rule. Comments on the proposal will be accepted through August 14, 2017.

The OCC has issued Alert 2017-7 concerning a report from First-Lockhart National Bank, Lockhart, Texas, that at least two versions of counterfeit cashier's checks using its routing number are being presented for payment in connection with scams involving online purchases and job opportunities. See our Alert page for details of the bank's report.

The Federal Emergency Management Agency has published a final rule in today's Federal Register identifying communities that will be suspended from the National Flood Insurance Program on July 18, 2017, for noncompliance with the floodplain management requirements of the program. Listed communities include:

• California—portions of Mendocino County
• Maine—portions of Washington County
• Pennsylvania—portions of Fayette County
• South Carolina—Towns of Reevesville and Summerville

The Federal Reserve Board has announced it has completed its review of the capital planning practices of the nation's largest banks and did not object to the capital plans of all 34 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). However, the Board is requiring one firm—Capital One Financial Corporation—to address weaknesses in its capital planning process and resubmit its capital plan by the end of 2017.

U.S. firms have substantially increased their capital since the first round of stress tests led by the Federal Reserve in 2009. The common equity capital ratio--which compares high-quality capital to risk-weighted assets--of the 34 bank holding companies in the 2017 CCAR has more than doubled from 5.5 percent in the first quarter of 2009 to 12.5 percent in the first quarter of 2017.

• Comprehensive Capital Analysis and Review 2017: Assessment Framework and Results

The NCUA has announced that President Trump has designated Acting National Credit Union Administration Board Chairman J. Mark McWatters as the tenth Chairman of the NCUA Board, effective June 23. McWatters was nominated to the NCUA Board by then-President Barack Obama on January 7, 2014. Following Senate confirmation, he took office as an NCUA Board Member on August 26, 2014. McWatters has served as Acting Board Chairman since January 23.

The CFPB has announced the filing of two complaints and proposed final judgments in federal court against four California-based credit repair companies and three individuals for misleading consumers and charging illegal fees. The Bureau alleges that the companies not only charged illegal advance fees for credit repair services, but also misrepresented their ability to repair consumers’ credit scores. Under a proposed final judgment, Prime Credit, LLC, IMC Capital, LLC, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel would pay a civil money penalty of more than $1.5 million. Under a second proposed final judgment, Park View Law, known formerly as Prime Law Experts, Inc., and its owner Arthur Barens would pay $500,000 in relinquished funds to the U.S. Treasury.

• Complaint against Prime Credit, et al.
• Proposed final judgment against Prime Credit, et al.
• Complaint against Park View Law et al.
• Proposed final judgment against Park View Law et al.

The Bureau has released a special edition of its monthly complaint report containing a snapshot of consumer complaints received from each state and the District of Columbia. The report provides statistics on complaint volume, the products and services generating the most complaints, company response rates, and a look at complaints from servicemembers and older Americans. The report also gives a national overview and spotlights narratives submitted by consumers regarding their experience with the CFPB’s complaint process.

• CFPB press release