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E.g., Dec 2 2020
E.g., Dec 2 2020

10/29/2020

SBA fiscal year loan summary data

The Small Business Administration has released its Fiscal Year 2020 summary loan data of the financial assistance provided through traditional loan program lending as well as aid provided via the CARES Act.

Loans guaranteed through traditional SBA lending programs exceeded $28 billion; however, enactment of the CARES Act dramatically increased loan volume guaranteed by the Agency. In FY20, the Paycheck Protection Program provided an additional 5.2 million loans worth more than $525 billion. The Agency’s Economic Injury Disaster Loan Program added another 3.6 million small business loans valued at $191 billion, as well as an additional 5.7 million EIDL Advances worth $20 billion.

Highlights from the Paycheck Protection Program:

  • 27% of the PPP loan dollars were made in low-and moderate-income communities which is in proportion to the percentage of population in these areas
  • More than $133 billion, or 25%, of PPP loans were approved for small businesses in historically underutilized business zones (HUBZones)
  • Over $80 billion, or 15%, of total PPP dollars were approved to small businesses in rural communities

10/29/2020

CFPB Ombudsman 2020 Annual Report

The 2020 Annual Report of the CFPB Private Education Loan Ombudsman has been issued. It shows that from September 1, 2019, through August 31, 2020, the Bureau handled approximately 7,000 complaints related to private or federal student loans. That is an overall decrease from last year and continues a trend from 2017. More specifically, for the 12 months ending August 31, 2020, the Bureau handled approximately 1,900 private student loan complaints, a decrease of approximately 33 percent compared to that of the previous year, and approximately 5,000 federal student loan complaints, a decrease of approximately 24 percent compared to that of the previous 12 months.

10/29/2020

Failed Kansas bank purchased

The FDIC has announced that the Kansas Office of the State Bank Commissioner has closed Almena State Bank, Almena, Kansas, and appointed the FDIC as receiver. The bank had experienced longstanding capital and asset quality issues.

The FDIC entered into a purchase and assumption agreement with Equity Bank, Andover, Kansas, to assume all the deposits of the failed bank. As of June 30, 2020, Almena State Bank had about $70 million in assets and $68.7 million in total deposits.

The FDIC estimated that the cost to the Deposit Insurance Fund will be $18.3 million. This was the fourth failure of an FDIC-insured bank this year, and the second this month.

10/29/2020

OFAC reissues Yemen Sanctions regulation

OFAC has posted a Recent Actions Update to announce it has amended and reissued in their entirety the Yemen Sanctions Regulations (31 CFR Part 552), which were published in today's Federal Register. This final rule replaces the regulations that were published in abbreviated form on November 9, 2012, with a more comprehensive set of regulations that includes additional interpretive and definitional guidance, general licenses, statements of licensing policy, and other regulatory provisions that will provide further guidance to the public.

10/28/2020

Hurricane Zeta closings authorized

Yesterday, the OCC issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices along the Gulf Coast of the United States and in other areas impacted by Hurricane Zeta at their discretion.

10/28/2020

FHFA House Price Index up

The FHFA has released its latest FHFA House Price Index. House prices rose nationwide in August, up 1.5 percent from the previous month. Prices rose 8.0 percent from August 2019 to August 2020. FHFA also revised its previously reported 1.0 percent price change for July 2020 to 1.1 percent. For the nine census divisions, seasonally adjusted monthly house price changes from July 2020 to August 2020 ranged from +0.9 percent in the East South Central division to +1.9 percent in the West South Central division. The 12-month changes ranged from +7.2 percent in the West North Central division to +9.7 percent in the Mountain division.

10/28/2020

2020 National DNC Registry Data Book

The Federal Trade Commission has issued the National Do Not Call Registry Data Book for Fiscal Year 2020. The Do Not Call (DNC) Registry lets consumers choose not to receive most legal telemarketing calls. The data show that the number of active registrations on the DNC Registry increased by two million over the past year, while the total number of consumer complaints decreased for the third year in a row.

10/28/2020

Interest Rate Risk Statistics report

The OCC has issued Bulletin 2020-91 to announce the publication of the first semiannual "Interest Rate Risk Statistics Report." The report presents interest rate risk data gathered during examinations of OCC-supervised midsize and community financial institutions. The statistics are for informational purposes only and do not represent OCC-suggested limits or exposures. The report provides statistics on interest rate risk exposures and risk limits for different midsize and community bank populations, including:

  • all OCC-supervised midsize and community banks with reported data
  • banks by asset size
  • banks by charter type
  • minority depository institutions

10/28/2020

NMLS Policy Guidebook updated

An updated version of the NMLS Policy Guidebook has been posted on the NMLS Resource Center and the Regulator Resource Center.

The updates include a provision that individuals (including mortgage loan originators) working under executive order, state guidance, laws, regulations or any other pronouncement with the effect of law, need not change their work location in their Registry record.

10/28/2020

Washington Federal Bank hit with HMDA penalty

The CFPB has announced it has settled with Washington Federal Bank, N.A., a federally insured national bank, and issued a consent order to address the Bureau’s finding that the bank reported inaccurate Home Mortgage Disclosure Act (HMDA) data about its mortgage transactions for 2016 and 2017. The settlement requires Washington Federal to pay a $200,000 civil money penalty and develop and implement an effective compliance-management system to prevent future violations.

The bank was previously issued a consent order in 2013 for HMDA filing violations. For additional information and a link to the consent order, see "Washington Federal Bank, NA pays HMDA penalty" in BankersOnline's penalty pages.

10/28/2020

OCC finalizes True Lender Rule

The OCC has issued a final rule that determines when a bank (national bank or federal savings association) makes a loan and is the “true lender,” including in the context of a partnership between a bank and a third party. The rule specifies that a bank makes a loan and is the true lender if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. The rule also specifies that if, as of the date of origination, one bank is named as the lender in the loan agreement for a loan and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan. The rule also clarifies that as the true lender of a loan, the bank retains the compliance obligations associated with the origination of that loan, thus negating concern regarding harmful rent-a-charter arrangements.

The OCC specifies in the prefatory text to the final rule in the Federal Register filing that the bank would not be considered the true lender in certain traditional lending or finance arrangements such as mortgage warehouse lending, indirect automobile finance, loan syndication and other structured finance. The OCC also clarified that the rule “does not affect the applicability” of the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act or their implementing regulations. The final rule will take effect 60 days after publication in the Federal Register.

PUBLICATION AND EFFECTIVE DATE INFO: Published at 85 FR 68742 on October 30, 2020, with an effective date of December 29, 2020.

10/28/2020

FHFA finalizes strategic plan for FY 2021-2024

The Federal Housing Finance Agency has announced its adoption of the FHFA Strategic Plan: Fiscal Years 2021-2024. The Strategic Plan establishes new goals needed for FHFA to fulfill its statutory duties, which include responsibly ending the conservatorships of Fannie Mae and Freddie Mac (the Enterprises). The FHFA said it carefully reviewed all comments submitted on the Plan. The agency fulfilled one of the most common comment requests on October 19, when it released a proposed rule on new Enterprise products and activities.

The Strategic Plan formalizes the new direction of the agency and its regulated entities by updating the agency’s mission, vision, and values, and by establishing three new strategic goals:

  1. Ensuring safe and sound regulated entities through world-class supervision;
  2. Fostering competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets; and
  3. Positioning the agency as a model of operational excellence by strengthening its workforce and infrastructure.

10/28/2020

9th mortgage company settles with CFPB over deceptive ads

The CFPB has issued a consent order against Low VA Rates LLC, a Utah-based mortgage lender and broker incorporated in Colorado and licensed in 48 states and the District of Columbia. The order addresses the Bureau’s finding that Low VA Rates sent consumers mailers for mortgage loans guaranteed by the U.S. Department of Veterans Affairs (VA) that contained false, misleading, and inaccurate statements, which violated the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule, Regulation N), and Regulation Z. The order requires Low VA Rates to pay a civil money penalty of $1,800,000 to the Bureau and imposes requirements to prevent future violations.

This CFPB action is the ninth and last case stemming from a Bureau sweep of investigations of multiple mortgage companies that used deceptive mailers to advertise VA-guaranteed mortgages. The Bureau began the sweep in response to concerns raised by the VA about potentially unlawful advertising in the mortgage lending market. The Bureau has obtained more than $4.4 million in civil money penalties as a result of this sweep.

To prevent future violations, the consent order requires Low VA Rates to designate an advertising compliance official who must review its mortgage advertisements for compliance with mortgage advertising laws prior to use. Low VA Rates must also refrain from making misrepresentations like those identified by the Bureau through its investigation, and comply with certain enhanced disclosure requirements.

For additional information, see "Low VA Rates LLC settles with Bureau over deceptive VA loan ads," in BankersOnline's Penalty Pages.

10/27/2020

Revised pamphlet for Comptroller's Handbook

The OCC has posted Bulletin 2020-90 to announce the revision of the “Concentrations of Credit” booklet of the Comptroller’s Handbook, which is used by OCC examiners in their examination and supervision of national banks, federal savings associations, and federal branches and agencies of foreign banking organizations. The revised booklet—

  • changes the supervisory calculation for credit concentration ratios for banks that have implemented the current expected credit loss (CECL) transition rule to avoid double counting the allowance for credit losses in the denominator
  • replaces the term “criticized” with “special mention” for consistency with Banking Bulletin (BB) 1993-35, “Interagency Definition of Special Mention Assets”
  • reflects relevant OCC issuances published since this booklet was last issued
  • reflects changes to laws and regulations that occurred since this booklet was last issued
  • clarifies applicability of references to covered savings associations
  • includes clarifying edits regarding supervisory guidance, sound risk management practices, or legal language
  • revises certain content for general clarity
  • removes the NAICS code listing, as this information is readily available at www.census.gov

10/27/2020

HUD awards $10M in sweat equity grants

HUD has announced the award of $10 million in "sweat equity" grants to four non-profit self-help housing organizations which will create at least 536 affordable homes for hard-working, low-income families and individuals. The organizations receiving the grants are:

  • Habitat for Humanity International, Inc. - $5,341,907
  • Tierra Del Housing Corporation - $2,043,781
  • Community Frameworks - $1,320,232
  • Housing Assistance Council - $1,294,080

10/27/2020

OFAC targets key actors in Iran's oil sector

On Monday, OFAC designated the Iranian Ministry of Petroleum, the National Iranian Oil Company (NIOC), and the National Iranian Tanker Company (NITC) in accordance with E.O. 13224, a counterterrorism authority, for their financial support to Iran’s Islamic Revolutionary Guard Corps-Qods Force. OFAC also designated multiple entities and individuals associated with the Ministry of Petroleum, NIOC, and NITC, including front companies, subsidiaries, and senior executives; and four persons involved in the recent sale of Iranian gasoline to the illegitimate Maduro regime in Venezuela.

For identification information on the individuals, entities and vessels added to OFAC's SDN List with those designations, related changes to the List, and a new Iran-related General License, see this BankersOnline OFAC Update.

10/28/2020

FDIC updates RMS Manual

The FDIC has released the October 2020 updates to its Risk Management Manual of Examinations Policies (RMS Manual). Updates to Section 22.1—Examination Documentation (ED) Modules include revisions to the Credit Card Related Merchant Activities, Electronic Funds Transfer Risk Assessment, Trust, and Trust - Abbreviated ED modules to clarify certain procedures and to address other technical edits.

10/27/2020

Cuban Assets Control Regs amended

OFAC has amended the Cuban Assets Control Regulations (CACR) to further implement parts of the president's foreign policy toward Cuba. The changes are meant to deny the Cuban government access to funds in connection with remittances to Cuba. The rule was published in the October 27, 2020, Federal Register, and will be effective 30 days later, on November 26, 2020.

OFAC's announcement also includes links to 10 FAQ updates and one new FAQ related to the CCAR.

10/26/2020

Agencies propose lower recordkeeping and travel rule threshold

The Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve Board have invited comment on a proposed rule that would amend the recordkeeping and travel rule regulations under the Bank Secrecy Act.

FinCEN and the Board, under their shared authority, are proposing amendments to the recordkeeping rule jointly, while FinCEN is proposing amendments to the travel rule. Under the current recordkeeping and travel rule regulations, financial institutions must collect, retain, and transmit certain information related to funds transfers and transmittals of funds over $3,000. The proposed rule lowers the applicable threshold from $3,000 to $250 for international transactions. The threshold for domestic transactions remains unchanged at $3,000.

The proposed rule further clarifies that those regulations apply to transactions above the applicable threshold involving convertible virtual currencies, as well as transactions involving digital assets with legal tender status, by clarifying the meaning of "money" as used in certain defined terms.

Comments on the proposal will be accepted for 30 days following publication in the Federal Register.

PUBLICATION AND COMMENT PERIOD UPDATE: Published at 85 FR 68005 on 10/27/2020, with a comment period ending 11/27/2020.

10/26/2020

FATF strengthens standards against proliferation financing

Treasury reports that the Financial Action Task Force (FATF) concluded its 32nd plenary meeting on Friday, October 23, by agreeing to revise its standards to further strengthen the global response to the financing of proliferation related to weapons of mass destruction. The endorsement of the new standard is a result of an initiative that began under the U.S. FATF presidency and was adopted by finance ministers of FATF members in 2019.

The FATF also continued its focus on the impact of the COVID-19 pandemic on detecting and countering fraud including attempts to defraud government-backed stimulus programs. The task force also adopted an updated report on trade-based money laundering and recognized progress by a number of jurisdictions in rectifying their AML/CFT deficiencies.

10/26/2020

Russian government research institute sanctioned

On Friday, the Department of the Treasury announced that OFAC had designated, in accordance with Section 224 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), a Russian government research institution—State Research Center of the Russian Federation FGUP Central Scientific Research Institute of Chemistry and Mechanics (TsNIIKhM)—that is connected to the destructive Triton malware. The Triton malware—known also as TRISIS and HatMan in open source reporting—was designed specifically to target and manipulate industrial safety systems, which provide for the safe emergency shutdown of industrial processes at critical infrastructure facilities in order to protect lives.

For detailed identification information on TsNIIKhM, see this BankersOnline OFAC Update.

10/23/2020

High ranking Hizballah officials and entities designated

OFAC has announced counter terrorism designations, Iran-related designations and updates, foreign interference in U.S. election designations, and a Syria designation update.

  • Two members of Hizballah’s Central Council—Nabil Qaouk and Hassan al-Baghdadi. The Central Council is responsible for identifying and electing the group’s highest decision-making body, the Shura Council, which formulates policy and asserts control over all aspects of Hizballah’s activities, including its military activities.
  • Iraj Masjedi, a general in Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Iran’s Ambassador to Iraq.
  • Five Iranian entities for attempting to influence elections in the United States

The full SDN listings of each of the individuals and entities designated can be found in this BankersOnline OFAC Update.

10/23/2020

CFPB ANPR on consumer access to financial records

The CFPB announced yesterday an advance notice of proposed rulemaking (ANPR) requesting information related to consumer access to financial records.

The CFPB is asking the public how it might most efficiently and effectively develop regulations to implement Section 1033 of the Dodd-Frank Act, which provides for consumer rights to access financial records. When consumers use financial products and services, the providers of those products and services generally accumulate data about those consumers and their use of those products and services. Consumer access to these data allow consumers to manage their financial accounts and can enhance consumers’ control of their financial matters.

Consumers may realize these benefits by authorizing third parties to access these data on their behalf and allowing those third parties to deliver new or improved financial products and services. Use cases for consumer-authorized data include personal financial management, making and receiving payments, assisting consumers with improving savings outcomes, underwriting credit, and many other services.

While consumer access to financial records can enable the development of innovative and beneficial consumer financial products, it can also present consumer risks. The Bureau’s ANPR seeks comments and information on costs and benefits of consumer data access; competitive incentives; standard-setting; access scope; consumer control and privacy; and data security and accuracy.

Comments on the ANPR will be accepted for 90 days following its publication in the Federal Register.

UPDATE ON PUBLICATION AND COMMENT DUE DATE: Published at 85 FR 71003 on November 6, 2020, in the Federal Register, with comments due by February 4, 2021.

10/23/2020

Goldman Sachs fined $2.9B

The Federal Reserve Board has announced it has issued an order to cease and desist and for assessment of a civil money penalty of $154 million against Goldman Sachs Group, Inc., for the firm's failure to maintain appropriate oversight, internal controls, and risk management with respect to Goldman's involvement in a far-reaching scheme to defraud a Malaysian state-owned investment and development company, 1Malaysia Development Berhad (1MDB).

In 2012 and 2013, Goldman arranged and underwrote three bond offerings that raised $6.5 billion for 1MDB. Certain former Goldman bankers in Asia participated in a scheme with Malaysian businessman Low Taek Jho and others to divert substantial portions of the proceeds from the 1MDB offerings for their personal benefit and to pay bribes to certain foreign government officials. Goldman's transaction approval processes and internal controls failed to detect or prevent the scheme or to address obvious red flags around the 1MDB offerings.

The Board is requiring Goldman to improve its risk management and oversight of significant and complex transactions, enhance its due diligence related to these transactions, and improve its anti-bribery compliance program. The Board's action is being taken in conjunction with actions by other authorities including the U.S. Department of Justice, the Securities and Exchange Commission, the New York Department of Financial Services, the U.K. Financial Conduct Authority, and the Bank of England Prudential Regulation Authority, and other foreign authorities. The penalties and disgorgement announced by all of the agencies total approximately $2.9 billion.

10/22/2020

October 2020 Beige Book

The Federal Reserve Board has released the October 21, 2020 issue of the Beige Book.

Economic activity continued to increase across all Districts, with the pace of growth characterized as slight to modest in most Districts. Changes in activity varied greatly by sector. Manufacturing activity generally increased at a moderate pace. Residential housing markets continued to experience steady demand for new and existing homes, with activity constrained by low inventories. Banking contacts also cited increased demand for mortgages as the key driver of overall loan demand. Conversely, commercial real estate conditions continued to deteriorate in many Districts, with the exception being warehouse and industrial space where construction and leasing activity remained steady. Consumer spending growth remained positive, but some Districts reported a leveling off of retail sales and a slight uptick in tourism activity. Demand for autos remained steady, but low inventories have constrained sales to varying degrees. Reports on agriculture conditions were mixed, as some Districts are experiencing drought conditions. Districts characterized the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty. Restaurateurs in many Districts expressed concern that cooler weather would slow sales, as they have relied on outdoor dining. Banking contacts in many Districts expressed concern that delinquency rates may rise in coming months, citing various reasons; however, delinquency rates have remained stable.

10/21/2020

FHA extends COVID-19 forbearance request time

The FHA has announced it is extending the date for single family homeowners with FHA-insured mortgages to request an initial forbearance from their mortgage servicer to forbear their mortgage payments for up to six months. Homeowners experiencing a financial hardship as a result of the COVID-19 pandemic may now request an initial forbearance through December 31, 2020 (the deadline was previously October 30). The FHA requires mortgage servicers to:

  • Offer homeowners with FHA-insured mortgages mortgage payment forbearance when the homeowner requests it, with the option to extend the forbearance for up to a year in total. FHA does not require a lump sum payment at the end of the forbearance period.
  • Assess homeowners who receive COVID-19 forbearance for FHA's special COVID-19 National Emergency Standalone Partial Claim before the end of the forbearance period. This program puts all suspended mortgage payment amounts owed into a junior lien, which is only repaid when the homeowner sells the home, refinances the mortgage, or the mortgage is otherwise extinguished.
  • Assess homeowners who are not eligible for the COVID-19 National Emergency Standalone Partial Claim for one of FHA’s COVID-19 expanded home retention solutions announced on July 8, 2020.

10/22/2020

Social media scams increase

The Federal Trade Commission has released data revealing there has been a surge in reports from people who say they lost money to a scam that started on social media, including a spike of such complaints in the spring at the height of the COVID-19 pandemic. The data shows that the number of complaints about scams that started on social media more than tripled in the last year. People reported losing more than $117 million to this type of scam in just the first six months of 2020 compared to $134 million for all of 2019.

Online shopping topped the list of complaints from consumers who reported a scam to the FTC that originated on social media. Of these consumers, many were responding to an ad they saw on social media and reported that the item they ordered never arrived. Most of those consumers (94 percent) who identified the social media service in their complaint cited Facebook or Instagram as the platform they used.

Other top consumer complaints about social media scams related to romance scams or economic relief or income opportunities, which often target people who have lost a job or other income because of the pandemic. About half of all romance scam reports to the FTC since 2019 involve social media, usually on Facebook or Instagram.

10/22/2020

Automated underwriting system for mortgages launched

The Federal Housing Administration has announced the launch of its new automated underwriting system (AUS) for use by lenders originating mortgages for FHA insurance. Built on the FHA Catalyst technology platform, the new FHA Catalyst: Single Family Origination Module - AUS allows lenders to electronically submit loan application data for single family forward mortgages from their loan origination systems directly to the module and receive mortgage insurance eligibility scoring decisions generated from FHA’s TOTAL Mortgage Scorecard. The new AUS accepts the Mortgage Industry Standards Maintenance Organization (MISMO) 3.4 dataset used in the new, industry-wide Uniform Residential Loan Application. Other features include:

  • Detailed feedback certificates that provide specific and actionable information for lenders that corresponds with FHA policies in the Single Family Housing Policy Handbook 4000.1;
  • Integrated submission of credit report data reissuances, which eliminates the need for lenders to use a third-party routing system; and
  • Enhanced data synchronization between loan origination systems and FHA Catalyst through state-of-the-art Application Programming Interface (API) technology.

The AUS will be available in FHA Catalyst for single family forward mortgage programs on or after October 30, 2020.

10/21/2020

Florida bank closed and purchased

The FDIC has reported that First City Bank of Florida, Fort Walton Beach, Florida, was closed Friday by the Florida Office of Financial Regulation, which appointed the FDIC as receiver. The failed bank experienced longstanding capital and asset quality issues, operating with financial difficulties dating back to 2009, which are not related to the current economic conditions resulting from the pandemic.

To protect depositors, the FDIC entered into a purchase and assumption agreement with United Fidelity Bank, fsb in Evansville, Indiana, to assume all of the deposits of First City Bank of Florida. As of June 30, 2020, First City Bank of Florida had approximately $134.7 million in total assets and $131.4 million in total deposits. In addition to assuming all of the deposits, United Fidelity Bank, fsb agreed to purchase essentially all of the failed bank’s assets.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $10 million

10/22/2020

CFPB extends the 'GSE Patch'

The Consumer Financial Protection Bureau has issued a final rule to extend the Government-Sponsored Enterprise (GSE) Patch until the (yet to be established) mandatory compliance date of a final rule amending the General Qualified Mortgage (QM) loan definition in Regulation Z. The GSE Patch was scheduled to expire on January 10, 2021. The Bureau is not amending the provision in Regulation Z stating that the GSE Patch will expire if the GSEs (Fannie Mae and Freddie Mac) exit conservatorship.

The GSE Patch provides QM status to certain mortgage loans eligible for purchase or guarantee by either of the GSEs. GSE Patch loans are eligible for QM status even if the borrower's debt-to-income ratio exceeds 43 percent. The rule extending the GSE Patch will be effective 60 days after it is published in the Federal Register.

PUBLICATION AND EFFECTIVE DATE UPDATE: This final rule was published at 85 FR 67938 on October 26, 2020. It will become effective December 28, 2020.

10/21/2020

HUD awards $12.5M in housing counseling grants

HUD has announced it has awarded more than $12.5 million in supplemental housing counseling grants. These grants will support quality housing counseling services, including the foreclosure avoidance and rental counseling services used by many families as they work to recover from the COVID-19 pandemic. The grants awarded will directly support the housing counseling services provided by 219 HUD-approved local housing counseling agencies, national and regional organizations, and state housing finance agencies that competed under HUD’s FY 2020 Supplemental Comprehensive Housing Counseling Grant Notice of Funds Availability (NOFA) or HUD’s FY 2019/2020 Comprehensive Housing Counseling NOFA.

10/21/2020

FDIC approves temporary Part 363 amendment

The FDIC has issued an interim final rule to provide relief for insured depository institutions that have experienced large cash inflows resulting from participation in the Paycheck Protection Program, the Money Market Mutual Fund Liquidity Facility, and the Paycheck Protection Program Liquidity Facility, or due to other factors such as the effects of other government stimulus efforts, and, absent regulatory action, would be required to incur substantial costs on a temporary basis.

The rule will allow IDIs that have experienced growth to determine whether they are subject to the requirements of Part 363 of the FDIC’s regulations for fiscal years ending in 2021 based on the consolidated total assets as of December 31, 2019. Such IDIs, whose asset growth may be temporary but significant, would be otherwise required to develop processes and systems to comply with the annual independent audits and reporting requirements of Part 363 on a potentially short-term basis.

The rule is effective immediately and remains effective through December 31, 2021, unless extended by the FDIC. Comments on the rule will be accepted for 30 days after it is published in the Federal Register.

PUBLICATION UPDATE: This rule was published at 85 FR 67427 on October 23, 2020. The comment period will end on Monday, November 23, 2020.

10/21/2020

OFAC settlement with Berkshire Hathaway

OFAC has announced a $4,144,651 settlement with Berkshire Hathaway, Inc. (“Berkshire”), a multinational conglomerate holding company based in Omaha Nebraska, and its foreign subsidiary, Iscar Kesici Takim Ticareti ve Imalati Limited Sirket (“Iscar Turkey”).

Berkshire, on behalf of itself and its subsidiary located in Turkey, has agreed to settle its potential civil liability for 144 apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR). Specifically, between December 2012 and January 2016, Iscar Turkey exported 144 shipments of cutting tools and related inserts, with a total value of $383,443, to two third-party Turkish distributors knowing that such goods would be shipped to a distributor in Iran for resale to Iranian end-users, including several entities later identified as meeting the definition of the Government of Iran, which would have been prohibited if engaged in by a U.S. person. These transactions appear to have violated § 560.215 of the ITSR. OFAC determined that Berkshire voluntarily self-disclosed the apparent violations on behalf of Iscar Turkey, and that the apparent violations constitute an egregious case.

According to OFAC's Enforcement Release, Iscar Turkey's action violated Berkshire's compliance policies, and Iscar Turkey took steps to obfuscate its dealings with Iran, including concealing these activities from Berkshire. The Apparent Violations occurred under the direction of certain Iscar Turkey senior managers despite Berkshire and other Berkshire subsidiaries’ repeated communications and policies sent to Iscar Turkey regarding U.S. sanctions against Iran and the application of the ITSR to Iscar Turkey’s operations. The General Manager and his employees took certain steps to conceal Iscar Turkey’s activities and plans with Iran such as: (1) utilizing private email addresses that bypassed the controls and visibility of the corporate email system to communicate about orders from Iranian customers; (2) utilizing false names in internal records of Iscar Turkey to conceal transactions; (3) providing false assurances in response to compliance inquiries; (4) providing fraudulent evidence of a compliance training session; and, (5) when the internal investigation was initiated, lying to interviewers and counseling others to lie.

Berkshire voluntarily self-disclosed the apparent violations to OFAC in May 2016 after receiving an anonymous tip in January 2016. Berkshire followed with multiple mitigating actions in cooperation with the OFAC investigation. Those mitigating actions helped reduce the base civil monetary penalty for the violations from $18.4 million to the settlement amount of $4,144,651.

10/20/2020

CFPB posts HMDA data reference chart for 2021

The CFPB has posted the "Reportable HMDA Data: A Regulatory and Reporting Overview Reference Chart for HMDA Data Collected in 2021," which can be used as a reference tool for data points required to be collected, recorded, and reported under Regulation C, as amended by the HMDA Rules. Relevant regulation and commentary sections are provided for ease of reference. The chart also incorporates the information found in Section 4.2.2 of the 2021 Filing Instructions Guide and provides when to report not applicable or exempt, including the codes used for reporting not applicable or exempt from section 4 of the 2021 Filing Instructions Guide for ease of reference.

10/20/2020

ACCESS initiative launched by NCUA

NCUA Chairman Hood has announced the launch of the agency’s new Advancing Communities through Credit, Education, Stability, and Support (ACCESS) initiative, which will bring together leaders across the NCUA to refresh and modernize regulations, policies, and programs in support of greater financial inclusion within the agency and the credit union system. Efforts under this program include increasing access to credit and loan products, dedicating resources to help people make smart financial decisions, enhancing existing programs that encourage credit union membership and access to financial services, and fostering inclusive policies and outreach efforts in the community.

10/21/2020

Agencies' rule to reduce impact of large bank failures

The federal bank regulatory agencies—The OCC, Federal Reserve Board, and FDIC—have finalized a rule to limit the interconnectedness and reduce the impact from failure of the largest banking organizations. The final rule is substantially similar to the proposal announced last year and complements other measures that the agencies have taken to limit interconnectedness among the largest banking organizations.

U.S. global systemically important bank holding companies, or GSIBs, as well as U.S. intermediate holding companies of foreign GSIBs, are required to issue debt with certain features under the Federal Reserve Board’s “total loss-absorbing capacity,” or TLAC, rule. That debt could be used to recapitalize the holding company during bankruptcy or resolution if it were to fail.

To discourage the largest banking organizations from purchasing TLAC debt, the final rule prescribes a more stringent regulatory capital treatment for holdings of TLAC debt. The regulatory capital treatment in the final rule will help to reduce the interconnectedness between the largest banking organizations and, if a GSIB were to fail, reduce the impact on the U.S. financial system from that failure.

This rulemaking, which becomes effective April 1, 2021, also includes a revision to the Federal Reserve Board’s TLAC requirements that will require GSIBs to report publicly their outstanding TLAC debt.

10/19/2020

Industrial production declines

The Federal Reserve has released September G.17 Industrial Production and Capacity Utilization data. Industrial production fell 0.6 percent in September, its first decline after four consecutive months of gains. The index increased at an annual rate of 39.8 percent for the third quarter as a whole. Although production has recovered more than half of its February to April decline, the September reading was still 7.1 percent below its pre-pandemic February level.

Manufacturing output decreased 0.3 percent in September and was 6.4 percent below February's level. The output of utilities dropped 5.6 percent, as demand for air conditioning fell by more than usual in September. Mining production increased 1.7 percent in September; even so, it was 14.8 percent below a year earlier. At 101.5 percent of its 2012 average, total industrial production was 7.3 percent lower in September than it was a year earlier. Capacity utilization for the industrial sector decreased 0.5 percentage point in September to 71.5 percent, a rate that is 8.3 percentage points below its long-run (1972–2019) average but 7.3 percentage points above its low in April.

10/19/2020

Fed publishes its CRA ANPR

The Federal Reserve Board has published [85 FR 66410] in today's Federal Register its September 21 Advance Notice of Proposed Rulemaking [see our earlier Top Story] to solicit public input regarding modernizing the Board's Community Reinvestment Act regulatory and supervisory framework. The 120-day comment period will end February 16, 2021.

10/20/2020

OFAC designates al-Qa’ida financial facilitator

On Monday, the Treasury Department announced that OFAC has designated Australia-based al-Qa’ida-associated facilitator Ahmed Luqman Talib for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Al-Qa’ida. Additionally, OFAC also designated one company, Talib and Sons, for being owned, controlled, or directed by Ahmed Luqman Talib.

For identification information on these and several other newly designated persons, see this BankersOnline OFAC Update.

10/19/2020

FDIC names Rapid Prototyping Competition contestants

The FDIC has announced the selection of 14 technology companies to compete in the next phase of the agency’s Rapid Prototyping Competition, a tech sprint designed to develop an innovative new approach to financial reporting, particularly for community banks. The FDIC has awarded initial contracts to:

  1. Accenture Federal Services, LLC
  2. ACTUS Financial Research Foundation, Inc.
  3. Amberoon, Inc.
  4. Donnelley Financial, LLC
  5. DSQuorum, LLC (Data Society)
  6. Fed Reporter, Inc.
  7. Fidelity Information Services, LLC
  8. First Data Government Solutions, LP (Fiserv)
  9. Neocova Corporation
  10. Novantas, Inc.
  11. Palantir Technologies Inc.
  12. Synthetic P2P Holding Corporation (PeerIQ)
  13. S&P Global Market Intelligence, LLC
  14. TrueTandem, LLC

The objective of the Rapid Prototyping Competition is to develop technology for a timelier and less burdensome financial reporting process. Once completed, the system would better equip regulators to detect signs of risk and to take early actions designed to protect consumers, banks, the financial system and the economy.

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