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Credit unions can learn how to assist member small businesses while helping their own bottom lines by joining the National Credit Union Administration’s upcoming webinar, “Micro-Enterprise Lending – Making Loans to Small Businesses.”
The 90-minute webinar is scheduled for Wednesday, July 13, 2016 at 2 p.m. ET.

The CFPB has announced its annual adjustments to the dollar amounts of various thresholds under the Truth in Lending Act regulations that will apply to certain consumer credit transactions in 2017. The notice addresses the thresholds related to the minimum interest charge and safe harbor penalty fees under the Credit Card Accountability Responsibility and Disclosure Act (CARD Act), the total loan amount and points and fees dollar trigger for high-cost mortgages under the Home Ownership and Equity Protection Act (HOEPA), and the maximum points and fees for qualified mortgages under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The notice also revises one of the 2016 safe harbor penalty fee amounts due to a decline in the 2015 Consumer Price Index that was not fully accounted for, and that revision is effective upon publication in the Federal Register.

• Final Rule

UPDATE: The amendments were published in the Federal Register on June 27, 2016.

The National Credit Union Administration's Board has published a proposed rule [81 FR 40197] to make several technical amendments to NCUA's rule at 12 CFR 705 governing the Community Development Revolving Loan Fund (CDRLF). The proposed amendments would make the rule more succinct and update it to improve its transparency, organization, and ease of use by credit unions. Comments on the proposal are due by August 22, 2016.

The National Credit Union Administration has published at 81 FR 40152 of today's Federal Register an interim final rule amending its regulations at 12 CFR 747 to adjust the maximum amount of each civil monetary penalty (CMP) within its jurisdiction to account for inflation. This action, including the amount of the adjustments, is required under the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The rule is effective on, and comments are due by, July 21, 2016.

Update: This story has been corrected to reflect the correct effective date.

The Federal Reserve has released the 1st quarter 2016 household debt service and financial obligations ratios.

The May 2016 new residential construction activity report has been announced by HUD and the Census Bureau.

• Building permits—Privately owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,138,000. This is 0.7 percent above the revised April rate, but is 10.1 percent below the May 2015 estimate. Single-family authorizations in May were at a rate of 726,000; this is 2.0 percent below the revised April figure. Authorizations of units in buildings with five units or more were at a rate of 381,000 in May.
• Housing starts—Privately owned housing starts in May were at a seasonally adjusted annual rate of 1,164,000. This is 0.3 percent below the revised April estimate, but is 9.5 percent above the April 2015 rate. Single-family housing starts in May were at a rate of 764,000; this is 0.3 percent above the revised April figure. The April rate for units in buildings with five units or more was 396,000.
• Housing completions—Privately owned housing completions in May were at a seasonally adjusted annual rate of 988,000. This is 5.1 percent above the revised April estimate and is 3.5 percent below the May 2015 rate of 1,024,000. Single-family housing completions in May were at a rate of 717,000; this is 2.3 percent above the revised April rate. The May rate for units in buildings with five units or more was 263,000.

OFAC has released the 4th quarter 2014 and the 1st quarter 2015 reports for licensing activities undertaken pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA). Under the procedures established in its TSRA-related regulations, OFAC processes license applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan under specific licensing.

The Federal Reserve, OCC, and FDIC have announced the availability of the 2016 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities are eligible to receive Community Reinvestment Act (CRA) consideration as community development. Distressed nonmetropolitan middle-income geographies and underserved nonmetropolitan middle-income geographies are designated by the agencies in accordance with their CRA regulations. The current and previous years' lists can be found on the FFIEC website, along with information about the data sources used to generate those lists.

A joint press release from the Federal Reserve, FDIC, OCC and NCUA has announced the issuance of a joint statement regarding the new accounting standard, Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, issued by the Financial Accounting Standards Board. The joint statement also provides initial supervisory views regarding the standard's implementation. The new accounting standard applies to all banks, savings associations, credit unions, and financial institution holding companies, regardless of asset size. The standard allows for various expected credit loss estimation methods and is scalable. The standard will become effective in 2020 for financial institutions required to file financial statements with the U.S. Securities and Exchange Commission or the appropriate federal banking agency under the federal securities laws. The new accounting standard will take effect in 2021 for all other financial institutions. Early adoption is permitted, but no earlier than in 2019.

• Federal Reserve Board SR letter 16-12
• OCC Bulletin 2016-21
• FDIC FIL-39-2016

The Federal Reserve, FDIC, and OCC have issued the host state loan-to-deposit ratios that they will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios replace the prior year’s ratios, which were released on June 29, 2015. In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.

The Office of the Comptroller of the Currency has released new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. Among those actions there was a Civil Money Penalty Order for $70 million against Wells Fargo Bank, N.A. (see our May 26 Top Story), and a Cease and Desist Order issued to a Pennsylvania Bank. There was also a personal Cease and Desist Order issued to a former branch manager of Gibraltar Private Bank and Trust, Coral Gables, Florida, after the Comptroller found that she was involved in improperly maintaining a set of accounts of a customer later found to be operating an illegal Ponzi scheme, and she failed to report suspicious activity in those accounts to the bank's BSA department.

The Federal Trade Commission has obtained a court order banning the head of an unlawful debt collection operation from the debt collection business. The court found Gail Daniels and The Primary Group Inc. had deceived consumers via text messages, emails and phone calls that falsely threatened consumers with arrest or lawsuits if they did not make debt collection payments. The court’s final order bans the defendants from debt collection activities and prohibits them from misrepresenting material facts about financial-related products and services. It also bars them from profiting from consumers’ personal information and failing to dispose of it properly, and imposes a judgment of $980,000, which represents the amount of money the defendants collected from the scheme.

• May 21, 2015, Complaint and Ex Parte Temporary Restraining Order
• June 16, 2016, District Court Order for Summary Judgment

The Federal Trade Commission has announced it has filed a complaint in federal court charging the operators of a mortgage relief scam with bilking millions of dollars from homeowners by falsely telling them they could join a so-called “mass joinder” lawsuit that would save them from foreclosure and provide additional financial awards. The court has granted the Commission’s request to temporarily halt the scheme while the agency seeks to permanently stop the alleged illegal practices and obtain refunds for consumers.

The Financial Action Task Force (FATF) has posted a public statement by the Caribbean Financial Action Task Force (CFATF) on Haiti's lack of progress in addressing the significant strategic deficiencies in its anti-money laundering and counter-terrorist financing (AML/CFT) regime. The CFATF also acknowledged the significant progress made by Suriname in improving its AML/CFT enforcement programs.

The NCUA has announced that the agency again ranks as a “Best of the Best” place to work for minorities and women. The annual rankings are published by DiversityComm, Inc., a human resources research and consulting firm specializing in workplace diversity. The NCUA has consistently ranked as a best place to work by DiversityComm over the last three years.

The Department of the Treasury has released the Treasury International Capital (TIC) data for April 2016. The sum total in April of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $80.4 billion. Of this, net foreign private inflows were $110.9 billion, and net foreign official outflows were $30.4 billion. Foreign residents decreased their holdings of long-term U.S. securities in April: net sales were $68.7 billion. Net sales by private foreign investors were $60.5 billion, while net sales by foreign official institutions were $8.2 billion. U.S. residents increased their holdings of long-term foreign securities, with net purchases of $10.9 billion.

The Federal Housing Finance Authority (FHFA) has released its 2015 Report to Congress. The report provides information about FHFA's 2015 examinations of Fannie Mae, Freddie Mac, 11 Federal Home Loan Banks and the Banks' Office of Finance. The report also describes FHFA's actions as conservator of Fannie Mae and Freddie Mac during the year and it describes the Agency's regulatory guidance, research and publications.

The Federal Reserve Board has released the May 2016 G.17 Industrial Production and Capacity Utilization Report. Industrial production decreased 0.4 percent in May after increasing 0.6 percent in April. Declines in the indexes for manufacturing and utilities in May were slightly offset by a small gain for mining. The output of manufacturing moved down 0.4 percent, led by a large step-down in the production of motor vehicles and parts; factory output aside from motor vehicles and parts edged down 0.1 percent. The index for utilities fell 1.0 percent, as a drop in the output of electric utilities was partly offset by a gain for natural gas utilities. After eight straight monthly declines, the production at mines moved up 0.2 percent. At 103.6 percent of its 2012 average, total industrial production in May was 1.4 percent below its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in May to 74.9 percent, a rate that is 5.1 percentage points below its long-run (1972–2015) average.

The Federal Reserve Board has released the statement, implementation note, economic projections, and materials from the June 14–15, 2016, meeting of Federal Open Market Committee. The Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent.

The June issue of FedFlash features the modification of mid-day deposit options, along with articles regarding:

• testing and training opportunities for billing data file layout
• the upcoming freeze of Check Services operations
• a new look for CheckImage Central
• same day ACH and FedLine Web derived return functionality
• billing codes for the new Same Day ACH accounting transactions and entry fee billing
• a reminder of the suspension of the acceptance of uncurrent coin deposits

The OCC will host two workshops in Tampa, Florida, on July 26–27, for directors of national community banks and federal savings associations. The Credit Risk workshop on July 26 focuses on credit risk within the loan portfolio, such as identifying trends and recognizing problems. The workshop also covers the roles of the board and management, how to stay informed of changes in credit risk, and how to effect change. The Operational Risk workshop on July 27 focuses on the key components of operational risk—people, processes and systems. The workshop also covers governance, third-party risk, vendor management, and cybersecurity.

In remarks to the Exchequer Club in Washington, D.C., FDIC Chairman Gruenberg shared some thoughts on the broader effects on the U.S. financial system and economy of the prudential safety and soundness reforms that the regulators have implemented since the financial crisis. He noted the regulators have undertaken a series of measures to strengthen the banking system of the United States and promote a more stable and resilient financial system. Gruenberg discussed credit availability, bank profitability, market liquidity, and the migration of financial activities to nonbanks. The Chairman concluded, "the economic environment remains challenging for U.S. banks, with narrower net interest margins and modest overall economic growth. Nevertheless, I think an objective look at relevant data suggests that on balance, the reforms that have been put in place since the crisis have made the financial system more resilient and more stable, while strengthening the ability of banking organizations to serve the U.S. economy."

NCUA Chairman Metsger has announced that credit union stakeholders will have an opportunity to offer comments on the NCUA's proposed 2017–2018 budget at a briefing in October. The agency has posted detailed budget information on its Budget and Supplementary Materials webpage. A rolling two-year budget, approved by the NCUA Board in November 2015, will be revised and supplemented before the October briefing.

The CFPB has posted the third article in its series on shopping for auto loans. The current entry features tips on these topics for servicemembers:

• Reductions of interest rate under the Servicemembers Civil Relief Act (SCRA)
• Permission from the lender to take a vehicle overseas
• Special military interest rates or discounts

The Federal Reserve Board has announced it has issued a Consent Order to Cease and Desist under the Federal Deposit Insurance Act to Affinity Financial Corporation (AFC), of Newport Beach, California, a savings and loan holding company; and Waterfield Financial Services, Inc., now known as Affinity Financial Centers, Inc. (WFS), of Indianapolis, Indiana, a wholly-owned subsidiary of AFC, for unsafe and unsound practices involving asset-liability management (or lack thereof). AFC and WFS gathered deposits that were typically short-term, and placed the proceeds of those deposits in other financial institutions for terms as long as five or ten years, creating substantial interest rate risk and liquidity risk. WFS was not subject to oversight as a depository institution. AFC and WFS have been ordered, and each has agreed, to refrain from engaging in any deposit gathering program, including as a deposit broker, without prior written approval of the Board or other appropriate federal banking agency.

On Thursday, June 16, 2016, The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) with a new loan loss accounting framework, also known as the current expected credit loss model (CECL), a significant departure from its current standard for accounting for loan losses. Overly simplified, CECL shifts the timing for recording loan losses to require bankers to record, at the time of loan origination, the credit losses expected throughout the life of the asset portfolio, both on loans and held-to-maturity securities. It is anticipated that implementation of the new standard will result in increases in the allowance for loan and lease losses for all lenders. It will also require significant changes to bank operations, since it will require analysis of data supporting the modeling of loss expectations, and forecasting losses into the future.

The new standard will become effective for SEC filers for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2019. For other public companies, the standard will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2020. For all other organizations, the new rule will become effective for fiscal years beginning after December 15, 2020, and for interim periods within fiscal years beginning after December 15, 2021.

Early application of the revised standards will be permitted for fiscal years and interim periods within them beginning after December 15, 2018.

The FDIC has issued FIL-38-2016 with guidance to help institutions and to facilitate recovery in areas of Texas recently affected by severe storms and flooding.

The notice of the June 21, 2017, meeting of the FDIC Board has been posted. The agenda includes Memoranda and resolutions regarding:

• Interim Final Rule Adjusting Civil Money Penalties for Inflation.
• Final Rule Addressing Public Comments Received on Interim Final Rule That Exempts Commercial End Users and Small Financial Institutions From Swap Margin Requirements.
• Final Rule Regarding the Retention of Records of a Covered Financial Company and of the FDIC as Receiver Pursuant to Section 210(a)(16)(D) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010-12 CFR Part 380.
• Final Rule to Revise 12 C.F.R. § 360.6 [Securitization Safe Harbor].
• Notice of Proposed Rulemaking: Alternatives to References to Credit Ratings With Respect to Permissible Activities for Foreign Branches of Insured State Nonmember Banks and Pledge of Assets by Insured Domestic Branches of Foreign Banks [Part 347].

The June 2016 issue of The NCUA Report features an article by the regulator’s Office of Minority and Women Inclusion outlining how diversity leads to better service, greater innovation and increased membership. Other articles in this issue include:

• NCUA Extends Call Report Deadlines for July, October Reporting
• Chairman’s Corner: Instant Replay Timeout: Official Review of the Regulatory Process
• Board Member McWatters’ Perspective: Accounting Standards May Drive ALLL Changes
• Board Actions: Stabilization Fund to Pay Treasury $700 Million
• How Will Your Commercial Loan Underwriting and Deal Structure Change with the New Member Business Lending Rule?
• Grants Give Low-Income Credit Unions the Means to Grow
• Reaching the Credit-Invisible.

The NCUA has posted five questions for stakeholders' consideration regarding the regulator’s efforts to modify supervision and examination procedures with its Exam Flexibility Initiative:

• How can NCUA conduct future examinations in ways that minimize their impact on credit unions’ operations?
• What concerns do credit unions have about the current examination and supervision program?
• What steps should NCUA take to improve the efficiency of its examination program while ensuring it remains effective?
• How can NCUA better use technology in examinations?
• What metrics should NCUA consider to determine a credit union’s eligibility for an extended examination cycle?

Comments can be submitted online. The NCUA will accept suggestions received after August 1, but comments received before that date will receive full consideration.

The CFPB has posted an article with tips for consumers to consider prior to co-signing for an auto loan. The article is the second in the CFPB series on auto loans, “Take control of your auto loan.”

The National Credit Union Administration has published a "Sunshine Act" notice of its Board of Directors meeting to be held at 10 a.m. ET on Thursday, June 16, 2016. The agenda for the public portion of the meeting includes

• NCUA's Rules and Regulations, Technical Amendments to Community Development Revolving Loan Fund
• NCUA's Rules and Regulations, Statutory Inflation Adjustment of Civil Money Penalties.
• Board Briefing, Interest Rate Risk Supervision and Adding 'S' to CAMEL.

The Government Accountability Office has published a report that in its audit of the CFPB's fiscal years 2015 and 2014 financial statements, GAO identified deficiencies in CFPB’s internal control over accounting for property, equipment, and software that collectively constituted a significant deficiency in CFPB’s internal control over financial reporting. Specifically, GAO found that CFPB did not effectively design or implement controls to (1) reasonably assure accurate and timely classification and recording of software costs and (2) maintain ongoing accuracy and completeness of property and equipment inventory records. The GAO found that the CFPB had completed corrective actions on two of the four recommendations from GAO’s prior management report that remained open at the beginning of GAO’s fiscal year 2015 audit. As a result, the CFPB currently has seven financial audit-related GAO recommendations to address: the previous two open recommendations and the five recommendations GAO made in the current report.

The Department of Housing and Urban Development published in this morning's Federal Register an interim final rule, "Inflation Catch-up Adjustment of Civil Monetary Penalty Amounts," amending the agency's civil monetary penalty regulations by making inflation adjustments as mandated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The rule also removes three obsolete civil monetary penalty regulations previously authorized under statutes for which either HUD no longer has enforcement authority or the program is no longer active. Among other increases, the amendment increases the penalty per violation for FHA mortgagees and lenders from the current levels of $8,500 per violation capped at $1,525,000 per year, to $9,468 per violation capped annually at $1,893,610.

The rule will be effective August 16, 2016. Comments on the rule are due by August 15, 2016.

OFAC has issued another general license under the Kingpin Act related to Importadora Maduro, S.A. and affiliated companies. See "OFAC adds Kingpin Act/Panama-related license" in our OFAC Updates pages for additional information.

OFAC has published four Kingpin Act General Licenses related to Honduras/Panama and updated four related frequently asked questions (FAQs). The General Licenses authorize certain transactions and activities that would otherwise be prohibited pursuant to the Kingpin Act.

The Federal Reserve Board and FDIC have jointly announced 84 firms with limited U.S. operations will be permitted to file reduced content resolution plans for their next three resolution plans. The 84 firms have less than $50 billion in total U.S. assets, and are foreign banking organizations with limited U.S. operations. The decision is intended to increase clarity and reduce burden by creating more certainty around future filing requirements.

The Board of Governors of the Federal Reserve System has delivered to Congress the June 2016 report of profitability of credit card operations of depository institutions. 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. It also reviews trends in credit card pricing, including changes in interest rates.

OCC Bulletin 2016-20 has been issued to inform national banks, federal savings associations, and federal branches and agencies of foreign banks of the temporary extension of certain protections under the Servicemembers Civil Relief Act (SCRA), which was renewed on March 31, 2016, with the signing of the Foreclosure Relief and Extension for Servicemembers Act of 2015. [Note: The OCC often sends announcements of such developments well after they occur.] The SCRA amendments continue a temporary provision that extends for one year following a servicemember’s period of military service the protections related to the sale, foreclosure, or seizure of the servicemember’s mortgaged property, or the filing of a legal action to enforce a mortgage obligation or other similarly secured obligation. The temporary extension now expires on December 31, 2017. HUD has updated its “Servicemembers Civil Relief Act Notice Disclosure” (Form 92070) to reflect the extensions.

The NCUA has posted the Quarterly U.S. map review, which tracks credit union performance. More than half of federally insured credit unions in every state reported growth in loan balances over the year ending in the first quarter of 2016. Nationally, median loan growth in federally insured credit unions was 4.5 percent during the year ending in the first quarter of 2016. The median rate of growth in deposits and shares was 3.0 percent. The median loan-to-share ratio moved above 60 percent. The median loan delinquency rate was essentially unchanged from a year earlier at 0.7 percent.