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The Consumer Financial Protection Bureau announced early this morning proposed rules that would prohibit mandatory arbitration clauses in new contracts that deny groups of consumers their day in court. Under the proposal, which would add a new 12 C.F.R. part 1040 (Regulation NN?), companies would still be able to include arbitration clauses in their contracts. However, for contracts subject to the proposal, the clauses would have to say explicitly that they cannot be used to stop consumers from being part of a class action in court. The proposal would provide the specific language that companies must use. Companies with arbitration clauses would be required to submit to the CFPB claims, awards, and certain related materials that are filed in arbitration cases. This would allow the Bureau to monitor consumer finance arbitrations to ensure that the arbitration process is fair for consumers. The Bureau reports that the rules would apply to most consumer financial products and services that the CFPB oversees, including those related to the core consumer financial markets that involve lending money, storing money, and moving or exchanging money. Congress already prohibited arbitration agreements in the largest market that the Bureau oversees – the residential mortgage market. Comments on the proposal will be accepted for 90 days following publication in the Federal Register.

• Bureau press release
• Proposed rule (377-page Federal Register submission)
• Published 5/24/2016 at 81 FR 32829, with comment period ending August 22, 2016

HUD has announced the first-time allocation to states from the Housing Trust Fund of $174M. The Housing Trust Fund is a new affordable housing production program that will complement existing Federal, state and local efforts to increase and preserve the supply of decent, safe, and sanitary affordable housing for extremely low- and very low-income households, including families experiencing homelessness. By law, each state is allocated a minimum of $3 million.

A workshop for directors of national community banks and federal savings associations will be hosted by the OCC in Syracuse, NY, on June 20-22. The Building Blocks for Directors workshop will combine lectures, discussion, and exercises to provide practical information on the roles and responsibilities of board participation for both new and experienced directors. It focuses on directors' duties and core responsibilities, discusses major laws and regulations, and increases familiarity with the examination process.

The NCUA will host a free webinar, "Cybersecurity: What Can You Do?" on May 12, beginning at 2 p.m. ET, to provide credit unions with valuable information about protecting themselves and their members from cyber threats. Topics will include:

• How small credit unions can prepare for, or recover from, a cybersecurity event;
• How to use the FFIEC cybersecurity assessment tool;
• How to balance the impact associated with fraud risk and fraud prevention; and
• How to avoid or minimize cyber security vulnerabilities in products and services.

The Department of the Treasury's Office of Foreign Assets Control has announced it has designated the Waken Money Laundering Organization and its leaders as Specially Designated Narcotics Traffickers under the Kingpin Act. OFAC also targeted six Waked MLO associates and 68 companies tied to the drug money laundering network, including Grupo Wisa, S.A., Vida Panama (Zona Libre) S.A., and Balboa Bank & Trust. The Waked organization uses trade-based money laundering schemes, such as false commercial invoicing; bulk cash smuggling; and other methods, to launder drug proceeds on behalf of multiple international drug traffickers and their organizations.

OFAC also published three Kingpin Act General Licenses authorizing certain transactions and activities that would otherwise be prohibited under the Act, and issued three related Frequently Asked Questions. OFAC also added a total of nine individuals and 69 entities to its SDN Lists. See our May 5, 2016, OFAC Update for additional details.

The Department of Housing and Urban Development has announced that it is charging a White Plains, New York, co-op with housing discrimination for refusing to grant an exception to its policies that would allow a person with disabilities to buy a unit there. The case came to HUD's attention after a person with disabilities filed a complaint alleging that he was denied the opportunity to buy a unit at Thompkins Manor, a 155-unit cooperative, because of his disabilities. The man's parents had created a supplemental needs irrevocable trust to provide for their son's care. In August 2013, the man and his parents attempted to purchase a cooperative unit using the trust as the owner. According to HUD's charge, 505 Central Avenue Corp., which owns Thompkins Manor, rejected the application because the cooperative did not permit ownership by trust. The family allegedly asked the company to make an exception to its ownership rule as a reasonable accommodation, but it refused to do so.

A joint press release by the federal banking agencies announced they are proposing a rule to strengthen the resilience of large banking organizations by requiring them to maintain a minimum level of stable funding relative to the liquidity of their assets, derivatives, and commitments, over a one-year period. The rule, the net stable funding ratio, or NSFR, is being proposed by the FDIC, the FRB, and the OCC. A notice of the proposed rule has been submitted for publication to the Federal Register. ..

Update, June 1, 2016: The proposal was published in the June 1, 2016, Federal Register at 81 FR 35123. Comments are due by August 5, 2016.

FDIC FIL-32-2016, issued Tuesday, seeks input from financial institutions, consumer groups and other stakeholders on the FDIC's plans to assess opportunities for mobile financial services (MFS) to enhance underserved consumers' banking experiences. The FDIC has identified a set of six strategies that banks employing MFS may consider to better meet consumer needs, as well as potential demonstrations that can document the usefulness of certain strategies. The FDIC is soliciting comments and feedback on:

• financial institutions' current implementation of these strategies;
• the best way to shape a demonstration project; and
• indications of interest from financial institutions that may wish to participate in a demonstration.

The National Credit Union Administration has announced the appointment by President Obama of NCUA Vice Chairman Rick Metsger to be the ninth chairman of the NCUA Board. Metsger succeeds Board Chairman Debbie Matz, whose tenure ended April 30.

The Federal Reserve Board on Tuesday proposed a rule to support U.S. financial stability by enhancing the resolvability of very large and complex financial firms. The proposed rule would require U.S. global systemically important banking institutions (GSIBs) and the U.S. operations of foreign GSIBs to amend contracts for common financial transactions (qualified financial contracts, or QFCs) to prevent the immediate cancellation of the contracts if the firm enters bankruptcy or a resolution process. This change should reduce the risk of a run on the solvent subsidiaries of a failed GSIB caused by a large number of firms terminating their financial contracts at the same time.

The Consumer Financial Protection Bureau's Regulatory Implementation Team has announced that they have posted the archive recording of the Bureau's April 12 webinar addressing specific questions raised about the implementation of the TRID rule's requirements.

The FDIC has posted its May 2016 list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA) to which the FDIC assigned ratings in February 2016. Of the 71 institutions listed, three received outstanding ratings, two were rated "needs to improve," and 66 received ratings of satisfactory.

The U.S. Department of Housing and Urban Development has announced the award of $355 million to more than 1,200 local homeless housing and service programs across the U.S. and Puerto Rico. The Continuum of Care (CoC) grants support efforts to end homelessness and build upon the $1.6 billion HUD awarded through a first round of funding in March 2016.

The Federal Reserve Board has released the April 2016 G.5 Foreign Exchange Rate and the February 2016 G.20 Finance Companies owned and managed receivables outstanding reports.

The April 2016 Senior Loan Office Opinion Survey on Bank Lending Practices (SLOOS) has been released by the Federal Reserve Board. The survey results indicated that, on balance, banks tightened their standards on commercial and industrial (C&I) and commercial real estate (CRE) loans over the first quarter of 2016. The survey results also indicated that demand for C&I loans had weakened and that demand for CRE loans had strengthened during the first quarter on net.

The FFIEC State Liaison Committee (SLC) today announced the election of Karen Lawson as its chairman. The SLC chairman's term begins May 1 and runs through April 30 of the following year. The SLC can re-elect the chairman for additional terms. The appointment of Edward "Joe" Face to the SLC was also announced.

A listening session to solicit input on ways the NCUA can enhance its Minority Depository Institutions Preservation Program will be held on May 25 in Alexandria, Virginia, from 2:00–3:30 p.m. ET.

The NCUA has announced that credit unions that qualify for consulting assistance from the agency have until May 31 to submit nominations. To qualify for the NCUA's consulting assistance, a credit union must fall into one of the following categories:

• Have total assets of less than $100 million;
• Have been chartered for fewer than 10 years;
• Be designated as a Minority Depository Institution; or
• Have a low-income designation from NCUA.

Eligible credit unions should complete the agency's online registration form.

The CFPB has announced it is amending the regulations implementing the Interstate Land Sales Full Disclosure Act (ILSA) to allow electronic filings. ILSA requires certain land developers to register their subdivisions and provide disclosures about the lots being offered, to protect consumers from deception or abuse. The final rule issued by the CFPB amends Regulations J and L to permit the electronic submission of filings. The CFPB also has launched a new webpage with instructions for electronic filing once the rule becomes effective and new simplified instructions for making electronic payments for ILSA registration fees. The rule will be effective 30 days after publication in the Federal Register.

Update: Federal Register publication date is May 11, 2016. Effective date is June 10, 2016.

The Federal Reserve Board on Monday announced it has approved a joint agency notice of proposed rulemaking to implement the incentive compensation provisions of section 956 of the Dodd-Frank Act. Publication of the proposed rule in the Federal Register will be delayed to allow all of the agencies to consider the proposal, and comments will be accepted until July 22.

The proposed rule would prohibit incentive-based compensation arrangements for executives that the regulators believe could encourage excessive risk-taking behavior. It would apply to firms (including banks) with more than $1 billion in assets. Other agencies involved in the joint proposal are the NCUA, FDIC, OCC, and FHFA (all of which have previously approved their versions of the proposed rule), and the SEC, which is expected to approve its version shortly.

• Board staff summary of proposal
• Board-approved joint agency proposal

The Federal Reserve Board has announced it has executed an Order of Assessment of a Civil Money Penalty in the amount of $6,200 against Farmers & Merchants Bank of Ashland, Ashland, Nebraska, for violations of Regulation H, which implements the National Flood Insurance Act.

The Office of the Comptroller of the Currency (OCC) has released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of April 1, 2016 through April 30, 2016. The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings. Of the 24 evaluations made public this month, four are rated outstanding and 20 are rated satisfactory.

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) has designated Colombian national Jose Bayron Piedrahita Ceballos as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Jose Bayron Piedrahita Ceballos, a patron of narcotics traffickers in Colombia, provides material support to the criminal group La Oficina de Envigado (La Oficina), which was designated by OFAC in June 2014. OFAC also designated seven other Colombian nationals and 11 entities in Colombia, Panama, Guatemala, and Argentina for their ties to Piedrahita Ceballos or the individuals and companies tied to him. For further information, see our May 3, 2016, OFAC Update.

The FFIEC has announced it is seeking public comment on a proposal to revise the existing Uniform Interagency Consumer Compliance Rating System. The revisions are designed to more fully align the rating system with the FFIEC agencies' current risk-based, tailored examination approaches.. Comments must be received 60 days from publication in the Federal Register.

Update, 5/3/2016: The notice was published on 5/3/2016 at 81 FR 26553; comments close on July 5, 2016.

The Federal Deposit Insurance Corporation has announced that Trust Company Bank, Memphis, Tennessee, was closed by the Tennessee Department of Financial Institutions, which appointed the FDIC as receiver. The FDIC has entered into a purchase and assumption agreement with The Bank of Fayette County, Piperton, Tennessee, to assume all of the deposits of Trust Company Bank. Trust Company Bank is the second FDIC-insured institution to fail this year, and the first in Tennessee.

The FDIC has released the list of orders of administrative enforcement actions taken against banks and individuals in March (and one from February). A total of 26 orders, including one issued in February, and one notice were issued The administrative enforcement actions consisted of one consent order; one prompt corrective action; one removal and prohibition order; eleven Section 19 orders; two civil money penalties (CMP); two voluntary terminations of insurance; seven terminations of consent orders and cease and desist orders; one adjudicated decision; and one notice. Both of the CMPs were imposed on individuals who are or were institution-related parties, one of a bank in San Francisco, California, and the other of a bank in Logan, Ohio.

The NCUA has announced the issuance in April of five notices of prohibition to individuals who have been convicted of crimes of dishonesty and, as a result, are prohibited from participating in the affairs of any federally insured financial institution:

• Melissa Ann Joiner, a former employee of Metro North Federal Credit Union in Jacksonville, Florida
• Schrelle L. Malone, a former employee of Pacific Marine Credit Union in Oceanside, California
• Michael J. McGrath, Jr., the former CEO of U.S. Mortgage Corporation and CU National Mortgage, LLC, in Pine Brook, New Jersey
• Randy Gard Teall, a former employee of Global Credit Union in Spokane, Washington
• Yvondia M. "Susan" Young, a former employee of Heritage Trust Federal Credit Union in Summerville, South Carolina

The CFPB has posted a Bureau Blog article announcing that 20 federal agencies, social services, legal aid, and volunteer-based organizations and networks across the country have added by the CFPB to the list of entities involved in the "Your Money, Your Goals" toolkit training program. The program equips case managers, legal aid attorneys and other staff and volunteers with information and tools to help them talk with the people they serve about setting and reaching their own financial goals. The toolkit covers a number of topics, including saving for emergencies, tracking and managing income and spending, building and improving credit, managing debt, and using consumer financial products and services.

The Bureau Blog features an article for consumers about the right to be treated fairly in the financial marketplace. It reviews various illegal and/or discriminatory practices and what consumers can do to protect their rights.

The FFIEC has announced the release of a new Appendix E, "Mobile Financial Services," to the "Retail Payment Systems" booklet of the FFIEC Information Technology (IT) Examination Handbook. The new appendix focuses on risks associated with activities and devices for mobile financial services. The appendix emphasizes an enterprise-wide risk management approach for effectively managing and mitigating existing and evolving risks. Additionally, the appendix contains work program objectives to assist examiners in determining the state of risk and controls at an institution or third-party provider. OCC Bulletin 2016-14 and FDIC FIL-31-2016 were also issued to announce the new appendix.

Treasury has released a report which is submitted to Congress on the Foreign Exchange Policies of Major Trading Partners of the United States. The report highlights that, underpinned by robust job creation and resilient domestic demand, the U.S. economy grew at a solid pace of 2.4 percent in 2015. Outside of the United States, growth in other advanced economies was more disappointing and emerging market economies are facing significant headwinds from low commodity prices, weak trade growth, and internal cyclical dynamics. Most projections for 2016 point to the continuation of modest growth abroad.

HUD has announced the awarding of $9.9M in sweat equity grants to produce at least 541 affordable homes for low-income individuals and families funded through HUD's Self-Help Homeownership Opportunity Program (SHOP). The SHOP program provides federal grants on a competitive basis to national and regional non-profit organizations and consortia that have experience in administering self-help homeownership housing programs. The SHOP grants must be used to purchase land and make necessary infrastructure improvements, which together may not exceed an average SHOP investment of $15,000 per dwelling unit. Leveraged funds must be used for the construction or rehabilitation of these homeownership units.

An article on the CFPB Blog notes that it may be difficult for incarcerated individuals to monitor personal accounts or credit reports. Individuals who can’t monitor their credit reports could face an increased risk of fraud or identity theft. Errors or other problems on a credit report can create a barrier for those seeking employment or housing, accessing credit, and can lead to other financial difficulties. The Bureau has released a tip sheet to help currently and recently incarcerated consumers protect their credit files and help eliminate unnecessary barriers to a successful transition to jobs or housing after these individuals serve their sentence.

The CFPB has unveiled its student loan "Payback Playbook," a set of prototype disclosures [PDF; download before opening] that outline a path to affordable payments for borrowers trying to avoid student debt distress. The Payback Playbook provides borrowers with personalized information about their repayment options from loan servicers so they can secure a monthly payment they can afford. The Payback Playbook would be available to borrowers on their monthly bills, in regular email communications from their student loan servicers, or when they log into their student loan accounts. The proposed features will include: personalized payment options; no fine print; and real-time, up-to-date information. The CFPB has posted a public request for comments, which can be submitted online. Prepared remarks from Director Cordray on the Payback Playbook were also released.

The NCUA has announced that a new online training module regarding best practices for merging credit unions is now available. The three-part video module examines current trends in mergers, when a credit union board should consider a merger and how to negotiate a merger agreement that best serves the credit union’s interests.

Federal Reserve Bank Services has announced amendments to the following Federal Reserve Operating Circulars, effective June 30, 2016:

• OC 4 – Automated Clearing House items
• OC 5 – Electronic Access – new appendix A
• OC 6 – Funds Transfers Through the Fedwire Funds Service
• OC 7 – Book-Entry Securities Account Maintenance and Transfer Services
• OC 12 – Multinational Settlement

See the Federal Reserve's Operating Circulars page for a summary of key changes and the revised text.

The FHFA has released its March index, which shows mortgage interest rates decreased from February 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 3.73 percent for loans closed in late March, down 15 basis points. The average interest rate on all mortgage loans was 3.76 percent, down 13 basis points. The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 3.95 percent, down 16 basis points. The effective interest rate on all mortgage loans was 3.88 percent in March, down 15 basis points. 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 $325,000 in March, up $8,300.

HUD has announced a $22,600 Conciliation Agreement between Housing Equality Law Project and the owners and managers of a San Diego-based property management company, settling allegations that they discriminated against persons with disabilities who required the use of assistance animals. The Fair Housing Act prohibits housing providers from denying or limiting housing to persons with disabilities or from refusing to make reasonable accommodations in policies or practices. This includes waiving no pet policies for assistance or service animals.

A Pakistani national and former D.C. business owner who served the last eight years in federal prison for conspiring to launder money and concealing terrorist financing has been turned over to authorities in Islamabad by officers with U.S. Immigration and Customs Enforcement’s (ICE) Enforcement and Removal Operations (ERO).

The Securities and Exchange Commission has announced and published a fact sheet seeking public comment a on a proposed national market system (NMS) plan to create a single, comprehensive database that would enable regulators to efficiently track all trading activity in the U.S. equity and options market. The plan for the database, known as the consolidated audit trail (CAT), was submitted jointly by the self-regulatory organizations (SROs).