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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.

OCC Alert 2016-8 has been circulated concerning reports of counterfeit cashier's checks being circulated that purport to have been issued by Provident Savings Bank, FSB, Riverside, California.

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.

The Consumer Finance Protection Bureau has published [81 FR 38569] in today's Federal Register an interim final rule to adjust the civil monetary penalties within the Bureau’s jurisdiction for inflation, as required by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The interim rule will be effective on, and comments on the rule will be accepted through, July 14, 2016. The rule adds new Part 1083 ("Civil Penalty Adjustments") to chapter X in title 12 of the CFR. Specifically, it adjusts these civil money penalties:

• Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(A) -- Tier 1 penalty for any violation of any provision of Federal consumer financial law, or rule, or final order imposed in writing by the Bureau -- $5,000 per day, adjusted to $5,437
• Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(B) -- Tier 2 penalty for any reckless violation of any provision of Federal consumer financial law, or rule, or final order imposed in writing by the Bureau -- $25,000 per day, adjusted to $27,186
• Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(C) -- Tier 3 penalty for any knowing violation of any provision of Federal consumer financial law, or rule, or final order imposed in writing by the Bureau -- $1,000,000 per day, adjusted to $1,087,450
• Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1717a(a)(2) -- Per violation, $1,000, adjusted to $1,894; annual cap from $1,000,000 to $1,893,610
• Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2609(d)(1) -- Provision of annual escrow statement, per failure, $50, with annual cap of $100,000, increased to $89 per failures, with annual cap of $178,156; per intentional failure, $100 raised to $178 (no caps)
• S.A.F.E. Act , 12 U.S.C. 5113(d)(2) -- (Only in states where there is a licensing system imposed by the CFPB) $25,000 per violation, increased to $27,455
• Truth in Lending Act , 15 U.S.C. 1639c(k) (Appraisal independence requirements in real estate transactions) -- $10,000 per day for first violation, increased to $10,875; $20,000 per day for subsequent violations, increased to $21,749

The Federal Reserve System has published the first 2016 issue of Consumer Compliance Outlook, featuring these and other articles:

• Interagency Flood Insurance Regulation Update Webinar: Questions and Answers
• Credit and Debit Card Issuers’ Obligations When Consumers Dispute Transactions with Merchants
• Proposed Changes to the Uniform Interagency Consumer Compliance Rating System

The Consumer Financial Protection Bureau has scheduled a one-hour webinar at 2 p.m. ET on Wednesday, June 22, providing an overview of the recent updates to its eRegulations tool. Preregistration is required.by 5 p.m. ET on June 21.

OFAC has identified the Yarmouk Martyrs Brigade, headquartered in Syria's Daraa Province, as a Specially-designated global terrorist organization.

The Federal Reserve Board has released the June 9, 2016 Z.1 Financial Accounts of the United States report.

The Federal Reserve Board has issued CA 16-3 with revised interagency examination procedures for Regulation P (Privacy of Consumer Financial Information).

The First Quarter 2016 mortgage debt outstanding report has been released by the Board of Governors of the Federal Reserve System.

The CFPB has announced new resources for consumers regarding shopping and negotiating an auto loan. “Take Control of your Auto Loan” is a roadmap to help consumers navigate the process and understand the total cost of a car loan. The Auto Loan Worksheet helps keep track of offers, see the total cost of a car purchase, and negotiate the best deal.

The Department of Housing and Urban Development has announced an agreement with First-Citizens Bank & Trust Company, resolving allegations that the bank's predecessor, First Citizens Bank and Trust Co., denied mortgage loans to African American, Latino and Asian American mortgage applicants at a disproportionately higher rate than white applicants. In January 2015, the South Carolina-based bank was merged into First-Citizens Bank & Trust Company, a North Carolina-chartered commercial lender. As the successor, First-Citizens Bank & Trust Company continued to cooperate with HUD throughout the investigation and ultimate resolution. First-Citizens agreed to take several steps to ensure and protect equal access to credit including refraining from unlawful consideration of race or national origin when selecting sites for branch offices and services offered, conducting marketing, and defining Community Reinvestment Act assessment areas.

OFAC has updated its frequently asked questions (FAQs) relating to the lifting of certain sanctions under the joint comprehensive plan of action relating to Iran. Two FAQs related to Financial and Banking Measures (C.15 and C.16) and nine FAQs related to Foreign Entities Owned or Controlled by U.S. Persons (K.14 – K.22) were added. OFAC added these FAQs to provide further clarity on the scope of the sanctions lifting that occurred on Implementation Day of the JCPOA.

Federal Reserve Bank Services has announced the availability of frequently asked questions (FAQs) on the Fixing America’s Surface Transportation Act (FAST Act), which amended Section 7 of the Federal Reserve Act related to Reserve Bank surplus and the payment of dividends to member banks. The FAST Act changes the dividend rate for member banks with more than $10 billion (adjusted annually for inflation) of total consolidated assets, effective January 1, 2016, to the lesser of six percent or the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of the dividend.

The Federal Reserve Board and the FDIC have announced that four foreign banking organizations (FBOs)—Barclays PLC, Credit Suisse Group, Deutsche Bank AG, and UBS—will be required to submit their next resolution plans on July 1, 2017. The agencies jointly determined the 2016 annual resolution plan filing requirement will be satisfied by the submission of 2017 resolution plans.

The Federal Reserve Board has issued SR 16-11 with supervisory guidance for assessing risk management at supervised institutions with total consolidated assets of less than $50 billion. The guidance reaffirms the Federal Reserve's long-standing supervisory approach that emphasizes the importance of prudent risk management.

The March 2016 structure data for U.S. banking offices of foreign entities has been released by country and by type.

The Office of the Comptroller of the Currency has announced the publication of the June 2016 edition of its Community Developments Investments electronic newsletter entitled "Financing Health Centers: Supporting Community Wellness." Articles look at how banks are financing the construction, renovation, and expansion of federally funded health centers. Bankers and public health professionals discuss the public sector financial resources they have leveraged in the financing of these facilities.

The FDIC has released its first quarter 2016 state profiles. The profiles are a quarterly data sheet summation of banking and economic conditions in each state.

ICE has announced that Manuel Geovanny Rodriguez-Perez, 43, aka “Shorty,” the leader of a massive and violent racketeering organization, has pleaded guilty to one count of racketeering conspiracy and took responsibility for nine murders, 10 attempted murders, marijuana trafficking, and money laundering. The guilty plea, which could result in incarceration for life, stems from an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Additionally, Rodriguez-Perez agreed to pay $25 million as a forfeiture penalty.