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Friday, July 25, 2014

Bill Would Let Post Offices Offer Deposit Accounts

Rep. Cedric Richmond (D-La.) introduced a bill that would allow the U.S. Postal Service to provide an expanded range of financial products — including checking accounts, interest-bearing savings accounts, small-dollar loans, debit cards and international money transfers.

In addition to these products, which are explicitly mentioned in the bill, Richmond would allow USPS to offer “such other basic financial services as the Postal Service determines appropriate in the public interest.” ABA EVP Ken Clayton said:

Serving the unbanked is a top priority for banks, which are reaching more and more people with innovative products and services. At the same time, we’re concerned about possibly creating a new entity engaged in banking services, but not subject to the same level of regulation. This new entity could be perceived by many as a government-endorsed and preferred provider of financial products. The impact on banks — particularly community banks — would be substantial.

Read more.

OCC Updates Guidance on Muni Securities

The OCC issued a new Comptroller’s Handbook booklet on the Municipal Securities Rulemaking Board’s rules. It covers MSRB regulations and interpretive guidance and addresses compliance with new MSRB rules on recordkeeping, timing of disclosures, prices and commissions, municipal advisers and other topics. The new booklet consolidates 1990 guidance on bank dealer activities and a 1991 booklet on securities activities.

Read the booklet.

CFPB Proposes HMDA Changes

The CFPB proposed several changes to Regulation C, which implements the Home Mortgage Disclosure Act. The bureau is seeking to add several new categories for reporting by lenders and make changes in how the data is reported.

In keeping with the Dodd-Frank Act, the rule would require lenders to report for the first time property value, loan term, total points and fees, the duration of teaser rates and the age and credit score of the applicant or borrower. The CFPB also proposed that lenders submit data on an applicant’s debt-to-income ratio, interest rate and total points charged, which the bureau said would help it evaluate the impact of its mortgage rules. With only a few exceptions, all dwelling-secured loans would be subject to the rule.

The CFPB proposed a single threshold — 25 mortgages originated annually — at which banks and nonbanks become subject to the rule. It said it would align the HMDA reporting requirements with industry data standards and improve the electronic reporting process. The bureau also said it would seek to improve its public, online HMDA database that was launched in February.

Comments are due Oct. 22.

Read the proposed rule.

The Week Ahead: July 28 - August 1

  • Hearing: Examining the GAO Report on Expectations of Government Support for Bank Holding Companies Read more.
All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar. Do you have questions about things like mortgages, credit cards, fighting fraud, or saving for college? Our personal finance resources are here to help you understand these topics (and more) and make knowledgeable financial decisions. Read more.

Thursday, July 24, 2014

SEC Approves Floating NAV, Fees, Restrictions for MMFs

The SEC approved a plan to increase regulation of money market mutual funds. The 3-2 vote adopted both approaches outlined in the SEC’s proposal last summer: a floating net asset value and redemption fees and limitations for certain funds -- plus an enhanced disclosure regime. ABA has opposed this plan, arguing that enhanced disclosures alone would be sufficient to protect MMFs and that the new rules will limit the usefulness of the funds.

Institutional prime MMFs, including institutional municipal funds, will be required to have a floating net asset value, instead of the current practice of fixing the NAV at $1 per share. Government and retail MMFs would be exempt from this requirement. For all prime funds, should weekly liquid assets fall below 30% of total assets, MMF boards would be allowed to impose up to a 2% liquidity fee on redemptions and stop redemptions for up to 10 days. The SEC also added new daily online disclosures, as well as additional reporting and diversification requirements.

“We’re disappointed that the final rule gives insufficient weight to the need for liquidity and stability of principal that drives this market,” said ABA VP Cris Naser. “Bank fiduciaries and corporate trustees have long invested client assets in money market mutual funds. Unfortunately, legal, regulatory or contractual considerations may now limit their ability to do so.”

The floating NAV and new fees and gates take effect two years after publication in the Federal Register, while the new reporting requirements take effect 9-18 months after publication. Meanwhile, the IRS proposed regulations to adjust MMF investors’ tax reporting requirements under a floating NAV.

Read the final rule.
Read the IRS proposal.

Wednesday, July 23, 2014

Fed Report to Congress on Gov’t Prepaid Cards

The Dodd-Frank Act requires the Federal Reserve Board to report annually to the Congress on the prevalence of use of general-use prepaid cards in federal, state, and local government-administered payment programs and on the interchange fees and cardholder fees charged with respect to the use of such prepaid cards.

Across reported programs that provided a prepaid card option, government offices disbursed almost $1.1 trillion in 2013, 14% of which was disbursed through prepaid cards—a small increase in comparison to 2012 and 2013 data.

Issuers collected more than $502 million in fee revenue during 2013 across reported programs, with 65% from interchange fees and 35% from cardholder fees. Although the prepaid cards provided under government-administered programs usually offer cardholders one or more free ATM cash withdrawals per month, ATM withdrawal fees constitute 58% of all card- holder fee revenue that issuers collected in 2013. Customer service and account servicing fees constitute the next largest source of cardholder fee revenue, at 15% and 14%, respectively.

Read the report.