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Friday, September 23, 2016

The Week Ahead: Sep. 26 - 30

  • Comments Due CDFIF: New Markets Tax Credit Program Allocation Tracking System (PRA)
    Read more.
  • Comments Due CDFIF:Uses of Award Report Form (formerly BEA Program Award Report Form) (PRA)
    Read more.
  • Meeting CFPB: Community Bank Advisory Council Meeting
    Read more.
All times in Eastern Standard Time. See future events on the  Dodd-Frank Calendar.

New Bill Would Provide Compliance Safe Harbors for Innovation

Under a bill introduced by Rep. Patrick McHenry (R-N.C.), companies – banks and nonbank financial technology firms alike – will be able to test innovative fintech products under a streamlined regulatory process with greater certainty about compliance requirements. “New financial technologies already make it easier to pay friends, save for college, or access credit needed to start and grow a business,” McHenry said. “Continued innovation will only further that progress, making it easier and cheaper for all Americans to access our financial system.”

The Financial Services Innovation Act (H.R. 6118) would require several agencies, including all federal financial regulators and the Federal Trade Commission, to establish Financial Services Innovation Offices. Any company, bank or nonbank, wishing to offer financial innovations would be able to apply to the FSIO of their choosing, seeking a modification to or waiver of particular rules or statutes and seeking an alternative compliance agreement.

Through notice-and-comment rulemaking, the FSIOs would review each petition promptly, with a burden to prove the costs outweigh the benefits in the case of a denial. Once approved, the company would enter an enforceable compliance agreement outlining the alternative strategy and protecting the innovation from enforcement on other grounds or by other agencies. Each FSIO would be given authority to waive outdated or burdensome statutory or regulatory requirements so long as the agency’s reading of the rule or statute is rational.

ABA staff are carefully reviewing the legislation, which appears aligned with ABA’s broad principles for supporting fintech innovation: focusing on activities, not on charter type; being based on up-to-date laws; and offering a regulatory “greenhouse” to test innovations. ABA experts consulted with McHenry’s staff as the legislation was being drafted.

Read more.

ABA Issues Staff Analysis of ADA Web Accessibility Guidelines

ABA has published a staff analysis of the Americans with Disabilities Act’s treatment of website accessibility, outlining the current state of the law and the Department of Justice’s anticipated regulations on the topic.

While Title III website accessibility rulemaking is not scheduled until 2018, plaintiffs’ attorneys are making use of DOJ’s position that banks and others have an existing duty to provide accessible web content based on the statutory obligation to “provide effective communication to persons with disabilities through the provision of auxiliary aids and services,” as DOJ has said. On this basis, they are sending banks demand letters alleging ADA violations.

Read the staff analysis.

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Thursday, September 22, 2016

ABA Urges Regulators to Seek Advance Feedback on 'Basel IV'

As U.S. regulators consider whether and how to implement a wave of recently proposed revisions to Basel III’s risk-based regulatory capital requirements – often known collectively as “Basel IV” – ABA urged the agencies to issue an advance notice of proposed rulemaking that would “[set] forth comprehensively and in detail the goals and concerns driving the cluster of proposed modifications...the various alternatives under consideration; and the potential effects of each alternative on different types of U.S. banking organizations and the delivery of banking services.”

Given the level of complexity and interconnectivity between these new capital proposals (which have thus far been released in a piecemeal fashion), ABA said that an ANPR would be the most effective, fair and transparent way for bankers to analyze and comment on the potential effects of the changes.

ABA said:
We recognize that the array of changes being proposed by the Basel Committee, and the various alternatives under consideration in the United States, would be intended to produce simplification, transparency, compliance, certainty, and international harmonization benefits. But our members also believe that, if crafted on a piecemeal basis, the alternatives could instead result in new complexity, a substantial increase in required capital unrelated to risk, significant competitive inequality, and new burdens on community banks.

The association added that in moving forward with revising the U.S. regulatory capital framework, regulators should ensure that any changes to the framework would: produce capital requirements generally consistent with levels required domestically today; maintain an appropriate level of risk sensitivity; consider the overall capital level requirements relative to international standards; and not add unnecessary complexity. Regulators should also carefully consider the potential effects that the changes could have on community and midsize banks, ABA said.

Read the letter.

Wednesday, September 21, 2016

OCC to Banks: Expect Closer Scrutiny of Cross-Selling

With Wells Fargo’s product sales quotas in regulatory cross-hairs, Comptroller of the Currency Thomas Curry warned that large and midsize banks should expect closer examiner scrutiny of sales practices.

Curry told the Senate Banking Committee:
The actions against Wells Fargo highlight that we must continue our efforts to improve and refine the agency’s supervisory program, to sharpen our early warning processes, and to enhance our supervisory capabilities, particularly with respect to our largest, most complex banks. At the same time, I have directed our examiners to review the sales practices of all the large and midsize banks the OCC supervises and assess the sufficiency of controls with respect to these practices.

During the hearing, senators raised questions about the timeline of when Wells Fargo first reported the problems with unauthorized accounts to regulators. Stumpf said that he first became aware of the problems in late 2013, prior to which they were being handled by the compliance and audit functions within Wells Fargo’s retail banking unit.

Curry noted that the OCC first received consumer and employee complaints in 2012, and Consumer Financial Protection Bureau Director Richard Cordray said that the CFPB learned about the problem through tips in mid-2013. “We had known about these types of problems from our sources, but if any institution feels they can divide and conquer the regulators, they should know that that is a mistake,” Cordray added, urging financial institutions to self-report known issues promptly to all relevant regulatory agencies.

Read Curry’s testimony.

Tuesday, September 20, 2016

ABA Issues Staff Analysis on Proposed Records Disclosure Amendments

ABA has published a staff analysis of the CFPB’s recently proposed changes to the confidential treatment of information and the procedures used by the public to obtain information under the Freedom of Information Act, the Privacy Act of 1974 and in legal proceedings. Among other things, the proposed changes would allow the CFPB to disclose confidential supervisory information to any agency for which the information is “relevant to the exercise of the Agency’s statutory or regulatory authority,” including foreign regulators and state bar associations.

ABA is currently seeking input from banks regarding the confidentiality provisions of this rule, particularly with respect to the protection and dissemination of information provided by banks to the bureau.

Read the staff analysis.

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Learn about the benefits of membership and ways to join here.