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Tuesday, May 30, 2017

In L.A. Times, Nichols Emphasizes Urgency of Regulatory Reform

Banks of all sizes need regulatory reform, and the need is especially pressing for community banks, ABA President and CEO Rob Nichols wrote in a Los Angeles Times op-ed. With the House expected to vote on a regulatory relief bill as early as next week, the op-ed drives home the message that excessive regulatory burdens negatively affect bank customers.

Nichols recounted a story from a southern California community bank that had to end mortgage lending because the software required to stay compliant would have meant the bank lost money on every loan. He wrote:
Nearly a decade after the crisis, we’ve ended up with too many duplicative and sometimes contradictory rules that don’t always promote safety and soundness, and may actually hinder banks from serving their customers and growing local economies.

Nichols also rebutted the argument that strong bank profitability figures reported by the FDIC means that banks do not need regulatory relief. "The topline profit figure doesn’t tell the whole story," he said. "Tunnel vision on bank profits ignores macro-level trends" on bank consolidation and the lack of de novo activity, with just four new banks formed since Dodd-Frank passed.

Nichols concluded:
Our economy performs best with a healthy and diverse mix of banks to meet customers’ needs – large, small and everywhere in between. Without reasonable reform in Washington, California’s banking sector will continue to shrink and become less diverse.

Read the op-ed.

Friday, May 26, 2017

The Week Ahead: May 29 - June 2

  • Comments Due CFTC: Agency Information Collection Activities: Notice of Intent To Extend Collection 3038-0049: Procedural Requirements for Requests for Interpretative, No-Action, and Exemptive Letters (PRA)
    Read more.
  • Comments Due FDIC: Agency Information Collection Activities: Proposed Collection Renewals; Comment Request (3064-0099; -0118; -0148 and -0153) (PRA)
    Read more.
  • Comments Due FDIC: Agency Information Collection Activities: Submission for OMB Review; Comment Request (3064-0006 & -0184) (PRA)
    Read more.
  • Comments Due FDIC: Application for Waiver of Prohibition on Acceptance of Brokered Deposits
    Read more.
  • Comments Due FDIC: Interagency Biographical and Financial Report
    Read more.
  • Comments Due FDIC: Interagency Statement on Sound Practices Concerning Complex Structured Finance Transactions
    Read more.
  • Comments Due FDIC: Management Official Interlocks
    Read more.
  • Comments Due FDIC: Prohibitions and Restrictions on Proprietary Trading and Certain Interests In and Relationships With, Hedge Funds and Private Equity Funds
    Read more.
  • Comments Due FDIC: Regulatory Capital Rules
    Read more.
  • Comments Due FINCEN: Due Diligence Programs for Correspondent Accounts for Foreign Financial Institutions (PRA)
    Read more.
  • Comments Due FINCEN: Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery (PRA)
    Read more.
  • Comments Due FSA: Disaster Assistance Program (General) (PRA)
    Read more.
  • Comments Due FSA: Information Collection Request; Customer Data Worksheet Request for Business Partner Record Change (PRA)
    Read more.
  • Effective Date SEC: Securities Transaction Settlement Cycle; Final Rule
    Read more.
  • Comments Due SBA: Borrower Information Form, Lenders Application for Guaranty, and 7(a) Loan (PRA)
    Read more.
  • Comments Due SBA: Certified Development Company (CDC) Annual Report Guide (PRA)
    Read more.
  • Comments Due SBA: Small Business Investment Companies: Passive Business Expansion and Technical Clarifications
    Read more.
  • Comments Due FRB: Proposed Agency Information Collection Activities; Comment Request
    Read more.
  • Comments Due SBA: Entrepreneurial Development Customer Intake Form & Training Report Form
    Read more.

All times in Eastern Standard Time. See future events on the  Dodd-Frank Calendar.

ABA: Proposed HMDA Changes Warrant Further Discussion

In a comment letter, ABA provided feedback on the CFPB’s proposed technical changes to the data lenders that are required to collect and report under the final HMDA (Regulation C). Most provisions of the rule take effect Jan. 1, 2018.

ABA pointed out that while the CFPB characterized the proposed revisions as “technical corrections, clarifying amendments or minor changes,” many of the changes are substantive in nature. Despite this, the proposed changes would have the same compliance date as the original rule, adding confusion and additional compliance burden for banks, the association said. ABA added that offering the industry only 30 days to comment on the proposed changes was insufficient for gathering comprehensive feedback, and called on the bureau to undertake a more formal process for identifying problems with the rule.

In its revisions, the CFPB attempted to address how lenders should report loans in process when the HMDA rule takes effect, since those transactions may lack certain data that it was either not required or illegal to collect at the time of application. However, ABA noted that the proposed process would add unnecessary complications and recommended a simpler solution. The association also raised concerns about the new disaggregated race and ethnicity data and its alignment with Community Reinvestment Act requirements and fair lending analysis, among other things.

ABA has long sought changes to the final HMDA rule since it was issued in October 2015, and has previously expressed concerns particularly about privacy protection and data security, which the 150-page revision proposal does not address. In a recent white paper to the U.S. Treasury Department, ABA reiterated these concerns, calling for a pause to the implementation of the new requirements until security and privacy issues are adequately addressed.

Read the comment letter.
Read the white paper.

CFPB to Assess Effectiveness of Qualified Mortgage Rule

The CFPB released a plan to assess the effectiveness of its final Ability-to-Repay/Qualified Mortgage rule. The bureau’s review of the effectiveness of the rule is required by the Dodd-Frank Act, and comments on the plan will be accepted for 60 days after publication in the Federal Register.

The proposed assessment process would examine the rule’s effects on mortgage costs, origination volumes, approval rates and loan performance. The bureau also said it would consider how creditors’ underwriting policies and procedures have changed as a result of the rule. Of special interest are outcomes related to self-employed borrowers, borrowers with seasonal or intermittent income, borrowers seeking smaller-than-average loan amounts, borrowers who use asset-derived income to repay the loan, borrowers with debt-to-income ratios above 43%, lower-income borrowers, minority borrowers and borrowers in rural areas.

To conduct its assessment, the CFPB said it is planning “a limited request of data directly from creditors and other stakeholders” in addition to other data sources. The plan also includes interviews with creditors on their compliance activities. ABA will carefully review the CFPB’s proposed assessment plan and will submit comments.

Read the assessment plan

FHFA Seeks Input on Improving Credit Access for Limited English Proficiency Borrowers

The FHFA is seeking input from the industry on the obstacles facing qualified mortgage borrowers with limited English proficiency (LEP) throughout all stages of the mortgage lifecycle. Specifically, FHFA is seeking feedback on issues qualified LEP borrowers face in learning about assistance resources, existing requirements governing interactions with LEP borrowers and other challenges to serving this population. Comments are due July 10, 2017.

Read more.

Thursday, May 25, 2017

Watchdog Dings CFPB for Website Security ‘Deficiencies’

Despite steps to improve it, the CFPB’s website has several “control deficiencies” that must be “mitigated to protect the website from compromise,” according to a report from the Federal Reserve’s independent inspector general, which audits CFPB activity.

“Those deficiencies have to do with configuration management, system and information integrity, and contingency planning,” the report said. “If not addressed, these deficiencies could adversely affect the confidentiality, integrity, and availability of and the information it contains.” The CFPB website includes its consumer complaint portal; the American Bankers Association has long noted that the bureau’s approach to posting complaints could compromise consumer information.

The IG provided eight recommendations to improve the security of the website, which were redacted for security reasons. The report noted several other risks related to the CFPB’s website, but said it did not issue recommendations because the bureau is in the process of addressing those.