Federal financial institution regulators were busy organizations last week, as they worked to clear their outboxes for the end of the summer in preparation for the oncoming fall season of meetings, congressional testimony, regulatory actions and more.
Here’s a list, with brief detail, of what Regulatory Report missed last week while out for a one-week respite:
Bureau announces settlements with debt collector, remittance firm – the latter a first for the agency
Actions against an Illinois-based debt collector, and a remittance firm – the first such action under new rules – were announced by the Consumer Financial Protection Bureau (CFPB) last week. The bureau said Asset Recovery Associates, Inc. (ARA – also known as Financial Credit Service, Inc.) would pay at least $36,800 in restitution to affected consumers and a $200,000 civil money penalty to CFPB. The agency said the consent order also prohibits ARA from continuing to engage in this conduct and requires ARA to record calls with consumers to help ensure collectors do not make false statements in the future. The agency also last week said that it settled with Maxitransfers Corp., which provides remittance services, in the first enforcement action under the Remittance Transfer Rule, which implements the Electronic Fund Transfer Act (EFTA). The bureau said, under the settlement, the firm must pay a civil money penalty of $500,000, refrain from violating the Consumer Financial Protection Act (CFPA) by stating it is not responsible for the acts of its agents, and take steps to improve its compliance management to prevent future violations of the CFPA, EFTA, and Remittance Transfer Rule.
Consumer Financial Protection Bureau Settles with Asset Recovery Associates
Consumer Financial Protection Bureau Settles with Maxitransfers Corporation
Data on mortgage lending released …
2018 mortgage lending data was released by the umbrella group for federal financial institution regulators, an announcement that was quickly amplified to financial institutions by their respective regulators. The Federal Financial Institutions Examination Council (FFIEC) – the group that counts as members all of the federal financial institution regulators – said the data covered mortgage lending transactions at 5,683 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA), including banks, savings associations, credit unions, and mortgage companies. The loan-level HMDA data covers 2018 lending activity that was submitted on or before Aug. 7.
FFIEC Announces Availability of 2018 Data on Mortgage Lending
… leading to CFPB reports on 2018 mortgage market trends, activity
In concert with the FFIEC’s release of HMDA data, the CFPB issued two reports focusing on (respectively) trends in mortgage applications and originations, and the 2018 HMDA data itself. Among other things, the CFPB reports noted: 5,666 institutions reported HMDA data in 2018, down 3.9% from the 5,897 which reported in 2017; the number of originations of home-purchase loans secured by one-to-four-family properties remained unchanged between 2017 and 2018 at 4.3 million, “thus ending a long upward trend in originations going back to 2011”; the number of refinance originations fell from 2.5 million in 2017 to 1.9 million in 2018.
Data point: 2018 mortgage market activity and trends
Consumers, satisfied with credit cards, have lowest debt service burden in more than 10 years
Consumer satisfaction with credit cards remains high and debt service burdens are near the lowest level in more than a decade, the CFPB said in a report. Late payment and default rates have risen modestly but remain below pre-recession levels, the agency added. Further, since 2015, consumers have more than doubled credit card spending, with only modest balance growth, the agency said. “The great majority of credit card spending results in consumers obtaining rewards, and surveys indicate rewards are the primary factor consumers consider in choosing a credit card,” CFPB said.
The Consumer Credit Card Market
CRA tools, exam schedules announced
The FFIEC released its latest list of tools for the collection, reporting, and analysis of HMDA and Community Reinvestment Act (CRA) data – and the FDIC and OCC announced their exam schedules for CRA for the final quarter of this year and the first quarter of 2020. Among the updated census and demographic data the exam council released were the: Online Census Data System (formerly FFIEC Census Reports); Census Information Sheets; Census Windows Application; and the Estimated Median Family Income Report.
OCC Issues Fourth Quarter 2019 and First Quarter 2020 CRA Evaluation Schedule
FDIC Issues CRA Examination Schedules for Fourth Quarter 2019 and First Quarter 2020
Comptroller continues tour in NM of communities in pursuit of CRA reform
At the same time that the agencies were releasing the latest data – and scheduling exams – Comptroller of the Currency Joseph Otting made what he said was his fourth tour of a community to discuss how CRA has supported the communities and what more can be done. The OCC, in a release, said the tours are part of a “nationwide effort to discuss modernizing Community Reinvestment Act (CRA) regulations and opportunities to bring more investment, lending, and services to underserved areas.” Otting visited Native American pueblos in the New Mexico communities of Santa Ana, San Felipe, and the Kewa, OCC said, as well as the Indian Pueblo Cultural Center in Albuquerque. OCC indicated that more tours are coming.
Agencies release prohibition orders, enforcement actions – including for former CEO of large CU engage in taxi medallion lending
The FDIC and the National Credit Union Administration (NCUA) both released reports on recent enforcement actions, with the credit union regulator noting it had prohibited six individuals from participating in the affairs of any federally insured financial institution. One of those, NCUA said, was for the former CEO of a large Queens, N.Y.-based credit union that suffered losses from loans due to devalued taxicab medallions. NCUA said Alan S. Kaufman, the former CEO and institution-affiliated party of Melrose Credit Union in Queens, had been prohibited after the agency’s board determined that “continued service or participation by Kaufman in a credit union’s operations may impair public confidence in federally insured credit unions.” Kaufman has been charged with conspiracy to commit bribery and bribery, in U.S. District Court for the Southern District of New York, NCUA stated. Meanwhile, the FDIC said it issued 14 orders and one notice of charges in July 2019.The actions consisted of: four stipulated consent orders; four terminations of consent orders; four Section 19 orders; one stipulated civil money penalty order (against The Union Bank of Marksville, La.); one stipulated removal and prohibition order; and one notice of charges and hearing.
NCUA Issues Prohibition Notices and Order
FDIC Makes Public July Enforcement Actions
At least 3 letters issued by FDIC covering risk-focused exams, final rule on deposit insurance determination, webinar on CECL for large banks
Letters on risk-focused, forward-looking safety and soundness supervision, a final rule on “timely deposit insurance determination,” and today’s webinar on CECL for large banks were issued by the FDIC to banks last week.
In its first letter, the agency said it is updating its Risk Management Manual of Examination Policies to incorporate a new section titled Risk-Focused, Forward-Looking Safety and Soundness Supervision. “The latter describes the FDIC’s long-standing philosophy and methods for supervising institutions by focusing on the areas presenting the greatest risks,” the agency wrote. “The new section has been included in the new Part VI of the Manual titled ‘Appendix: Examination Processes and Tools,’ and describes communication and risk-tailoring principles followed during safety and soundness examination activities.”
In the second letter on the final rule concerning “Recordkeeping for Timely Deposit Insurance Determination” (issued last month), the agency wrote that the rule would make certain substantive revisions to simplify the process for making insurance determinations in the event a bank is placed into receivership by better aligning the benefits and the burdens of the Rule, clarifying the Rule’s requirements, and making technical corrections. The rule takes effect Oct. 1.
Finally, in the third letter, the agency noted that it, along with the Federal Reserve and the OCC, jointly hosted a webinar today intended to clarify the use of model risk management by large institutions for model-based processes employed in their CECL frameworks.
FIL-47-2019 Risk-Focused, Forward-Looking Safety and Soundness Supervision
Credit union regulator adds confidential assistant to chairman’s staff
A former staff member to a retired Tennessee senator has joined the personal staff of the chairman of the NCUA Board as “confidential assistant.” The agency said Hallie Williams will hold the post for NCUA Chairman Rodney E. Hood. Before joining the agency (she started Aug. 26), Williams was executive assistant and scheduler to Sen. Bob Corker (R-Tenn.) in his Washington, D.C., office.
Williams Chosen as Confidential Assistant to NCUA Chairman Hood
Regulators press for ‘standardized’ approach to cybersecurity preparedness
Use of a standardized approach for assessing and improving cybersecurity preparedness was emphasized by federal financial institution regulators last week in a joint letter. Issued via the FFIEC, the regulators’ joint letter noted that firms adopting a standardized approach are better able to track their progress over time, and share information and best practices with other financial institutions and with regulators. “Institutions may choose from a variety of standardized tools aligned with industry standards and best practices to assess their cybersecurity preparedness,” the letter states. These tools include, the letter states, the FFIEC Cybersecurity Assessment Tool, the National Institute of Standards and Technology Cybersecurity Framework, the Financial Services Sector Coordinating Council Cybersecurity Profile, and the Center for Internet Security Critical Security Controls. The letter notes that the tools are not examination programs and that regulators take a risk-focused approach to examinations. As cyber risk evolves, examiners may address areas not covered by all tools, the letter states.
FFIEC Encourages Standardized Approach to Assessing Cybersecurity Preparedness