Senators Seek Real-Life Stories of Regulatory Burden
ABA has been working closely with members of Congress over the past several months to make the case for regulatory relief. While the House passed several measures in the last Congress, little progress was made in the Senate.
Following ABA Chairman-Elect Dan Blanton’s testimony at a Senate Banking Committee hearing last week, the panel’s leaders appear poised to act on ABA’s Agenda for America’s Hometown Banks. They have asked for detailed feedback from community bankers on specific laws and regulations that hinder banks from serving their customers.
Bankers can click here to share their examples and experiences. ABA will compile the responses and share them with members of Congress as they explore ways to provide regulatory relief through legislation.
ABA Wins Longer Loan Estimate Disclosure Window
After ABA requested three business days for creditors to issue revised mortgage disclosures after locking in a customer’s interest rate, the Consumer Financial Protection Bureau granted the request. The bureau is today issuing a final rule allowing a three-business-day window to revise a Loan Estimate form -- longer than the one-day window proposed in October and the same-day requirement included in the original TILA-RESPA mortgage disclosure rule.
In a comment letter last year, ABA expressed appreciation for the proposal to relax timing requirements but explained why a 24-hour turnaround would be very difficult.
The bureau’s final rule also added language clarifying the disclosure process for construction borrowers and making a minor origination-related modification to the TILA-RESPA Loan Estimate and Closing Disclosure forms. These changes become effective on Aug. 1, along with the broader TILA-RESPA disclosure integration rule. Read the final rule.
New Study Finds CFPB 'Overstates' Auto Loan Discrimination
ABA and several other trade groups yesterday shared with the Consumer Financial Protection Bureau an independent study that calls into question the bureau’s methodology for finding fair lending violations by indirect auto lenders.
Because car dealers are not required to report demographic data about purchasers, the CFPB uses a proxy methodology to identify racial and ethnic information using geographic locations and surnames. This method “creates significant measurement error,” the groups said -- it overestimates minorities in the population by as much as 41 percent. The CFPB’s own materials say the method overestimates minorities by 21 percent but do not explain how the bureau corrects for the discrepancy.
The study, conducted by Boston-based Charles River Associates, shows that the auto finance market is vastly complex. Any apparent discrepancies are explained by correcting for bias in the proxy methodology and taking into account the complexity and diversity of car sales, including new versus used, seasonality, trade-ins, add-ons and other factors. Read the letter. Read the study.
Obama Action to Promote Public-Private Information Sharing
At Friday’s White House summit on cybersecurity at Stanford University, President Obama announced an executive order that will promote better public-private information sharing on cyber threats and responses.
Under the executive order, the Department of Homeland Security will develop standards for new information-sharing organizations, based on existing entities like the Financial Services Information Sharing and Analysis Center. ABA is an FS-ISAC member and encourages all banks to join it.
DHS will also be given clearer authority to share information between its National Cybersecurity and Communications Integration Center and the ISACs. The order will make it easier for the private sector to access classified cyber threat information. “The administration intends this proposal to complement and not to limit existing effective relationships between government and the private sector,” the White House said.
ABA Chairman John Ikard, CEO of FirstBank, Lakewood, Colo., spoke on a panel during the summit about the importance of public-private information sharing. The summit was convened to bring together experts from the government, financial sector, other businesses, security firms and the academy to discuss how better to keep critical infrastructure and customer information secure.
“The banking industry is dedicated to protecting customer data, and has led the way for effective information sharing through the development of FS-ISAC,” commented ABA President and CEO Frank Keating. “We are committed to working with others within the business community -- including retailers -- to develop a similarly strong and effective mechanism for sharing threat information.” Read more.
FS-ISAC: U.S. Banks Unbreached by 'Carbanak' Malware
No U.S. banks have been breached by a malware-based campaign to hack bank systems known as Carbanak, according to the Financial Services Information Sharing and Analysis Center, which collects, analyzes and shares information about cyber threats on banks.
Carbanak, described in a report on Monday from security firm Kaspersky, was widely covered by media outlets over the weekend. Cyber criminals used phishing efforts to get bank employees to unknowingly download malware that would give the criminals access to bank systems. The hackers would then use their access to initiate unauthorized wire transfers or ATM disbursement.
Kaspersky estimated that affected financial institutions could lose as much as $1 billion as a result of Carbanak. Although the firm's report said that some of the approximately 100 affected institutions were U.S.-based, FS-ISAC CEO Bill Nelson said that “from what we can see, no U.S. financial institutions have been compromised, and no money moved out of U.S. banks, in terms of losses.”
ABA is working closely with FS-ISAC to monitor the situation. Read more about Carbanak. For more information, contact ABA's Doug Johnson.
ABA Embraces Licensing Model for Virtual Currency Regulation
ABA supports the Conference of State Bank Supervisors’ licensing-based draft framework for model state-level regulation of virtual currencies such as bitcoin, the association said in a comment letter Tuesday.
“ABA believes that our payments system must protect consumers, be secure, ensure a level playing field of regulation, and be driven by consumer and market demand,” the association said, adding that the technology-neutral approach in the CSBS framework would support those principles.
ABA’s specific recommendations included a publicly available, nationwide registry of virtual currency businesses and the application of Regulation E to virtual currency transactions. To help alleviate bank concerns about the risks of serving virtual currency firms, ABA recommended that state regulators require these businesses to comply with anti-money laundering, Bank Secrecy Act and know-your-customer rules.
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