SDBA eNews: March 16, 2017

In This Issue

ABA Older Americans Benchmarking Survey Completion Date Extended


The completion date has been extended to March 22 for the ABA Foundation’s 2017 Older Americans Benchmarking Survey.

The survey will collect valuable benchmarking data on the products, services and consumer education banks are providing to their customers. Participants can use the survey results to directly compare their efforts to serve older customers with those of their peers.

Survey responses are anonymous, and survey participants will receive a free e-copy of the report if completed by the survey deadline. To inquire whether your bank has received a copy of the survey, please contact ABA's Melissa Murray.


FDIC Updates Money Smart for Older Adults Curriculum


The FDIC has updated its Money Smart for Older Adults curriculum to include new information and resources to help older Americans and their caregivers guard against fraud and other scams targeting the elderly. A joint effort between the FDIC and the CFPB, this program is a stand-alone, instructor-led module that bankers and other professionals serving older Americans can use to educate their customers about financial exploitation.

The program covers a range of topics including common types of elder financial exploitation, scams targeting veterans, identity theft, medical identity theft, scams that target homeowners, planning for unexpected life events and how to be financially prepared for disasters. The modules--which include an instructor guide, a resource guide and a PowerPoint presentation--are available in both English and Spanish. Read more.


 Question of the Week

We have just updated our website to include all our lenders who are registered with NMLS. Are we required to still post some kind of sign in our lobby? I did not see that requirement in what I have read, but I want to be sure.

Answer: There's not a lobby requirement necessarily--posting it on the website would suffice. As noted in the supplementary information section of 105(a) of the Required Use of the NMLS ID: "...For example, the institution may choose to direct consumers to a listing of registered mortgage loan originators and their unique identifiers on its Web site; post this information prominently in a publicly accessible place, such as a branch office lobby or lending office reception area; and/or establish a process to ensure that institution personnel provide the unique identifier of a registered mortgage loan originator to consumers who request it from employees other than the mortgage loan originator...."

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Sen. Rounds Added to Government Relations Summit Lineup


Senate Banking Committee member Mike Rounds has been added to the keynote speaker lineup for the ABA Government Relations Summit, March 20-22 in Washington, D.C. Rounds is the lead Senate sponsor of the ABA and state association-advocated TAILOR Act, a tailored regulation bill that is a signature part of ABA's Blueprint for Growth.

Mark Calabria, the chief economist for Vice President Mike Pence, has also been added as a keynote speaker. Before joining the White House, Calabria was previously director of financial regulation studies at the Cato Institute and a senior staffer on the Senate Banking Committee.

Other Summit keynoters will include House Financial Services Committee Chairman Jeb Hensarling (R-Texas), Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio), House Majority Whip Steve Scalise (R-La.) and “Fox News Sunday” host Chris Wallace.

In related news, Rep. Keith Rothfus (R-Pa.) has been added as a featured speaker at the ABA Mutual Community Bank Forum, held on March 20 just before the Summit. Rothfus is a champion of the ABA-backed bill to help federal thrifts serve customers more flexibly while retaining their unique charters. Register now. The SDBA will provide a $500 stipend to each SDBA member banker who attends to help cover travel expenses.


OCC Issues Draft Licensing Manual for Fintech Charter Applicants


The OCC yesterday released its long-awaited draft licensing manual for fintech companies seeking the agency’s new limited-purpose national bank charters. The manual spells out in greater detail than at any point previously how applicants can seek a charter and how the OCC will review applications and examine newly-chartered fintech firms. Consistent with previous OCC statements and papers, the manual makes clear that the special-purpose charters will be subject to all applicable banking laws and regulations. It also clarifies that the special-purpose charters will not authorize deposit-taking.

“This manual reflects the approach we’ve seen from the OCC all along, and it’s clear that this is not a ‘bank-lite’ charter,” said ABA VP Rob Morgan. “The OCC has also clarified several points in response to ABA and other industry feedback.” Comments on the manual are due by April 14.

The manual walks through the initial steps of applying, the chartering standards the OCC will apply, the business plan the applicant is expected to provide and the OCC’s final decision-making process. For example, the manual notes that some members of the organizing group, management and board would usually be expected to have “experience in regulated financial services” in addition to experience with the kind of novel products or services the company may propose to offer.

It also provides greater texture on the “financial inclusion plans” that each applicant whose business plan includes consumer or small business lending will be required to provide as part of their applications. In response to concerns expressed by ABA, the draft manual makes clear that the agency “will not approve proposals that would result in an inappropriate commingling of banking and commerce.” It also emphasized that the OCC will collaborate with other regulators to ensure no such mixing occurs.

The manual also addresses concerns expressed about erosion of the dual system of financial supervision in the United States and about one-size-fits-all regulation of fintech. “This [manual] is not intended to discourage these other ways of conducting business but rather to clarify the OCC’s expectations for a particular segment of financial service providers--that is, fintech companies seeking [a special-purpose national bank] charter,” the agency says, acknowledging that fintech firms may continue to seek state charters, apply for full-service national bank charters or pursue partnerships with existing depository institutions. Read the draft licensing manual.


ABA Urges Longer Delay, Full Review on Fiduciary Rule

 
ABA yesterday called for a longer delay of the Department of Labor’s fiduciary rule effective date and an updated economic and legal analysis of the final rule. “The fiduciary rule remains fundamentally flawed and unworkable in critical areas, and thus requires substantial revision in order to be considered a functional rule, let alone a wise public policy,” ABA said.

DOL has proposed delaying the effective date to June 9, a 60-day delay pursuant to President Trump’s memorandum on the rule. ABA urged a 180-day delay in addition to the full analysis called for in Trump’s memo. Read the letter. For more information, contact ABA's Tim Keehan.


CFPB Imposes Largest-Ever HMDA Deficiency Fine on Nonbank Lender

   
The Consumer Financial Protection Bureau yesterday issued an enforcement action for alleged Home Mortgage Disclosure Act reporting deficiencies by Nationstar Mortgage. Nationstar is the country’s ninth-largest HMDA-reporting institution by total originations. The enforcement order imposes a $1.75 million fine--the largest ever for a CFPB HMDA violation--and requires Nationstar to correct reporting deficiencies by improving its compliance management program and correcting its HMDA submissions from 2012 to 2014.

According to the consent order, as Nationstar grew its HMDA-covered loan portfolio by nearly 900 percent over four years, it had flawed HMDA compliance systems that generated submission sample error rates reaching as high as 33 percent in 2013. The bureau also said that Nationstar did not adequately detail HMDA data collection and validation strategies, define employee roles related to HMDA, conduct compliance audits or tests of HMDA data, guard against data inconsistencies, monitor vendors or implement compliance management tactics to identify these deficiencies.

The enforcement action comes as the industry is preparing to comply with HMDA’s greatly-expanded data collection, scheduled to take effect on Jan. 1, 2018. The expanded pool of reportable data raises the stakes for HMDA compliance. Bureau officials have in the past advised financial institutions to read CFPB enforcement actions carefully to understand the bureau’s interpretation of its regulations. Read the consent order.


Fed Raises Rates in Widely Telegraphed Move


As numerous policymakers had signaled in recent weeks, the Federal Open Market Committee decided to raise the target federal funds rate to 0.75 to 1 percent--the first rate hike since December’s 25 basis-point increase to 0.5 to 0.75 percent--according to a statement from the committee released yesterday. All but one committee member voted for the increase.

FOMC members credited rising inflation as the primary reason for the increase--also noting job gains and steady overall economic growth--and said they expect the “moderate” pace of growth to continue. The committee agreed that it will “carefully monitor actual and expected inflation developments” to determine when to next raise rates, and by how much.

Economic projections also released yesterday showed that most FOMC members expect two more rate hikes this year, leaving the rate target at year end between 1.25 and 1.5 percent. Read the FOMC statement.


Applications Open for ABA's Candidate School

 
Applications are now being accepted for ABA’s Candidate School, which helps bankers learn how to run for state or federal office. Set for Sept. 13-15 in Washington, D.C., this new pilot program is a two-day workshop that will provide information on how to file necessary paperwork, manage paid and earned media, fund raise, conduct research and targeting and getting out the vote.

The program is part of ABA’s efforts to promote a pro-growth policy environment in Washington, said ABA president and CEO Rob Nichols. “It’s critically important that those casting votes on banking policy fully understand and appreciate the impact their decisions will have on a community and its residents,” Nichols said, noting that just 18 of the 535 members of the current Congress have a banking background. “When it’s time to set banking and economic policy, we strongly believe nothing beats real-world banking experience.”

Applications are open to bankers and bank directors with concrete plans to run for state or federal office in the next two election cycles. The application deadline is June 1, and accepted applicants will pay a $250 registration fee and cover their travel and hotel costs. Learn more and apply now. For more information, contact ABA's Brittany Grimm.