January 28, 2021 

Luetkemeyer Urges Biden Administration To Avoid Overregulation

Rep. Blaine Luetkemeyer, lead Republican on the House Small Business Committee and the House Financial Services Subcommittee on Consumer Protection and Financial Institutions, sent a letter to President Biden urging his administration to avoid excessive regulation and government overreach, especially during America’s continued economic recovery.

Luetkemeyer wrote that he shares the president’s “goal of a robust economic recovery and cannot stress enough the importance of getting small businesses and their employees back to work.” To “ensure a strong economic recovery,” he said the administration should “commit to a consistent, transparent and fair regulatory framework.”

“Regulators should use the appropriate procedures … to initiate policy, not ‘regulation by enforcement,’” Luetkemeyer wrote. “Wavering from the established procedures to achieve administrative goals is not only outside of administrative authority but will force institutions to become more risk averse and ultimately decrease capital investment, harming American businesses and consumers.”

Cleaver Named Chairman Of Subcommittee On Housing, Community Development and Insurance

Rep. Emmanuel Cleaver was named to the House Financial Services Committee during the 117th Congress and was appointed chairman of the Subcommittee on Housing, Community Development and Insurance. 

The Subcommittee on Housing, Community Development, and Insurance has oversight of the Department of Housing and Urban Development, as well as broad jurisdiction over U.S. housing policy. The subcommittee handles matters related to homeownership, rural housing, rental housing, community and economic development, homeowner insurance and government-sponsored insurance programs

Cleaver also was named to the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets and the Subcommittee on Oversight & Investigations. 

Fed Maintains Interest Rates Near Zero As Recovery Weakens

As expected, the Federal Reserve will continue to keep its target range for the federal funds rate at zero to 0.25% to support the U.S. economy during this "challenging time," the Federal Open Market Committee said. The committee said it will maintain that range of the federal funds rate until labor market conditions have reached levels consistent with its assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.

The FOMC added that the pace of the economic recovery has moderated in recent months, with weakness concentrated in the sectors most affected by the pandemic and that the path of the economy will depend significantly on the course of the virus, including progress on vaccinations.

In a press conference after the release of the FOMC statement, Fed Chairman Jerome Powell said that “the main thing about the economy is getting the pandemic under control, getting everyone vaccinated, getting people wearing masks. That's the single most important economic growth policy that we can have.”

Senate Confirms Yellen As Treasury Secretary

By a 84-15 bipartisan vote, the Senate on Monday approved the nomination of Janet Yellen to serve as the next secretary of the treasury. Yellen, who is only the second person to lead the Federal Reserve and Treasury Department and the first woman to hold the top Treasury post, received unanimous approval by the Senate Finance Committee last week.

American Bankers Association President and CEO Rob Nichols congratulated Yellen following her confirmation. 

“Dr. Yellen brings a wealth of experience in economics, regulation and crisis management from her time at the Federal Reserve that will benefit the Treasury Department at this challenging time for the nation,” Nichols said. “ABA and its member banks look forward to working with her to help alleviate the painful economic effects of the pandemic and expand opportunities for all Americans.”

ABA Calls For ‘Circuit Breaker’ Ahead Of ACH Threshold Increases

The American Bankers Association provided feedback to NACHA on its proposed plan to increase the dollar limit for same-day ACH transactions. NACHA proposed to phase-in the increases over three stages, with the threshold increasing from $100,000 to $1 million in March 2022, then to $10 million in March 2023 and finally to the standard ACH limit of $99,999,999.99 by March 2024. 

ABA strongly supported increasing the level to $1 million as proposed but raised concerns about the potential increases in fraud and operational risk that could arise because of the subsequent proposed increases. As NACHA proceeds with the second planned increase, ABA advocated for a “circuit breaker” that would allow NACHA to pause any further increases on short notice.

ABA urged NACHA only to move ahead with the third and final increase “only after an extensive circuit breaker review process that takes into consideration the risk associated with raising the transaction limit by $90 million per transaction. If it is determined the increase will create a significant risk, then implementation should be deferred.”

ABA, Trade Groups Support HUD Private Flood Insurance Proposal

The American Bankers Association joined a coalition of finance, housing and insurance trade groups in a letter urging the Department of Housing and Urban Development to quickly advance a proposed rule that would allow mortgagors the option to purchase private flood insurance on Federal Housing Administration-insured mortgages for properties located in Special Flood Hazard Areas.

Noting that the proposal “will provide substantial benefit to FHA borrowers,” the groups recommended that HUD align FHA with other federal agency regulations that govern the acceptance of private flood insurance. That should include adopting identical compliance aid language, adopting federal regulators’ discretionary acceptance and mutual aid society provisions and aligning the definitions of “private flood insurance,” they wrote. 

The groups also supported HUD’s decision to permit, but not require, lenders to accept private flood insurance policies under the proposal. 

OCC Pauses Publication Of Fair Access Rule

The Office of the Comptroller of the Currency announced today that it will pause the publication of a controversial final rule stating that banks should provide access to services, capital and credit based on their risk assessment of individual customers and not make broad-based decisions that affect whole categories or classes of customers. The rule, which was finalized earlier this month on the eve of Acting Comptroller of the Currency Brian Brooks’ departure from the agency, will undergo a review by the next confirmed comptroller “as part of an orderly transition,” the OCC said.

Among other things, the rule would have required covered national banks and federal savings associations (generally, those with $100 billion or more in assets) to provide financial products and services to businesses on proportionally equal basis and not deny service except based on documented failure to meet quantitative standards.

The American Bankers Association had vigorously opposed the rule on the grounds that the OCC lacked the statutory authority to pursue the rulemaking and did not meet procedural requirements for issuing the proposal. ABA also expressed concerns that the OCC seriously underestimated the cost burden that it would impose upon covered banks.

Biden Calls For Review Of HUD’s 2020 Disparate Impact Rule

In an executive order issued Wednesday, President Biden directed the Department of Housing and Human Services to review the effects of a September 2020 rule that revised HUD’s standard for bringing disparate impact claims under the Fair Housing Act. The rule conformed HUD’s 2013 disparate impact rule with the U.S. Supreme Court’s 2015 decision in Texas Department of Housing Community Affairs v. Inclusive Communities, which recognized disparate impact analysis to demonstrate discrimination claims under the FHA but added key limitations to ensure the burden of proof in disparate impact cases is with the plaintiffs.

The order directs HUD to “take any necessary steps, as appropriate and consistent with applicable law, to implement the Fair Housing Act’s requirements that HUD administer its programs in a manner that affirmatively furthers fair housing and HUD’s overall duty to administer the Act … including by preventing practices with an unjustified discriminatory effect.”

Federal Banking Agencies Issue FAQs On Suspicious Activity Reporting

The federal banking agencies issued a set of frequently asked questions providing clarity about suspicious activity reporting and other anti-money laundering issues. The agencies issued the FAQs at the recommendation of the Bank Secrecy Act Advisory Group. The FAQs clarify existing expectations and do not establish new requirements.

The agencies said the FAQs are intended to enable financial institutions to focus resources on activities that "produce the greatest value to law enforcement agencies and other government users of Bank Secrecy Act reporting."

Among other things, the FAQs address SAR character limits, maintaining a customer relationship following the filing of a SAR and requests by law enforcement for financial institutions to maintain accounts, as well as receipt of grand jury subpoenas and law enforcement inquiries.

OCC Pauses CRA Information Collection Survey

The Office of the Comptroller of the Currency announced that national banks will not be required to respond to the agency’s Community Reinvestment Act information collection by the previously established May 31, 2021, deadline. Before determining how to proceed with the CRA information collection, the agency will consider comments that it receives in response to the Paperwork Reduction Act notice published in the Federal Register on Dec. 15, 2020. Comments will be due Feb. 16.

The OCC issued the information collection to gather bank-specific data on which to base the new CRA performance benchmarks under the agency’s June 2020 CRA rule. The American Bankers Association and other trade associations urged the OCC to withdraw the information collection survey and coordinate with the Federal Reserve and the FDIC to update the CRA regulations on an interagency basis. 

CFPB Recognizes Pandemic Accommodations By Financial Institutions

Banks made accommodations to help consumers address pandemic-related hardships beyond what was legally required under the CARES Act, the Consumer Financial Protection Bureau observed in its latest “Supervisory Highlights” report. The report focuses on findings from the bureau’s prioritized assessment work that took place in response to the COVID-19 pandemic.

The bureau said some institutions offered expanded payment assistance programs and fee waivers because of the pandemic and many credit card issuers offered deferrals while auto servicers provided six-month payment deferrals to any consumer with a COVID-19 hardship. Given the rapidly evolving nature of the pandemic, many institutions created COVID-19 response teams to identify and address consumer and industry challenges caused by the pandemic, and the CFPB noted that many were active in monitoring key processes and were able to self-identify issues and implement corrective actions.

Other pandemic response efforts observed by the bureau included the following. 

• providing consumer remediation
• reversing fees
• updating scripts to provide accurate information to consumers
• transitioning from manual to automated processes
• correcting inaccurate credit reporting
• correcting account histories

The report also offered specific observations related to mortgage servicing, auto and student loan servicing, credit card account management, consumer report-furnishing, debt collection, deposits, prepaid cards and small business lending. 

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