February 3, 2022
MBA Prepares Campaign To Correct CFPB’s Misguided View On Bank Fees
MBA is coordinating resources for banks to use in comment letters to the Consumer Financial Protection Bureau on its recent request for information regarding bank fees. The CFBP blatantly mischaracterized fees for overdraft and insufficient funds, credit cards, remittance, prepaid account and mortgages as “junk fees,” equating them to “resort fees” and “service fees” charged for resorts and concerts.
Federal law already requires banks to disclose their fees to customers before they open accounts. In our nation’s highly competitive financial services marketplace, consumers have a wide range of choices when it comes to financial services products.
Comments on the RFI are due Thursday, March 31. To help prepare its comment letter to the CFPB, MBA is seeking assistance from its members. MBA plans to survey its members to gather information that will help inform the MBA's comment letter to the CFPB. If you have questions, please contact Carol Barnett
Financial Groups Call For Repeal Of Durbin Amendment In Letter To Fed
In a letter to the Federal Reserve, a group of six financial trade associations described the ongoing harm that the Durbin Amendment has caused to consumers and community banks and called for its repeal and expressed concerns about the risks from current and potential future proposals to change Regulation II (Durbin’s implementing regulation). The Fed last year proposed to change Reg II’s routing provision to mandate that banks provide at least two unaffiliated networks when processing card-not-present purchases (such as internet transactions) and to accept novel transaction types like so-called PIN-less transactions that may be riskier.
The groups highlighted data showing that Durbin’s routing provision, which applies to all banks, has reduced revenue even at community banks that were nominally exempt from the law’s rate cap provisions. They pointed out that “lowering the interchange fee cap would drive small and medium-volume card issuers out of the industry, which would have negative impacts on both competition and consumers in the long run.”
In addition, the groups critiqued the methodology that the Federal Reserve uses to measure the cost of debit card transactions, honing in on the agency’s request for comment on the quality of its information collection practices. The groups cited nearly a dozen sources of debit card costs borne by issuers that the Fed does not take into account when determining allowable interchange fees. All of these factors have led to quantifiable consumer harm that stands in the billions.
In light of merchant requests that the Federal Reserve reinterpret Durbin and make its rules stricter on banks, the group also warned that “further adjustments, ostensibly to refine the implementation of Durbin’s mandates, are likely to have additional and unpredictable distortionary market effects and exacerbate the damage done by existing rules.” The groups added that “demands to reopen Regulation II are premature and motivated by short-term and parochial economic interest” and called on the Fed to “report to Congress a conclusion that the Durbin Amendment has failed to achieve its stated goals” and “recommend its speedy repeal.”
Banking, Consumer Groups Call For Changes To FHA’s Proposed Defect Taxonomy
The American Bankers Association, the Housing Policy Council and the Mortgage Bankers Association offered comments on recent proposed changes to a section of the Federal Housing Administration’s Single-Family Housing Policy Handbook related to the servicing defect taxonomy. The defect taxonomy outlines the remedies the agency may seek if it finds loan-level defects pertaining to servicing.
The groups raised concern that the current proposal fails to provide sufficient detail or clarity regarding defects most likely to occur, severity ties and appropriate remedies and offered specific recommendations on how it could be improved. The groups urged FHA to restructure the proposed servicing defect taxonomy and engage with stakeholders to develop a new and more robust taxonomy.
In a separate letter, ABA and HPC joined with the Center for Responsible Lending, the National Consumer Law Center and others in urging FHA not to finalize the taxonomy and outlining characteristics of a successful taxonomy. These characteristics include the following.
- classifying which violations of HUD policies are most severe and which are not
- assessing severity based on the level of concrete harm the conduct poses to borrowers and FHA
- assigning a range of appropriate remedies for each specific violation
- stating the aggravating and mitigating factors HUD will consider in determining the particular remedy and the process for considering these factors
- describing how HUD will address systemic issues identified in the evaluation process
OCC Seeks Feedback On Managing Compliance Risk For Reverse Mortgage Products
The Office of the Comptroller of the Currency is seeking comments on the renewal of its guidance for managing compliance and reputation risk related to reverse mortgage products. The final guidance was issued in 2010 and included information collection requirements addressing the implementation of policies and procedures, training and program maintenance.
The OCC is seeking feedback on the following.
- whether the collection of this information is necessary and practical
- the accuracy of the estimates of the burden of information collection
- ways to enhance the quality, utility and clarity of the information to be collected
- ways to minimize the burden of information collection on respondents
- estimates of capital or start-up costs and costs of operation, maintenance and purchase of services to provide information
Comments are due March 29.
Fed Survey: Loan Easing Trend Continues In Fourth Quarter 2021
Banks continued to ease standards on commercial, mortgage and personal loan products amid mixed demand, according to the Federal Reserve’s senior loan officer opinion survey.
- C&I — Banks reported easing standards and terms on C&I loans to firms of all sizes, with 14.5% on net reporting easing lending standards somewhat for large and middle-market firms and 9.4% easing somewhat for small firms. Of respondents surveyed, 44% said that more aggressive competition from banks or nonbank lenders was a “very important” factor in their decision to ease terms and standards. Demand for C&I loans from large and middle-market firms picked up, with a net 21.8% noting that it was moderately stronger while for small firms, a net 9.3% said demand was moderately stronger.
- CRE — Demand for loans secured by multifamily properties picked up in the fourth quarter, with a net 37.7% reporting stronger demand. A net 23% of banks also reported easing standards for these loans. Firms reported slightly stronger demand for construction, land development and nonfarm residential loans, with a net 13.2% reporting moderately stronger demand. Moderate net shares of banks eased standards for these loans — about 10% on net did so. Meanwhile, a net 14.5% reported easing standards for loans secured by nonfarm residential properties, and a net 11.6% of banks reported stronger demand.
- Mortgages — Continuing with the trend of easing, banks also reported loosening standards for most residential real estate loans and home equity lines of credit, although standards for GSE-eligible and government mortgages remained basically unchanged. Banks reported weaker demand on net for mortgage loans over the fourth quarter, including GSE-eligible and government mortgages, for which a net 23.3% reported weaker demand.
- Personal Loans — Demand strengthened for credit card loans over the fourth quarter as standards also eased — 19.6% on net reported moderately stronger demand. Meanwhile, a net 7.3% of banks reported weaker demand for auto loans while for other loan types, demand remained mostly unchanged.
Survey: Real-Time Payments Capability Top Factor In Bank Selection By Businesses
A recent survey by Citizens Financial Group found 85% of business leaders say real-time payments capabilities is the most important factor when choosing a bank. The national survey of 260 corporate decision-makers also found that the ability to offer real-time payments was considered even more important than providing the lowest-cost financing.
Of those surveyed, 73% said they have an interest in having a secure “mobile-optimized treasury management platform.” Four in 10 that use a treasury management platform expressed frustration with their current technology and said their time working with the platform could be more productive.
The survey also found that 81% believe that RTP would be very or somewhat transformative to their firm’s payments process, if adopted. The most cited applications of RTP were managing cash flow more accurately and handling payments requiring immediate attention.
Article Explores Flood Insurance Premium Changes
A new article
in ABA Risk and Compliance looks at a new pricing methodology from the Federal Emergency Management Agency that alters the way it prices insurance and determines an individual’s property flood risk.
“Risk Rating 2.0” is likely to affect borrowers who have not previously seen large increases in their flood insurance premiums, and the American Bankers Association expects that “Write Your Own” insurance carriers, which administer the majority of FEMA flood insurance policies, will begin communicating these changes to borrowers for insurance policy renewals scheduled for April 1, 2022, or later. Because policy changes are typically communicated in advance, borrowers can expect to see communications about rate changes begin as early as February.
The article outlines what bankers need to know if they hear from borrowers experiencing rate increases, including resources they can share. The article also covers escrow and servicing issues that may arise from Risk Rating 2.0-related premium changes.
Industry’s ‘COVID Help For Home’ Website Updated
To continue assisting Americans experiencing difficulties paying their mortgage because of COVID-19, the “COVID Help for Home” website, which was created by a coalition of mortgage industry stakeholders, and consumer groups, has been updated with new information and resources.
Among other things, the updates include new materials to help servicers reach out to customers who may be eligible for Homeowners Assistance Fund dollars. As part of the American Rescue Plan, approximately $10 billion was authorized for the HAF to provide direct assistance through state housing finance agencies to borrowers facing COVID-related hardships.
IRS Releases FAQs To Help Taxpayers Prepare 2021 Returns
The Internal Revenue Service published a series of frequently asked questions to assist taxpayers who received the advance child tax credit or who were eligible to receive the child tax credit in preparing their 2021 tax returns. The FAQs address child tax credit basics, eligibility rules for claiming the tax credit and commonly asked immigration-related questions.
ABA Foundation Invites Banks To Host Lights, Camera, Save! Video Contest
The American Bankers Association Foundation is urging banks to participate in its Lights, Camera, Save! contest that encourages teens to use video to communicate the value of sound money management. The Foundation is urging banks register for free to host a contest. Registered banks will gain access to materials to help promote the contest to teens in their community including a new communications toolkit with social posts, ads and contest materials. Participating banks will submit their winner to the foundation for the national contest in April.
Teen participants will create a video up to 30 seconds long that demonstrates the importance of using money wisely and submit it to their local participating bank. The contest is open to teen filmmakers of all experience levels and submission will be accepted from Feb. 21 to March 31.
The contest is open to teen filmmakers of all experience levels and submission will be accepted from Feb. 21 to March 31. The ABA Foundation will host Zoom chats on the contest at 2 p.m. Feb. 8 for banks that have not participated in the contest before and at 1 p.m. Feb. 9 about contest best practices. To participate in the Zoom chats, contact ABA's Jeni Pastier.
FDIC Partners With Operation Hope To Promote Financial Education
The Federal Deposit Insurance Corporation has partnered with the nonprofit Operation Hope to promote financial education to minority and women-owned businesses
. Through the partnership, Operation Hope will use the FDIC’s Money Smart financial education resources to help teach how to do business with the agency. The program has now been adopted by an alliance of more than 1,400 financial institutions and community-based partners across the country.