February 25, 2022
Biden Administration Announces ‘Unprecedented’ Sanctions Against Russia
In response to the invasion of Ukraine by Russian troops, President Biden announced a second round of economic sanctions, including those against two additional large Russian financial institutions, Sberbank and VTB Bank.
In a statement, the Treasury Department said that within 30 days, the Office of Foreign Assets Control will require all U.S. banks “to close any Sberbank correspondent or payable-through accounts and to reject any future transactions involving Sberbank or its foreign financial institution subsidiaries. Payments that Sberbank attempts to process in U.S. dollars for its clients — with examples ranging from to technology to transportation — will be disrupted and rejected once the payment hits a U.S. financial institution.”
OFAC will also impose full blocking sanctions on VTB Bank, a systemically important institution that holds nearly 20% of all banking assets in Russia and will immediately freeze all assets held in U.S. financial institutions. The sanctions also extend to 20 VTB Bank subsidiaries.
In addition, OFAC will block three additional Russian banks — Otkritie, Novikom and Sovcom — from accessing the U.S. financial system. Treasury also announced additional debt and equity prohibitions against 13 other state and private-owned firms operating in the financial services sector, as well as a series of actions targeting several Russian families with close ties to President Putin.
Separately, OFAC also sanctioned 24 Belarusian individuals and entities for their support for and facilitation of the Russian invasion.
Sanction Of Russian Banks Raises Cyberattack Concerns For U.S. Banks
Russia’s invasion of Ukraine, along with U.S. sanctions against Russian banks, have only solidified the need for U.S. banks to be prepared for the possibility of cyberattacks.
Russia executed massive DDoS (Distributed Denial of Service) attacks against Ukrainian banks, government agencies and infrastructure in advance of its invasion into Ukraine. These punitive economic measures from the U.S. (first round sanctions and second round sanctions) against Russian banks have raised concerns that Putin may retaliate against the U.S. banking system and other critical infrastructure sectors — potentially through cyberattacks to include the deployment of ransomware and malware.
MBA strongly urges banks to review all their cybersecurity protocols and ensure they are up to date with the most recent guidance. The U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Agency issued a “SHIELDS UP” advisory that identifies key steps to help reduce damage from a cyber intrusion. CISA has compiled a list of free cybersecurity tools and services to help organizations further advance their security capabilities.
Action Request: Complete MBA Survey On CFPB RFI On ODP, NSF, Other Bank Fees
In an email to CEOs and compliance leaders, MBA is asking banks to participate in its survey about the Consumer Financial Protection Bureau's recent request for information regarding bank fees. The CFBP blatantly mischaracterized fees for overdraft and insufficient funds, credit cards, remittance transfers, prepaid accounts and mortgages as “junk fees,” equating them to “resort fees” and “service fees” charged for resorts and concerts.
If you have completed the survey, thank you. If not, we encourage your bank to participate in this important survey about your consumer customer accounts. Answering the questions in this survey will help MBA formulate a comment letter to the CFPB responding to the RFI and outlining our serious concerns with the CFPB’s characterization of bank fees. All data will be shared in aggregate.
Please coordinate with others in your bank to ensure that only one survey response is submitted per bank. Be assured that all financial institution data will be kept confidential. Please respond to the survey by Tuesday, March 15.
Thanks in advance for your cooperation. If you have questions, please contact Carol Barnett at MBA.
MBA Accepting Applications For Bankers To Serve On Boards, Committees
Help lead the MBA and grow your career! MBA seeks bankers to serve on various committees to increase their engagement with MBA and the banking community. Serving on MBA's boards and committees allows bankers to share their knowledge and expertise with fellow bankers.
This leadership opportunity offers bankers more engagement with MBA and the banking community. Please review the leadership opportunities and email completed applications to Peggy Mantle by Friday, Feb. 25. MBA appreciates your involvement with the association.
Brainard: Federal Reserve Needs To Prepare For Payment Landscape Of The Future
In recent remarks, Federal Reserve Governor Lael Brainard said the Fed needs to be preparing for the payment landscape of the future even as it makes improvements to meet today’s needs. Brainard said the Fed has been thinking critically about whether there is a role for a U.S. central bank digital currency and about potential costs and benefits, including through a recently issued research paper that is currently open for public comment.
She noted it is prudent for the Fed to explore if a central bank digital currency could preserve some of the same and effective elements of the current financial system “in a way that is complementary to the private sector innovations transforming the financial landscape of the future.” She added that it is essential that the U.S. be on the frontier of research and policy development regarding central bank digital currencies, as international developments related to central bank digital currencies can have implications for the global financial system.
The American Bankers Association has previously weighed in on the risks associated with issuing a U.S. CBDC, warning that the issuance of a CBDC could compete with bank deposits and limit banks’ ability to power economic growth.
ABA, Trade Groups Urge Congress To Raise Small-Business Loan Program Cap
The American Bankers Association and a coalition of trade groups urged congressional leaders to increase the authorization level for the Small Business Administration’s 504 loan program. Demand is expected to reach the program’s authorization cap of $7.5 billion in early summer, likely June, the groups said. Without congressional action, the program would be unavailable to small businesses for an entire quarter of the fiscal year until the authorization level resets, they added wrote.
The program previously reached its congressionally authorized cap Sept. 7, 2021, and SBA was unable to approve new 504 loans until the program’s authorization level reset Oct. 1. That three-week shutdown of the program caused a number of issues for small-business borrowers, including the loss of real estate and endangered escrow, the groups wrote.
ABA, Trade Groups File Amicus Brief On Mortgage Servicing Convenience Fees
The American Bankers Association and several financial trade organizations filed a “friend of the court” brief with the U.S. Court of Appeals for the 9th Circuit rebutting the Consumer Financial Protection Bureau’s argument that the collection of convenience fees violate the Fair Debt Collection Practices Act. CFPB previous filed an amicus brief in the same case arguing that the phrase “permitted by law” under Section 1692f(1) of the FDCPA refers only to amounts that are expressly or affirmatively authorized by law.
The amicus brief filed by ABA and the trade groups maintains that the CFPB’s interpretation is contrary to the plain language of the FDCPA. The groups wrote that there is no basis in the broad language in the section to eliminate the freedom of borrowers and servicers to enter otherwise lawful, enforceable contracts under state law unless a state statute specially authorizes a certain fee for a certain service.
The amicus brief also discusses the importance of expedited payment services to borrowers and the adverse consequences of penalizing mortgage servicers for the development of such services, including reducing the incentive to offer such options, limiting important consumer choices and deterring future servicing innovations that benefit borrowers.
OCC Issues FAQs On Final Rule To Rescind 2020 CRA Regulations
The Office of the Comptroller of the Currency issued a set of frequently asked questions on its final rule to rescind its 2020 Community Reinvestment Act rule and replace it with rules based on the 1995 CRA rules that were jointly adopted by the OCC, Federal Reserve and Federal Deposit Insurance Corporation. The FAQs address qualifying activities, transition period, examination administration, assessment areas, targeted geographic areas, data reporting, changes to public notices and strategic plans.
FHFA Re-Proposes Updated Seller, Servicer Eligibility Requirements
The Federal Housing Finance Agency re-proposed updated standards that mortgage lenders would have to meet in order to sell loans to or service loans on behalf of Fannie Mae and Freddie Mac. The proposed update includes requirements for the servicing of Ginnie Mae mortgages. FHFA also noted that in this latest proposal, it also has incorporated feedback from a January 2020 proposal, as well as lessons learned from the COVID-19 pandemic.
Under the proposed requirements, all sellers and servicers would be required to maintain a base net worth of $2.5 million plus 35 basis points of the unpaid principal balance for Ginnie Mae servicing and 25 basis points of the unpaid principal balance for all other 1-to-4-family loans serviced. Depository institutions would continue to rely on their prudential regulatory standards to meet the GSEs’ capital and liquidity requirements.
Among other things, nonbanks’ minimum capital ratio would remain unchanged while their minimum liquidity would rise from 3.5 basis points of their total agency servicing to four basis points for GSE servicing and 10 basis points for Ginnie Mae servicing. Comments on the proposed changes will be due in 60 days.
CFPB Issues Factsheet On Calculating Interest For ARMs To Satisfy QM Definition
The Consumer Financial Protection Bureau released a four-page factsheet on calculating prepaid interest on so-called “short-reset” adjustable-rate mortgages and step-rate loans. The bureau’s price-based General Qualified Mortgage definition includes a special rule for calculating annual percentage rates on these kinds of loans where the interest rate may or will change within five years of the first regular periodic payment due date.
Federal Banking Regulators Urge SPCP Use
The federal banking regulators reminded banks and creditors of the ability under the Equal Credit Opportunity Act and Regulation B to establish special purpose credit programs to meet the credit needs of specified classes of persons. SPCPs are programs designed to direct financial assistance to groups who have historically been hindered from homeownership. The regulators said they encourage creditors to explore opportunities to develop SPCPs.
CFPB Zeroes In On Auto Lending Market
In a new blog post, the Consumer Financial Protection Bureau signaled that it intends to increase its focus on the auto lending market. The bureau noted that prices for new and used cars have increased significantly over the last year, and that “we expect that both the total amount of debt and the average loan size will continue to increase and that larger car loans will put increased pressure on some consumers’ budgets for much of the next decade.”
Among other things, the CFPB expressed concern about loan-to-value ratios in the auto lending market, auto loan servicing and collections practices and the subprime auto lending market in particular.
“We are looking to better understand potential barriers to competition in the subprime auto lending market that may drive these and related outcomes,” the bureau said. “We will continue to research auto lending policies and practices that may hinder a fair, transparent, and competitive market. And, we will work with our counterparts at the Federal Trade Commission and the Federal Reserve Bank Board of Governors to use our collective authorities to address issues in the market.”
IRS Releases Proposed Required Minimum Distribution Rule
The IRS released its proposed required minimum distribution rule for retirement plans and IRAs, implementing Sections 114 and 401 of the bipartisan Secure Act of 2019. The proposed rule affects administrators, participants, owners, beneficiaries of plans and IRAs, as well as addresses the act’s requirements for designated beneficiaries, trusts as plan and IRA beneficiaries including multi-beneficiary trusts, see-through trusts and conduit trusts. Comments are due Wednesday, May 25.
Article Explores Digital Transformation In Banking
A 2021 survey found that 84% of banking customers said they plan to maintain the same level of digital banking services after the pandemic subsides, a challenge and opportunity for banks, according to a new article in ABA Bank Marketing.
There are two primary challenges for banks in delivering high-quality digital experience, writes Doug Wilber, CEO of Denim Social, a social media management software company.
“First, traditional banks tend to struggle to design meaningful and emotional experiences in digital ways. Second, they struggle to deliver those experiences impactfully due to internal and external digital transformation hurdles,” Wilber writes.
The article provides four digital transformation initiatives for bank marketers and includes information on how the initiatives can help improve digital customer experiences and strengthen human relationships.