July 28, 2022

Make Your Voice Heard In Tuesday's Election

Make plans today to cast your vote in the 2022 primary election Tuesday, Aug. 2.

The primary election will determine the nominees who will represent their respective parties in the Nov. 8 general election. Several races will be decided in the primary election either because there is no general opponent or the general election will not be competitive.

This year’s elections feature races for:

• a U.S. Senate seat
• eight U.S. House seats
• state auditor
• 17 state Senate seats
• all 163 State House seats

For the first time in several years, Missouri’s U.S. Senate seat is an open seat as Sen. Roy Blunt is retiring. His retirement created a down-ballot domino effect, with two current U.S. House members — Reps. Vickie Hartzler and Billy Long deciding to run for the U.S. Senate rather than for re-election. Several state senators are running for open U.S. House seats, but only Sen. Eric Burlison, R-Springfield, will not be eligible to maintain his current state Senate seat.

Among the top contenders to replace Blunt in the Republican primary are Hartzler, Missouri Attorney General Eric Schmitt and former Gov. Eric Greitens. Trudy Busch-Valentine, Lucas Kunce and several others are vying for the Democrat nomination.

On the state level, there are 17 state Senate seats up for election and all 163 House seats. Seven of the 17 Senate seats are open contests, meaning the incumbent is not running for re-election. Forty of the 163 House seats are open because of term limits, incumbents running for higher office, resignations and redistricting.

All candidate filings can be viewed on the Missouri Secretary of State’s website. The site also has information on polling locations and more.

Make sure your voice is heard by voting in the Aug. 2 primary election!

ABA Opposes Overdraft Bill, Calls Credit Report Bill Flawed

The American Bankers Association is asking House Financial Service Committee members to oppose two bills that would rewrite federal rules on overdraft fees and the use of credit information in determining mortgage loan eligibility. Both bills are scheduled for markup by the committee this week.

The Overdraft Protection Act (H.R. 4277) would restrict the ability of banks and other financial institutions to collect overdraft fees and mandate disclosure about their fee policies. In a letter sent to committee members, ABA said the bill upends a framework established in 2009 when the Federal Reserve amended Regulation E to require customers to opt in for overdraft protection for one-time debit card (in-store, point-of-sale purchases) and ATM transactions.

“If the Overdraft Protection Act is enacted, depository institutions would be prohibited from charging consumers more than one overdraft fee in a month and more than six overdraft fees in a year, regardless of a consumer’s choice to opt-in,” ABA said.

The Expanding Access to Credit through Consumer-Permissioned Data Act (H.R. 8485) would require lenders to consider additional, alternative information not typically considered when evaluating a borrower for a mortgage and not typically found in credit reports. While calling the bill well-intentioned, ABA said the legislative text was flawed, adding new mandates and burdens to the mortgage process. The association also said the bill does not clearly define what additional data sets should be considered and that it adds more complexity to the already extensive disclosures provided in the mortgage process.

Fed Raises Interest Rates For Fourth Time This Year

The Federal Reserve raised interest rates by three-quarters of a percentage point to a target range of 2.25% to 2.5%, the Federal Open Market Committee announced Wednesday. The committee added that it anticipates that ongoing increases in the target range will be appropriate, with Fed Chairman Jerome Powell saying that another “unusually large” increase could come during the FOMC’s September meeting.

Wednesday's announcement marks the fourth time the Fed has raised rates this year. FOMC also announced it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.

“Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low,” the statement said. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”

The Fed said the war in Ukraine and related events are creating additional upward pressure on inflation and are weighing on global economic activity. During a news conference, Powell acknowledged that the rapid pace of inflation has come as a surprise and more economic surprises could be in store. The committee “will strive to avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time.”

“We are highly attentive to inflation risks and determined to take the measures necessary to return inflation to our 2% longer-run goal,” Powell said. “This process is likely to involve a period of below-trend economic growth and some softening in labor market conditions. But such outcomes are likely necessary to restore price stability and to set the stage for achieving maximum employment and stable prices over the longer run.”

Community Bank Execs See Recession In Near Future

A recent survey of community bank leaders found that nearly all believe that a recession is just around the corner, with more than half of respondents blaming the Federal Reserve.

“Bankers have become less confident in the Fed's ability to curb inflation while guiding the economy to a soft landing,” said Mark Jacobsen, CEO and co-founder of IntraFi. “To a degree greater than reflected in the equity markets today, most banks do not believe the Fed can constrain inflation without triggering a recession.”

IntraFi Network, an MBA endorsed partner, polled C-suite executives at 388 institutions nationwide via email in June and found 96% believe a recession would start this year or next year. Fifty-one percent assigned blame to what they viewed as overcorrection by the Fed. However, 25% blamed ongoing supply-chain issues, 5% faulted the conflict in Eastern Europe and 2% said lingering pandemic-related issues would be the likely cause. The remainder blamed a combination of some or all the cited reasons.

IntraFi also asked community banks what they were doing to attract and retain workers. Sixty-six percent of respondents said they had increased compensation, with 60% reporting they were having trouble finding qualified candidates for open positions. Remote work was not a job perk most community banks could offer potential hires, with 59% saying their open positions could not be filled remotely.

FDIC Clarifies When Cease-and-Desist, Consent Orders May Be Terminated

The Federal Deposit Insurance Corporation has updated two chapters of its manual on formal and informal enforcement actions to provide clarity regarding the agency’s minimum standards for terminating cease-and-desist and consent orders issued under Section 8(b) of the Federal Deposit Insurance Act.

The updates clarify that cease-and-desist or consent orders may be terminated if:

• the institution is in full compliance with all provisions of the order and has fully corrected legal violations, unsafe or unsound practices or other conditions that led to the issuance of the order
• any provisions deemed “not in compliance” have become outdated or irrelevant
• deteriorations or any provisions deemed “not in compliance” lead to issuance of a new or revised formal action

Infographics Created To Help Bankers Understand CRA Rulemaking

The Office of the Comptroller of the Currency released a series of infographics to promote comment on the interagency notice of proposed rulemaking to modernize and strengthen the Community Reinvestment Act. Comments are due by Friday, Aug. 5.

The infographics include key information from the CRA NPR on:

• performance standards
• data collection, maintenance and reporting
• assessment areas
• community development
• retail lending products

The infographics are specific to how the CRA proposal would affect small banks, intermediate banks, large banks and wholesale or limited purpose banks. The large bank infographic includes an additional section on data reporting.

SBA Begins Accepting PPP Borrowers’ Requests For Loan Reviews

The Small Business Administration announced it will immediately begin accepting requests from Paycheck Protection Program borrowers for SBA to conduct a review of a lender’s forgiveness decision when the lender provided partial forgiveness of the PPP loan. A borrower may submit these requests to SBA through the borrower’s PPP lender.

SBA issued a procedural notice this past January that stated the agency would allow borrowers to request an SBA loan review of partial approval forgiveness decisions issued by the borrower’s PPP lender. With the its latest announcement, SBA has updated the PPP platform to allow these requests to be submitted.

The announcement also stated SBA is committed to conducting a manual review of all forgiveness decisions where the lender did not forgive any amount of the PPP loan. No action is required by lenders until contacted by SBA.

FDIC Updates Risk Management Exam Manual

The Federal Deposit Insurance Corporation has updated Section 1 of its Risk Management Manual of Examination Policies to improve flow, clarity and expansion of discussions about:

• trust department policies
• strategic planning
• incentive compensation
• dominant managers
• management information systems
• account reviews
• meetings between examiners and trust department management

CFPB Updates Debt Collection Rule FAQs

The Consumer Financial Protection Bureau has added three new sections to its debt collection frequently asked questions. The new sections address third-party communications prohibitions, electronic communications opt-out provision and unusual and inconvenient time and place provisions.

CDFI Fund Seeks Feedback On Criteria For Designating ‘Minority Lending Institutions’

The Community Development Financial Institutions Fund is asking for public feedback to refine the criteria it should use to designate “minority lending institutions” as a subset of CDFIs. By statute, MLIs both direct the majority of their financial products to minority populations or communities and either hold minority depository institution status or otherwise “demonstrate accountability to Minority populations” (which encompass Native Americans, Alaska Natives, Asians, Blacks, Hispanics or Latinos, and Native Hawaiians or Pacific Islanders).

The MLI designation was created by a December 2020 federal spending bill as one factor for COVID-19-related funding for CDFIs.

“Although no federal funding will be associated with an MLI designation at this time, the CDFI Fund seeks to implement the designation for those CDFIs that wish to be recognized for their high levels of service and accountability to Minority populations, as well as to identify barriers such CDFIs experience in providing access to capital,” the fund said.

Among other specific topics, the CDFI Fund sought feedback on:

• how to define majority-minority census tracts
• the window of time used to assess service in these tracts
• how to count financial products delivered to non-minority-owned customers who serve individuals from racial and ethnic minorities
• methods MLIs may use to demonstrate accountability to minority populations, including governing board, advisory board and executive staff representation
• the alignment of the MLI and Native CDFI designations

Comments are due Nov. 25.

OCC To Revise Statement On Minority Depository Institutions

The Office of the Comptroller of the Currency is revising its 2013 policy statement for minority depository institutions to update and streamline descriptions of its policies, procedures and programs, the bureau announced. The statement also describes the range of programs the OCC has in place to preserve and support MDIs.

The review was prompted by increased interest from banks and other stakeholders in working with MDIs and the MDI designation process following the 2021 creation of the Emergency Capital Investment Program by Congress and the 2020 formation of Project REACh. The Roundtable for Economic Access and Change, or REACh, promotes financial inclusion through greater access to credit and capital.

OCC Issues Call For Fintech Research

The Office of the Comptroller of the Currency issued a call for academic papers and policy-focused research on the effects of financial technology entities and nonbanks on banking and the markets for lending, deposit and payment services. Submissions are due by Sunday, Aug. 21, and must represent original, unpublished research.

Authors of selected papers will be invited to present to agency staff and invited guests at OCC headquarters on Nov. 7-8. The presentations will serve as a platform for interested academic and regulatory experts to discuss research that explores how the banking system, community banks in particular, uses technology and responds to the growth of new providers of banking services.

Report: Financial Services Most Impersonated Industry In Phishing Scams

Scammers are increasingly impersonating financial services companies as they seek to trick unsuspecting computer users into divulging sensitive information through phishing emails and websites, according to a report released by cybersecurity firm Vade. Financial services overtook cloud services as the most impersonated industry in phishing attempts in 2021, Vade said in its most recent year-in-review of phishing scams. Fake websites and emails claiming to be from financial service providers accounted for 35% of all phishing attempts tracked by the company during the year. By comparison, the sector accounted for 29% of phishing attempts in 2020.

Vade attributed the increase to the effects of the COVID-19 pandemic on global economy, with business and individuals taking advantage of government-backed business loans, as well as payment deferrals or “holidays” from financial institutions. As those payment moratoriums expired in 2021, the bills came due.

“This is a significant weapon for phishers to wield against businesses and individual citizens who borrowed or deferred,” Vade said in the report.

However, when it came to individual businesses, Microsoft and Facebook were the most imitated companies by phishers. Vade also reported that 78% of phishing emails were sent during weekdays, with Mondays and Tuesdays being the most popular days for the scams.

To help banks educate consumers about how to recognize phishing attempts from scammers pretending to be their bank, the American Bankers Association provides free resources through its popular campaign, #BanksNeverAskThat.