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OFAC Amends Executive Order Regarding Significant Malicious Cyber-Enabled Activities to Include Interfering With or Undermining Election Processes
On December 28, 2016, the President announced the issuance of an Executive Order Taking Additional Steps To Address The National Emergency With Respect To Significant Malicious Cyber-Enabled Activities thereby amending Executive Order 13694. Among other things, the new Executive Order allows for the imposition of sanctions on individuals and entities determined to be responsible for tampering, altering, or causing the misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions. Five entities and six individuals have been identified and will be added to OFAC’s SDN List, the latest version of which can be accessed here.
PA Amends Money Transmission Business Licensing Law
Pennsylvania’s Secretary of Banking and Securities, Robin L. Wiessmann, issued guidance to businesses engaged in money transmission to inform them of significant changes that will be required for their businesses as a result of amendments to the Money Transmission Business Licensing Law. Governor Tom Wolf signed the changes into law on November 3, 2016 (Act 129 of 2016) and the new law became effective on January 2, 2017.
Senate Republicans Announce Three New Banking Committee Members
On January 3, 2017, Senate Republican leadership released committee assignments for the 115th Congress, and in the process, announced the addition of three new Republican members of the Banking, Housing, and Urban Affairs Committee. Specifically, Sens. David Perdue (R-Ga.), Thom Tillis (R-N.C.) and John Kennedy (R-La.) have been assigned to the Committee, replacing Sens. Jerry Moran (R-Kan.), who was reassigned, David Vitter (R-La.), who retired last year, and Mark Kirk (R-Ill.), who lost his re-election bid. Looking ahead, committee chairs will be selected next week following a vote of the members of each respective committee and then ratified by the Senate Republican Conference.
Joint Final Rules on Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks
On January 4, 2017, the FDIC and the other federal financial institution regulatory agencies announced that they had adopted final rules permitting Insured Depository Institutions (“IDIs”) with up to $1 billion in total assets (and that meet certain other criteria) to qualify for an 18-month on-site examination cycle. The rule modification is aimed at allowing banking regulators to better focus supervisory resources on IDIs that present capital, managerial, or other issues of supervisory concern while reducing regulatory burden on small, well-capitalized and well-managed institutions.
CFPB Settles with Two Credit Reporting Companies Regarding Marketing Practices
On January 3, the CFPB entered into separate consent orders (2017-CFPB-0001, 2017-CFPB-0002) with two credit reporting companies and their subsidiaries regarding the companies’ representations concerning credit scores sold to consumers, as well as the companies’ credit-related product sales practices. Under the terms of its consent order, one of the companies must pay a $2.5 million civil penalty in addition to almost $3.8 million in restitution to affected consumers. The consent order for the other company includes a $3 million civil penalty and payment of more than $13.9 million in restitution to affected consumers.
Banking Agencies Approve Streamlined Call Report
The Fed, FDIC, and OCC, as members of the FFIEC, recently announced that the implementation of a streamlined Call Report Form (FFIEC 051) for eligible small institutions—financial institutions with only domestic offices and less than $1 billion in total assets—which is proposed to take effect March 31, 2017. The FFIEC’s action is the result of an ongoing initiative to reduce the burden associated with Call Report requirements for community banks. Among other things, the streamlined Call Report reduces the existing Call Report from 85 to 61 pages, resulting from the removal of approximately 950 (or about 40 percent) of the nearly 2,400 data items in the Call Report. Because the OMB must approve the revisions before they can be implemented, the above-referenced banking agencies have also issued a joint notice reflecting that they have submitted the information collection to OMB for review.
OCC Finalizes Rule Banning Industrial, Commercial Metal Dealing
Last week, on December 28, 2016, the OCC announced the release of its final rule to prohibit national banks and federal savings associations from dealing or investing in industrial or commercial metals. Under the new restrictions, banks will no longer be permitted to deal or invest in metals and alloys in forms primarily suited for industrial or commercial purposes, such as copper cathodes, aluminum T-bars and gold jewelry. The final rule is effective as of April 1, 2017, and includes a divestiture period, which provides for institutions that previously acquired industrial or commercial metal through dealing or investing to unwind their investments as soon as practicable, but not later than April 1, 2018. The OCC may also—on a case-by-case basis—grant up to four separate one-year extensions of the divestiture period if the bank has made a good faith effort to dispose of its existing investments and the bank’s retention of the metal is not inconsistent with safe and sound operation.
CFPB Releases Report on Student Debt Incurred by Older Consumers
On January 5, the CFPB announced the release of a report, entitled Snapshot of Older Consumers and Student Loan Debt, which examines the “increasing student loan debt that older consumers are carrying, as well as how the increased debt burden is impacting borrowers’ later life financial security.” Among other things, the Report notes that the number of older student loan borrowers has quadrupled over the last decade, and that the amount of debt per older borrower has roughly doubled over that same time period, particularly as many borrowers take out loans for children or grandchildren. The Report notes further that, in 2015, nearly 40 percent of federal student loan borrowers age 65 and older were in default.
The Report also examines complaints from older consumers with private and federal student loans and highlights common problems that appear to arise, including, among other things, co-signing private student loans and difficulties accessing protections guaranteed under federal law for many federal student loan borrowers.
CFPB Releases Annual Report to Congress on Transparency, Accountability in 2016
On January 3, the CFPB announced the release of its annual report to the Senate and House Committees on Appropriations for 2016. The report—which covers October 1, 2015 through September 30, 2016—identifies the specific responsibilities that the Dodd-Frank Act tasked to the CFPB and explains how the Bureau has attempted to meet those responsibilities. Among other things, the report describes Bureau regulations and guidance related to the Dodd-Frank Act including, but not limited to: (i) a proposed rule on arbitration; (ii) a proposed rule related to payday loans, vehicle title loans, and other similar credit products; (iii) a final rule to amend various provisions of the mortgage servicing rules implementing the Real Estate Settlement Procedures Act and the Truth in Lending Act; and (iv) a final rule amending Regulation C, implementing the Home Mortgage Disclosure Act. The report also includes descriptions of the Bureau’s supervisory activities and enforcement actions undertaken by in the 2016 fiscal year.
Kentucky Regulator Announces New Licensing Requirement for Mortgage Servicers
On December 22, the Kentucky Department of Financial Institutions (the “Department”) issued a memorandum stating that master servicers and sub servicers are required to be licensed as mortgage loan companies under the Kentucky Mortgage Licensing and Regulation Act, unless they can document to the Department in writing that an exemption applies to them. The memorandum defines “master servicer” as “any entity or individual that owns the right to perform servicing of a mortgage loan. A master servicer typically reserves the legal right to either perform the servicing itself or to do so through a sub servicer.” The memorandum specifies that “[a] sub servicer does not own the right to perform mortgage servicing, but performs servicing on behalf of a master servicer, generally premised upon duties enumerated in a contract between the sub servicer and master servicer.” The licensing requirement is effective March 1, 2017.