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Virginia issues modified stay at home order identifying banks and financial institution as essential retail businesses
On December 10, the governor of Virginia issued a modified stay at home order limiting travel and gatherings for Virginia residents and operations for certain businesses. However, banks and other financial institutions with retail functions are considered essential retail businesses and may continue to remain open during normal business hours. All businesses, including essential retail businesses, are advised to adhere to the Guidelines for All Business Sectors.
On November 23, the OCC announced a final rule that updates and eliminates outdated regulatory requirements for national bank and federal savings association activities and operations. The final rule, originally proposed in June (covered by InfoBytes here), amends 12 CFR 7 to clarify and codify recent OCC interpretations related to the modern financial system. Among other things, the changes will (i) incorporate and streamline interpretations concerning permissible derivatives activities; (ii) codify interpretations which permit covered institutions to engage in certain tax equity finance transactions; (iii) “codify interpretations regarding national bank membership in payment systems and clarify that federal savings associations are subject to the same requirements as national banks; (iv) “expand the ability of national banks and federal savings associations to choose corporate governance provisions under state law; (v) clarify anti-takeover provisions; and (vi) codify National Bank Act interpretations concerning capital stock issuances and repurchases. The final rule takes effect April 1, 2021.
On November 20, the OCC announced a notice of proposed rulemaking (NPRM), which seeks to ensure that national banks, federal savings associations, and federal branches and agencies of foreign bank organizations offer and provide fair access to financial services “based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers.” The NPRM implements language included in Title III of Dodd-Frank—“which charged the OCC with ‘assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction’”—and builds upon the principle of nondiscrimination. The NPRM would apply to the largest banks in the country and would prevent such banks from denying or limiting services in an effort to (i) prevent a person from entering or competing in a particular market; or (ii) disadvantage a person in order to benefit another person in which the bank has a financial interest. The OCC emphasizes in its press release that “a covered bank’s decision to deny services based on an objective assessment of the person’s creditworthiness, ability to pay, or other quantitative, impartial, risk-based reasons would not violate the bank’s obligation to provide fair access.” Comments on the NPRM are due by January 4, 2021.
On November 23, the OCC announced a new Comptroller’s Licensing Manual booklet, “Mutual to Stock Conversions,” which incorporates provisions of revised regulation 12 CFR Part 192. The new booklet, among other things, “provides an overview of policy considerations and decision criteria that the OCC considers when reviewing applications by federal savings associations to convert from a mutual to stock form of ownership under 12 CFR 192.” The new booklet also outlines requirements for covered institutions when filing conversion applications, as well as references and information resources for prospective filers.
On November 9, the OCC released Bulletin 2020-99, which discusses key provisions of the June 2020 Community Reinvestment Act (CRA) Rule and includes FAQs. As previously covered by a Buckley Special Alert, on May 20, the OCC announced the final rule to modernize the regulatory framework implementing the CRA. The final rule was technically effective on October 1, but the final rule provides for at least a 27-month transition period for compliance based on a bank’s size and business model. Large banks and wholesale and limited purpose banks will have until January 1, 2023 to comply, and small and intermediate banks that opt-in to the final rule’s performance standards will have until January 1, 2024. The Bulletin details the key provisions of the final rule, including the (i) new criteria for designating bank assessment areas, and (ii) varying performance standards by bank type. The Bulletin’s FAQs cover a range of topics including (i) the transition period; (ii) qualifying activities; (iii) activities outside bank assessment areas; (iv) examination administration; and (v) data collection and reporting.
The Bulletin notes that the OCC is conducting outreach to provide banks with more information regarding how the agency will administer the transition to the final rule. Additionally, the Bulletin notes the OCC will issue guidance addressing how the July 2016 Interagency Questions and Answers Regarding Community Reinvestment will apply to activities conducted under the final rule.
Lastly, the Bulletin rescinds OCC Bulletin 2020-3, “Community Reinvestment Act: Notice of Proposed Rulemaking,” and OCC Bulletin 2020-4, “Community Reinvestment Act: Request for Public Input.”
On September 30, the Federal Reserve Board announced it would extend measures previously instituted to ensure that large banks maintain a high level of capital resilience in light of uncertainty introduced by the Covid-19 outbreak. The measures were extended for an additional quarter. Large banks (i.e. banks with more than $100 billion in total assets) will be prohibited from making share repurchases. Additionally, dividend payments will be capped and tied to a formula based on recent income. The announcement notes that the Board will conduct a second stress test later this year to further test the resiliency of large banks.
On September 9, the OCC announced an updated version of its “Federal Branches and Agencies” booklet of the Comptroller’s Licensing Manual. According to Bulletin 2020-80, the revised booklet clarifies and updates the OCC’s policies and processes covering the establishment, operations, and other corporate activities of federally licensed offices of foreign banks, including (i) notice and application filing requirements; (ii) decision factors and criteria; and (iii) removal of internal licensing procedures.
On August 4, the FDIC published responses to exception requests pursuant to the Recordkeeping for Timely Deposit Insurance Determination rule (Rule). The notice outlines two time-limited exceptions for covered institutions effective as of July 28. The Rule, codified at 12 CFR Part 370 (and amended last year—covered by InfoBytes here), requires covered institutions to implement information technology systems and recordkeeping capabilities in order to calculate quickly the available amount of deposit insurance coverage for each deposit account in the event of failure. The FDIC allows covered institutions to request an exception from one or more of Part 370’s requirements should circumstances “make it impracticable or overly burdensome to meet those requirements.” Additionally, a covered institution may—upon notice to the FDIC—rely upon another covered institution’s FDIC-granted exception request, if the two institutions have substantially similar facts and circumstances.
The first exception grants an exception of up to 18 months from certain information technology and general recordkeeping requirements to allow covered institutions to perform system updates and remediation efforts to ensure certain sole proprietorship deposit accounts are correctly classified by an institution’s information technology system. The second exception grants an exception of up to 12 months from certain information technology and general recordkeeping requirements “for a limited number of joint accounts that a covered institution has not confirmed are ‘qualifying joint accounts’ entitled to separate deposit insurance coverage.”
California Department of Business Oversight will monitor licensees’ compliance with face covering guidance
The California Department of Business Oversight announced that it will monitor licensees’ compliance with face covering guidance issued by the California governor and the California Department of Public Health. All customers must be required to wear appropriate face coverings under circumstances outlined in the guidance, and those who refuse to comply and do not meet the outlined exemptions should be refused entry to banks, credit unions, and other places of business.
On July 7, the Kansas Office of the State Bank Commissioner again extended its remote work guidance for mortgage companies, mortgage loan originators, supervised loan licenses, credit service organizations, money transmitters, and credit notification registrations, previously covered here. With the update, working from home is permitted through September 15.
- Daniel R. Alonso to moderate an interactive roundtable at the Latin Lawyer and GIR Connect: Anti-Corruption & Investigations Conference
- APPROVED Checkpoint Webcast: You have license renewal questions, we have answers
- Jonice Gray Tucker to discuss “Fintech trends” at the BIHC Network Elevating Black Excellence Regional Summit
- Jeffrey P. Naimon to discuss "Truth in lending” at the American Bar Association National Institute on Consumer Financial Services Basics
- Daniel R. Alonso to discuss anti-money-laundering at FELABAN Spanish-language webinar “Perspective for banks: LAFT, FINCEN, OFAC, Cryptocurrency”
- Daniel R. Alonso to discuss "What’s new in BSA/AML compliance?" at the Institute of International Bankers Regulatory Compliance Seminar
- Marshall T. Bell and John R. Coleman to speak at 2021 AFSA Annual Meeting
- Jon David D. Langlois to discuss "Regulatory update: What you need to know under the new boss; It won’t be the same as the old boss" at the IMN Residential Mortgage Service Rights Forum (East)
- Daniel R. Alonso to discuss internal investigations at the Institute of Internal Auditors of Argentina Spanish-language webinar
- Benjamin B. Klubes to discuss “Creating a Fantastic Workplace Culture”
- John R. Coleman and Amanda R. Lawrence to discuss “Consumer financial services government enforcement actions – The CFPB and beyond” at the Government Investigations & Civil Litigation Institute Annual Meeting
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute
- Jonice Gray Tucker to discuss “Regulators always ring twice: Responding to a government request” at ALM Legalweek