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Financial Services Law Insights and Observations

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  • Agencies outline 2021 resolution plan guidance for largest banking organizations

    Agency Rule-Making & Guidance

    On July 1, the Federal Reserve Board and FDIC released a letter to address 2021 resolution plan submission requirements for the eight largest and most complex domestic banking organizations. The letter identifies targeted information required to be included in the 2021 resolution plans (due July 1, 2021), including certain core elements such as capital, liquidity, and recapitalization strategies, in addition to information on how each banking organization has integrated changes and lessons learned as a result of the Covid-19 pandemic. The agencies intend to use the banking organization’s response to the stress caused by the pandemic to inform their assessment of the banking organization’s resolution-related capabilities and infrastructure. According to the announcement, these will be the “first ‘targeted’ resolution plan[s]” following the agencies’ adoption of a final rule last year, which, among other things, amended the resolution planning requirements for large domestic and foreign firms with more than $100 billion in total consolidated assets (covered by InfoBytes here).

    Agency Rule-Making & Guidance Living Wills Bank Compliance Covid-19

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  • Federal agencies release host state loan-to-deposit ratios

    Agency Rule-Making & Guidance

    On June 2, the FDIC, the Federal Reserve Board, and the OCC released the current host state loan-to-deposit ratios for each state or U.S. territory, which the agencies use to determine compliance with Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Under the Act, banks are prohibited from establishing or acquiring branches outside of their home state for the primary purpose of deposit production. Branches of banks controlled by out-of-state bank holding companies are also subject to the same restriction. Determining compliance with Section 109 requires a comparison of a bank’s estimated statewide loan-to-deposit ratio to the yearly host state loan-to-deposit ratios. If a bank’s statewide ratio is less than one-half of the yearly published host state ratio, an additional review is required by the appropriate agency, which involves a determination of whether a bank is reasonably helping to meet the credit needs of the communities served by the bank’s interstate branches.

    Agency Rule-Making & Guidance OCC Federal Reserve FDIC Bank Compliance

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  • North Carolina Attorney General announces joint relief effort for North Carolinians facing Covid-19 financial hardship

    State Issues

    On June 4, the North Carolina attorney general announced the Carolina Relief Plan, a voluntary agreement whereby participating financial institutions will offer certain financial relief to customers facing Covid-19 financial hardships. Relief includes, among other things, allowing eligible customers to request a forbearance on residential mortgage payments not otherwise covered by the CARES Act, assistance for payment extensions of auto loan accounts, and relief from monthly maintenance fees, overdraft fees, and CD early withdrawal penalties. Under the agreement, any participating financial institution also must: (1) offer to place a moratorium on residential mortgage foreclosures and consumer auto repossessions through at least June 30, 2020; (2) refrain from reporting loans subject to Covid-19 accommodations; and (3) inform customers about the assistance they are being offered and of the heightened risk of scams. One financial institution has signed onto the relief plan as of the time of the announcement.

    State Issues Covid-19 North Carolina State Attorney General Bank Compliance Consumer Finance Forbearance Mortgages CARES Act Overdraft Repossession Auto Finance

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  • New Hampshire issues guidance for reopening of branches of financial institutions

    State Issues

    The New Hampshire Banking Department has issued guidance on the reopening of branches and other financial institution offices that were closed due to the Covid-19 pandemic. Banks or credit unions planning to reopen branch offices or other offices are requested to provide notice to the in the manner specified in the guidance and must also ensure that customers and members are aware of any planned reopening. Banks and credit institutions are urged to consult Emergency Order 40 for guidance on precautions to protect the safety of the institutions’ staff and customers.

    State Issues Covid-19 New Hampshire Credit Union Financial Institutions Bank Compliance

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  • OCC releases recent enforcement actions

    Federal Issues

    On May 21, the OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such entities. Included among the actions is an April 14 consent order to resolve the OCC’s claims that a California-based bank engaged in Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program violations. According to the consent order, an OCC examination identified deficiencies in the bank’s BSA/AML compliance program, including failure to implement a compliance program that “adequately covered the required BSA/AML program elements,” and failure to correct a previously identified BSA/AML compliance program problem. The consent order requires the bank to, among other things, (i) appoint a compliance committee of independent directors ; (ii) submit a written strategic plan to the OCC covering at least the next three years; (iii) ensure competent management and staff is in place to ensure compliance with the order, applicable laws, and rules and regulations; (iv) appoint a “permanent, qualified, and experienced BSA Officer”; (v) create and adopt a “written program of policies and procedures to provide for compliance with the BSA”; (vi) adopt a “written risk-based program of internal controls and processes to ensure compliance with the requirements to file SARs”; (vi) develop policies and procedures for performing customer due diligence; (vii) implement a program to manage BSA/AML and Office of Foreign Assets Control risk associated with processing wire transfers; and (viii) conduct a SAR “look-back” review, implement an independent BSA/AML audit program, and develop a comprehensive training program for bank employees.

    Federal Issues OCC Enforcement Bank Secrecy Act Anti-Money Laundering Bank Compliance

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  • OCC permits remote director, shareholder, and member meetings

    Federal Issues

    On May 26, the Office of the Comptroller of the Currency announced an interim final rule that would permit national banks and federal savings associations to hold all board of director, shareholder and member meetings telephonically or electronically, including after the Covid-19 emergency ends. The OCC also published optional model bylaws for mutual savings associations and federal savings associations to authorize and govern telephonic and electronic meetings. The interim final rule takes effect on May 28, and comments must be received by July 13, 2020.

    Federal Issues Covid-19 OCC Shareholders Directors & Officers Bank Compliance

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  • Michigan regulator encourages financial institutions to avoid offsetting CARES Act stimulus payments

    State Issues

    On May 14, the Michigan Department of Insurance and Financial Services issued a bulletin “strongly” urging Michigan financial institutions not to access CARES Act stimulus payments to satisfy overdrafts or to exercise any right of offset against the funds without the agreement of the customer or member. The regulator also “strongly” urged financial institutions not to use CARES Act stimulus payments for ATM, late payment, overdraft, or other fees.

    State Issues Covid-19 Michigan CARES Act Bank Compliance ATM Overdraft

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  • Colorado issues guidance to critical financial institutions

    State Issues

    On May 12, Colorado issued additional guidance to critical financial institutions during the Safer at Home for Public Health Order 20-28. The guidance clarifies that financial and professional institutions are considered “Critical Business/Critical Service” under the public health order. It also provides responses to frequently asked questions, including how to follow guidance at the city, county, and state level, whether banks and credit union branches are considered “Critical Retailers,” the requirements for monitoring employee health, and cleaning procedures at the financial institutions’ facilities.

    State Issues Covid-19 Colorado Bank Compliance Credit Union

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  • OCC issues guidance about health-related changes to annual meetings

    Federal Issues

    On May 12, the Office of the Comptroller of the Currency issued guidance for national banks and federal savings associations that are considering changing the date, time, or location of their annual meetings as a result of stay-at-home orders or other health concerns. The OCC clarified that, for national banks, the requirement to hold an annual meeting is governed by state laws and the bank’s governing documents. OCC regulations require federal savings associations to hold annual meetings within 150 days after the end of the fiscal year and to incorporate the time frame for conducting the meeting into their bylaws. Although federal savings associations must receive OCC approval to amend their bylaws to incorporate a longer time frame, the OCC will deem such an amendment as approved and effective if it meets the conditions set out in the guidance. The OCC also strongly encourages all banks to use electronic methods for submitting licensing filings during the COVID-19 emergency.

    Federal Issues Covid-19 OCC Bank Compliance Licensing

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  • Arkansas Insurance Department rescinds several Covid-19-related bulletins

    State Issues

    On May 11, the Arkansas Insurance Department issued a bulletin announcing the rescission of certain Covid-19 related bulletins issued under Executive Order 20-03. Among others, Bulletin 16-2020 regarding the suspension of title insurance audits and Bulletin 18-2020 regarding Covid-19 financial regulatory compliance, are suspended as of May 11, 2020.

    State Issues Covid-19 Arkansas Insurance Bank Compliance

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