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FTC proposes rule to implement free credit monitoring for servicemembers
On November 1, the FTC announced a proposed rule, which would implement the Economic Growth, Regulatory Relief, and Consumer Protection Act requirement for nationwide consumer reporting agencies (CRAs) to provide free electronic credit monitoring services for active duty servicemembers. The proposal defines the term “electronic credit monitoring service” as a service through which the CRAs provide, at a minimum, electronic notification of material additions or modifications to a consumer’s file and requires CRAs to notify servicemembers within 24 hours of any material change. The proposal notes that CRAs may require that servicemembers provide contact information, proof of identity, and proof of active duty status in order to use the free service and outlines how a servicemember may prove active duty status, such as with a copy of active duty orders. Additionally, the proposal prohibits CRAs from requiring servicemembers to purchase a product in order to obtain the free service or requiring the servicemember to agree to terms and conditions. Comments will be due 60 days after publication in the Federal Register.
OCC proposes changes to annual stress test reporting requirements
On October 31, the OCC published in the Federal Register proposed changes to its “stress test” rules for covered financial institutions, as required by the Dodd-Frank Act. The proposal would, among other things, (i) revise the OCC reporting requirements to mirror the Federal Reserve Board’s proposed Comprehensive Capital Analysis and Review (CCAR) reporting form FR Y-14A for covered institutions with total consolidated assets of $100 billion or more; (ii) implement the revised asset threshold mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act; and (iii) remove the Retail Repurchase worksheet. Comments on the proposed changes must be received by December 31.
Federal Reserve sets annual indexing requirements under Regulation D for 2019
On October 25, the Federal Reserve Board announced the annual indexing of the reserve requirement exemption amount and the low reserve tranche for 2019 under Regulation D. For 2019, Regulation D is amended to set the reserve requirement exemption amount at $16.3 million (an increase from 2018’s $16 million) and the low reserve tranche at $124.2 million (an increase from 2018’s $122.3 million). The new low reserve tranche and reserve requirement exemption amount will apply to the fourteen-day reserve maintenance period that begins January 17, 2019. The final amendments are effective 30 days after publication in the Federal Register.
FDIC proposes to eliminate annual disclosure requirement for state nonmember banks
On October 25, the FDIC published a proposed rule in the Federal Register to rescind the annual disclosure requirement applicable to all state nonmember banks and insured state-licensed branches of foreign banks (collectively, “banks”). Specifically, the FDIC is proposing to eliminate 12 CFR Part 350, which, in general, required banks to prepare annual disclosure statements consisting of (i) required financial data comparable to specified schedules in the Call Reports filed for the previous two years; (ii) information that the FDIC may request, such as enforcement actions; and (iii) other information the bank chooses to disclose. According to the proposal, the FDIC has determined that the regulation is “outdated and no longer necessary,” because, with widespread access to the internet, information about the financial condition and performance of individual banks is now “reliably and directly offered to the public through the FDIC’s and the Federal Financial Institutions Examination Council’s (FFIEC) websites” in the form of Call Reports and Uniform Bank Performance Reports. This eliminates the need for the annual disclosure statement requirements. Similar disclosure requirements have already been rescinded in recent years by the Federal Reserve Board and OCC. Comments on the proposed rule must be received by November 26.
FTC seeks comments on possible adjustments to privacy and data security rulemaking authority
On August 6, the FTC published a request for comments in the Federal Register—in advance of a series of 15 to 20 public hearings scheduled to start this September—on whether the agency should make adjustments to competition and consumer protection law, enforcement priorities, and policy in light of evolving technologies and market developments. The hearings will cover a range of consumer-related issues, including the agency’s “remedial authority to deter unfair and deceptive conduct in privacy and data security matters” and the “interpretation and harmonization of state and federal statutes and regulations that prohibit [such conduct].” According to testimony presented by FTC Chairman Joseph Simons at a July 18 House Subcommittee on Digital Commerce and Consumer Protection hearing, there exists a need for expanded rulemaking and civil penalty authority. Specifically, Simons discussed Section 5 of the FTC Act, which he stated is too limited to address all of the privacy and security concerns in the marketplace and does not provide for civil penalties. Comments on the hearing topics must be received by August 20.
FDIC issues updated Section 19 policy statement
On August 3, the FDIC published in the Federal Register an updated statement of policy pursuant to Section 19 of the Federal Deposit Insurance Act (FDI Act) concerning participation in banking of a person convicted of a crime of dishonesty, breach of trust, money laundering or who has entered a pretrial diversion program in connection with the prosecution of such offenses. In addition to technical and clarifying changes, the final policy statement expands the criteria of de minimis offenses for which the FDIC will not require the filing of an application, and in response to comments received on the January proposal, (i) clarifies when an expungement is considered complete for Section 19 purposes; (ii) clearly recognizes that convictions set aside based on procedural or substantive error should not be considered convictions under Section 19; and (iii) adjusts the definition of “jail time” to not include “those on probation or parole who may be restricted to a particular jurisdiction.”
Federal Reserve issues final rules reflecting credit and interest rate increases
On June 20, the Federal Reserve issued a final rule amending Regulation A (Extensions of Credit by Federal Reserve Banks) to reflect its June 14 approval of a one-quarter percent increase in the primary credit rate at each Federal Reserve Bank. Because the formula for the secondary credit rate references the primary rate, the secondary credit rate also increased by one-quarter percentage point.
The same day, the Federal Reserve also issued a final rule amending Regulation D (Reserve Requirements of Depository Institutions) to reflect its June 14 approval of a one-quarter percent increase to the “rate of interest paid on balances maintained to satisfy reserve balance requirements (IORR) and the rate of interest paid on excess balances (IOER) maintained at Federal Reserve Banks by or on behalf of eligible institutions.”
NCUA proposes additional payday loan alternative option
On June 4, the National Credit Union Administration (NCUA) published in the Federal Register a proposal to create a new payday alternative loan product (PAL II) in addition to the current payday alternative loan product (PAL I), which has been available since 2010. According to the NCUA announcement, the goal of PAL II is to expand access to safe and affordable short-term, small-dollar loans for consumers of modest means. PAL II would include most features of PAL I, with four changes: (i) eliminating a loan minimum while setting the maximum at $2,000; (ii) setting a term maximum of 12 months; (iii) eliminating the requirement for membership minimum length; and (iv) as long as the consumer only has one outstanding loan at the time, eliminating the time restriction on the number of loans a credit union can make to the borrower in a six month period.
The proposal also requests input on the potential features of a possible third option, PAL III, including lending restrictions, associated fees, and underwriting guidelines.
As previously covered by InfoBytes, the OCC recently issued a bulletin encouraging banks to offer short-term, small dollar installment lending.
FDIC proposes information collection renewal for appraisal management companies
On May 2, the FDIC published a notice and request for comment in the Federal Register regarding the renewal of an existing information collection on the minimum requirements for appraisal management companies (AMCs). According to the notice, there is no significant change in the methodology or substance of the information collection; however, burden estimates for states and AMCs have been revised to include (i) “AMC Written Notice of Appraiser Removal from Network or Panel;” (ii) “Develop and Maintain a State Licensing Program;” (iii) “AMC Reporting Requirements (State and Federal AMCs);” and (iv) “State Reporting Requirements to the Appraisal Subcommittee.” The notice requests comment on, among other things, whether the information collection is necessary and ways to minimize the burden of the information collection on the respondents. Comments are due by July 2.
Federal Reserve requests comments on proposal addressing capital plan and stress test rules
On April 25, the Federal Reserve Board (Fed) published a request for comments in the Federal Register on a proposal to amend the Fed’s capital plan rule, capital rule, and stress testing rules by integrating the rules to simplify the capital regime. Under the proposed rule, a financial institution’s required stress capital buffer and stress leverage buffer would be established by the Fed’s supervisory stress test. The stress capital buffer requirement would replace the existing, static 2.5 percent of risk-weighted assets portion of the capital conservation buffer requirement under the standardized approach of the capital rule. The proposal—which would take effect December 31 with financial institutions’ first set of buffer requirements generally going into effect on October 1, 2019—would apply to bank holding companies with total consolidated assets of $50 billion or more, as well as U.S. intermediate holding companies of foreign banking organizations established pursuant to the Fed’s Regulation YY. Community banks, state member banks or saving and loan companies, and bank holding companies that do not meet the required asset threshold would be exempt. All comments must be received by June 25.