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Federal Reserve Requests Comments on Proposals Seeking Transparency Increases in Stress Testing Programs
The Federal Reserve Board (Fed) issued a request for comments on three proposals designed to increase stress testing transparency while also testing the resiliency of large, complex banks. Earlier in June, Fed Chair Janet Yellen underscored the Fed’s understanding of the need to provide transparency in its Comprehensive Capital Analysis and Review (CCAR) process and stress test scenarios. (See previous InfoBytes coverage here.) The first December 7 proposal, “Enhanced Disclosure of the Models Used in the Federal Reserve’s Supervisory Stress Test,” announces the Fed’s plans to publicly release, for the first time, information concerning the models and methodologies used during supervisory stress tests, including those applied in the CCAR, including:
- “enhanced descriptions of supervisory models, including key variables;”
- “modeled loss rates on loans grouped by important risk characteristics and summary statistics associated with the loans in each group;” and,
- “portfolios of hypothetical loans and the estimated loss rates associated with the loans in each portfolio.”
The information will offer banks expanded details as to how the Fed’s models treat different types of loans under stress, along with insight into the determination of annual stress test results.
The second request for comments concerns the “Stress Testing Policy Statement,” which elaborates on prior disclosures and outlines details on the principles and policies that govern the Fed’s development, implementation, and validation of its stress testing models.
Finally, the Fed issued a proposed policy statement to request comments on introduced amendments to the design of its annual hypothetical economic scenarios framework. The “Amendments to Policy Statement on the Scenario Design Framework for Stress Testing” is intended to enhance transparency and provide clarification on hypothetical economic scenarios, including the direction of housing prices, as well as the Fed’s commitment to exploring additional variables to test for funding risks.
All comments must be received by January 22, 2018.
CFPB Updates Guide to TRID Forms
On December 6, the CFPB published an updated version of the TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure Forms. The updated guide reflects the amendments issued by the CFPB on July 7 of this year (previously covered by a Buckley Sandler Special Alert). These include changes resolving a number of significant ambiguities that generated concerns about the liability of lenders and purchasers of mortgage loans.
OCC Releases Schedule of Fees and Assessments for 2018; Rates to Remain Unchanged
On December 1, the OCC issued Bulletin 2017-60 (Bulletin), which informs all national banks, federal savings associations, and federal branches and agencies of foreign banks that the agency’s 2018 fees and assessment rates remain unchanged from last year. The Bulletin provides details concerning, among other things, the assessment schedule, surcharges designed to ensure fees accurately reflect the increased cost of supervision, and general assessment fees. The Bulletin takes effect January 1, 2018.
Federal Banking Agencies Amend CRA Regulations to Conform With HMDA Regulation Changes
On November 24, the Federal Reserve Board, FDIC, and OCC published a joint final rule in the Federal Register, amending their respective Community Reinvestment Act (CRA) regulations. The amended regulations conform with the CFPB’s amendments to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The amendments are designed to reduce the burden associated with CRA performance evaluation reporting requirements. Specifically, the amended regulations (i) modify the definitions of “home mortgage loan” and “consumer loan”; (ii) revise the public file content requirements; and (iii) make technical corrections and remove obsolete references to the Neighborhood Stabilization Program (see previous InfoBytes coverage here).
As previously reported in InfoBytes, amendments to Regulation C generally take effect January 1, 2018, with the agencies’ specific amendments to the CRA regulations taking effect the same day.
OCC Updates Public Comment Policy on Licensing Applications
On November 17, the OCC released Bulletin 2017-55 announcing a revised version of its “Public Notice and Comments” booklet. This revised booklet replaces a May 2017 booklet of the same name, and is part of the Comptroller’s Licensing Manual. The revised booklet reflects updates related to the OCC’s policy regarding review of public comments on licensing filings. Specifically, the OCC will now only consider public comments if they are received before the close of the comment period (typically 30 days following a filing), unless an extension has been granted “in accordance with 12 CFR 5.10(b)(2).” The revised booklet also describes situations in which an extension may be granted.
OCC Updates Comptroller’s Licensing Manual to Provide Revised Guidance on Branching and Relocation Procedures
On November 15, the OCC released Bulletin 2017-54 announcing a revised version of its “Branches and Relocations” booklet (replacing the booklet of the same title issued in October 2009), which includes updates related to procedures and requirements for national banks and federal savings associations submitting branch or relocation applications. The booklet, which is part of the Comptroller’s Licensing Manual, covers:
- policies and criteria of general applicability, including the application and approval process; and
- specific policies and requirements unique to national banks and those unique to federal savings associations.
Reflected in the newly revised booklet are updates to procedures and regulations that have been implemented since 2009, including the integration of the Office of Thrift Supervision into the OCC and the issuance of revised regulation 12 C.F.R. § 5 that went into effect July 1, 2015.
OCC Updates Comptroller’s Licensing Manual to Provide Revised Guidance on Business Combination Applications
On November 14, the OCC released Bulletin 2017-53 announcing a revised version of its “Business Combinations” booklet (replacing the booklet of the same title issued in December 2006), which includes updates related to regulations addressing applications for national banks and federal savings associations proposing to execute a business combination. The booklet, which is part of the Comptroller’s Licensing Manual, covers:
- policies and decision criteria that the OCC considers when evaluating applications from banks seeking to execute business combinations, including mergers, consolidations, certain purchase and assumption transactions, and reorganizations;
- the application process, including the pre-filing, filing, review, decision, and post-consummation phases;
- guidance on application requirements and circumstances under which a streamlined business combination is granted; and
- references and links to informational resources for applicants to use during the filing process.
Reflected in the newly revised booklet are updates to procedures and regulations that have been implemented since 2006, including the integration of the Office of Thrift Supervision into the OCC and the issuance of revised regulation 12 C.F.R. § 5 that went into effect July 1, 2015.
CFPB Requests Comments on Overdraft Disclosures; CFPB Announces Final Language Access Plan; Holds Ceiling at $12.00 for Allowable FCRA Charges
On November 15, the CFPB published a request for comment on a proposal to the Office of Management and Budget (OMB) to conduct online testing of point of sale/ATM (POS/ATM) overdraft disclosure forms. In the request, the Bureau invited comments on, (i) “[w]hether the collection of information is necessary for the proper performance of the functions of the Bureau, including whether the information will have practical utility”; (ii) “[t]he accuracy of the Bureau’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used”; (iii) “[w]ays to enhance the quality, utility, and clarity of the information to be collected”; and (iv) “[w]ays to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.” Comments must be received by January 16, 2018.
On November 16, the CFPB released the final version of its Language Access Plan (Plan) to provide non-English speaking persons access to its programs and services. The Plan highlights two key language access functions of the Bureau: offering translated consumer-facing brochures and handling complaints from consumers in multiple languages. The Bureau originally proposed the Plan in 2014 (covered previously by InfoBytes). The final Plan is current as of November 13, 2017.
CFPB also announced on November 16 that the maximum allowable charges for certain disclosures under the Fair Credit Reporting Act (FCRA) will remain at the current level. Each year the original amount referenced in the FCRA must be readjusted (and rounded to the nearest fifty cents) based on the annual percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U). The amount for 2018, based on the annual percentage increase in the CPI-U, remains unchanged at $12.00.
OCC Updates Policies and Procedures to Clarify Impact of CRA Ratings on Licensing Applications
On November 8, the OCC issued Bulletin 2017-51, updating guidance related to its approach when evaluating certain licensing applications from OCC-supervised banks that have “less than satisfactory” Community Reinvestment Act (CRA) ratings, either overall or in one or more particular geographic region. The revised Policies and Procedures Manual (PPM 6300-2) provides clarity on the OCC’s scrutiny of a bank’s CRA performance when an application is submitted to participate in a covered transaction such as (i) establishing or relocating a branch or main or home office; (ii) participating in a Bank Merger Act filing; (iii) converting from a state to a federal charter; and (iv) converting between federal charters. The revisions also allow applicants to document for the OCC how participating in such a transaction would “help the bank to achieve its CRA objectives” and “meet the credit needs of the community it serves, consistent with its safe and sound operation.”
Agencies Announce Changes to Threshold Amounts for Truth in Lending Act and Consumer Leasing Act
On November 8, the CFPB and the Federal Reserve Board (Board) finalized the annual dollar threshold adjustments that govern the application of Regulation Z (Truth in Lending Act) and Regulation M (Consumer Leasing Act) to credit transactions as required by the Dodd-Frank Act. Each year the thresholds must be readjusted based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The exemption threshold for 2018, based on the annual percentage increase in the CPI-W, is now $55,800 or less, except for private student loans and loans secured by real property, which are subject to TILA regardless of the amount.
Additionally, on November 8, the OCC, along with the CFPB and the Board, finalized amendments to the official interpretations for the regulations implementing section 129H of TILA, which determines the threshold amount for a small loan’s exemption from the special appraisal requirements that apply to higher-priced mortgage loans. The threshold for 2018, based on the annual percentage increase in the CPI-W, is now $26,000.