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GOP Leaders Formally Request that Obama Administration Not Finalize Rules and Regulations in its Final Days
On November 15, GOP leaders sent a letter to “Secretaries, Administrators, Directors and Commissioners” within the Obama Administration caution[ing] [each] against finalizing pending rules or regulations in the administration’s last days.” The letter explains that by “refraining from acting with undue haste, . . . it [is] less likely that unintended consequences will harm consumers and businesses.” In addition, “such forbearance is necessary to afford the recently elected administration and Congress the opportunity to review and give direction concerning pending rulemakings.”
FDIC Board Approves Final Rule on Deposit Account Recordkeeping Requirements to Facilitate Timely Payment of Insured Deposits in Large Bank Failures
On November 15, the FDIC approved a final rule establishing systems and recordkeeping requirements for large FDIC-insured institutions to facilitate the prompt payment of insured deposits to customers upon the failure of any such depository institution. The final rule requires each insured depository institution that has two million or more deposit accounts to: (i) configure its IT system so that it is capable of calculating insured and uninsured amounts in each deposit account by ownership right and capacity; and (ii) maintain complete and accurate records with all information needed by the FDIC to determine deposit insurance coverage with respect to each deposit account. The final rule will become effective April 1, 2017.
OCC Proposes Revisions to Stress Test Information Collection
On November 15, the OCC published a notice and request for comment on proposed changes to its rules requiring certain covered financial institutions, including national banks and federal savings associations with assets over $50 billion, to report certain financial information as part of stress testing. The proposed revisions to the OCC’s reporting requirements are “intended to promote consistency with” the Fed’s proposed changes to its form FR Y-14A, and consist generally of clarifying instructions, shifting the “as-of date”, adding data items, deleting data items, and redefining existing data items—including an expansion of the information collected in the scenario schedule. The proposed revisions also reflect the implementation of the final Basel III regulatory capital rule, which is set to revise and replace the OCC’s risk-based and leverage capital requirements to be consistent with agreements reached by the Basel Committee on Banking Supervision in ‘‘Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems’’ (Basel III). All comments must be received by January 19, 2017.
FDIC Proposed Rule to Consolidate Regulations
On November 1, the FDIC published a proposed rule that would rescind and remove Part 391 subpart A (Security Procedures, transferred from the former OTS) from the Code of Federal Regulations and to amend FDIC regulations at Part 326 to make the removed OTS regulations applicable to state savings associations. Comments on the proposal are due by January 3, 2017.
FCC Adopts Privacy Rules for Broadband Providers
On October 27, the FCC adopted privacy rules regulating consumers’ use of broadband internet services. As previously covered in InfoBytes, the FCC issued revised proposed privacy rules for broadband internet service providers (ISPs) in early October to provide consumers with “increased choice, transparency and security online.” Like the proposed rules, the adopted rules (i) require ISPs to obtain confirmative consent to use and share sensitive information; and (ii) permit ISPs to share non-sensitive information unless a customer opts-out.
Because the scope of the rules is limited to broadband service providers and other telecommunication carriers, the FTC maintains its authority over the privacy practices of websites and other “edge services.” In support of the newly adopted FCC rules, FTC Chairwoman commented that “[t]he rules will provide robust privacy protections, including protecting sensitive information such as consumers’ social security numbers, precise geolocation data, and content of communications, and requiring reasonable data security practices.”
State AGs Urge the CFPB to Ensure that States Maintain the Right to Set Usury Caps on High Cost Loans
In October, New York AG Eric T. Schneiderman, along with seven other state AGs (Connecticut, Maryland, Massachusetts, New Hampshire, Pennsylvania, Vermont and the District of Columbia), submitted a letter to the CFPB in response to the agency’s proposed rule addressing payday loans, vehicle title loans, and certain high-cost installment loans. While commending the CFPB for introducing additional consumer protections, the letter urges the CFPB to integrate the following language from the preamble of the proposed rule into the body of the final rule: “The protections imposed by this proposal would operate as a floor across the country, while leaving State and local jurisdictions to adopt additional regulatory requirements (whether a usury limit or another form of protection) above that floor as they judge appropriate to protect consumers in their respective jurisdictions.” The letter explains that because the CFPB does not have the authority to set interest rates – or usury caps – for loans, it is “crucial” that states maintain their right to do so.
Proposed Rule Issued to Stimulate Robust Marketplace for Private Flood Insurance
On October 20, the FDIC, OCC, Federal Reserve, Farm Credit Administration, and National Credit Union Administration issued a proposed rule intended to develop further the private flood insurance marketplace by implementing certain provisions of the 2012 Biggert-Waters Flood Insurance Reform Act (Biggert-Waters Act). Notably, the proposed rule would “require regulated lending institutions to accept policies that meet the statutory definition of private flood insurance in the Biggert-Waters Act and permit regulated lending institutions to accept flood insurance provided by private insurers that does not meet the statutory definition of ‘private flood insurance’ on a discretionary basis, subject to certain restrictions.” Comments on the proposal are due 60 days after it is published in the Federal Register.
OFAC Amends Cuban Assets Controls Regulations
OFAC took an additional step toward further implementation of President Obama’s new policy direction toward Cuba on October 17, with the publication of a final rule amending the Cuban Assets Control Regulations, 31 CFR Part 515 (CACR). Of those most relevant to financial institutions, OFAC updated the CACR by, among other things, amending paragraphs (c) and (f) of section 515.584, which relates to certain financial transactions involving Cuba. Section 515.584(c), as outlined in OFAC’s set of updated FAQs, “authorizes all transactions incident to the processing and payment of credit and debit card transactions for third-country nationals traveling to, from, or within Cuba.” FAQ number 49 further explains that “[a]ny person subject to U.S. jurisdiction, including U.S. financial institutions and their foreign branches, may conduct transactions authorized by [section 515.584(c)].” Section 515.584(f), as explained by FAQ 73, permits: Any banking institution …that is a person subject to U.S. jurisdiction is authorized to provide financing for exports or reexports of items, other than agricultural commodities, authorized pursuant to § 515.533, including issuing, advising, negotiating, paying, or confirming letters of credit (including letters of credit issued by a financial institution that is a national of Cuba), accepting collateral for issuing or confirming letters of credit, and processing documentary collections. OFAC’s amendments to the CACR are effective immediately.
ABA and CBA Lend Perspective on CFPB's Proposed TRID Revisions
On October 18, the American Banking Association (ABA) and Consumer Bankers Association (CBA) submitted a joint comment letter responding to a recent proposal by the CFPB seeking to codify informal guidance and clarifications to the Know Before Your Owe TILA-RESPA Integrated Disclosure (TRID) rule. Of particular concern among lenders and investors was the lack of clarity about liability for unintentional mistakes and technical noncompliance with TRID. To help address these concerns, the Associations urged the CFPB to, among other things, (i) publish the specific statutory provisions it relied upon for each disclosure item or requirement identified in the recent proposal; (ii) grant a “safe harbor” for model forms issued by the bureau; (iii) grant an extension of the “good faith” compliance examination policy pending the CFPB’s proscribed deadlines for the proposed rules; and (iv) develop a formal process to address ongoing compliance and legal issues related to TRID.
The Associations also expressed appreciation for “the numerous amendments offered in th[e] proposal,” including those allowing corrected closing disclosures to reset applicable good faith tolerances for creditors. The Associations further explained that their “preliminary analysis reflects that this proposed rule will resolve multiple ambiguities that banks deem significant” and “urged that the bureau . . . allow for the correction of previous non-compliance caused by the interpretive ambiguity that the bureau is now fixing” (emphasis added).
Federal Banking Agencies Consider Joint ANPR to Address Cybersecurity Standards
On October 19, the FDIC, the OCC, and the Federal Reserve, issued an Advanced Notice of Proposed Rulemaking (ANPR) to further the “development of enhanced cyber risk management standards for the largest and most interconnected entities under their respective supervisory jurisdictions, and those entities’ service providers.” These standards, according to the ANPR, are intended to “increase the operational resilience” of supervised entities and their service providers and, based on the interconnectedness of these entities, “reduce the impact on the financial system in case of a cyber event experienced by one of these entities.” The ANPR proposes organizing enhanced cyber standards into the following categories: (i) cyber risk governance; (ii) cyber risk management; (iii) internal dependency management; (iv) external dependency management; and (v) incident response. The ANPR further explains that the banking agencies “are considering implementing the enhanced standards in a tiered manner, imposing more stringent standards on the systems of those entities that are critical to the functioning of the financial sector.” Comments on the ANPR, which would not apply to community banks, are due January 17, 2017.