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CFPB issues 2019 fair lending report to Congress
On April 30, the CFPB issued its annual fair lending report to Congress, which outlines the Bureau’s efforts in 2019 to fulfill its fair lending mandate. According to the report, in 2019 the Bureau continued to focus on promoting fair, equitable, and nondiscriminatory access to credit, highlighting several fair lending priorities that continued from years past such as mortgage lending, student loans, and small business lending. The Bureau also highlighted three policies released over the last year to promote innovation and to facilitate compliance: the No-Action Letter Policy, the Trial Disclosure Program Policy, and the Compliance Assistance Sandbox Policy (covered by InfoBytes here). Additionally, the report discussed the Bureau’s efforts in encouraging consumer-friendly innovation to expand access to unbanked and underbanked consumers and communities. These include: (i) using alternative data in credit underwriting to expand credit access responsibly; (ii) issuing a request for information on the use of “Tech Sprints” (covered by InfoBytes here) to encourage regulatory innovation and stakeholder collaboration; (iii) continuing to enforce fair lending laws such as ECOA and HMDA, including reaching a settlement with one of the largest HDMA reporters nationwide to resolve HMDA reporting allegations; and (iv) engaging with stakeholders to discuss fair lending compliance, issues related to credit access, and policy decisions. The report also provides information related to supervision, enforcement, rulemaking, and education efforts.
FINRA adds PPP question to Covid-19 FAQs
On April 13, FINRA updated its FAQs on regulatory relief due to Covid-19 to include an FAQ that addresses Paycheck Protection Program loans. The FAQ answers a question relating to loan forgiveness for registered persons, stating that the loan forgiveness amount will not be considered a “compromise with a creditor” and will not need to be reported on Form U4 for question 14K.
CFPB announces regulatory flexibility after remittance transfer rule exception expires
On April 10, the CFPB announced the release of a policy statement “Supervisory and Enforcement Practices Regarding the Remittance Rule in Light of the COVID-19 Pandemic” addressing the implementation of the Electronic Fund Transfer Act (EFTA), and the Regulation E Remittance Rule (Rule). EFTA’s consumer protections, implemented by the Rule, require financial companies handling international money transfers, or remittance transfers, to disclose the exact exchange rate, fees, and amount delivered to the consumer making the transfer. However, it also provides a temporary exception, which allows institutions that provide remittance transfers to estimate these fees to consumers. (Covered by InfoBytes here.) The temporary exception is set to expire on July 1, and section 919 of the EFTA does not authorize the Bureau to extend it past that date. Accordingly, “[i]n order to minimize the impact of the pandemic on the remittances market…the Bureau will neither cite supervisory violations nor initiate enforcement actions against certain remittance transfer providers” for disclosing estimated fees and exchange rates from July 1 until January 21, 2021.
FINRA adds new Covid-19 FAQs
On April 6, FINRA added new FAQs to its Covid-19 regulatory relief FAQs document, which was launched in March (covered by InfoBytes here). The newly added FAQs state that (i) firms may electronically transmit required copies of the Uniform Termination Notice for Securities Industry Registration (Form U5) to terminated individuals; (ii) the prescribed period in which continuing education must be completed will be extended through May 31 for persons whose window is currently expired or set to expire before June; and (iii) late filing fees for Forms U4/U5 may be refunded or reduced upon request.
Previously, FINRA added FAQs regarding the “Net Capital Treatment of Covered Loans Under the CARES Act.” The FAQs cover adding back to net capital the “Forgivable Expense Amount” of a loan during the “covered period,” and excluding the loan amount from “aggregate indebtedness.” FINRA will continue to update the FAQ document as necessary, and it will issue a regulatory notice when a date for the termination of the temporary relief measures is determined.
CFPB states commitment to protecting consumers through continued examination and supervisory work
On April 1, the CFPB published a statement which assured that the Bureau will continue to perform examinations and other supervisory work during the Covid-19 pandemic, reinforcing the Bureau’s mission to protect consumers. The statement explains that the Bureau is taking advantage of technology to fulfill its examination duties and to stay in communication with supervised entities. Additionally, the statement suggests that the Bureau will consider individual circumstances and good faith efforts to comply when performing examination and supervisory work.
NCUA issues off-site exam and supervision letter
In March, the NCUA issued a release expanding its March 16 off-site policy by extending off-site examinations through May 1. In the release, the NCUA outlined its top three priorities during the Covid-19 pandemic, which include: (i) “credit unions experiencing significant financial or operational problems”; (ii) outreach by examiners to all credit unions regarding “the institution’s operational and financial status” during the pandemic; and (iii) the continuation of off-site examinations. The NCUA added that “[i]f credit unions are occupied with addressing the impact of the COVID-19 pandemic on their operations, employees, and members, they should not be required to address an offsite examination request unless it is a serious or time-sensitive matter.”
FDIC updates guidance on protecting banks and consumers
On March 27, the FDIC announced an update to guidance it issued on March 16 regarding “steps to protect banks and consumers and to continue operations.” Among the updates, the agency (i) extended telework for all FDIC employees from March 30 until at least April 12; (ii) expanded the period of time the agency will conduct “[s]upervisory and other FDIC activities” off-site through April 12; and (iii) encouraged institutions to communicate with their “Examiner-in-Charge or Regional Director” if they anticipate delays in responding to “normal supervisory requests.”
CFPB outlines regulatory flexibility related to Covid-19
On March 26, the CFPB announced several regulatory flexibility measures to help financial companies work with consumers affected by Covid-19. Specifically, the measures postpone certain industry data collections on Bureau-related rules. These include:
- HMDA. Quarterly information reporting by certain mortgage lenders as required under HMDA and Regulation C will not be expected during this time. However, entities should continue collecting and recording HMDA data in anticipation of making annual submissions. Entities will be provided information by the Bureau on when and how to commence new quarterly HMDA data submissions. (See statement here.)
- TILA. During this time, annual submissions required under TILA, Regulation Z, and Regulation E “concerning agreements between credit card issuers and institutions of higher education; quarterly submission of consumer credit card agreements; collection of certain credit card price and availability information; and submission of prepaid account agreements and related information” will not be expected. (See statement here.)
- Section 1071. A survey seeking information from financial institutions on the cost of compliance in connection with pending rulemaking on Section 1071 of the Dodd-Frank Act has been postponed. As previously covered by InfoBytes, under the terms of a stipulated settlement resolving a 2019 lawsuit that sought an order compelling the Bureau to issue a final rule implementing Section 1071, the Bureau agreed to outline a proposal for collecting data and studying discrimination in small-business lending.
- PACE Financing. A survey of firms providing Property Assessed Clean Energy (PACE) financing to consumers for the purposes of implementing Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act has been postponed.
- Supervision and Enforcement. The Bureau’s policy statement provides “that it does not intend to cite in an examination or initiate an enforcement action against any entity for failure to submit to the Bureau” specified information related to credit card and prepaid accounts. However, the Bureau’s announcement advises entities to “maintain records sufficient to allow them to make delayed submissions pursuant to Bureau guidance.” With respect to operational challenges facing institutions due to Covid-19, the Bureau states that it will work with institutions when scheduling examinations and other supervisory activities to minimize disruption and burden. “[W]hen conducting examinations and other supervisory activities and in determining whether to take enforcement action, the Bureau will consider the circumstances that entities may face as a result of the [Covid-19] pandemic and will be sensitive to good-faith efforts demonstrably designed to assist consumers,” the announcement states.
Fed recalibrates supervisory activities during Covid-19 pandemic
On March 24, the Federal Reserve (Fed) released a statement regarding adjustments to supervisory activities that the agency is making as a result of Covid-19. Among the changes, the Fed plans to (i) “temporarily reduce its examination activities,” including ceasing regular exam activities for banks with less than $100 billion in assets, unless the exam is critical to safety and soundness or consumer protection, or to address urgent or immediate needs; (ii) conduct all examination activities off-site; (iii) “focus on monitoring and outreach”; (iv) provide an additional 90 days to financial institutions “for resolving non-critical existing supervisory findings”; and (v) “work with financial institutions to understand the specific issues they are facing.” Those institutions subject to the upcoming Comprehensive Capital Analysis and Review must submit their capital plans by April 6.
Fed amends internal appeals process
On March 17, the Federal Reserve Board (Fed) published a final policy, which revises the internal appeals process for institutions that receive an adverse material supervisory determination, as well as its policy regarding the Fed’s Ombudsman. As previously covered by InfoBytes, the Fed requested comments on proposed amendments intended to improve and expedite the appeals process. Among other things, the final amendments (i) clarify that Matters Requiring Attention and Matters Requiring Immediate Attention “are appealable material supervisory determinations”; (ii) “permit an institution’s senior management to file an appeal, provided that management informs the institution’s board of directors of their decision to file an appeal and keeps the board informed of the status of the appeal”; (iii) “permit an institution to request an extension of time to file an appeal in appropriate circumstances”; and (iv) “clarify that, at an institution’s request, the initial review panel must schedule a meeting with the institution.” The amendments and final policy are applicable starting April 1, and the final appeals process will apply to all material supervisory determination appeals initiated after that date.