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Nasdaq Board Names Adena Friedman President and CEO
On November 14, Nasdaq announced that its Board of Directors named Adena Friedman President and Chief Executive Officer, effective January 1, 2017. Friedman also will join the Nasdaq Board of Directors at the same time. Friedman, currently serving as Nasdaq’s chief operating officer, will replace Bob Greifeld who is stepping down after 14 years as CEO. Greitfeld is slated to become Chairman of Nasdaq's Board.
FHA MMI Fund Shows Gains in Fiscal 2016
On November 15, HUD released its 2016 Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance (MMI) Fund (the MMI Report). The MMI Report reflected the Fund’s improved financial condition for the fourth year in a row amid rising home prices, fewer defaults and a surge of new borrowers. The capital cushion of the Fund grew to 2.32 percent in fiscal 2016, up from 2.07 percent. It was only the second year since 2008 that the capital ratio, a proxy for the fund's health, exceeded the 2 percent minimum required by law. The net worth of the Fund, which stands behind $1 trillion in U.S. home loans and serves as a sort of savings account to pay lender claims if borrowers default, grew by $3.8 billion to $27.6 billion.
Treasury Announces its Latest Round of Federal Tax Credit Allocations to Community Development Entities
On November 17, Treasury announced that its Community Development Financial Institutions Fund (CDFI Fund) will provide a total of $7 billion in New Markets Tax Credit (NMTC) awards to over 120 organizations nationwide. The 120 organizations receiving awards were selected from a pool of 238 applicants that requested approximately $17.6 billion in allocation authority. This year’s award brings the total amount awarded through the NMTC Program to $50.5 billion.
As Part of Joint Initiative with the CFPB, FTC Launches Updated, Mobile-Friendly Military Consumer Website
On November 15, the FTC announced the launch of its new mobile-friendly “financial readiness” website, which is designed to help members of the military community navigate personal financial decisions in light of the unique challenges they face, such as frequent relocations and deployment. The website, which may be found at www.Military.Consumer.gov, is a collaborative effort of the FTC, DoD, CFPB and others.
IG Report Concludes that IRS Lacks Compliance Strategy For Virtual Currencies
On November 8, the Treasury Inspector General for Tax Administration (TIGTA) released a report evaluating the IRS’s strategy for addressing income produced via virtual currencies. The report which was completed on Sept. 21, but released Tuesday, observed that none of the agency’s divisions have yet developed any type of compliance initiatives or guidelines for conducting examinations or investigations specific to tax noncompliance related to virtual currencies. Accordingly, the TIGTA recommended that the IRS develop a comprehensive strategy for virtual currencies such as Bitcoin to help ensure compliance with tax law. The report also recommended that the IRS provide updated guidance to reflect the necessary documentation requirements and tax treatments necessary for the various uses of virtual currency and that the agency revise third-party reporting documents so that they identify how much virtual currency was used in taxable transactions. The IRS agreed with each of these three recommendations.
Community Groups Submit Letter to OCC on Potential FinTech Charter
On October 25, the National Community Reinvestment Coalition and community groups across the country sent a letter to the OCC explaining that they strongly oppose the consideration of a limited-purpose fintech charter by the bank regulator. The groups explained that they would consider supporting the limited-purpose chartering of a fintech firm "only if the OCC does not preempt strong state law and establishes vigorous supervision and regulation for the newly chartered institutions." Additionally, the groups want chartered fintech firms to be subject to "rigorous Community Reinvestment Act (CRA)-like obligations" and "stringent" safety and soundness reviews. The letter argues that “new charter and receivership authority for uninsured institutions, primarily financial technology companies (fintechs), has the potential to benefit consumers and communities,” but only if accompanied by CRA-like obligations, and supervision and examination to ensure compliance with both fair lending and consumer protection laws.
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).
ABA and Regional Members Lend Perspective on CFPB's Proposed Rule on Payday, Title, and Certain Other Installment Loans
On October 7, the American Bankers Association (ABA) sent a comment letter to the CFPB regarding the agency’s proposed rule on payday, title, and certain other installment loans. Describing the proposal as “exceedingly and unnecessarily complex,” the ABA argues that the proposed rule imposes significant restrictions on the small-dollar credit industry by limiting financial institutions’ ability to make small-dollar loans to consumers in need of such credit. In addition to asserting that the proposal reflects an over-reach of the CFPB’s statutory authority to regulate unfair, deceptive or abusive acts or practices, the comment letter contends that, if adopted, the proposed rule would, among other things, (i) “stifle innovation in consumer lending, reduce consumer choice, and directly harm the very borrowers [it] was intended to protect”; (ii) impose an unlawful cap on interest rates; (iii) regulate insurance, thereby violating the Dodd-Frank Act; and (iv) levy substantial costs on consumers and lenders. Furthermore, the comment letter includes several testimonials to illustrate how receiving short-term credit helped consumers establish credit and overcome arduous financial conditions. In an effort to safeguard affordable financial services, the ABA urged the CFPB to “protect the ability of community banks to continue to meet small dollar lending needs.” In particular, the ABA sought to exempt entities that make no more than 2,500 loans subject to the proposed rule in the course of a year “if those loans comprise no more than 10% of the lender’s gross annual revenue.”
In addition to the ABA’s comment letter, various regional ABA members, such as individual banks and state bankers associations, sent a letter to CFPB Director Richard Cordray expressing concern about the “substantial barriers and costs” the proposed rule would impose if adopted. ABA members called on the CFPB to “restore its previously proposed ‘5 percent payment-to-income ratio’ alternative compliance option” so that banks may maintain their ability to offer small-dollar credit.
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