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OCC’s Hsu discusses climate financial risk management, diversity and inclusion
On March 7, acting Comptroller of the Currency Michael J. Hsu spoke before the Institute of International Bankers Annual Washington Conference to discuss climate-related financial risk and diversity and inclusion in the banking industry. In his remarks, Hsu described the agency as “laser-focused on the safety and soundness aspects of climate change risks.” Specifically, he noted that the OCC is concentrating on “large banks’ climate risk management capabilities: identifying, measuring, monitoring and mitigating climate-related exposures and risks.” He stated that “[w]eaknesses in risk management could adversely affect a bank’s safety and soundness, as well as the overall financial system.” Hsu also stressed the importance of cyber defense, saying “[h]eightened vigilance is clearly warranted.”
Hsu further discussed draft principles, which were released in December 2021, and are intended to support the identification and management of climate-related financial risks at OCC-regulated institutions with over $100 billion in total consolidated assets. (Covered by InfoBytes here). He noted that the principles will be finalized later this year when more detailed guidance will be developed in collaboration with the Federal Reserve Board and FDIC. After “an appropriate transition period,” Hsu noted that an assessment of large banks’ climate risk management capabilities would begin. He also noted that for midsize and community banks, it will be a number of years before OCC examiners conduct climate risk management examinations and suggested to bankers to use time “wisely.”
At the end of his remarks, Hsu compared “diversity and inclusion” to “safety and soundness,” in that it should be treated as a single idea, and without it, “diversity over time becomes a box to be checked, not a state to strive for or a value to be upheld.”
FTC, DOJ reach $1.5 million settlement with weight-loss companies
On March 4, the FTC and DOJ announced a $1.5 million settlement with an international weight loss service organization and its subsidiary (collectively, “defendants”) accused of allegedly using unfair and deceptive practices to obtain personal information of underage users without parental consent. As previously covered by InfoBytes, the agencies claimed that the defendants violated the Children’s Online Privacy Protection Act (COPPA) and Section 5 of the FTC Act by collecting and keeping personal information from children under 13 without providing notice to or obtaining consent from their parents. The agencies’ settlement announcement stated that the defendants’ signup process originally “encouraged younger users to falsely claim they were over the age of 13, despite text indicating that children under 13 must sign up through a parent,” and that even after the signup process was revised, the defendants allegedly “failed to provide a mechanism to ensure that those who choose the parent signup option were indeed parents and not a child trying to bypass the age restriction.” Additionally, the defendants allegedly violated COPPA’s data retention provisions “by retaining children’s personal information indefinitely and only deleting it when requested by a parent.”
Under the terms of the settlement, unless verified parent consent has been subsequently obtained, the defendants are required to refrain from disclosing, using, or benefiting from previously collected personal information that did not comply with COPPA’s parental notice and consent requirements, and must destroy all previously collected personal information, as well as any affected work product that used illegally collected data. The settlement also orders the defendants to pay a $1.5 million civil penalty.
Biden to streamline medical debt forgiveness for veterans
On March 1, President Biden announced that veterans will be able to apply for medical debt forgiveness under a new streamlined process in 90 to 120 days. According to the White House press release, the current process for veterans who are entitled to medical debt forgiveness is complicated, confusing, and time consuming, and may deter veterans from applying for relief. To streamline the medical debt forgiveness request process, the Department of Veterans Affairs (VA) will provide an online option for veterans and set a simple income threshold for receiving relief. The announcement follows a final rule issued by the VA last month, which amended its regulations around the conditions by which VA benefits debts or medical debts are reported to consumer reporting agencies (CRAs), and created a methodology for determining a minimum threshold for debts reported to the CRAs. (Covered by InfoBytes here.)
OCC appoints deputy comptroller and chief accountant
On March 4, the OCC announced that Amanda Freedle will serve as Deputy Comptroller and Chief Accountant starting on March 28. Previously, Ms. Freedle served as a Senior Accounting Policy Advisor at the OCC’s Office of the Chief Accountant, where she provided accounting support for large bank examination teams. She also served as a member of the OCC’s National Retail Risk Committee and most recently held the position of Deputy Chief Accountant, serving as a key advisor to the Acting Deputy Comptroller and Chief Accountant. According to the OCC, as the Deputy Comptroller and Chief Accountant, “Ms. Freedle will lead the OCC's efforts for bank accounting and financial reporting, providing accounting counsel to examiners, the banking industry, and the accounting profession.”
Agencies crack down on deceptive Covid-19 treatment claims
On March 3, the FTC, along with the DOJ and FDA, filed a lawsuit against a New York-based marketer of herbal tea for allegedly claiming its tea was clinically proven to treat, cure, and prevent Covid-19. The announcement reiterated the agencies’ commitment to cracking down on companies that unlawfully market unproven Covid-19 treatments. According to the joint agency complaint, the defendants’ deceptive marketing claims that their herbal tea product is capable of preventing or treating Covid-19 (and is more effective than Covid-19 vaccines) are not supported by competent or reliable scientific evidence and pose “a significant risk to public health and safety.” Moreover, the defendants have allegedly repeatedly ignored FTC and FDA warnings that their deceptive advertising and misrepresentations violate the FTC Act, the Covid-19 Consumer Protection Act, and the Federal Food, Drug, and Cosmetic Act. The complaint seeks permanent injunctive relief, civil penalties, and other remedies to prevent the harms caused by the defendants’ deceptive misrepresentations.
VA updates loan repayment relief for Covid-19 borrowers
On February 28, the Department of Veterans Affairs (VA) issued changes updating Circular 26-21-07 to address loan repayment relief for borrowers affected by Covid-19. The circular is “Change 2” of the original circular issued in June 2021, which, among other things, provided servicers with information regarding home retention options and foreclosure alternatives for impacted borrowers. The guidance stems from the extended duration of the pandemic and developments in the VA’s program. (Covered by InfoBytes here). The circular is now effective until July 2023.
Treasury highlights climate transition efforts
On March 3, the U.S. Treasury Department released a Fact Sheet covering topics discussed during “The Climate Transition: Federal Policy and State and Local Government Best Practices” roundtable, including efforts to support states, localities, and communities impacted by climate change. Topics discussed included, among others: (i) promoting an equitable and sustainable recovery and driving green investments; (ii) disseminating analysis and recommendations to advance shared climate priorities; (iii) monitoring climate-related issues in municipal markets and identifying best practices; and (iv) promoting resilience to extreme weather events. Specifically, Treasury pointed out its Federal Insurance Office is advancing a set of priorities on climate-related issues by developing a report “focused on climate-related insurance supervision and regulation, with an assessment of climate-related issues or gaps in the supervision and regulation of insurers, including their potential impact on U.S. financial stability.” (Covered by InfoBytes here). Additionally, Treasury noted that it is “coordinating with interagency partners and state and local governments on a national mitigation framework,” and is “promoting energy efficiency and sustainability through tax incentives for homes and buildings.”
Waters sends letter to HUD and others regarding appraisal bias
On February 22, Chairwoman of the House Financial Services Committee Maxine Waters (D-CA) sent a letter to HUD Secretary Marcia Fudge, the Appraisal Subcommittee, the Appraisal Foundation, and the Appraisal Institute regarding appraisal bias and discrimination. The letter, among other things, urged federal regulators and the Appraisal Institute to investigate appraiser misconduct and the possibility of illegal discrimination and highlighted “longstanding racial inequities plaguing America’s home valuation system, particularly in Black-majority communities and other communities of color,” according to the press release. In the letter, Waters noted that during her time with the House Financial Services Committee, the committee has “paid special attention to the racial inequities that continue to plague America’s home valuation system, including through home appraisals, despite the passage of anti-discrimination laws.” She further pointed to “qualitative research” from the National Fair Housing Alliance to shed light on “the ways in which individual appraisers and the appraisal profession help perpetuate systemic and overt racism, highlighting statements made by appraisers as well as policies and practices that continue to be upheld by an appraisal profession that is 97% White.” The letter also provided excerpts from an appraiser’s email as an example of discriminatory practices, in which Waters asserted, “shines a spotlight on the racist stereotypes and harmful lines of thinking prevalent in an industry which systematically devalues the homes of Black people and other people of color.” Waters noted that she will be drafting legislation “to address systemic appraisal discrimination,” recommended that the recipients of her letter conduct pertinent investigations, and urged them to respond to her letter accordingly. Waters also disclosed that the House Financial Services Committee “will convene hearings, advance legislation, and continue working with stakeholders to end housing discrimination and hold the appraisal industry fully accountable.”
CFPB looks at removing medical debt from credit reports
On March 1, the CFPB announced plans to review whether data on unpaid medical bills should be included in consumer credit reports. The Bureau stated in its report, Medical Debt Burden in the United States, that research found $88 billion in medical debt on consumer credit reports, accounting for 58 percent of all uncollected debt tradelines reported to credit reporting agencies (CRAs). “Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe,” CFPB Director Rohit Chopra said in a statement.
The Bureau noted that medical debt is often less transparent than other types of debt, due to opaque pricing, complicated insurance, charity care coverage, and pricing rules, reporting that in many instances, consumers may not even sign a billing agreement until after receiving treatment. Medical debts often end up in collections, the Bureau added, which can cause far-ranging repercussions even if the bill itself is inaccurate or erroneous. The report noted additional challenges for uninsured consumers, as well as for Black and Latino families, consumers with low incomes, veterans, older adults, and young adults of all races and ethnicities. The report further stated that the Covid-19 pandemic has exacerbated the situation, with costs and medical debt expected to increase post-pandemic, and found that medical debt weakens underwriting accuracy, as it is less predictive of future repayment than reporting on traditional credit obligations. The Bureau pointed out that it has seen dramatic effects when newer credit scoring models weigh medical collections tradelines less heavily, but noted that there has been very little adoption of this approach so far.
The Bureau stated it intends to examine CRAs to ensure they are collecting accurate information from medical debt collectors and expects CRAs to take action against furnishers who routinely report inaccurate information, including cutting off their access to the system. The Bureau also plans to work with the Department of Health and Human Services to make sure consumers are not forced to pay more than the amount due for medical debt. A January compliance bulletin reminded debt collectors and CRAs of their legal obligations under the FDCPA and the FCRA when collecting, furnishing information about, and reporting medical debts covered by the No Surprises Act. The Bureau also recently supported changes by the Department of Veterans Affairs to amend its regulations related to the conditions by which VA benefit debts or medical debts are reported to CRAs. (Covered by InfoBytes here and here.)
CFPB reviewing 2,100 comments on small business data collection
On February 22, the CFPB filed its eighth status report in the U.S. District Court for the Northern District of California, as required under a stipulated settlement reached in February 2020 with a group of plaintiffs, including the California Reinvestment Coalition, related to the collection of small business lending data. The settlement (covered by InfoBytes here) resolved a 2019 lawsuit that sought an order compelling the Bureau to issue a final rule implementing Section 1071 of the Dodd-Frank Act, which requires the Bureau to collect and disclose data on lending to women and minority-owned small businesses. The current status report states that the Bureau has met the deadlines under the stipulated settlement, which included issuing its long-awaited proposed rule (NPRM) last September. As covered by a Buckley Special Alert, the NPRM would require a broad swath of lenders to collect small business loan data, including information about the loans themselves, borrower characteristics, and demographic information regarding the borrower’s principal owners. This information would be reported annually to the Bureau and published by the Bureau on its website. The Bureau notes in its status report that the NPRM’s comment period ended on January 6. The Bureau is currently reviewing approximately 2,100 comments submitted via the public docket and will confer with plaintiffs regarding an appropriate deadline for issuing a final rule.
Find continuing Section 1071 coverage here.