ABA Dodd-Frank Tracker

The Dodd-Frank Tracker is Moving to a New Location

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 25 Aug 2017 16:41:00 +0000

The ABA Dodd-Frank Tracker is moving from its current blogger format to ABA's online Banking Journal. Posts on blogger will be discontinued on Monday, August 28th. As such, email subscribers to the current format will no longer receive updates. The current blog will be closed on September 8th.

ABA will continue posting Dodd-Frank content, which can be found at www.aba.com/dfatracker.

You may subscribe to receive email updates through the RSS feed: http://bankingjournal.aba.com/tag/dodd-frank/feed. Please note that in order to subscribe, the link must be opened in Internet Explorer, Firefox or Safari browsers.

Thank you for reading, and we hope you continue following Dodd-Frank updates in the new location.

This Week Ahead: August 28-September 1

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 25 Aug 2017 15:37:00 +0000

Monday

Comments Due CFTC: Disclosure and Retention of Certain Information Relating to Cleared Swaps Customer Collateral (PRA)
Read more.
Comments Due CFTC: Protection of Collateral of Counterparties to Uncleared Swaps; Treatment of Securities in a Portfolio Margining Account in a Commodity Broker Bankruptcy
Read more.
Comments Due FDIC: Consolidated Call Reports
Read more.

Thursday

Comments Due CFTC: Derivatives Clearing Organizations, General Regulations and International Standards
Read more.

Friday

Comments Due EBSA: Draft Model Non-Quantitative Treatment Limitations Form
Read more.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

CFPB Finalizes HMDA Technical Corrections, HELOC Reporting Threshold

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 25 Aug 2017 14:15:00 +0000

The CFPB issued a final rule making several technical corrections and clarifications to the expanded data collection under Regulation C, which implements the Home Mortgage Disclosure Act, as well as temporarily raising the threshold at which banks are required to report data on home equity lines of credit.

In finalizing the technical corrections, the bureau took note of at least one compliance challenge discussed in ABA’s comment letter and backtracked on a proposal to define multifamily dwellings as including properties in multiple locations. However, the bureau declined to adopt other ABA suggestions that would improve compliance and clarity and finalized the rules largely as proposed, including a provision ABA characterized as “significant and substantive” that would increase the number of institutions subject to HMDA.

Under the rule as originally written, banks originating more than 100 HELOCs would have been generally required to report under HMDA, but the final rule temporarily raises that threshold to 500 HELOCS for calendar years 2018 and 2019, allowing the bureau time to assess whether to make the adjusted threshold permanent. This provision takes effect on Jan. 1, along with compliance for most HMDA expansion provisions.

Read the final rule.
Read ABA’s comment letter.

Fed Names New Director of Payments Strategy

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 25 Aug 2017 13:52:00 +0000

The Federal Reserve named Dave Sapenaro as its new payments strategy director. In his role, Sapenaro will be responsible for overseeing the Fed's efforts to improve the U.S. payments system, including its faster payments initiative. Sapenaro has been with the Federal Reserve for 32 years, serving most recently as first vice president and chief operating at the Federal Reserve Bank of St. Louis.

Read more.

In First Step to Simplify Capital Rules, Agencies Pause Basel III Phase-In for Most Banks

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Wed, 23 Aug 2017 14:30:00 +0000

The Federal Reserve, FDIC and OCC issued a proposed rule that would pause the transition to the Basel III capital framework for banks not using the Basel advanced approaches. The rule comes as regulators are working on a broader effort to simplify the regulatory capital rules for non-advanced approaches banks as has been long advocated by ABA and championed in the Treasury Department report on financial reform.

“As part of the recent review of regulations under the Economic Growth and Regulatory Paperwork Reduction Act, the agencies announced that they are developing a proposal that would simplify the capital rules to reduce regulatory burden, particularly for community banks,” the agencies said. “That proposal would simplify the capital rules' treatment of mortgage servicing assets and other items. However, under the current capital rules, the transitional treatment for those items is scheduled to be replaced with a different treatment on Jan. 1, 2018.”

The proposed rule would pause the full transition to the Basel III treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests pending a new rulemaking addressing these topics. Since advanced approaches are principally used by banking organizations with over $250 billion in assets or foreign bank subsidiaries with over $10 billion in assets, the pause would apply broadly to community, midsize and even several regional banks.

ABA plans to comment on the proposal and will strongly urge the agencies to include the advanced approaches banks in both the extended transition period and the future rulemaking simplifying the capital framework. Comments on the proposed pause are due 30 days after the rule is published in the Federal Register.

Read the proposed rule.
Read ABA's June letter urging a Basel III pause.
Read ABA's white paper on regulatory capital reform.

Agency Guidelines on HMDA Data Testing Fall Harder on Smaller Lenders

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Wed, 23 Aug 2017 14:00:00 +0000

The federal banking agencies issued guidelines for how examiners will test the accuracy of data collected and reported by financial institutions under the Home Mortgage Disclosure Act.

Despite coming after concerns expressed by ABA and others about the burdens imposed by unreasonable error tolerances that require a bank to resubmit its HMDA data — in light of the vastly expanded data fields that must be reported beginning in March 2019 — the new guidelines are expected to have the opposite result, creating disproportionate expectations for smaller volume lenders. For example, an examiner will review 30 loan files of a bank that only makes 50 mortgage loans but only 159 files for a bank that originates 100,000 loans. Moreover, a small number of errors in any given data field will trigger review and resubmission.

In comments filed to the proposed guidelines, ABA called for more reasonable tolerances. The association intends to ask the congressional banking committees to review the new guidelines and consider whether the level of perfection required will undermine the ability of banks to serve their customers.

Read more.

ABA to CFPB: Process for Overdraft Study, Forms Falls Short

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Wed, 23 Aug 2017 13:27:00 +0000

The CFPB must base its studies of overdrafts on current, rigorous data and adopt any new disclosures through an open and transparent process, ABA told the bureau in a comment letter. Moreover, the bureau must explore why frequent users continue to use overdrafts and how their needs for short-term liquidity would be affected by CFPB regulatory activity. ABA remarked on the importance of allowing customer flexibility for access to different short-term credit products.

People of all walks of life rely upon overdraft and other short-term credit products to meet small dollar account shortfalls. Absent compelling evidence of knowledge gaps or that consumers tend to use the product irrationally — neither of which has been demonstrated during the bureau’s five-year study of overdraft — ABA believes that people should be assumed to be the best judges of what is in their best interests and should remain free to choose.

The bureau’s recent report on customers who frequently overdraw their accounts is based on an outdated sample of data from only a few banks that do not represent the entire industry — particularly community banks and credit unions. The report relies on data provided between January 2011 and June 2012 — before the recent growth in mobile banking and other technologies that help bank customers avoid overdrafts. Moreover, the outdated report neglects key changes since that time in how banks handle and process overdrafts, ABA added.

As for the prototype disclosures also issued by the bureau, ABA noted particular instances in which they are less clear than the existing model form and argued that the existing disclosure “is providing information necessary for bank customers to make informed decisions.” ABA also said that the bureau must use notice-and-comment rulemaking to adopt any new disclosure form for overdrafts.

Read the letter.

OCC Issues Guidance on Programs for Home Loans with Over 100 Percent LTV

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Tue, 22 Aug 2017 14:45:00 +0000

Noting that in many communities persistently depressed home prices are hindering recovery, the OCC issued guidance for OCC-regulated banks seeking to develop programs to offer home loans with loan-to-value ratios of over 100%, known as “higher-LTV” loans. These programs may be eligible for Community Reinvestment Act credit.

“The OCC recognizes that supporting long-term community revitalization may necessitate responsible, innovative lending strategies,” the agency said. “The OCC believes that in some circumstances, a bank also can design a program to offer higher-LTV loans in communities targeted for revitalization in a manner consistent with safe and sound lending practices and current regulations and guidelines.”

Such programs would apply to purchase loans or purchase plus rehabilitation of owner-occupied properties in communities “officially targeted” for revitalization by federal, state, municipal or other government-designated entities. Eligible loans would be permanent first-lien mortgages with LTV ratios exceeding 100 percent, without mortgage insurance or other acceptable collateral and with an original loan balance of $200,000 or less.

The guidance also provides information about the required policies and procedures under such a program and about the process and timing for notifying the OCC about starting or modifying a program. “Bank lending under such a program may serve the credit needs of individual borrowers and the community, and the bank may receive Community Reinvestment Act consideration depending on the specifics of the program,” the agency added.

Read the guidance.

This Week Ahead: August 21-25

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 18 Aug 2017 15:00:00 +0000

Monday

Comment Due SEC: Covered Securities Pursuant to Section 18 of the Securities Act of 1933
Read more.
Comments Due CFTC: Conflicts of Interest Policies and Procedures by Swap Dealers and Major Swap Participants (PRA)
Read more.
Comments Due CFTC: Revisions to Freedom of Information Act Regulations
Read more.

Wednesday

Comments Due FHFA: Minority and Women Inclusion Amendments
Read more.
Comments Due OCC: Agency Information Collection Activities: Information Collection Revision; Submission for OMB Review; Uniform Interagency Transfer Agent Registration and Deregistration Forms
Read more.

Friday

Comments Due FDIC: Agency Information Collection Activities: Submission for OMB Review
Read more.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Justice Department Formally Ends ‘Operation Choke Point’

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 18 Aug 2017 14:00:00 +0000

In a letter to House Judiciary Committee Chairman Bob Goodlatte (R-Va.), a Department of Justice official formally confirmed that the agency has ended the controversial Operation Choke Point initiative, which under the Obama administration sought to curtail legal but politically disfavored businesses by working through bank regulators to pressure financial institutions to end customer relationships with those businesses. Assistant Attorney General Stephen Boyd expanded on DOJ's change.

All of the Department’s bank investigations conducted as part of Operation Choke Point are now over, the initiative is no longer in effect, and it will not be undertaken again. The Department will not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities.

ABA has long opposed Choke Point, successfully urging the FDIC to end its participation in the initiative and supporting legislation to prevent similar activities in the future. However, many financial institutions had been concerned about serving Choke Point-targeted businesses without a clear statement from DOJ that the initiative has been dropped.

Read the letter.

HARP Extended through 2018 as Changes Made to High-LTV Refi Program

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 18 Aug 2017 13:30:00 +0000

The Federal Housing Finance Agency extended the Home Affordable Refinance Program through Dec. 31, 2018. The program was scheduled to phase out in September upon the launch of Fannie Mae and Freddie Mac’s new streamlined refinance program for borrowers with high loan-to-value ratios.

However, the agency announced that the new high LTV refi program would only be available for borrowers who originate their loans on or after Oct. 1, 2017; as a result, FHFA determined that HARP remained necessary to serve eligible existing borrowers. More than 143,000 homeowners may still be able to benefit from HARP, the agency added. Since its inception in 2009, more than 3.47 million refinances have been done through HARP.

The eligibility date for the new high LTV refi program was necessary to support the GSEs’ credit risk transfer programs, which since March have seen $54.2 billion worth of risk transferred. Fannie and Freddie will modify future credit risk transfers to accommodate the new streamlined refi program.

Meanwhile, FHFA announced that nearly 357,000 refinances of Fannie or Freddie loans were completed in the second quarter, with 9,700 of them coming through HARP. HARP refinances dropped by one third since the prior quarter. Fourteen percent of second-quarter loans refinanced through HARP had a loan-to-value ratio greater than 105 percent. In Nevada and Florida, HARP refinances this year accounted for at least 6 or more percent of total refinances, double the national average of 3 percent.

Read more.
Read the refinance report.

ABA to FCC: Follow Congressional Intent in TCPA Applicability Ruling

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 18 Aug 2017 13:13:00 +0000

In a comment letter to the Federal Communications Commission, ABA urged the FCC not to limit the use of newer calling and fax technologies that are beyond the scope of the Telephone Consumer Protection Act. The letter responds to a petition that raised the important issue of whether the FCC should interpret the TCPA to apply to technologies that were not in existence or common use when the TCPA was enacted in 1991. Under its prior leadership, the FCC interpreted the TCPA expansively to apply to such newer technologies not contemplated by Congress; the agency is expected to revisit those interpretations in the near future.

Because of the uncertainty over the TCPA’s applicability to newer technologies and the availability of significant statutory damages, “any company that seeks to use an advanced technology not contemplated by the TCPA’s drafters may be subjected to a class action lawsuit with a damage claim in the millions, if not billions, of dollars, with a high settlement value unrelated to actual culpability,” ABA noted. “The risk of draconian litigation costs has led financial institutions to limit — and, in certain instances, to eliminate — many pro-consumer communications.”

Read the letter.

CFPB Launches New Web Form for Regulatory Inquiries

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Thu, 17 Aug 2017 15:09:00 +0000

The CFPB announced its launch of a new web form to replace the email address (CFPB_RegInquiries @cfpb.gov) that industry and other stakeholders were using to submit their questions on Bureau regulations. The form can be found on their website at https://reginquiries.consumerfinance.gov.

ABA Supports Changes to CFPB's Prepaid Card Rule

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Wed, 16 Aug 2017 14:22:00 +0000

ABA provided feedback on the CFPB’s proposed changes to its final rule on prepaid products. The proposal includes several revisions to error resolution requirements and limited liability provisions of the prepaid rule, which is set to take effect on April 1, 2018.

ABA generally supported the changes and recommended that the CFPB delete certain cards from its definition of “prepaid accounts,” such as jury duty cards that have no fees, cannot be registered and are not marketed to the general public. ABA also recommended that the bureau delete certain language that would require credit card companies to treat prepaid accounts offered by a related company as credit cards for purposes of merchant disputes and error resolution. Finally, the association noted that the April 2018 compliance deadline may no longer be sufficient, and urged the bureau to extend the deadline to Oct. 1, 2018.

Read the letter.

SBA Seeks Feedback on Burdensome, Excessive Regulations

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Tue, 15 Aug 2017 14:00:00 +0000

In response to President Trump’s executive order requiring all federal agencies to reduce regulatory burden, the U.S. Small Business Administration issued a request for input on which regulations could be repealed, replaced or modified.

The executive order directs agencies to focus specifically on regulations that inhibit job creation, are outdated, unnecessary or ineffective, impose costs that exceed benefits, are inconsistent with regulatory reform initiatives and policies or are associated with other executive orders or presidential directives that have been rescinded or substantially modified. Comments will be due 60 days after the notice is published in the Federal Register.

Read more.

Agencies Clarify Capital Treatment of Centrally Cleared Derivatives Contracts

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Tue, 15 Aug 2017 13:29:00 +0000

The federal regulatory agencies issued joint guidance on the regulatory capital treatment of certain centrally cleared derivative contracts in light of recent changes to the rulebooks of certain central counterparties. The guidance specifically addresses the regulatory capital treatment of variation margin requirements for such centrally cleared derivative contracts and will result in more beneficial regulatory capital treatment for centrally cleared derivative contracts.

Previously, variation margin transferred to cover the exposure that arises from marking such centrally cleared derivatives contracts to market price was considered collateral pledged by one party to the other, with title to the collateral remaining with the posting party. However, under the central counterparties’ revised rulebooks, such variation margin for centrally cleared derivative contracts is considered a settlement payment for the exposure, with title to the payment transferring to the receiving party.

Under the guidance, if banks, after conducting accounting and legal analysis, determine that variation margin payments may be considered settlement of outstanding exposure under the regulatory capital rules, and that the payer of the variation margin has relinquished all legal claims to the variation margin, then variation margin would no longer be considered collateral pledged by one party to the other. ABA has long advocated for more risk-based bank regulatory capital treatment for centrally cleared derivative contracts.

Read the guidance.

This Week Ahead: August 14-18

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 11 Aug 2017 15:00:00 +0000

Monday

Comments Due CFPB: Amendments to Rules Concerning Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z)
Read more.
Comments Due CFTC: Real-Time Public Reporting and Block Trade
Read more.
Comments Due DOE: Request for Title IV Reimbursement or Heightened Cash Monitoring 2 (HCM2) (PRA)
Read more.
Comments Due FEMA: Evaluation of Existing Regulations, Policies, and Information Collections
Read more.
Comments Due IRS: Centralized Partnership Audit Regime
Read more.
Comments Due TREAS: Financial Crimes Enforcement Network Proposed Collection; Update and Renewal of the Bank Secrecy Act Designation of Exempt Person Report (PRA)
Read more.

Wednesday

Comments Due FCA: Statement on Regulatory Burden
Read more.

Friday

Effective Date SBA: Small Business Investment Companies: Passive Business Expansion and Technical Clarifications
Read more.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Watt: FHFA Will Not Build Short-Term Capital Buffer for GSEs

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Fri, 11 Aug 2017 13:38:00 +0000

In a letter to the National Association of Realtors, FHFA Director Mel Watt signaled that the agency would not move to establish a short-term capital buffer for Fannie Mae and Freddie Mac when the current capital buffer put in place under the terms of the Senior Preferred Stock Purchase Agreements with the Treasury Department expires on Jan. 1, 2018.

Watt’s letter came in response to calls from NAR to establish a short-term “mortgage market liquidity fund,” where the GSEs could deposit a portion of their profits to cover future losses and reduce risk to taxpayers. Watt responded that while FHFA remains concerned about the expiration of the capital buffer, any changes to housing reform should come through Congress.

“I am sensitive to the prospect that whatever steps FHFA could take might be misperceived as either an effort to promote recapitalization and release of the Enterprises or as interference with Congress’ important work to advance housing finance reform,” Watt wrote, calling on lawmakers to continue the work it began on reform before the August recess.

ABA has long held that reform of the housing finance system must be directed by Congress. The association previously outlined specific recommendations for reforming Fannie and Freddie, with the goal of reducing the direct role of the federal government in mortgage finance, restoring private participation in housing markets and ensuring equitable access.

Read Watt’s letter.
Read ABA’s principles for housing reform.

DOL Signals Intention to Delay Fiduciary Rule’s Exemptions

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Thu, 10 Aug 2017 14:00:00 +0000

In a notice of administrative action filed in an ongoing lawsuit with the wealth management firm Thrivent Financial, the Department of Labor said that it has submitted a proposal to the Office of Management and Budget to extend to July 1, 2019, the applicability date for certain exemptions to the fiduciary rule. The extension would apply to the best interest contract exemption, principal transactions exemption, and prohibited transaction exemption 84-24.

The rule – which greatly expands the definition of who counts as a fiduciary under the Employee Retirement Income Security act and the Internal Revenue Code – took effect on June 9, 2017, though most provisions of the exemptions had a compliance date of Jan. 1, 2018.

The delay marks a significant victory for ABA, which has long called on DOL to extend the effective date for the exemptions to allow bankers more time to comply. The announcement came just two days after ABA wrote to DOL expressing concern that the rule remains “deeply flawed in several critical areas.” The association had also submitted comments in late July reiterating its call for an extension to the Jan. 1, 2018 compliance date and requesting that DOL act expeditiously so that banks could optimize the implementation of their compliance strategies and resources.

Fed Issues Final Guidelines for Evaluating Joint Federal Reserve Account Requests

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Thu, 10 Aug 2017 13:45:00 +0000

The Federal Reserve issued its framework for how it will evaluate applications for joint accounts at Federal Reserve banks. Joint accounts can be used to facilitate faster settlement for payment transactions among the joint account holders.

Under the guidelines, joint account applicants must be depository institutions eligible to open individual accounts at Federal Reserve banks. Applicants must designate one “agent” for the account, indemnify the Fed for losses related to operating the account and rely on the payment system operator or agent to provide clearing services and manage positions within the joint account. The Fed will evaluate all applications it receives based on six specific criteria.

ABA generally supports the Fed’s guidelines as the industry continues to work toward the goal of a faster, more efficient payments system. In previous comments, ABA emphasized the need to maintain the safety and integrity of the payments system by limiting access to joint accounts to those that are already eligible to open individual accounts with the Fed. “Put simply, banks are held to higher standards in order to protect the interests of their customers,” ABA said. “Any entity that is not subject to the same standards and oversight would present unacceptable risk as a payments system participant.”

Read the final guidelines.
Read ABA's comment letter.

Registration Open for Minority Bankers Forum

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Thu, 10 Aug 2017 13:37:00 +0000

Registrations are now being accepted for the 2017 Minority Bankers Forum, hosted by the Federal Reserve Bank of Kansas City, in partnership with the Fed Board of Governors and the Federal Reserve Banks of Atlanta, Minneapolis, Philadelphia, Richmond and St. Louis. The forum – to be held September 27-28 in Kansas City – will provide minority bank leaders with industry knowledge and professional development.

Learn more and register.

Fannie, Freddie Fail Stress Tests

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Wed, 09 Aug 2017 13:25:00 +0000

Fannie Mae and Freddie Mac could need upwards of $100 billion in bailout funds if faced with another financial crisis, according to the results of the GSEs’ Dodd-Frank Act stress tests. Under a “severely adverse” scenario that saw GDP fall 6.5 percent from its pre-recession peak and unemployment reaching 10 percent, Fannie and Freddie combined would require between $34.8 and $99.6 billion in Treasury funds, the Federal Housing Finance Agency said in its report.

The findings underscore the need for housing reform that would shift risk away from taxpayers, which ABA has long called for. The association earlier this year outlined nine principles for reforming Fannie and Freddie, with the goal of reducing the direct role of the federal government in mortgage finance, restoring private participation in housing markets and ensuring equitable access. ABA also testified at a recent Senate Banking Committee hearing on housing reform, and will continue to encourage further engagement on the issue on Capitol Hill when Congress returns in September.

View the stress test results.

Regulators Extend ‘Living Will’ Deadline For 21 Domestic, Foreign Banks

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Wed, 09 Aug 2017 13:13:00 +0000

The regulatory agencies announced that they will extend for one year the deadline for 21 domestic and foreign banks to file their so-called “living wills” detailing how they would be resolved in the event of bankruptcy. The new filing deadline is Dec. 31, 2018.

Read more.

ABA: Fiduciary Rule Remains ‘Deeply Flawed’

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Tue, 08 Aug 2017 13:44:00 +0000

The Department of Labor’s final fiduciary rule is “deeply flawed in several critical areas” that prevent it from functioning properly, ABA said in a comment letter. The letter came in response to a DOL request for information on the rule as part of an ongoing review ordered by President Trump.

Among other things, the definition of who is considered a fiduciary under the rule is unclear, resulting in confusion among financial institutions and ultimately, harm to retirement investors, ABA said. The association urged DOL to either rescind or significantly revise the rule to provide a sharpened, targeted definition of “fiduciary” that would establish discernible boundaries and increase certainty about compliance.

Along with the letter, ABA included the results of a recent survey on the fiduciary rule that shows that banks are already re-evaluating and reducing – and in some cases, eliminating – their offerings to retirement customers. For example, 30% said they have eliminated or reduced the number of retirement products or services they offer, while 38% noted that customer relationships have been “fragmented” as a result of the bank no longer being able to provide holistic financial advice.

When it came to compliance, more than 80% of banks surveyed said they were sometimes or often unable to determine with certainty whether they are in compliance with the fiduciary rule, and two-thirds believe it will increase their liability and litigation risk under the Employee Retirement Income Security Act and the Internal Revenue Code. Sixty-three percent noted that customer accounts with $25,000 or less have been most affected by the rule.

ABA has long advocated for major changes to the fiduciary rule to ensure that it does not negatively affect the services available to bank customers. The association will continue to provide feedback to the DOL as it continues its review of the rule.

Read the letter.

CFPB Proposes New Disclosure Form for Overdraft Fees

noreply@blogger.com (ABA Regulatory Policy Staff 2) — Mon, 07 Aug 2017 15:00:00 +0000

The CFPB released four new “prototype” overdraft disclosure forms as part of its “Know Before You Owe” campaign. The bureau plans further testing of the forms to determine whether they are more effective than the model opt-in form that banks currently use to explain the overdraft protection options available to consumers.

While the release of the forms was not accompanied by any regulatory amendments, CFPB Director Richard Cordray noted that the bureau is currently in the “pre-rule stage” of an overdraft rulemaking, “with no timing stated for when a rule might be proposed.” The bureau has been studying overdraft since February 2012.

Along with the model disclosure forms, the bureau also published a report on “frequent” overdraft users. The report noted that a low percentage (about 9 percent) of consumers are considered to be frequent overdrafters, incurring more than 10 overdraft or non-sufficient funds fees annually. Unsurprisingly, the study found that frequent overdrafters have lower credit scores, are more likely to be “credit constrained” than infrequent or non-overdrafters and are less likely to have a general purpose credit card. The study also found that 30.5 percent of frequent overdrafters are opted in to overdraft protection services, a rate 2.5 times higher than opt-in rates for other consumers.

ABA believes this opt-in rate demonstrates that frequent users understand and choose to use overdraft services to meet short-term credit needs. The report’s findings underscore the need for consumers to have access to a variety of small-dollar credit options — including overdraft — within the banking industry.

View the disclosure forms.
View the report.