All in Regulatory Update

FFIEC Statement on LIBOR Transition

Adam Witmer
Regulatory Update, Compliance Management

On 7/1/2020, the Federal Financial Institutions Examination Council (FFIEC) issued a statement to highlight the risks that will result from the transition away from LIBOR, which is used by the financial industry as a reference rate for many products and instruments like loans, investments, and deposits. In their release, the regulators encouraged financial institutions to continue working toward a transition to alternative reference rates so that financial, legal, operational, and consumer protection risks can be mitigated. While the transition away from the LIBOR will affect some institutions more than others, the regulators state that the impact will affect almost all institutions and, therefore, it would be beneficial for all financial institutions to consider the risks associated with the LIBOR transition.

OCC Updates UDAAP Resources

Adam Witmer
Regulatory Update, UDAAP

On 6/29/2020, the Office of the Comptroller of the Currency (OCC) issued an updated section to their Comptroller’s Handbook by releasing a new “Unfair or Deceptive Acts or Practices and Unfair, Deceptive, or Abusive Acts or Practices” booklet. In their release, the OCC explains that highlights of this booklet include…

Supreme Court Ruling on CFPB Structure

Adam Witmer
Regulatory Update

On June 29, 2020, the Supreme Court of the United States issued a decision related to the structure, and specifically the Director’s authority, of the Consumer Financial Protection Bureau (CFPB). In their ruling, the courts determined that the current structure - which only allows the single CFPB Director to be removed by the President for “inefficiency, neglect of duty, or malfeasance in office,” - is unconstitutional. Therefore, the ruling has now established that the President can, in fact, remove the CFPB Director at will. That said, the CFPB can continue to operate, but the ruling establishes that the Director must be removable by the President “at will.”

FinCEN Issues Hemp Guidance

Adam Witmer
BSA, Regulatory Update

On 6/29/2020, FinCEN issued guidance (FIN-2020-G001) to address BSA/AML requirements for hemp-related business customers. This guidance supplements the December 3, 2019 interagency statement on providing financial services to customers engaged in hemp-related businesses and focuses on the due diligence for financial institutions servicing hemp-related businesses. The guidance also explains the type of information and documentation financial institutions can collect from hemp-related businesses to comply with BSA/AML rules.

CFPB Proposes QM Changes

Adam Witmer
Regulatory Update, Regulation Z

In June of 2020, the CFPB proposed two new rules to adjust the current Qualified Mortgage rules. The CFPB states that their objective with these proposals is to facilitate a smooth and orderly transition away from the Temporary GSE QM loan definition (which is a temporary QM category set to expire on 1/10/2021 that basically qualifies a mortgage as a QM if it is eligible for purchase or guarantee by Fannie or Freddie) and to ensure access to responsible, affordable mortgage credit upon its expiration.

New Flood FAQs Proposed

Adam Witmer
Regulatory Update, Flood

On 6/26/2020, the OCC, Federal Reserve, FDIC, Farm Credit Administration, and the NCUA issued a joint proposal to update the interagency flood FAQs. If issued as proposed, these revisions would be the first updates to the Interagency Questions and Answer Regarding Flood Insurance since they were last updated in 2011.

As you might recall, there have been several updates to flood insurance rules since 2011 including the Biggert-Waters Flood Insurance Reform Act of 2012, the Homeowner Flood Insurance Affordability Act of 2014, interagency guidance on the detached structure exemption, rules on the escrow of flood insurance premiums, and private flood insurance guidance. In addition to updating the questions and answers to align with most of the current flood insurance laws and guidance, the proposal would also…

Interagency Examiner Guidance for COVID-19

Adam Witmer
Regulatory Update

On 6/23/2020, the joint regulators issued interagency examiner guidance for assessing the safety and soundness of financial institutions considering the effect of the COVID-19 pandemic on institutions. The guidance states that the purpose is to outline the supervisory principles for assessing the safety and soundness of institutions given the ongoing impact of the COVID-19 pandemic. In assessing an institution under the principles in this document, the joint guidance explains that examiners will consider the institution’s asset size, complexity, and risk profile, as well as the industry and business focus of its customers and that examiners will consider the unique, evolving, and potentially long-term nature of the issues confronting institutions and exercise appropriate flexibility in their supervisory response.

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