STATE GOVERNMENT RELATIONS
General Assembly to Convene Monday
The Indiana General Assembly will convene this Monday, Jan. 9, for the start of the 2023 legislative session. Issues at the forefront of discussion will include education, health care and the biennial state budget. Lawmakers have until the end of April to complete all legislative business for the session.
FEDERAL GOVERNMENT RELATIONS
Agencies Issue Regulatory Agenda Addressing Overdraft, NSF Fees, Other Issues
The Biden administration Wednesday issued its Fall 2022 Semiannual Regulatory Agenda, a semiannual listing of rulemakings that departments and agencies expect to initiate or continue during the next six months. The agenda is current as of Sept. 30, 2022.
In the agenda, the Consumer Financial Protection Bureau projected that it will commence “pre-rule activity” in November to examine whether overdraft fees are finance charges, which would subject the fees to the requirements of Regulation Z. The CFPB also projected that it will commence pre-rule activity in November to “consider new rules regarding NSF fees.” The CFPB did not indicate what rules it may be contemplating.
Other projected issuances this month include a final rule to implement section 1071 of the Dodd-Frank Act, which concerns small business lending data collection, and a proposed rule to amend the rules implementing the CARD Act related to penalty fees levied by card issuers, including the safe harbors for those penalty fees. Additionally, the bureau projected that it will begin pre-rule activity in November for potential amendments to Regulation V, which implements the Fair Credit Reporting Act, and indicated it expects to issue proposed rules in December requiring certain nonbanks that are under public enforcement orders to register with the agency via a public registry.
The Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit Insurance Corp. projected March for issuance of a “joint rule to modernize the Community Reinvestment Act Regulations.” The Department of Labor projected May for issuance of a proposed rule to “update” the salary level used to determine whether an employee is subject to federal minimum wage and overtime requirements. The Financial Crimes Enforcement Network projects that it will issue a proposed rule in November to revise Customer Due Diligence requirements for financial institutions, to account for changes created by the two other rulemakings FinCEN is required to undertake to create a beneficial ownership registry.
Banking Regulators Issue Warning on Cryptocurrency Risks
Events of the past year have highlighted several key risks posed by cryptoassets that banks should consider if they wish to offer crypto-related services, the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency indicated Tuesday in a joint statement. The agencies did not single out any specific event – like the FTX collapse – but instead listed several signs of the “significant volatility and the exposure of vulnerabilities in the cryptoasset sector” that such events have allegedly exposed. Among the risks cited are the possibility of fraud and scams, legal uncertainties related to custody practices and ownership rights, and the lack of maturity in risk management practices within the crypto sector.
The three agencies indicated they are continuing to assess how banks could provide crypto services in a safe manner. However, they added that based on their current understanding, “the agencies believe that issuing or holding as principal cryptoassets that are issued, stored or transferred on an open, public and/or decentralized network, or similar system is highly likely to be inconsistent with safe-and-sound banking practices. Further, the agencies have significant safety and soundness concerns with business models that are concentrated in cryptoasset-related activities or have concentrated exposures to the cryptoasset sector.”
CFPB Sets Truth in Lending Annual Threshold Adjustments
The Consumer Financial Protection Bureau has announced the 2023 dollar amounts for the annual threshold adjustments for Regulation Z, which implements the Truth in Lending Act. For open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1 in 2023. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2023 will be $24,866. The adjusted points-and-fees dollar trigger for high-cost mortgages in 2023 will be $1,243.
For qualified mortgages under the general QM loan definition, the thresholds for the spread between the annual percentage rate and the average prime offer rate in 2023 will be:
- 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $124,331;
- 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $74,599 but less than $124,331;
- 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $74,599;
- 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $124,331;
- 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599; or
- 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599.
For all categories of QMs, the thresholds for total points and fees in 2023 will be:
- 3% of the total loan amount for a loan greater than or equal to $124,331;
- $3,730 for a loan amount greater than or equal to $74,599 but less than $124,331;
- 5% of the total loan amount for a loan greater than or equal to $24,866 but less than $74,599;
- $1,243 for a loan amount greater than or equal to $15,541 but less than $24,866; and
- 8% of the total loan amount for a loan amount less than $15,541.