STATE GOVERNMENT RELATIONS
Lt. Gov. Crouch, OCRA Announce $8M in Federal Block Grant Funding
Lt. Gov. Suzanne Crouch and the Indiana Office of Community and Rural Affairs announced in a Thursday news release that 13 rural Indiana communities will receive more than $8 million in federal grant funding to create and expand community facilities, remove blight and improve water infrastructure.
The IBA is tracking several bills as the 2024 legislative session progresses, including:
- Senate Bill 188 – Actions on deposit accounts.
- House Bill 1284 – Deposit account agreements.
- House Bill 1209 – Rule against perpetuities.
- House Bill 1183 – Foreign ownership of agricultural land.
- House Bill 1084 – Privacy of firearms financial transactions.
FEDERAL GOVERNMENT RELATIONS
CFPB Revises Supervisory Appeals Process
The Consumer Financial Protection Bureau Thursday issued a new rule revising the appeals process for institutions that seek to challenge a compliance rating or an adverse material finding made by the bureau. Under the rule, the CPFB will expand the appeals committee’s eligibility to include any bureau manager who did not participate in the matter being appealed and who has relevant expertise on the issues raised, not just managers from supervision, as was previously the case.
The rule also includes a new option for resolving the appeal, which is remanding the matter to supervision staff for consideration of a modified finding. In addition, the CFPB now will allow institutions to appeal any compliance rating issued for them, not just adverse ratings.
FHA Unveils Home Retention Option for Borrowers Struggling with Payments
The Federal Housing Administration Wednesday published the final mortgagee letter for its new loss mitigation home retention option for borrowers with FHA-insured single-family forward mortgages who are behind on their mortgage payments. The offering, called the Payment Supplement, will allow mortgage servicers to temporarily reduce a borrower’s mortgage payment by using funds from a partial claim which enables the borrower to access up to 30% of the outstanding balance of their FHA-insured mortgage, according to the agency.
The partial claim amount is placed in a junior lien and paid back when the homeowner sells or refinances the home or the mortgage otherwise terminates, FHA said. Funds from the partial claim will be used to pay any arrearages and bring the borrower’s mortgage payment current. Any remaining funds are deposited in an FHA custodial account managed by the mortgage servicer and used to temporarily supplement the principal and interest portion of a borrower’s mortgage payment each month, with a target of up to a 25% reduction in monthly principal and interest payments.
Mortgage servicers may begin implementing Payment Supplement on May 1, but must implement the solution for all eligible borrowers by Jan. 1, 2025. FHA also announced that it is extending its full suite of temporary loss mitigation options through April 30, 2025.
FOMC Minutes: Members Remain Cautious About Lowering Rates
During their most recent meeting in January, most members of the Federal Open Market Committee remained concerned about easing monetary policy too quickly, saying they needed more data to feel confident that inflation was moving sustainably toward the Federal Reserve 2% target, according to minutes from the meeting released Wednesday. The committee voted at the meeting to maintain the federal funds rate at 5.25-5.5%. Only two participants pointed to downside risks to the economy associated with maintaining an overly restrictive policy stance for too long, according to the minutes.
In addition, the minutes show that FOMC members agreed to remove language from their official meeting statement noting the resilience of the U.S. banking system, believing the reassurance was no longer necessary given that stresses caused last year’s bank failures had subsided.
FCC Clarifies Right to Revoke Consent for Autodialed Calls
The Federal Communications Commission last Friday finalized an order that clarifies how businesses must handle revocation requests from consumers under the Telephone Consumer Protection Act. Under the law, a bank or other business must have the prior express consent of the called party to place an autodialed or prerecorded voice call. In 2015, the FCC stated that a consumer can revoke consent through “any reasonable means.” The broad revocation right has made it difficult for banks to design efficient methods for processing customers’ revocation requests and has led plaintiffs’ firms to generate lawsuits alleging customers received calls from their bank after revoking their consent.
In Friday’s order finalizing a proposal issued last spring, the FCC adopted a standardized list of the specific words that consumers may use to revoke consent via a reply text message to ensure that automated systems can process revocation requests. Specifically, the use of the words “stop,” “quit,” “end,” “revoke,” “opt out,” “cancel” or “unsubscribe” via reply text message would constitute a reasonable means to revoke consent. If the recipient uses a different word to revoke consent, a “totality of the circumstances” standard would govern whether the consumer’s use of alternative words or phrases constitutes a reasonable means to revoke consent.
In a change from its proposal, the FCC held that callers must process revocation requests within 10 business days – not 24 hours – after trade associations had urged the FCC to provide a reasonable time period for businesses to process revocations. The agency also clarified that a one-time text message to confirm the scope of a consumer’s revocation request does not violate the TCPA as long as the confirmation text does not include marketing information and the text is sent within five minutes of receipt of the opt-out request, unless a legal requirement compels the company’s delay in sending the confirmation text.
Barr: Fed Strengthened Supervisory Program After SVB Failure
The Federal Reserve has bolstered its bank supervision program since last year’s Silicon Valley Bank failure, with large regional banks receiving heightened scrutiny, Fed Vice Chairman for Supervision Michael Barr said last Friday. Speaking at a banking conference in New York City, Barr pointed to the Fed’s internal investigation of SVB, which laid much of the blame for the bank’s failure on its management, but also faulted the Fed supervisors for not identifying issues quickly enough and being too slow to act when they did find problems.
“Since SVB's failure, we have focused on improving the speed, force and agility of supervision, as appropriate to the situation,” Barr said, adding that supervision should intensify at the right pace as a bank grows in size and complexity. He noted that much of SVB’s risk buildup occurred while it was supervised within the regional bank program, which includes banks between $10 billion and $100 billion in size. “Based on this experience, for large and more complex regional banking organizations, including firms that are growing rapidly, we are assessing such a firm's condition, strategy and risk management more frequently, and deepening our supervisory interactions the firm,” he said. “At the same time, smaller and less complex firms will see little difference from the current state.”
Barr also said that Fed supervisors have been “closely focused” on banks’ commercial real estate lending. Supervisors are asking banks how they are measuring their risk and monitoring that risk, what steps they have taken to mitigate the risk of losses on CRE loans, how they are reporting their risk to their directors and senior management, and whether they are provisioning appropriately and have sufficient capital to buffer against potential future CRE loan losses.
House Bill Would Set Time Limit on Bank Merger Applications
A proposed bill in the House would require the Federal Reserve to act on merger applications within 90 days of receiving the requests. The Bank Failure Prevention Act by Reps. Andy Barr, R-Ky., and Scott Fitzgerald, R-Wis., seeks to mitigate the likelihood of bank failures by allowing for healthy mergers and acquisitions, according to its sponsors.
“By enforcing a strict 90-day deadline for the Federal Reserve on bank merger applications, we're pushing back against the slow-walking tactics that have hindered our financial institutions,” Barr said. “This legislation is a step towards a more dynamic, diverse and competitive banking environment, free from unnecessary regulatory paralysis.”