FEDERAL GOVERNMENT RELATIONS
FinCEN: Financial Institutions Reported $27B in Elder Financial Exploitation
Financial institutions reported roughly $27 billion in suspicious activity related to elder financial exploitation during a one-year period from 2022 to 2023, the Financial Crimes Enforcement Network said Thursday in a new financial trend analysis based on Bank Secrecy Act reports. FinCEN identified two predominant categories of reported victimization: elder scams, where the victim does not know the perpetrator; and elder theft, where the victim knows the perpetrator. Banks filed 72% of all elder exploitation-related BSA reports, with elder scams accounting for 80% of all reported activity.
The analysis revealed that most elder scam-related BSA filings referenced "account takeover" by a perpetrator unknown to the victim, that adult children were the most frequent elder theft-related perpetrators and that illicit actors mostly relied on unsophisticated means to steal funds that minimize direct contact with financial institution employees, such as guessing passwords, according to FinCEN. FinCEN created new elder financial exploitation key terms for BSA reports in a 2022 advisory issued by the agency.
"FinCEN's analysis highlights the critical role of financial institutions in helping to identify, prevent and report suspected elder financial exploitation," FinCEN Director Andrea Gacki said. "We are grateful for their vigilance and for the BSA information they have filed – and continue to file – in response to FinCEN's 2022 advisory."
Bowman: Proposed Regulations Will Pose Challenges for Banks
Regulators need to acknowledge that changes to supervisory expectations and processes, along with the sheer number of new and proposed rules recently introduced, "will undoubtedly present additional challenges and risks for banks," Federal Reserve Governor Michelle Bowman said Thursday. Speaking at a banking conference in New York City, Bowman reiterated her concern about the new bank regulations that have been proposed recently, some in response to last year's bank failures.
"While some changes to the supervisory process and priorities may be appropriate to promote a safe and sound financial system and enhance financial stability, having an appropriate focus on the most salient risks is important for effective risk management and effective supervision," Bowman said. "We should be cautious that these changes do not distract banks or supervisors from focusing on core and emerging risks or impair the long-term viability of the banking system – especially for midsized and smaller banks."
Bowman also urged banks to have emergency contingency funding plans in place, which may include borrowing from the Federal Home Loan Banks or the Fed's discount window. However, with regulators preparing to unveil new liquidity regulations, she urged caution in how they approached the issue.
"While it may be appropriate for supervisors to encourage banks to establish and maintain contingency funding sources, test the contingency funding plans and evaluate whether those plans are adequate in the context of examination, supervisors are not bankers," Bowman said. "And we must be cautious not to cross the line from supervisor to member of the management team and avoid interfering with the decision-making of bank management."
Existing Home Sales Fell in March
The National Association of REALTORS® reported Thursday that existing home sales dropped 4.3% in March to a seasonally adjusted annual rate of 4.19 million, down 3.7% from a year ago. Total housing inventory in March was 1.11 million units, up 4.7% from the prior month. The median home price was $393,500, up 4.8% from the previous year.
Mortgage Rates Rise
The rate for a 30-year fixed-rate mortgage averaged 7.1% this week, up from last week when it averaged 6.88%. A year ago, the 30-year rate was 6.39%. The rate for a 15-year fixed-rate mortgage averaged 6.39%, up from last week when it averaged 6.16%. A year ago, the rate was 5.76%.
Senate Resolution Would Overturn SEC Climate Disclosure Rule
More than 30 senators are cosponsoring a Senate joint resolution to overturn the Security Exchange and Commission's climate disclosure rule. The resolution, which is being led by Senate Banking Committee Ranking Member Tim Scott, R-S.C., would strike down the rule if passed by both houses of Congress and signed by the president. An identical resolution has been introduced in the House.
The SEC rule requires companies to disclose material climate-related risks, their activities to mitigate or adapt to such risks, and information about the board's and management's oversight of risks. In a statement, Scott said the rule threatens economic opportunity across the country. "The SEC's mission is to regulate our capital markets and ensure all Americans can safely share in their economic success – not to force a partisan climate agenda on American businesses," he said.
The resolution's sponsors include all Republican members of the Senate Banking Committee and Sen. Joe Manchin, D-W.Va. Earlier this month, the SEC announced it had paused enforcement of the rule while several legal challenges to the regulation are considered by federal courts.
FHLB Support for Affordable Housing Grew in 2023
The Federal Housing Finance Agency said Thursday in its annual housing mission report that Federal Home Loan Banks awarded $446.9 million through their affordable housing programs in 2023, almost $180 million more than in 2022.
According to the report, FHLB affordable housing funding supported more than 33,000 housing units. FHLBs also funded approximately $4.2 billion in Community Investment Program housing advances in 2023, supporting almost 32,000 units, representing 11,000 more units than in 2022. Low-Income Housing Tax Credit properties represented more than 43% of FHLBs' total general fund projects and 55% of their total general fund rental projects.
FHFA also reported that Fannie Mae and Freddie Mac purchased more than 136,000 single-family mortgages for low- and moderate-income borrowers through their core affordable housing programs. Both also introduced enhancements to these programs, adding a credit of $2,500 for very low-income borrowers that lenders must pass through to borrowers by applying it to the down payment or closing costs.
Fannie Mae, Freddie Mac Issue Guidance on Real Estate Agent Commissions
On Monday, Fannie Mae and Freddie Mac issued guidance regarding the treatment of property seller-paid buyer agent fees under the enterprises' interested party contribution requirements following a recent court settlement involving the National Association of REALTORS®.
In March, NAR agreed to make several changes to how REALTORS' commissions are apportioned as part of a settlement to end several antitrust lawsuits brought against the association. In guidance about the effects of the settlement, Fannie and Freddie noted that their policies on interested party contributions, or IPC, allow parties – including property sellers – to make contributions to the borrower's closing costs subject to maximum limits ranging between 2% and 9% of the property value. Typical fees or closing costs paid by a seller in accordance with local custom, known as common and customary fees or costs, are not subject to the IPC limits, according to the guidance.
"If a seller or seller's real estate agent continues to pay the buyer's real estate agent commission in accordance with local common and customary practices, these amounts are not required to be counted towards the IPC limits for the transaction," Fannie Mae said.
Powell: Fed Could Maintain Higher Rates for Longer Than Expected
Citing a recent "lack of further progress" in returning inflation to the Federal Reserve's 2% target, Fed Chairman Jerome Powell said Tuesday that the Federal Open Market Committee may need to maintain higher interest rates for longer than anticipated.
The FOMC has held the target range of the federal funds rate at 5.25% to 5.5% since July 2023. However, the committee has suggested that it could begin easing monetary policy later this year if economic data gives it confidence that it is making progress in dialing back inflation. Speaking during a panel discussion at the Canada Institute, Powell said data for the first three months of the year have shown that inflation pressures remain persistent.
"The recent data have clearly not given us greater confidence and instead indicate that it is going to take longer than expected to achieve that confidence," Powell said.
In a separate speech Tuesday, Fed Vice Chairman Philip Jefferson also expressed caution, saying the job of restoring 2% inflation is not yet done. "Of course, the outlook is still quite uncertain, and if incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer," Jefferson said. The FOMC next meets April 30-May 1.