STATE GOVERNMENT RELATIONS
IHCDA Annual Report Shows Increased Interest in Homeownership Program
The Indiana Housing & Community Development Authority (IHCDA) recently released its annual report. The organization's Homeownership Program, which provides certain Hoosiers with up to 6% down payment assistance, helped 2,678 homebuyers compared to 2,539 the year prior, providing an average down payment assistance of $9,675, up from $7,680 in 2021, according to the report.
FEDERAL GOVERNMENT RELATIONS
Democratic Senators Urge Fed to Review Bank Merger Policy
Senate Banking Committee Chairman Sherrod Brown, D-Ohio, and three Democratic committee members Wednesday urged the Federal Reserve to review and reconsider its approach to large bank mergers, including the agency's framework for evaluating a merger's impact on financial stability.
In their letter, the senators noted the Dodd-Frank Act included an amendment to the Bank Merger Act that mandated federal banking regulators consider financial stability in evaluating bank mergers. They said the Fed has not issued any rules or guidance indicating the types of bank mergers that would implicate financial stability concerns.
"We hope that, following the failures of [Silicon Valley Bank], Signature Bank and First Republic Bank, and the acquisition of Credit Suisse by UBS, we will see real changes to the bank merger process to protect financial stability and ensure that we have a fair and competitive banking system that serves all communities," they said. The letter was cosigned by Sens. Jack Reed, D-R.I., Elizabeth Warren, D-Mass., and John Fetterman, D-Pa.
Fed Announces New Supervisory Program for Crypto, Nonbank Partnerships
The Federal Reserve Tuesday announced that the banks it supervises should first receive written notification of supervisory nonobjection from the agency before engaging with tokens using distributed ledger technology or similar technologies to facilitate payments. The Fed also announced the establishment of a Novel Activities Supervision Program to enhance the supervision of novel activities related to cryptoassets, distributed ledger technology and "complex, technology-driven" partnerships with nonbanks to deliver financial services.
In January, the Fed released guidelines for evaluating requests from banks it supervises seeking to engage in novel activities, such as those involving cryptoassets. In its announcement Tuesday, the agency said that to obtain a written notification of supervisory nonobjection, a state member bank must demonstrate that it has established appropriate risk management practices for the proposed activities, including having adequate systems in place to identify, measure, monitor and control the risks of its activities, and the ability to do so on an ongoing basis.
The Fed said the new supervisory program will be risk-based, with the level and intensity of supervision varying depending on each supervised banking organization's level of engagement in novel activities. It will notify in writing those institutions whose novel activities will be subject to examination through the program. The Fed added that it will periodically evaluate and update which banks should be subject to examination and will routinely monitor supervised banking organizations that are exploring novel activities.
Read the Fed letter on the nonobjection process
Read the Fed letter on the new supervisory program
FHFA Weighing Changes to Rollout for New Credit Score Models
On Monday the Federal Housing Finance Agency responded to recent industry communications expressing concerns about implementation timeframes for credit score reforms. The agency offered that it is considering potential adjustments to a proposed timeline under which Fannie Mae and Freddie Mac would replace the current FICO credit score model with the FICO 10T and the VantageScore 4.0 credit score models, as well as a planned transition from requiring three credit reports to two for single-family loans. The comments were in reply to a June letter signed by the American Bankers Association and 16 other organizations expressing concerns about the proposal.
Under the proposed timeline, FHFA would implement the new credit score models over two phases in 2024 and 2025. In the letter the groups said the agency had not adequately addressed the far-reaching effects, significant costs and immense operational complexity of the policy changes it proposed. They recommended "sufficient time and an adaptable structure" to consider and incorporate stakeholder feedback, adding that a "disciplined and orderly transition will minimize risk to the stability of the housing finance system."
In its response, FHFA said it is considering potential adjustments to the proposed timeline to ensure it facilitates a smooth transition to the new models and requirements. The agency also said it understood the need for data to support stakeholder analysis of the effects of the new credit score models, so it is "working diligently to secure the historical data needed for this analysis." FHFA added that it and the GSEs are developing mechanisms to ensure stakeholder engagement, such as publishing a playbook with timelines and resources, as well as training opportunities.