STATE GOVERNMENT RELATIONS
Indiana General Assembly Concludes 2020 Session
The Indiana General Assembly concluded the 2020 session late Wednesday evening. Lawmakers worked until midnight negotiating changes to the final bills that remained on the legislative calendar. Of the 913 bills that were filed at the start of session, 168 have passed the final steps of the legislative session. These bills will now move to the governor’s desk for action. The IBA had another successful legislative session advocating for several key policies notable to the industry. For a full summary of the session and its impact on the industry, please reference the upcoming IBA Legislative Summary set to be released next week.
FEDERAL GOVERNMENT RELATIONS
Agencies Issue Pandemic Planning Guidance for Banks
With the number of reported cases of the novel coronavirus on the rise in the U.S., the Federal Financial Institutions Examination Council last Friday issued guidance for banks on business continuity planning in the face of a pandemic. The agencies noted that plans should provide for: a preventive program; a documented strategy scaled to the stages of a pandemic outbreak; and a comprehensive framework to ensure the continuance of critical operations, a testing program and an oversight plan.
"Pandemic plans should be sufficiently flexible to effectively address a wide range of possible effects that could result from a pandemic," the guidance indicated. "[They] need to reflect the institution’s size, complexity, and business activities."
Agencies, Lawmakers to Banks: Work With Customers Affected by Coronavirus
Regulators and some members of Congress encouraged financial institutions to meet the financial needs of customers affected by the coronavirus, also known as COVID-19.
In a joint statement Monday, federal and state financial regulators said they will provide appropriate regulatory assistance to affected institutions and recognize potential staffing shortages. Prudent efforts consistent with safe and sound lending practices should not be subject to examiner criticism, they said.
Meanwhile, Senate Banking Committee Democrats urged federal and state officials to provide guidance to financial institutions to help affected communities. In a separate letter, the lawmakers called on financial trade groups to urge financial institutions to prioritize employees’ and customers’ health, economic well-being, and security amid the outbreak.
Also on Monday, Nacha reminded financial institutions of the importance of reviewing their business-continuity plans to ensure that they are prepared to maintain ACH payment processing capabilities. Federal regulators last week issued an interagency statement on pandemic planning with updated guidance on how to minimize the potential adverse effects of a pandemic.
CFPB to Issue Advisory Opinions, Encourage Self-Reporting
As part of its efforts to prevent consumer harm, the Consumer Financial Protection Bureau last Friday announced that it will issue advisory opinions to help companies understand legal and regulatory obligations. Advisory opinions issued under the program will include interpretations of the CFPB’s existing rules and will be published in the Federal Register, unlike the bureau’s current guidance process, under which responses on regulatory inquiries are available only to the requesters.
"Advisory opinions will ensure that companies know what compliance entails and what constitutes a violation," CFPB Director Kathleen Kraninger said. The bureau added that it will provide additional procedures on how the requests will be addressed and prioritized.
Meanwhile, the CFPB revised a 2013 bulletin on "responsible business conduct," particularly in self-assessing compliance, self-reporting likely violations, remediating the harm from those violations and cooperating with the bureau.
"[I]f an entity meaningfully engages in responsible conduct, the bureau intends to favorably consider such conduct, along with other relevant factors, in addressing violations of federal consumer financial law in supervisory and enforcement matters," the bulletin indicated. It further outlined several options available to the bureau to recognize responsible conduct and the factors that the bureau will consider in weighing responsible conduct.
FHFA Strengthens Duty to Serve Criteria
The Federal Housing Finance Agency said it is strengthening the Duty to Serve Underserved Markets program’s evaluation criteria. The "duty to serve" plans established by the Housing and Economic Recovery Act of 2008 require the enterprises to serve three specified underserved markets – manufactured housing, affordable housing preservation, and rural housing.
The updated guidance includes a revised ratings framework, higher expectations for impactful plans, and higher compliance thresholds. The FHFA indicated the updated guidance will ensure the programs have a significant impact in underserved communities.