FEDERAL GOVERNMENT RELATIONS
IBA Brings First Advocacy Group to Washington
This week over 50 IBA members joined together for the IBA Annual Washington Trip, becoming the first state banking association group to venture out to our nation’s capital for grassroots advocacy since the COVID-19 pandemic began. The trip began with briefings from the American Bankers Association and Independent Community Bankers of America to prepare members to better engage with regulators and legislators during the remainder of the trip. Attendees then received updates and conversed with representatives from the Department of the Treasury, Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, and Chair Jelena McWilliams from the Federal Deposit Insurance Corp.
Additionally, members held productive meetings with nearly all of Indiana’s congressional delegation on Capitol Hill to discuss topics including credit unions, proposed IRS reporting requirements, Farm Credit Services and more. To cap off a successful 2021 Washington visit, members enjoyed a night out at Nationals Park as the Washington Nationals defeated the Miami Marlins. Thank you to all the bankers and sponsoring associate members who engaged in this year’s trip!
FHFA Eliminates Industry-Opposed GSE Fee
The Federal Housing Finance Agency announced that it will eliminate the fee on refinance loans delivered to the government-sponsored enterprises.
Effective for loans delivered on Aug. 1 or later, lenders will no longer be required to pay Fannie Mae and Freddie Mac the 50-basis-point Adverse Market Refinance Fee, which was introduced last year.
After introducing the fee to cover projected losses at the GSEs caused by pandemic-related renter and borrower protections, the FHFA delayed the fee to December 2020 and exempted smaller loans.
In its announcement last Friday, the FHFA said the success of the GSEs’ COVID-19 policies reduced the impact of the pandemic enough to warrant an early end of the fee.
SBA Offers Guidance on PPP Purchase Process, Servicing Duties
The Small Business Administration has issued a new procedural notice to advise Paycheck Protection Program lenders of their servicing responsibilities and the purchase process to ensure a 100% guaranty on PPP loans.
Effective July 15, the existing PPP platform will:
- Be programmed to allow lenders to submit requests for guaranty purchase and charge-off for individual PPP loans.
- Make available Application Programming Interfaces using an automated method.
- Provide additional guidance, including step-by-step instructions.
Regarding servicing responsibilities, the notice says lenders:
- Must service PPP loans until they are fully forgiven, are paid in full, or the SBA purchases the guaranty and charges off any uncollectable remaining balance.
- Should work with the borrower to seek forgiveness at the end of the borrower’s loan forgiveness covered period or to request guaranty purchase and charge-off in the event of a default.
- Must meet additional responsibilities, such as keeping an accurate record of each loan and submitting monthly SBA Form 1502 reports.
The procedural notice provides additional guidance on borrowers who file for bankruptcy, requesting guaranty purchase and charge-off, required certifications and more.
CFPB Settlement Sets Sept. 30 Deadline for 1071 Proposal
A lawsuit on the Consumer Financial Protection Bureau’s implementation of small-business data collection and reporting rules determined that the bureau will issue a proposed rulemaking by Sept. 30, 2021, according to the Ballard Spahr law firm.
Section 1071 of the Dodd-Frank Act requires financial institutions to collect and report certain data on credit applications from women-owned, minority-owned, and small businesses, including the race, sex, and ethnicity of the principal owners.
With the California Reinvestment Coalition, et al, lawsuit alleging that the CFPB has wrongfully delayed adoption of regulations to implement the provisions, the agreement appears to provide a hard deadline on the rulemaking.
The CFPB last year issued an outline of proposals for implementing the rulemaking that would exempt community banks with $200 million or less in assets or up to 100 small-business loan originations.
FDIC Proposes Deposit Insurance Simplification
The Federal Deposit Insurance Corp. has issued a proposed rule to simplify aspects of the agency’s deposit insurance coverage rules.
First, the proposal would merge deposit insurance categories for revocable and irrevocable trusts while applying a common calculation for all trust accounts, making trust rules consistent and easier to understand for bankers and depositors.
The proposal also would amend the rule that governs coverage for mortgage servicing accounts to allow principal and interest funds advanced by a mortgage servicer to be included in the deposit insurance calculation.
Comments on the proposed rule will be accepted for 60 days after publication in the Federal Register.
Treasury: Stablecoin Recommendations Coming Soon
Treasury Secretary Janet Yellen met with federal regulators to discuss stablecoins, which are cryptocurrencies designed to maintain a stable value relative to specified assets.
According to Treasury, Yellen underscored the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place.
Agencies Signal Joint CRA Regulatory Overhaul to Come
Acting Comptroller of the Currency Michael Hsu announced that his agency will propose rescinding the changes to the Community Reinvestment Act regulations that were finalized in May 2020, and he also signaled the OCC’s intent to work together with the Federal Reserve and the Federal Deposit Insurance Corp. on a separate joint rulemaking to overhaul the CRA framework.
“While the OCC deserves credit for taking action to modernize the CRA through adoption of the 2020 rule, upon review I believe it was a false start,” Hsu said. “This is why we will propose rescinding it and facilitating an orderly transition to a new rule. I look forward to working with the other agencies to develop a joint notice of proposed rulemaking and building on the ANPR proposed by the [Fed] board in September 2020.”
In a joint statement, the agencies noted that they have “broad authority and responsibility for implementing the CRA,” and that “joint agency action will best achieve a consistent, modernized framework across all banks.”
The President’s Working Group on Financial Markets also issued a statement encouraging responsible payments innovation and stablecoin arrangements that comply with applicable U.S. legal, regulatory, and oversight requirements.
Treasury said the group, which convened the meeting along with FDIC and OCC officials, expects to issue recommendations in the coming months.