As we approach the summer doldrums, the agencies seem to be trying to clear their inventory with the release of various, and somewhat miscellaneous, pieces of guidance.  All community banks should take a moment to read the latest issue of the FDIC’s Supervisory Insights, which includes important articles on Matters Requiring Board Attention in examination reports and ways of reducing reliance on outside consultants.  Banks should also review the CFPB's proposed changes to HMDA reporting.  Different subsets of the industry should consider the OCC's analysis of mutual banks, the FDIC's step back from some of its guidance on third party payment processing services, the FDIC's study of minority-owned banks, and the FDIC's release on dividend payments by S-corporations.  The most publicized development of the past week was the SEC's finalization of rules on money market funds, a contentious issue on which the last word may be yet to come.

The full set of developments over the past week was as follows:

Community Banking

  • FDIC publishes “Supervisory Trends: ‘Matters Requiring Board Attention’ Highlight Evolving Risks in Banking” (July 29).
    • Describes MRBA categories cited most often at satisfactorily rated institutions and highlights trends in these categories since 2010.
      • Loans: credit administration and elevated volumes of problem assets.
      • Board/management: revisions to and compliance with board-approved policies, audit, and strategic plan.
    • Article available in Summer 2014 issue of Supervisory Insights, and at
  • FDIC publishes “Alternatives to Consultants: Meeting Regulatory Expectations with Internal Resources” (July 29).
    • Making use of available technical assistance and maintaining a dialogue with FDIC staff to clarify regulatory expectations in order to reduce reliance on outside consulting services.
    • Independent reviews of key bank functions using internal resources.
    • Article available in Summer 2014 issue of Supervisory Insights, and at




Dodd-Frank Anniversary



  • House Financial Services Committee markup scheduled for July 29.
    • H.R. 5018, the Federal Reserve Accountability and Transparency Act of 2014.
    • H.R. 4329, the Native American Housing Assistance and Self-Determination Reauthorization Act of 2014.
    • H.R. 3240, the Regulation D Study Act.
    • H.R. 3913, to amend the Bank Holding Company Act of 1956 to require agencies to make considerations relating to the promotion of efficiency, competition, and capital formation before issuing or modifying certain regulations.
    • H.R. 4042, the Community Bank Mortgage Service Asset Capital Requirements Study Act of 2014.
    • H.R. 5148, the Access to Affordable Mortgages Act of 2014.
    • Text of legislation available at

Minority-Owned Banks

  • Minority Depository Institutions: Structure, Performance, and Social Impact, FDIC Report (July 21).
    • "While the report notes that MDIs underperform non-MDI institutions in terms of standard industry measures of financial performance, it concludes that these organizations often promote the economic viability of minority and underserved communities, that is, populations that are underserved by mainstream financial institutions."  (FDIC press release.)
    • Part of FDIC Community Banking Initiative.
    • To be included in FDIC Quarterly 2014, vol. 8, no. 3; available now at

Money Market Funds

  • SEC finalizes rule on money market funds.
  • Proposals to amend money market fund rules.
    • Exemptions from certain confirmation requirements for transactions effected in shares of floating NAV money market funds.
    • Re-proposed amendments regarding use of credit ratings.
      • Comment deadline: 60 days after publication in Federal Register.

Mortgage Foreclosures

Municipal Bonds


  • Mutual Federal Savings Associations: Characteristics and Supervisory Considerationsreleased by OCC (July 22).
    • Certain supervisory issues unique to mutuals.
      • Capital: very limited ability to raise new capital; importance of capital planning.
      • Assets: concentration in residential mortgage lending.
      • Management: compensation, given absence of true stock options.
      • Earnings: mutuals tend to have lower earnings, net interest income, noninterest income, net interest margin, and return on equity, but more stable levels of profitability relative to stock federal savings associations.  Use of peer reviews.
      • Liquidity: mutuals typically rely much less on wholesale funding than stock federal savings associations.
      • Sensitivity to market risk: generally higher interest rate risk, given reliance on mortgage lending, and higher percentage of long-term FHLB advances.
    • OCC Bulletin 2014-35, available at
  • Remarks by Comptroller Curry before the Joint Mutual Forum (July 24).

Payment Processing

  • FDIC removes lists of merchant categories from guidance on account relationships with third-party payment processors (July 28). 
    • No merchant categories prohibited or discouraged.
      • Categories originally listed included payday lenders, firearms dealers, coin dealers, escort services, telemarketing and Internet merchant businesses.
    • FDIC continues to require adequate due diligence, underwriting, and ongoing monitoring of account relationships.
    • FIL-41-2014, available at
    • Existing guidance revised: FIL-127-2008, FIL-3-2012, FIL-43-2013, and "Managing Risks in Third-Party Relationships," Summer 2011, Supervisory Insights.

Prepaid Cards

  • CFPB begins accepting consumer complaints (July 21).


  • FDIC issues guidance (FIL-40-2014) on dividends to cover tax payments where dividends not otherwise permitted (July 21).  See Capital above.  Prerequisites: dividend may not exceed 40% of net income; bank must be rated CAMELS 1 or 2, with no written supervisory directive; and bank must remain at least adequately capitalized after dividend.

Third Party Service Providers

  • FDIC publishes article on reducing reliance on outside consultants.  See Community Banking above.

Bank Closings

  • GreenChoice Bank, fsb (Chicago, IL) (July 25).
    • Deposits assumed by Providence Bank, LLC (South Holland, IL), per P&A agreement with FDIC.

Congressional Hearings – Upcoming

  • House Financial Services Committee
    • July 30: "Allegations of Discrimination and Retaliation and the CFPB Management Culture."
  • Senate Banking Committee
    • July 30: "The Flood Insurance Claims Process in Communities After Sandy: Lessons Learned and Potential Improvements."
    • July 31: "Financial Products for Students: Issues and Challenges."
    • July 31: "Examining the GAO Report on Expectations of Government Support for Bank Holding Companies" (July 31).

Congressional Hearings – Last Week

Upcoming Events

  • July 28-30
    • OCC bank director workshop, "Mastering the Basics: A Director's Challenge" (Columbus OH).
  • July 29-30
    • FOMC meeting.
  • July 29
    • Don't Forget About Deposit Regulations, FDIC Chicago Region regulatory conference call.
  • July 30
    • House Financial Services Committee markup session, see Legislation above.
    • House Financial Services Committee and Senate Banking Committee hearings, seeCongressional Hearings – Upcoming above.
  • July 31
    • Senate Banking Committee hearings, see Congressional Hearings – Upcoming above.
    • Model Approaches to Community Bank/CDFI Partnerships, FDIC webinar.
  • Aug. 5-6
    • OCC workshops, Compliance Risk and Risk Assessment, for directors of national community banks and federal savings associations, Syracuse NY.
  • Aug. 21
    • Risk Management – Corporate Governance, teleconference by FDIC San Francisco Regional Office.
  • Aug. 27
    • Interagency Community Reinvestment Act Training for Bankers, Federal Reserve/FDIC/OCC workshop, Chicago IL.
  • Aug. 28
    • Building Community/Bank Partnerships, FDIC session, Indianapolis IN.
  • Sept. 23-24
    • Community Banking in the 21st Century, Federal Reserve System/CSBS Second Annual Community Banking Research Conference. 
  • Oct. 16-17
    • FDIC annual Consumer Research Symposium.

Regulatory Comment Deadlines

  • Aug. 4 – FHFA: Fannie and Freddie guarantee fees.
  • Aug. 4 – CFTC: position limits on physical commodity derivatives and aggregation.
  • Aug. 11 – OCC: integration of national bank and federal savings association rules on corporate activities and transactions.
  • Aug. 11 – Federal Reserve: shift in 12-month cycle for capital planning and stress testing.
  • Aug. 22 – Federal Reserve/FDIC/OCC: changes to Schedules RC-R and RC-L of call report.
  • 30 days from publication in Federal Register – CFPB: expansion of consumer complaint database to include personal narratives.
  • Sept. 2 – Federal Reserve/FDIC/OCC: regulatory burden with respect to applications and reporting, powers and activities, and international operations.
  • Sept. 2 – OCC/FDIC: shift in 12-month cycle for capital planning and stress testing.
  • Sept. 10 – CFPB: request for information on mobile financial services.
  • 60 days from publication in Federal Register – FDIC: changes to risk-based deposit insurance assessment system.
  • 60 days from publication in Federal Register – SEC: references to credit ratings in money market rules.
  • Oct. 22 – CFPB: HMDA reporting requirements.