In the past several days, the FDIC and the OCC have released material of high importance to community banks. Today, the FDIC published a special edition of its Supervisory Insights that addresses exclusively corporate governance at community banks. The publication will be the subject of discussion tomorrow at the FDIC’s community banking conference. The conference can be streamed live. Separately, regarding FinTech and marketplace lending, the OCC last week issued a white paper on its possible approaches to innovation in these areas. The OCC has scheduled a forum on new technology on June 23 in Washington, D.C. We will discuss the white paper in further detail in an alert later this week that will be available on our website at /newsletters.

In other noteworthy developments, the Federal Reserve Board released a study on mobile banking that confirms that it has taken hold yet still has some way to go. In a highly publicized announcement in another area – too big to fail – a federal district rescinded the Financial Stability Oversight Council's designation of MetLife as a systemically important financial institution. Separately, GE Capital asked the Council to rescind its designation.

The full set of developments over the last week includes:

The Economy

  • March jobs report shows unemployment rate unchanged at 5.0%.

Community Banks

Debt Collection

  • CFPB releases monthly complaint snapshot, highlighting consumer complaints about debt collection (Mar. 29).

FinTech

  • OCC releases white paper, Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective (Mar. 31).

Mobile Banking

  • Federal Reserve releases results of survey of mobile phone use for banking services,Consumer and Mobile Financial Services 2016 (Mar. 30).
    • Use of mobile banking up 4% from last year.
    • Greatest use is for checking account balances or recent transactions, payments between accounts, and receipt of alerts from banks.
    • Online and ATMs more popular; branch offices less popular.
    • Mobile payments used less frequently at around 25% of users making a mobile payment within last 12 months.
    • Survey available at http://www.federalreserve.gov/newsevents/press/other/20160330a.htm.

Monetary Policy

  • "The Outlook, Uncertainty, and Monetary Policy," remarks of Federal Reserve Chair Yellen at the Economic Club of New York (Mar. 29).

Mortgage Lending

Payment Systems

Regulation

  • GAO publishes report, Financial Regulation: Complex and Fragmented Structure Could Be Streamlined to Improve Effectiveness (Mar. 28).
    • Recommendations:
      • Congress should consider whether changes to the financial regulatory structure are needed to reduce or better manage fragmentation and overlap.
      • Congress should also consider whether legislative changes are needed to align FSOC's authorities with its mission to respond to systemic risks.
      • Office of Financial Research and the Federal Reserve should (1) jointly articulate individual and common goals for their systemic risk monitoring activities and engage in collaborative practices to support those goals; and (2) regularly and fully incorporate their monitoring tools, assessments, or results of monitoring activities into Systemic Risk Committee deliberations. Federal Reserve and OFR agreed with GAO's recommendations.
    • Report No. GAO-16-175 available at http://www.gao.gov/products/GAO-16-175.

Student Loans

  • CFPB enters into consent order with Student Aid Institute (Mar. 30).
    • Deceptive practices and violations of Telemarketing Sales Rule and privacy regulation:
      • Unlawful fees for federal loan benefits.
      • Misrepresentation of benefits and terms of service.
      • Failure to provide required privacy notices.
      • Misrepresentation of affiliation with Dep't of Education.
    • Remedies:
      • Cessation of debt relief services.
      • Cancellation of all contracts with consumers and cessation of imposition of fees.
      • No further participation in debt relief industry.
      • Requirement to ensure student loan borrowers do not miss important repayment benefits.
      • Civil money penalty of $50,000.
    • Order available at http://www.consumerfinance.gov/newsroom/cfpb-halts-student-loan-debt-relief-scam/.

Too Big to Fail

  • Federal Reserve finalizes rule on inclusion of certain municipal bonds in high quality liquid assets for purpose of liquidity coverage ratio (Apr. 1).
    • Rule applies to investment-grade U.S. general obligation state and municipal securities that meet same requirements as corporate debt securities included in HQLA.
    • Bonds treated as Level 2B assets.
    • Amount includable subject to certain limitations.
    • Rule (and LCR requirements generally) apply to bank holding companies with more than $50 billion in assets.
    • Rule available at http://www.federalreserve.gov/newsevents/press/bcreg/20160401a.htm. 
  • GAO publishes report, Financial Regulation: Complex and Fragmented Structure Could Be Streamlined to Improve Effectiveness (Mar. 28).
    • Focus is on supervision of systemically risky institutions.
    • For further information, see Regulation above.
  • Office of Financial Research publishes working paper, Stopping Contagion with Bailouts: Microevidence from Pennsylvania Bank Networks During the Panic of 1884 (Mar. 30).

Trading and Derivatives

  • OCC issues Quarterly Report on Bank Trading and Derivatives Activities for fourth quarter 2015 (Mar. 30).

Congressional Activity – Upcoming

  • Apr. 5
    • Senate Banking Committee hearing, "Assessing the Effects of Consumer Finance Regulations."
  • Apr. 7
    • Senate Banking Committee.
      • Hearing, "The Consumer Financial Protection Bureau's Semi-Annual Report to Congress."
      • Executive Session to vote on nominations.
  • Apr. 14
    • Senate Banking Committee hearing, "Examining Current Trends and Changes in the Fixed-Income Markets."

Upcoming Events

  • Apr. 5-6
    • OCC Director Workshop, "Building Blocks for Directors: Keys to Success," Omaha NE.
  • Apr. 6
    • FDIC Community Banking Conference, "Strategies for Long-Term Success," Arlington VA.
    • FDIC Comprehensive Deposit Insurance Seminar.
  • Apr. 7
    • FDIC Advisory Committee on Community Banking meeting, Washington DC.
  • Apr. 14
    • FDIC Systemic Risk Resolution Advisory Committee meeting, Washington DC.
  • Apr. 19
    • OCC Director Workshop, "Risk Governance – Improving Director Effectiveness," Williamsburg VA.
  • Apr. 20
    • OCC Director Workshop, "Credit Risk: Directors Can Make A Difference," Williamsburg VA.
    • FDIC Money Smart special online live meeting.
  • April 21
    • FDIC Atlanta regional regulatory conference call: "Cybersecurity Intelligence, Resilience and Management."
  • May 2-4
    • OCC Director Workshop, "Building Blocks for Directors: Keys to Success," Wilmington DE.
  • May 3
    • OCC Director Workshop, "Risk Governance – Improving Director Effectiveness," Springfield IL.
  • May 4
    • OCC Director Workshop, "Compliance Risk: What Directors Need to Know," Springfield IL.
  • May 17
    • OCC Director Workshop, "Credit Risk: Directors Can Make A Difference," Corpus Christi TX.
  • May 18
    • OCC Director Workshop, "Operational Risk – Navigating Rapid Changes," Corpus Christi TX.
  • June 23
    • OCC forum on "responsible innovation" (FinTech), Washington DC.

Regulatory Comment Deadlines

  • Apr. 25 – CFPB: expansion of mortgage rules to cover more small lenders operating in rural or underserved areas.
  • Apr. 29 – Federal Reserve: reduction in dividend rate on Reserve Bank stock held by member banks with total assets of more than $10 billion.
  • Apr. 29 – Federal Reserve, OCC, FDIC: ceiling on eligibility for 18-month examination cycle increased from $500 million to $1 billion.
  • May 2 – SEC/FDIC: application of orderly liquidation authority to broker-dealers.
  • May 13 – OCC: changes to various regulations to remove undue burdens.
  • May 26 – FDIC: recordkeeping requirements for banks with more than 2 million deposit accounts.
  • May 31 – OCC: white paper on responsible innovation (FinTech).
  • June 3 – Federal Reserve: single party credit exposures.