The Federal Reserve's and CSBS's third annual community banking conference and the release of the annual report on community banking highlighted the past week. Although no immediate initiatives emerged, the conference noted the decline in the number of community banks and considered ways to enhance the vitality of the sector. Of special interest are the remarks of Federal Reserve Governor Brainard who discussed the relationship between community banking and alternative online lenders.

Elsewhere, the CFPB sent a letter to industry trade groups on the eve of the effective date of the integrated disclosure rule describing how its examiners will approach compliance. Community banks are not, of course, subject to CFPB examinations, but the agency's views may inform the work of the federal banking agencies. Separately, a slightly disappointing jobs report was released accompanied by some downward revisions in earlier reports. Finally, remember that October is National Cybersecurity Awareness Month.

The full set of developments over the past two weeks is as follows:

The Economy

  • September jobs report released by Bureau of Labor Statistics (Oct. 2).
    • Unemployment rate remains at 5.1%.
    • Total nonfarm payroll employment increased by 142,000 jobs in September.
      • Job gains primarily in health care and information.
    • August and July jobs reports revised downwards by 59,000 jobs.
    • Report available at

Community Banking

  • 2015 Community Banking Report released by Federal Reserve System and CSBS (Oct. 1).
    • Findings include:
      • Hypothetical cost of regulatory compliance is $4.5 billion annually, representing 22% of net income across the sector.
      • Residential mortgage lines a primary product of 69% of respondent banks versus 75% in 2014. Decline anecdotally attributed to CFPB qualified mortgage rules.
      • Mobile banking services offered by 70% of community banks with another 20% planning to offer such services within next 3 years.
    • Report available at  
  • "Community Banking in the 21st Century," third annual community banking research and policy conference, hosted by the Federal Reserve System and CSBS (Sept. 30).
  • Global Capital Index shows largest banks with assets below $1 billion have average tangible equity capital ratio of 7.97%. Average ratio for U.S. G-SIBs is 5.73%.
    • See Too Big to Fail below.


Auto Lending

  • CFPB enters into consent order with indirect auto finance company and auto title lending subsidiary regarding illegal debt collection practices (Oct. 1).
  • CFPB and Justice Department settle fair lending claims against Fifth Third in connection with indirect auto lending (Sept. 28). See Fair Lending below.


  • Requirements for nonbank financial institutions: "Capital Regulation Across Financial Intermediaries," remarks of Federal Reserve Governor Tarullo at the Banque de France Conference (Paris, FR, Sept. 28).
  • Global Capital Index released (Sept. 28).

Credit Card Add-On Products


Fair Lending

Mortgage Lending – Know Before You Owe

  • New disclosure requirements took effect for all mortgage loan applications filed on or after October 3.  
  • CFPB sends letter to mortgage industry trade groups on initial examinations under the Know Before You Owe mortgage disclosure rule (Oct. 2).
    • "During initial examinations for compliance with the rule, the Bureau’s examiners will evaluate an institution’s compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance."
    • "Examiners will expect supervised entities to make good faith efforts to comply with the rule’s requirements in a timely manner."
    • "Specifically, examiners will consider: the institution’s implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and its handling of early technical problems or other implementation challenges."
    • Announcement (but no copy of letter) available at

Student Loans – Servicing

Virtual Currency

  • CFTC declares Bitcoin a commodity in consent order involving failure to register online trading facility (Sept. 17).
    • Consent order with Coinflip regarding failure to register as either a swap execution facility or a designated contract market a platform, known as Derivabit, for trading Bitcoin options.
    • Coinflip required to register and otherwise comply with Commodity Exchange Act requirements but no penalties.
    • Consent order available at

Congressional Activity – Recent

Congressional Activity – Upcoming

  • Oct. 8
    • House Financial Services Committee hearing, "The Future of Housing in America: 50 Years of HUD and its Impact on Federal Housing Policy."

Upcoming Events

  • Oct. 14
    • FDIC Chicago Region, Regional Regulatory Conference Call, "Real Estate Appraisals and Evaluations."  
  • Oct. 15-16
    • FDIC, 5th Annual Consumer Research Symposium, Arlington, VA.  
  • Oct. 19
    • EGRPRA outreach meeting, Chicago, IL.
  • Oct. 20
    • OCC director workshop, "Compliance Risk," Dallas, TX.  
  • Oct. 21
    • OCC director workshop, "Credit Risk," Dallas, TX.  
  • Oct. 26-27
    • OCC workshop, "Building Blocks for Directors," Chicago, IL.  
  • Oct. 27-28
    • FOMC meeting.  
  • Nov. 8-10
    • ABA National Conference.  
  • Nov. 19-20
    • National Community Investment Fund, 2015 Development Banking Conference, Chicago, IL.  
  • Dec. 15-16
    • FOMC meeting.

Regulatory Comment Deadlines

  • Oct. 30 – CFTC: reporting obligations of swap counterparties and registered entities.  
  • Nov. 2 – FinCEN: BSA/AML requirements for registered investment advisers.  
  • Nov. 17 – Federal Reserve/OCC/FDIC: call report changes.