On April 10, 2018, the Federal Financial Institutions Examination Council (the “FFIEC”), an interagency body composed of the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency and the State Liaison Committee, issued guidance to assist financial institutions in analyzing the use of cyber insurance in an effective risk management program (the “Guidance”).
On April 3, 2018, the Department of Treasury released recommendations to “modernize” the Community Reinvestment Act of 1977 (“CRA”). Treasury’s recommendations include:
- updating the definitions of geographic assessment areas to reflect the changing nature of banking arising from changing technology, customer behavior, and other factors;
- increasing clarity and flexibility of CRA examinations to increase transparency and effectiveness of CRA rating determinations;
- improving the examination process to increase timeliness of evaluations and increasing accountability for banks’ planning of their CRA activity; and
- incorporating performance incentives to better serve the CRA’s intended purpose of encouraging banks to meet the credit and deposit needs of their communities.
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In a recent interview, Comptroller of the Currency Joseph Otting, announced the OCC’s plan to “clarify” its support of bank-offered deposit advance products. “Deposit advance products” are typically defined as small-dollar, short-term loans or lines of credit that are to be repaid from the proceeds of the consumer’s next direct deposit. The WSJ reports that the OCC’s planned announcement will focus on 45-to-90 day loans.
According to the Federal Deposit Insurance Corporation (“FDIC”), from 2000 to 2008 there were 1,042 de novo community banks newly chartered in the United States. From 2011-2017, the FDIC received only 30 de novo applications for deposit insurance. Of those 30 applications received, six have been approved, 10 withdrawn and 14 remain outstanding. At year end 2017, the number of U.S. banks fell below 5,700 – a number the industry hasn’t seen since the 19th century. Recently, the FDIC indicated that it has warmed to the idea of accepting de novo bank applications. Now may be the time for interested investors to assess the possibility of entering the community bank industry.
In November 2016, with the election results confirmed, the banking industry was awash in hopes for a more lenient regulatory posture. To date, the industry has seen no reform. However, on March 14, 2018, the Senate passed and sent to the House of Representatives the bipartisan Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) (the “Consumer Protection Act”). Below we provide a brief summary of some of the Consumer Protection Act’s major provisions.