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Wednesday, October 30, 2024

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Associate Members

NMLS licensees urged to complete new login process


The Conference of State Bank Supervisors encouraged Nationwide Multistate Licensing System licensees to complete a new login process before Nov. 1.

 

CSBS said the NMLS has a new login process that requires users to update their username and password and establish account recovery details. Licensees should complete this process before Nov. 1 to save time during NMLS annual renewals, the CSBS said.

 

State licensees in the mortgage, money transmission, debt collection, and consumer financial services industry renew their licenses in NMLS annually. Mortgage loan originators and mortgage companies account for nearly 793,000 state licenses to be renewed.

 

The NMLS renewal period in most states runs from Nov. 1 to Dec. 31. State-licensed MLOs must complete annual continuing education requirements to renew their licenses, and federally registered MLOs and institutions must also renew their registrations via NMLS by Dec. 31.st

Source: CSBS

CFPB urged to rescind circular on overdraft practices


ICBA and other groups called on the Consumer Financial Protection Bureau to withdraw its Sept. 17 circular on improper overdraft opt-in practices.

 

The groups said:

  • Through the guidance, the CFPB is establishing new expectations in recordkeeping and effectively changing existing laws.
  • The circular asserts that a bank can be in violation of the Electronic Funds Transfer Act and Regulation E if the institution does not have “proof that it obtained affirmative consent” to enroll a customer in the institution’s overdraft program for POS debit card or ATM transactions.
  • By imposing new obligations on regulated parties, the circular is a legislative rule that should have gone through notice-and-comment rulemaking, and its issuance violates the Administrative Procedure Act.


Source: ICBA

Companies must follow FCRA rules when tracking employees


The Consumer Financial Protection Bureau issued a circular that said that companies using third-party consumer reports must follow Fair Credit Reporting Act rules. 

 

The CFPB said that employers that use consumer reports—both when hiring workers and for subsequent employment purposes—must comply with FCRA obligations, including:  

  • The requirement to obtain a worker’s permission to procure a consumer report.
  • The obligation to provide notices before and upon taking adverse actions.
  • A prohibition on using consumer reports for purposes other than the permissible purposes described in the FCRA. 

Source: CFPB

An article from ACB Associate Member

Sawyers & Jacobs, LLC

A Key Trait of a High - Performing Bank - a Culture of Awareness


"Security awareness has been necessary since the dawn of

banking. However, security risks are constantly changing,

and the prolific and evolving threats from cybersecurity

should continue to be a primary focus of bank management."


This article from the Arkansas Community Banker by Jason Corder, Senior Vice President with Sawyers & Jacobs, LLC explores "traits present in a high-performing bank that are not as straightforward. These traits are more subjective, a little more “touchy-feely.” Learn more about his insight into these aspects of measuring bank performance.

Source: Sawyers & Jacobs, LLC; Arkansas Community Banker

Bank resolution disparities show challenge of too-big-to-fail


After regulators last week closed an Oklahoma bank and indicated there were underlying issues of fraud that led to the closure, ICBA said it is troubled by the circumstances in which uninsured depositors of the bank were left without the same resolution that frequently applies to troubled too-big-to-fail banks.

 

In a message to community bankers, ICBA President and CEO Rebeca Romero Rainey said that while First National Bank of Lindsay, Okla., customers will have access to 50% of their uninsured deposits, regulators last year invoked the “systemic risk exception” to protect all depositors in the failed Silicon Valley Bank, then the 16th largest bank in the country.

 

 “While the FDIC last week acted according to its statutory authority in proceeding with a resolution option that was the least costly to the DIF, the disparity we continue to see in the FDIC’s approach to bank failures is yet another example of how too-big-to-fail is institutionalized in our system of banking regulations,” Romero Rainey said.

 Source: ICBA

FDIC extends compliance date for some signage rules


The FDIC announced that it is extending the compliance date for the new signage and advertising rule from Jan. 1, 2025, to May 1, 2025.

 

The FDIC said the extension applies only to a portion of the final rule designed to modernize the rules governing use of the official FDIC signs and advertising statements. The compliance date related to misrepresentations of deposit insurance coverage remains Jan.1, 2025.

 

ICBA Education recently released an FDIC Signage and Advertisement Requirements Policy that helps community banks adhere to these regulations, including display guidelines for official signs and advertisements.


Source: FDIC; ICBA

Proposed changes to FHLBanks


The Federal Housing Finance Agency (FHFA) is proposing changes to Federal Home Loan Banks' (FHLBanks) corporate governance rules, including expanding areas of knowledge and experience for independent directors to include areas like artificial intelligence, Community Development Financial Institution business models, climate risk, information technology and security; allowing the FHFA director to establish an annual amount of director compensation determined to be "reasonable;" and requiring FHLBanks to implement conflict of interest policies that address outside positions and financial interests of employees, close family members, and associates, as well as prohibit executive officers and senior management from holding paid positions at potential and existing members, housing associates, or their affiliates.

Source: FHFA

Credit union – bank acquisitions likely unaffected by FDIC merger policy


Credit union acquisitions of banks have been on the rise, and advisers predict deals will likely proceed without new obstacles under the Federal Deposit Insurance Corp.'s newly finalized merger guidance.

 

The FDIC's final Statement of Policy on mergers will take effect on Oct. 28, and it mentions credit unions as an example of an entity that could engage in a deal that would be subject to review. However, the policy statement does not significantly change the process or expectation for Bank Merger Act filings, whether the deals involve credit unions or not, said Joseph Silvia, partner at Duane Morris LLP, who advises financial institutions on M&A and other topics.

"It's largely the same review that they're already doing," Silvia said in an interview.

 

The FDIC wrote in the final statement that merger applications that involve an "operating non-insured entity are subject to the same statutory factors as any other merger application." While the FDIC's Deposit Insurance Fund does not cover credit unions, they are covered by something similar, the National Credit Union Administration's Share Insurance Fund. The National Credit Union Administration, which regulates credit unions, does its own review of credit union-bank deals.

 

During the FDIC's reviews of deal applications, it will "consider the nature and complexity of the non-insured entity, its scale relative to the existing [insured depository institution], its current condition and historical performance, and any other relevant information regarding the entity's operations or risk profile," according to the final statement.

 

Even beyond the credit union portion, advisers said the FDIC was putting existing practices into writing rather than creating new ones.

 

"There's just additional discussion about how they look at the statutory factors," Silvia said. "But, if you're in this space, and you've applied with the FDIC, you know that this is how they've been doing business. So it should not be a surprise to anybody how they're looking at these applications or the statutory factors."

 

Even though some are familiar with the current process, the statement can be helpful for them and others.

 

The FDIC "put their practice into writing, which is helpful to provide guidance to market participants so that everyone knows what to expect, rather than finding out through the regulatory process and being a little blindsided," said Sumaira Shaikh, associate at Hunton Andrews Kurth LLP, who represents financial institutions on M&A and more, in an interview.



Shaikh added that part of that practice involves doing additional analysis related to the "convenience and needs" statutory factor because, although banks can be compared to each other based on their Community Reinvestment Act (CRA) reports, credit unions are not subject to the CRA.

 

Not being subject to the CRA is just one reason banks might be interested in selling to credit unions. Compared to bank buyers, credit unions can often pay more because of their tax-exempt status, and their ability to offer attractive pricing has enticed some banks to sell even when they were not for sale. Given tax exemption and the perceived regulatory advantages, bank trade groups have been critical of the deals because they believe credit unions have an unfair advantage, and the trade groups have encouraged regulators to apply additional scrutiny. Some state lawmakers have pushed back against the deals.

 

A growing number of credit unions have still been looking to acquire banks as 2024 has been a record-setting year for the deals. There have been 19 credit union-bank deals announced this year, up from 11 in 2023 and 14 in 2022, according to S&P Global Market Intelligence data through Oct. 23.

 

In general, banks' acquisitions of credit unions are among the deal types that take longer to obtain approval.

 

"If anything, in my experience, bank-to-bank transactions tend to be on a shorter time frame," Shaikh said.Fed.


Source: S&P Global Market Intelligence

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