NBA, Banking Groups Urge FHFA to Update FHLB Advance Qualifications
The NBA joined more than 70 banking associations in urging the Federal Housing Finance Authority (FHFA) to update regulations regarding the use of tangible capital to determine whether financial institutions qualify for Federal Home Loan Bank (FHLB) advances. Under current regulations, if a bank does not meet the required tangible capital levels, it could be denied access to the FHLB advance system unless its primary federal regulator (PFR) requests in writing that an advance be made or rolled over.
In a letter sent this week, the groups said Tier 1 capital is a better metric and "offers the best picture of a bank’s financial condition." They noted that in today’s rising interest rate environment the tangible capital metric could lead to the conclusion that otherwise sound banks are not creditworthy for purposes of access to FHLB advances.
"Making the change from tangible capital to regulatory capital in the near term, prior to any future stress, would help to ensure that banks, particularly smaller banks, have seamless access to an important liquidity tool without compromising the FHLBs’ ability to screen for troubled institutions or work with a bank’s PFR," the groups said.
Read the Letter
SBA Clarifies Time Period for Lenders to Seek SBA Purchase of PPP Loans
The Small Business Administration (SBA) issued a procedural notice clarifying the time period when Paycheck Protection Program (PPP) lenders may ask the agency to purchase the guarantee on a PPP loan. If a PPP loan matures while a lender request for a forgiveness payment or while a loan review decision is pending with SBA (including with the Office of Hearing and Appeals), the lender will have 180 days from the date of the SBA forgiveness payment or final SBA loan review decision to request that SBA honor the guaranty.
Deposit Insurance Rates to Increase in 2023
Despite significant opposition from the banking industry, including the NBA, the Federal Deposit Insurance Corporation Board of Directors unanimously voted to raise deposit insurance assessment rates by two basis points. Acting Board Chairman Martin Gruenberg said the change, “increases the likelihood that the reserve ratio will reach the statutory minimum of 1.35 percent within the deadline set by statute.”
Court Overturns HMDA Reporting Threshold for Small Entities
The D.C. District Court partly invalidated exemptions that allowed small mortgage lenders to avoid reporting closed-end loan data under the Home Mortgage Disclosure Act (HMDA).
Dollar Thresholds for Exempt Transactions Increase
Financial regulators announced that the dollar threshold at which higher-priced mortgage loans (HPML) become subject to special appraisal requirements will increase from $28,500 to $31,000 in 2023. The Federal Reserve and the Consumer Financial Protection Bureau also said that the threshold under which consumer credit and lease transactions under Regulation Z (Truth in Lending Act) and Regulation M (Consumer Leasing Act) are exempt will increase from $61,000 to $66,400 in 2023.
Reg Z and Reg M