August 8, 2018

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The Treasury Department released a report with over 80 recommendations covering nonbank supervision, fintech companies, and innovation, and the OCC announced they will proceed with offering a fintech charter.
Several recommendations by Treasury have a direct impact on how state regulators supervise nonbank and fintech companies, including:
OCC Fintech Charter
  • Treasury recommends that the OCC move forward with applications for special purpose national bank charters, commonly known as the OCC Fintech Charter
  • To reduce taxpayer risk, the Fintech Charter should not be permitted to accept FDIC-insured deposits
  • The Federal Reserve should consider whether recipients of a Fintech Charter should receive access to federal payment services.
  • CSBS strongly opposes the OCC Fintech Charter
Federal Sandbox
  • Treasury recommends that federal and state financial regulators establish a unified regulatory sandbox that provides regulatory relief and promotes innovative products, services, and processes.
  • If state and federal financial regulators cannot do this, Treasury recommends that Congress consider legislation to enable a fintech sandbox, preempting state laws if necessary.
Harmonizing Multistate Nonbank Regulation
  • Treasury supports state regulators' efforts to harmonize multi-state licensing requirements, citing by name and crediting states with CSBS Vision 2020.
  • Treasury recommends more accelerated action to reduce inconsistencies across state laws and recommends a passporting system for licensing.
  • If states are unable to achieve meaningful harmonization within three years, Treasury recommends Congress act to force greater uniformity between the states.
OCC Release  >>  
Even while the Treasury Department endorses federal overreach in fintech, the agency recognizes the shortcomings of federal supervision in education.
Politico Pro [Subscription Required] Reports:
"A Treasury Department report released Tuesday criticizes the Education Department's oversight of the federal student loan program and calls on Congress to hold low-performing colleges more accountable. The sweeping report, submitted by Treasury Secretary Steven Mnuchin to the White House, recommends that the Education Department create minimum standards for federal student loan servicing companies. The report also appears to challenge Education Secretary Betsy DeVos' argument that states lack the authority to regulate those companies."
CSBS  opposes the Education Department's plans to preempt state supervision of the student loan industry.
Read More   >> 
In the previous quarter, banks kept terms and standards for business loans unchanged or eased them slightly, while tightening slightly on commercial real estate loans and easing in most residential mortgage loan categories, according to the Federal Reserve's latest senior loan officer opinion survey. When looking at the past 13 years, lenders reported that standards for C&I loans tended to be easier than the midpoint for that period, while standards on mortgage and CRE loans were said to be tighter than the midpoint.
On net, 16 percent of banks - up from the period before - eased standards and terms for commercial and industrial loans to large and middle-market firms; just 7.5 percent banks on net said they eased for smaller firms. For large and midsize firms, banks that eased terms were more likely to allow bigger credit lines, relax interest rate spreads and cut the cost of credit lines. More than nine in 10 banks that eased cited more aggressive competition as an important reason; the few that did tighten standards cited the economic outlook or reduced risk tolerance. Demand for C&I loans increased; on net, 10 percent of banks reported getting more credit inquiries.
Meanwhile, fewer banks tightened on CRE loans than in the previous quarter; most banks kept standards unchanged for construction loans, while 7.3 percent reported tightening on multifamily loans. For residential mortgage loans, 15.3 percent reported easing on GSE-eligible mortgages; banks held standards unchanged or eased them on every mortgage loan type except for subprime. Mortgage demand slipped during the previous quarter. In the consumer lending category, a net 12 percent of banks tightened standards on credit cards, principally by lowering credit limits, increasing spreads and increasing the minimum required credit score, while a net 3.5 percent eased terms on auto loans.  
The Survey  >> 
Several financial trade groups urged the House Energy and Commerce Committee to advance legislation with the Financial Services Committee that would set strong data security standards and data breach notification requirements.
In a letter to Rep. Bob Latta (R-Ohio), chairman of the House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection, the groups called for legislation that would include a flexible, scalable standard equivalent to the Gramm-Leach-Bliley Act requirements for depository institutions; a GLBA-equivalent notification regime; consistent enforcement of the standards by the Federal Trade Commission and state attorneys general; and clear preemption of the often-conflicting patchwork of state breach laws.
"Any legislation enacted into law must ensure that all entities that handle consumers' sensitive financial data have in place a robust - yet flexible and scalable - process to protect data, which must be coupled with effective oversight and enforcement procedures to ensure accountability and compliance," the groups said. "This standard should apply to all entities that handle sensitive personal and financial data in order to provide meaningful and consistent protection for consumers nationwide."
The Letter  >>  
The Senate passed legislation reauthorizing the National Flood Insurance Program on the day it was slated to expire. The legislation, which the Senate passed 86-12, extends the NFIP through November.

In a news release, ICBA thanked Congress for the extension and called for a long-term solution. Following several stopgap extensions and lapses in recent years, ICBA is urging lawmakers to pass a long-term reauthorization of the NFIP that continues to provide affordable, reliable flood insurance for residential and commercial properties.
News Release  >> 
November 8, 2018
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