November 27, 2019
 
Community Bank Services


 
 
BKD 2010
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Senate Passes Spending Bill with SBA 7(a) Extension   

The Senate passed a short-term spending bill that includes an extension of the Small Business Administration 7(a) guaranteed lending program. The 74-20 vote sent the continuing resolution to President Donald Trump and was signed into law hours before the midnight deadline. ICBA called on Senate leaders to ensure the stopgap spending bill, which runs through Dec. 20, included the SBA funds.
 

Senate Urged to Take Up BSA Reform 

ICBA called on Senate Banking Committee leaders to mark-up bipartisan legislation that would help modernize the Bank Secrecy Act by creating a central database of company beneficial ownership information at the Financial Crimes Enforcement Network.

 

The ILLICIT CASH Act (S. 2563), sponsored by a bipartisan group of eight Senate Banking Committee members, would complement ICBA-supported legislation that the House passed last month. Those bills would require small businesses to disclose their "beneficial owners" directly to FinCEN (H.R. 2513) and index currency transaction report thresholds to inflation (H.R. 2514).
 

Small Mortgage Servicers Have Fewer Delinquencies  

The Consumer Financial Protection Bureau said community banks and other smaller mortgage servicers play an outsize role in rural areas, experienced lower delinquencies during the financial crisis, and are less likely to service loans sold to Fannie Mae or Freddie Mac.
 
According to the bureau, 74 percent of borrowers with mortgages at small servicers said having a branch or office nearby was important in how they chose their mortgage lender, compared with 44 percent of those with large servicers. It also found that while delinquency rates on loans at servicers of all sizes increased in 2008 amid the crisis, peak rates were much lower for small servicers.
 
The Report  >>  
 

Treasury Taking 'Very Hard Look' at Cryptocurrency Risks           

Deputy Treasury Secretary Justin Muzinich put developers of so- called "stablecoins" like Libra on alert, warning that their governance structures are of concern for U.S. policymakers. Even stablecoins-which are virtual or digital currencies that are backed by or pegged to real assets, such as fiat currency, to minimize the volatility that has affected cryptocurrencies like bitcoin-that comply with existing money laundering, tax and other requirements may pose risks, Muzinich said.
 
"If a cryptocurrency checked all the near-term regulatory boxes today and grew to scale, what would be the process for making changes to rules governing the currency in the future?" he asked during a speech at the Clearing House/Bank Policy Institute annual conference. "If a decade from now there were a desire for a stablecoin to go from fully reserved to partially reserved, or to shift its underlying mix of reserve currencies, would that decision be made by a private governing association or by a majority of coin holders? What if foreign actors had acquired a majority of the coins? In any case, would important decisions about our economic system have been taken out of the hands of representatives accountable to the people?"
 
Muzinich's comments came as part of a broader regulatory and legislative response to Libra, a stablecoin proposed by Facebook that would be backed by a mix of reserve currencies and governed by a Switzerland-based association. "Decentralized privately-issued digital currencies are not simply a means of payment, but, depending on their structure, can shift some functions traditionally performed by government to the private sector," said Muzinich. "Policymakers, in pursuing the public interest, will take a very hard look at these issues."
 

Five-Year Review of TILA-RESPA Integrated Disclosure Rule  

The Consumer Financial Protection Bureau (CFPB) plans to conduct a five-year assessment of the 2013 TILA-RESPA Integrated Disclosure rule. The CFPB is conducting the review pursuant to the Dodd-Frank Act, which requires that all significant rules issued by the bureau be assessed within five years of their effective date.
 
The CFPB is seeking feedback on the costs and benefits of the TRID rule for consumers, lenders and other stakeholders, aspects of the rule that are confusing or in need of further guidance and recommendations for modifying, expanding or eliminating the rule, among other things.
 
The Plan  >>  
 

FedNow Not Open to Nonbanks           

Nonbanks should not expect direct access to FedNow, the 24/7/365 payments system being developed by the Federal Reserve.
 
"Congress has more or less clarified who can have an account at the Fed," said Federal Reserve Board of Governors General Counsel Mark Van Der Weide at the Clearing House/Bank Policy Institute annual conference today. "It's depository institutions as defined in the Federal Reserve Act, and we will follow that law." Under the Fed's proposal, FedNow transactions would be funded directly from depository institution master accounts.
 

Opposition to Farm Credit Plan to Undermine Farmer Mac  
 
ICBA expressed opposition to a proposal that would allow Farm  Credit System lenders to buy, sell and hold the guaranteed portion of USDA loans as part of their "investment" activities.
 
The Farm Credit Administration proposal would effectively allow FCS lenders to duplicate Farmer Mac's role in the secondary market regarding USDA guaranteed loan sales and purchases.
 
In a comment letter, ICBA told the FCA that diminishing Farmer Mac's role as a secondary market provider would ultimately reduce bank access to non-FCS secondary market loan purchasers.  
 

Answer of the Week        

Question:   What types of loans are excluded from payday lending rule?
 
Answer:   In general, the payday lending rule excludes credit from being a covered loan if it is any of the following:
  1. Purchase money security interest loan
  2. Real estate secured credit (this exclusion applies if the lender records otherwise perfects the security interest within the term of the loan
  3. Credit card account - if it is account under open end (not home secured) as defined in Regulation Z
  4. Student loan - if it is made, insured, or guaranteed by a program under Higher education act or private education as defined by Reg Z
  5. Non-recourse pawn loan - if 2 conditions are satisfied
  6. Overdraft service; overdraft line of credit as defined by Regulation E
  7. Wage advance program if conditions are satisfied
  8. No cost advance if conditions are satisfied.
Reference: Payday Vehicle Title, and Certain High-Cost Installment Loans: 12 CFR 1041.3(d). CFPB, Small Entity Compliance Guide: Payday Lending Rule: Payment Related Requirements 2.0, page 17-19.