The OCC has issued Bulletin 2023-27 on "Loan Purchase Activities - Legal Lending Limit Guidance."

Unless an exception applies, all loans and extensions of credit made by banks are subject to the Legal Lending Limit (LLL), which provides limitations on the total amount of loans and extensions of credit to any one borrower.

Aggregate exposures attributable to a single seller must be within the bank’s LLL. Loans are attributable to a seller under 12 CFR 32.2(q)(1)(iii) if the bank has direct or indirect recourse to the seller. Direct or indirect recourse can be explicit or implied.

If the bank does not have explicit or implied recourse to the seller, the loans are generally not attributable to the seller under 12 CFR 32.2(q)(1)(iii). In such cases, the purchased loans would generally be attributable under the LLL regulation to only the named borrowers on the loans, unless the direct benefit or common enterprise tests under 12 CFR 32.5 are met or other provisions under the LLL regulation warrant attribution to another party.

Federal Reserve Governor Michelle Bowman said she expects additional interest rate increases will likely be needed to lower inflation to the Federal Open Market Committee’s 2% goal.

Speaking at a Federal Reserve Bank of Atlanta listening session, Bowman also said monetary policy is not on a pre-set path and she will closely monitor incoming data and their implications for the economic outlook.

The FOMC last month voted unanimously to raise target interest rates by 25 basis points to a range of 5.25-5.50%, a 22-year high. The rate-setting body skipped a rate increase at its June meeting, ending 10 consecutive rate hikes.

On August 2, 2023, the Federal Reserve Board published amendments to section 201.51 of Regulation A [see 88 FR 50760] increasing the rates of interest charged by the Federal Reserve Banks for extensions of credit, and section 204.10 of Regulation D [see 88 FR 50761] increasing the interest rate paid on depository institutions' reserve balances.

The changes were effective August 2, and applicable as of July 27, 2023.

The Federal Reserve Board released additional information on its program to supervise novel activities in the banks it oversees, including stablecoin activity. The Fed board said:

1 • 1Novel activities include complex, technology-driven

 1 1 partnerships with nonbanks to provide banking services to customers as well as activities

 1 1 that involve crypto assets and distributed ledger or "blockchain" technology.

1 • 1The goal of the novel activities supervision program is to foster the benefits of financial

 1 1 innovation while recognizing and appropriately addressing risks to ensure the safety and

 1 1 soundness of the banking system.

1 • 1The program will be integrated into the Fed's existing supervisory processes, with program

 1 1 experts working alongside current supervisory teams to oversee banks engaged in novel

 1 1 activities.

The Fed board also provided additional information on the process for a state bank supervised by the Fed to follow before engaging in certain dollar token or stablecoin activity, including demonstrating to its Fed supervisors that it has appropriate safeguards to conduct the activity safely and soundly.

The Fed said the announcements are in line with its January policy statement clarifying that its regulatory limitations apply to both insured and uninsured depository institutions. That policy statement also said crypto activities—such as issuing stablecoins on decentralized networks—are “highly likely to be inconsistent with safe and sound banking practices.”

SR 23-7: Creation of Novel Activities Supervision Program

SR 23-8/CA 23-5: Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens

More: PayPal announces launch of stablecoin

The Federal Housing Finance Agency said it is considering adjustments to its plan for transitioning Fannie Mae and Freddie Mac to new credit score models. A June letter sent by ICBA and other groups representing the mortgage industry:

1 • 1Expressed concerns with the FHFA plan to replace the

 1 1 Classic FICO credit score model with FICO 10T and

 1 1 VantageScore 4.0.

1 • 1Said the implementation timeline and plan lack data and transparency and fail to address

 1 1 the far-reaching effects of the proposed policy changes.

1 • 1Called for stakeholder engagement, robust data transparency, and a recalibrated timeline.

In response, the FHFA said it is considering adjustments to the proposed timeline, understands the need for data to support stakeholder analysis of the impacts of the new credit score models, and is developing several mechanisms to ensure robust stakeholder engagement.

Total household debt edged up 0.1% in the second quarter as credit card balances increased 4.6% from the previous quarter to a series high of $1.03 trillion, the Federal Reserve Bank of New York said.

The NFIB said its Small Business Optimism Index increased 0.9 points in July to 91.9, the 19th consecutive month below the 49-year average of 98.

Wholesale inventories—a component of the U.S. gross domestic product—declined 0.5% in June but remained up 1.3% from a year ago, the Commerce Department reported.

The Federal Reserve System has posted its G.19 Consumer Credit data for June 2023.

1 • 1Consumer credit increased at a seasonally adjusted annual

 1 1 rate of 4 percent during the second quarter.

1 • 1Revolving credit increased at an annual rate of 7.1 percent, while nonrevolving credit

 1 1 increased at an annual rate of 3 percent.

1 • 1In June, consumer credit increased at an annual rate of 4.3 percent.

The FDIC issued a new letter demanding that a nonbank crypto entity cease making false or misleading representations about deposit insurance.

The FDIC said Unbanked Inc. of Alpharetta, Ga., made false representations on its website, in promotional materials, and on social media platforms stating or suggesting its crypto-related products and services are FDIC-insured.

The letter is the latest in a series of FDIC actions to prevent nonbanks from misleading consumers on deposit insurance. The agency last year issued:

1 • 1A consumer fact sheet addressing misrepresentations and misconceptions about crypto

 1 1 and deposit insurance.

1 • 1An advisory reminding banks dealing with crypto companies to confirm and monitor that

 1 1 these companies do not misrepresent deposit insurance.

The FDIC recently updated its Technical Assistance Video Program webpage. Video topics now include:

1 • 1Overview of the FDIC and the Examination Process: This

 1 1 video provides an overview of the FDIC, the FDIC’s mission,

 1 1 and how the FDIC conducts various examinations.

1 • 1Information for New Board Members: This video provides information for new bank board

 1 1 members and an overview of their responsibilities.

1 • 1Corporate Governance: This video highlights the importance of corporate governance and

 1 1 describes the roles of individual directors and the board as a whole.

1 • 1Interest Rate Risk: This video set includes an overview of interest rate risk; how it is

 1 1 measured, monitored, and controlled; and the board’s oversight role. The set also includes

 1 1 several short technical videos on various aspects of interest rate risk measurement and

 1 1 management.

1 • 1Current Expected Credit Losses: This video provides an overview of the Current Expected

 1 1 Credit Losses methodology, compares it to the incurred loss methodology, and delineates

 1 1 board and management responsibilities.

1 • 1Anti-Money Laundering/Countering the Financing of Terrorism: This video provides an

 1 1 overview of a bank director’s responsibilities relative to the Bank Secrecy Act (BSA) and

 1 1 related regulations.

1 • 1Fair Lending Overview - Credit Discrimination Risks and the FDIC Fair Lending Review

 1 1Process: This video provides a bank’s Board of Directors and senior management with an

 1 1 overview of the fair lending rules and credit discrimination risks, describes how a bank’s

 1 1 compliance management system can help identify and mitigate such risks, and explains

 1 1 how FDIC examiners conduct fair lending reviews.

1 • 1The Community Reinvestment Act: This video is designed to provide bank directors with

 1 1 foundational knowledge regarding the Community Reinvestment Act. Note: This video does

 1 1 not address the interagency notice of proposed rulemaking released on May 5, 2022 to

 1 1 revise the Community Reinvestment Act regulations.

These videos are available on the FDIC’s Technical Assistance Video Program webpage and on the FDIC’s YouTube channel.

The U.S. Department of Housing and Urban Development (HUD) has announced publication of updated guidance for Public Housing Authorities (PHAs) and owners of properties participating in HUD Multifamily Assisted Housing programs regarding the treatment of financial benefits received from participation in community solar energy programs or the presence of on-site solar facilities.

HUD updated this guidance to make it easier for program participants to understand and implement policies governing participation in solar programs so that residents can benefit from the expansion of these clean energy programs as provided in the Inflation Reduction Act. The new guidance consolidates multiple previously issued policy documents, along with current guidance for HUD programs supporting solar, including:

1 • 1New Community Solar Credits in Master Meter Buildings Guidance for Public Housing

 1 1 Authorities, which augments existing PIH guidance in PIH Notice-2022-34: Rate Reduction

 1 1 Incentive Guidance, Treatment of Community Solar Credits on Tenant Utility Bills; PIH

 1 1 Notice 2022-32: Small Rural Frozen Rolling Base Guidance; PIH Notice 2011-3: Energy

 1 1 Performance Contract Guidance; and

1 • 1New Housing Notice 2023-09 for Multifamily Assisted Housing property owners.