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The Federal Housing Finance Agency yesterday announced a proposed rule on Unsecured Credit Limits for Federal Home Loan Banks.

The proposed rule would improve the FHLBanks’ ability to provide liquidity to members by aligning the treatment of interest-bearing deposit accounts (IBDAs) and other authorized overnight investments with the treatment of Federal Funds sales. This updated regulatory treatment would allow the FHLBanks to better manage and respond to the intraday liquidity needs of their members. The proposed rule also clarifies terms for the FHLBanks to determine limits on unsecured credit to counterparties.

The FHFA will accept public comments on the proposed rule for 60 days following its publication in the Federal Register.

The FDIC has issued guidance to help banks and facilitate recovery in areas of Georgia (FIL-68-2024) and Vermont (FIL-69-2024) affected by severe weather.

The Federal Housing Finance Agency reports it has published its 2024 second quarter data for the Uniform Appraisal Dataset (UAD) Aggregate Statistics and introduced new condominium data as part of the UAD Aggregate Statistics. This is the first publicly available data drawn from condominium appraisal records and complements the existing data for single-family homes.

The current release includes data drawn from more than five million condominium appraisal records from 2013 through the second quarter of 2024. Condominium appraisal aggregate statistics may be grouped by property or neighborhood characteristics and geographic levels (national, state, and Metropolitan Statistical Area). FHFA plans to include condominium data in quarterly releases of the UAD Aggregate Statistics on an ongoing basis.

The United States Mint has published [89 FR 78241] a final rule in the Federal Register removing the Treasury Department's regulations relating to the exchange of bent, partial, fused, and mixed coins, thus ending the Mint's exchange program for bent and partial coin, effective October 25, 2024.

In August 2018, the United States Mint suspended the redemption program due to the possibility of unlawful material being submitted for redemption. On May 5, 2021, the United States Mint issued a notice of proposed rulemaking proposing certain revisions to these regulations (86 FR 23877), which was withdrawn on May 3, 2024 (89 FR 36721). The United States Mint subsequently decided to close the bent and partial coin exchange program.

The OCC has expanded the reach of its earlier announcement allowing banks in the path of Hurricane Helene to close. Yesterday, the OCC issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of North Carolina, South Carolina and Virginia affected by Hurricane Helene, if they are affected by potentially unsafe conditions as a result of the storm.

The Treasury Department has reported actions taken by OFAC in a coordinated international effort to disrupt Russian cybercrime services. FinCEN has issued a notice on Imposition of Special Measure Prohibiting the Transmittal of Funds Involving PM2BTC that identifies a Russian virtual currency exchanger associated with Russian individual Sergey Sergeevich Ivanov—as being of “primary money laundering concern” in connection with Russian illicit finance. Concurrently, the Office of Foreign Assets Control (OFAC) is sanctioning Ivanov and Cryptex—a virtual currency exchange registered in St. Vincent and the Grenadines and operating in Russia. The FinCEN and OFAC actions are being issued in conjunction with actions by other U.S. government agencies and international law enforcement partners to hold accountable Ivanov and the associated virtual currency services. FinCEN's notice will be effective when published in the Federal Register

According to Treasury, the U.S. Secret Service’s Cyber Investigative Section, the Netherlands Police, and the Dutch Fiscal Intelligence and Investigation Service (FIOD) have seized web domains and/or infrastructure associated with PM2BTC, UAPS, and Cryptex. The U.S. Department of State has issued a reward offer up to $10 million through its Transnational Organized Crime Rewards Program for information leading to the arrest and/or conviction of Ivanov. Lastly, the U.S. Secret Service and the U.S. Attorney’s Office for the Eastern District of Virginia are unsealing an indictment of Ivanov and another Russian national, Timur Shakhmametov. These actions by U.S. and Dutch agencies were taken in partnership with Operation Endgame, a multinational coordinated cyber operation with European partners, to dismantle financial enablers of transnational organized cybercrime.

For identification information on Ivanov and Cryptex, see BankersOnline’s September 26, 2024, OFAC Update.

FinCEN has announced it has published a notice in the Federal Register today at 89 FR 79184 withdrawing its finding that ABLV Bank, AS is a financial institution of primary money laundering concern, as well as the related notice of proposed rulemaking seeking to impose special measure five pursuant to section 311 of the USA PATRIOT Act.

On February 16, 2018, FinCEN issued an NPRM that set forth FinCEN’s findings of money laundering concern regarding ABLV, a commercial bank located in Riga, Latvia, and proposed imposing special measure five under section 311, prohibiting covered financial institutions from opening or maintaining in the United States correspondent accounts for, or on behalf of, ABLV.

According to FinCEN, material subsequent developments since the issuance of the NPRM have mitigated the money laundering risks associated with ABLV. Shortly after the issuance of the NPRM, the European Central Bank (ECB) determined that ABLV—as well as its subsidiary, ABLV Bank Luxembourg—was failing or likely to fail. The ECB subsequently withdrew ABLV’s banking license, and the Luxembourg subsidiary was ordered dissolved. Thus, ABLV no longer operates as a depository institution. The bank is in the advanced stage of an irrevocable liquidation process supervised by the Government of Latvia, which ensures anti-money laundering/countering terrorist financing compliance. Furthermore, Latvian authorities have undertaken significant efforts to identify and address past illicit activity facilitated by the bank, resulting in criminal charges against owners of the bank and its senior managers. As a result, FinCEN has determined that ABLV is no longer a financial institution of primary money laundering concern.

The U.S. Department of Justice has announced its filing of a civil antitrust lawsuit against Visa, Inc. for monopolization and other unlawful conduct in debit network markets in violation of Sections 1 and 2 of the Sherman Act.

The complaint alleges that Visa illegally maintains a monopoly over debit network markets by using its dominance to thwart the growth of its existing competitors and prevent others from developing new and innovative alternatives.

• Regulation A: 89 FR 78221, effective September 25, 2024, and applicable from September 19, 2024.
• Regulation D: 89 FR 78222, effective September 25, 2024, and applicable from September 19, 2024.

The Securities and Exchange Commission yesterday reported settled charges against 23 entities and individuals for failures to timely report information about their holdings and transactions in public company stock. Two public companies were also charged for contributing to filing failures by their officers and directors and failing to report their insiders’ filing delinquencies as required.

The charges announced yesterday stem from SEC enforcement initiatives focused on Schedules 13D and 13G reports and Forms 3, 4, and 5 that certain corporate insiders are required to file. Schedules 13D and 13G provide information about the holdings and intentions of investors who beneficially own more than five percent of any registered voting class of public company stock. Forms 3, 4, and 5 are reports used to provide information about public company stock transactions by corporate officers, directors, or certain investors who beneficially own more than 10 percent of the stock.

Without admitting or denying the findings, all of the entities and individuals agreed to cease and desist from committing and causing violations of the respective charged provisions and to pay civil penalties.

The CFPB has released its Office of Servicemembers Affairs’ annual report, which covers the top financial concerns facing servicemembers, veterans, and military families, based on the complaints they submitted to the CFPB. Servicemembers told the CFPB about issues they were having when trying to contact or get help from their federal student loan servicer. The report also highlights other areas of concern in student lending such as transcript withholding and fraud and scams.

The Federal Housing Finance Agency has released its first quarter 2024 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 52,154 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to 6,957,884 since the start of conservatorships in September 2008.

The report also shows that 29 percent of loan modifications completed in the first quarter reduced borrowers’ monthly payments by more than 20 percent. The number of refinances decreased from 71,378 in the fourth quarter of 2023 to 69,878 in the first quarter of 2024.

The Enterprises’ serious delinquency rate declined from 0.55 percent at the end of the fourth quarter of 2023 to 0.51 percent at the end of the first quarter of 2024. This compares with 3.18 percent for Federal Housing Administration (FHA) loans, 2.01 percent for Veterans Affairs (VA) loans, and 1.44 percent for all loans (industry average).

The data included in the quarterly reports are also available on the FHFA’s website as an interactive Borrower Assistance Map.

The Federal Housing Finance Agency has announced it has revised the Agency's proposal to amend the Suspended Counterparty Program (SCP). The SCP regulation requires a regulated entity to report to FHFA if an individual or institution that it does business with has committed certain types of misconduct within the prior three years. It also authorizes FHFA to order its regulated entities to cease doing business or refrain from entering into new business with certain counterparties. Final suspension orders are published on FHFA’s website.

FHFA is publishing this re-proposal after considering issues that commenters had raised about the original proposed rule, issued in July 2023. This includes distinguishing between misconduct that poses material risk to the safety and soundness of the regulated entities from behavior with de minimis impact.

Specifically, the re-proposal would:

• Authorize the suspension of business between a regulated entity and a counterparty whose misconduct resulted in a federal prohibition order or a civil money penalty above a specific threshold; and
• Authorize the suspension of business between a regulated entity and a counterparty that has committed criminal or civil misconduct related to the management or ownership of real property.

Comments on the re-proposed rule will be accepted for 60 days following its publication in the Federal Register.

Publication and comment period update: Published 10/1/2024 at 89 FR 79785 in the Federal Register, with a comment period of 62 days, ending 12/02/2024

The OCC has announced it has issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of Alabama, Florida, Georgia and Tennessee affected by Hurricane Helene. As is always the case, the OCC expects that only those bank offices directly affected by potentially unsafe conditions will close, and those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.

• OCC Bulletin 2012-28, Supervisory Guidance on Natural Disasters and Other Emergency Conditions
• OCC Major Disaster News Center

The Federal Trade Commission has announced action it is taking against Invitation Homes, the largest landlord of single-family homes in the U.S., for an array of unlawful actions against consumers, including deceiving renters about lease costs, charging undisclosed junk fees, failing to inspect homes before residents moved in, and unfairly withholding tenants’ security deposits when they moved out.

The FTC reports that Invitation Homes has agreed to a proposed settlement order that would require the company to turn over $48 million to be used to refund consumers harmed by its actions. The corporate landlord will also be required to clearly disclose its leasing prices, establish policies and procedures to handle security deposit refunds fairly, and stop other unlawful behavior.

The Treasury Department yesterday issued two announcements of OFAC sanctions activity.

OFAC has sanctioned two Haitian individuals: a former member of Haiti’s parliament, Prophane Victor, for his role in forming, supporting, and arming gangs and their members that have committed serious human rights abuse in Haiti; and Luckson Elan, the current leader of the Gran Grif gang, for his involvement in serious human rights abuse related to gang activity in Haiti’s Artibonite department.

OFAC has also sanctioned one individual and more than a dozen entities and vessels for their involvement in the shipment of Iranian crude oil and liquid petroleum gas to Syria and East Asia on behalf of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Hizballah.

For the names and identification information of the designated individuals, entities and vessels involved in the two OFAC actions, see yesterday’s BankersOnline OFAC Update.

The Federal Reserve System’s FedPayments Improvement group is promoting the combined use of its FraudClassifier and ScamClassifier models for analyzing scam and fraud incidents. The Federal Reserve has released a video tutorial to help the payments industry understand the connection points between the two models. When used together, says the group, they can help organizations improve fraud and scam mitigation strategies, training and more.

The CFPB has released a webpage that makes available for public comment applications to become a recognized standard setter under the Personal Financial Data Rights Rule. In June 2024, the CFPB finalized a portion of the Personal Financial Data Rights Proposed Rule. That final rule [published on June 11, 2024, at 89 FR 49084] defines criteria for becoming a recognized standard setter. Additionally, that final rule identifies that conformance with standards adopted and maintained by a recognized standard setter may indicate compliance for certain substantive provisions of the Personal Financial Data Rights Proposed Rule.

The CFPB has published the first application, from Financial Data Exchange, for public comment, and will accept comments on the application though October 16, 2024. Public comment on standard-setter applications enables stakeholders who believe an application is deficient in some respect to bring the CFPB’s attention to any evidence that might bear on the merits of the application. In response to comments, or to the CFPB’s own analysis, applicants may choose to adjust applications before final resolution.

The FDIC has issued FIL-66-2024 with steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Illinois affected by severe storms, tornadoes, straight-line winds, and flooding from July 13 to July 16, 2024. Cook, Fulton, Henry, St. Clair, Washington, Will and Winnebago Counties are currently included as affected areas. That list may change. Check FEMA's website at https://www.fema.gov/disaster/4819/designated-areas for any updates.

The FDIC also issued FIL-67-2024 to provide regulatory relief to financial institutions and facilitate recovery in areas of Connecticut — including Fairfield, Litchfield, and New Haven Counties — affected by a severe storm, flooding, landslides, and mudslides on August 18 and 19, 2024. Any updates to that list of counties will be posted to FEMA’s website at https://www.fema.gov/disaster/4820/designated-areas.

Yesterday, the Treasury Department reported that OFAC sanctioned five Colombian nationals and two Mexico-based businesses under authority of Executive Order 14059, “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade.” The Colombian individuals sanctioned are leaders within Colombia’s Clan del Golfo—also known as Los Urabeños—which is one of the country’s largest drug trafficking organizations and a key contributor to human smuggling through the Darién Gap.

The companies sanctioned yesterday are located in Mexico and owned by designated Sinaloa Cartel fentanyl traffickers. One of the most notorious and pervasive drug trafficking organizations in the world, the Sinaloa Cartel is responsible for a significant portion of the illicit fentanyl and other deadly drugs trafficked into the United States.

For the names and identification information of the designated individuals and entities, see yesterday's BankersOnline OFAC Update.

The Department of Housing and Urban Development has announced it has charged Tallahassee, Florida, housing providers Greenbriar Partners, LLC, Jackson Properties and Financial Services, LLC, and Erwin D. Jackson (the “Respondents”) with violating the Fair Housing Act by failing to grant a tenant with a disability a reasonable accommodation to allow the tenant to live with an emotional support animal.

HUD’s Charge of Discrimination alleges that the Respondents failed to grant the Complainant’s requested reasonable accommodation for an assistance animal. That denial led to economic loss, lost housing opportunity, and emotional distress. The Charge of Discrimination also alleges that the Respondents violated the Act when they threatened the Complainant with an eviction because of her reasonable accommodation request.

HUD's Charge will be heard by a United States Administrative Law Judge unless any party to the Charge elects to have the case heard in federal district court.

FinCEN has announced it will hold a virtual information session on beneficial ownership information reporting requirements and how to comply with the Corporate Transparency Act on its YouTube channel at 2 p.m. EDT tomorrow, September 25, 2024.

The CFPB has announced a proposed rule with a narrow amendment to disclosure requirements for certain international money transfers, or remittances. The proposed amendment would provide consumers clearer information about the types of inquiries that may be better handled by their remittance company before contacting the CFPB or the relevant state regulator.

The proposal would amend certain disclosures to clarify that consumers should contact their remittance company for issues specific to their money transfer. The proposal can potentially save consumers time by resolving their inquiries more quickly. Additionally, it may reduce the number of inquiries sent to states and the CFPB that would be more appropriately addressed initially by the providers themselves.

Comments will be accepted through November 4, 2024. UPDATE:The proposal was published at 89 FR 79456 on 9/30/2024.

The FDIC has released results of its annual survey of branch office deposits for all FDIC-insured institutions as of June 30, 2024. The FDIC’s Summary of Deposits (SOD) provides deposit totals for each of the more than 76,000 domestic offices operated by more than 4,500 FDIC-insured commercial and savings banks, savings associations, and U.S. branches of foreign banks.

The SOD includes historical data going back to 1994 that can be analyzed using online reports, tables, and downloads. SOD users can locate bank offices in a particular geographic area and create custom market share reports for areas such as state, county, and metropolitan statistical area. Market share reports allow users to see market growth and market presence for specific institutions.

FDIC’s SOD page includes the latest enhancements to the FDIC’s BankFind Suite, a resource for users to understand financial details and trends among FDIC-insured banks. The modernized SOD page in BankFind is available to preview now. The legacy Summary of Deposits will be discontinued by the end of 2024 and users will be automatically redirected to the BankFind Suite.

FDIC FIL-65-2024, issued Friday, provides guidance to financial institutions and facilitates recovery in areas of Louisiana — currently listing Ascension, Assumption, Lafourche, St. Charles, St. James, St. John the Baptist, St. Mary and Terrebonne Parishes — affected by Hurricane Francine from September 9–12, 2024.

The CFPB has posted the 2025 version of its HMDA Filing Instruction Guide (FIG), a compendium of resources to help lenders file annual HMDA data collected in 2025 with the Consumer Financial Protection Bureau (Bureau) in 2026.

The Bureau also released the Online Supplemental Guide for Quarterly Filers for 2025, which includes 2025 calendar year quarterly deadlines. This guide will help financial institutions that are required to file HMDA data on a quarterly basis.

The Online 2025 Filing Instructions Guide and the Supplemental Guide for Quarterly Filers for 2025 can also be accessed at https://ffiec.cfpb.gov under Guides for HMDA Filers.

The NCUA has announced that its Board of Directors yesterday approved a final rule incorporating its Second Chance Interpretive Ruling and Policy Statement and the Fair Hiring in Banking Act into its regulations, and a final rule that would simplify share insurance regulations by establishing a “trust accounts” category, aligning the Share Insurance Fund coverage for federally insured credit union members’ trust accounts with the coverage provided by the FDIC’s coverage of trust accounts at federally insured banks.

The OCC has announced enforcement actions recently taken against OCC-supervised institutions—

• A formal agreement with First Federal Savings Bank of Kentucky, Frankfort, Kentucky, for unsafe or unsound practices, including those related to strategic planning and budgeting, succession planning, liquidity risk management, and interest rate risk management
• A previously announced formal agreement with Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for deficiencies related to the bank’s financial crimes risk management practices and anti-money laundering internal controls in several areas
• An order of prohibition against Natasha A. Aikens, former lead associate at a Brooklyn, New York, branch of JPMorgan Chase Bank, N.A., Columbus, Ohio, for engaging in a scheme to steal bank funds and falsely reporting the receipt of counterfeit bills in the bank’s general ledger, resulting in losses to the bank of at least $201,000

FinCEN has announced its release of a Beneficial Ownership Reporting Outreach and Education Toolkit that can be used in efforts to educate small business owners about new beneficial ownership reporting requirements mandated by the bipartisan Corporate Transparency Act.

The toolkit contains templates and sample content that has been structured to allow private, public, and non-profit organizations to share and amplify this important information. The toolkit includes general background on the reporting requirements, as well as templates for newsletters, websites, and emails; sample social media posts and images; and information on how to contact FinCEN.

The Treasury Department has reported that OFAC has designated a network of five entities and one individual—based in Russia and in the Russia-occupied Georgian region of South Ossetia—that have enabled and supported ongoing efforts to establish illicit payment mechanisms between Russia and the Democratic People’s Republic of Korea (DPRK). Yesterday’s action holds accountable parties that have assisted DPRK and Russian sanctions evasion and demonstrates Treasury’s commitment to exposing and disrupting networks that facilitate the funding of the DPRK’s weapons of mass destruction (WMD) and ballistic missile programs and support Russia’s war against Ukraine.

For a link to the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update.

The Department of Housing and Urban Development has announced the approval of a Conciliation Agreement with OceanFirst Bank, headquartered in Toms River, New Jersey. The Agreement resolves a complaint against OceanFirst alleging that the bank engaged in redlining by restricting access to credit and mortgage lending services in majority-Black, Hispanic, and Asian neighborhoods in the New Brunswick, New Jersey area.

HUD's complaint alleges that, from 2018 through at least 2022, OceanFirst failed to provide mortgage lending services to predominantly Black, Hispanic, and Asian neighborhoods in Middlesex, Monmouth, and Ocean Counties. Specifically, the complaint alleges states that OceanFirst acquired and subsequently closed branches and loan production offices in these neighborhoods, which, coupled with its insufficient marketing efforts and fair lending policies, led to OceanFirst failing to serve the needs of these neighborhoods.

Under the terms of the Agreement, OceanFirst will:

• Invest at least $14 million in a loan subsidy fund with the goal of increasing access to credit for home mortgage loans, home improvement loans, and home refinance loans in majority-Black, Hispanic and Asian neighborhoods in the New Brunswick area
• Spend at least $400,000 on professional services for residents in these neighborhoods to increase access to residential mortgage credit and serve the credit needs of those communities through partnerships with one or more community-based or governmental organizations that provide services related to credit, financial education, homeownership, and/or foreclosure prevention
• Spend at least $140,000 each year of the Agreement ($700,000 total) on advertising, outreach, consumer financial education, and credit counseling in these neighborhoods
• Maintain a full-service branch opened in December 2023 and open a loan production office (LPO) located in these neighborhoods. The LPO will include a community room to accommodate financial education classes that OceanFirst will make available to the public and to community organizations and include an ATM that will not charge fees to OceanFirst’s customers and maintain lower fees for non-customers than what is available at nearby ATMs
• Assign or hire at least two full-time loan officers to solicit mortgage applications primarily in majority-Black, Hispanic, and Asian neighborhoods in the New Brunswick area
• Hire or designate a full-time position of Director of Community Lending
• Provide at least four outreach programs per year for real estate brokers and agents, developers, and public or private entities engaged in residential real estate-related business in these neighborhoods to inform these stakeholders of OceanFirst’s products and services
• Provide at least six consumer education seminars per year targeted and marketed toward residents of neighborhoods of color in the New Brunswick area to cover credit counseling, financial literacy, or other related consumer financial education
• Comply with HUD’s Guidance on Application of the Fair Housing Act to the Advertising of Housing, Credit, and Other Real Estate-Related Transactions through Digital Platforms for all OceanFirst’s advertising and targeting.

OceanFirst agreed to resolve the complaint voluntarily and HUD issued no findings related to the complaint’s allegations.

The Office of the Comptroller of the Currency has reported the performance of first-lien mortgages in the federal banking system during the second quarter of 2024.

The OCC Mortgage Metrics Report, Second Quarter 2024 showed that 97.3 percent of mortgages included in the report were current and performing at the end of the quarter, a decrease from the 97.4 percent in first quarter 2024, and unchanged from the 97.3 percent a year ago.

The percentage of seriously delinquent mortgages—mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due—remained stable from the previous quarter and a year ago.

The Federal Reserve Board has released the Federal Open Market Committee statement following the committee's meeting of September 17–18, 2024.

In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In its Implementation Note issued with the committee's statement, it is reported that the Board of Governors voted unanimously to lower the interest rate paid on reserve balances to 4.9 percent, effective September 19, 2024, and that the Board also voted unanimously to approve a 1/2 percentage point decrease in the primary credit rate to 5 percent, effective September 19, 2024.

The Board and FOMC also released the economic projections from the FOMC meeting.

The CFPB has released Frequently Asked Question (FAQ) guidance on Buy Now, Pay Later (BNPL) products. The FAQs provide guidance on applying Regulation Z to BNPL products, such as how to apply credit card periodic statement requirements to Pay-in-Four BNPL products that are accessed by digital user accounts.

The FAQs can also be downloaded as a PDF document.

The Securities and Exchange Commission yesterday announced charges against a dozen municipal advisors for failures by the firms and their personnel to maintain and preserve certain electronic communications. The firms agreed to pay combined civil penalties of more than $1.3 million to settle the SEC’s charges.

According to the SEC, the 12 firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, have begun implementing improvements to their compliance policies and procedures to address these violations, and agreed to pay the following civil penalties:

• Acacia Financial Group Inc. — $52,000
• Caine Mitter and Associates Inc. — $94,000
• cfX Inc. — $42,000
• CSG Advisors Inc. — $40,000
• Kaufman Hall & Associates LLC, together with Ponder & Company — $324,000
• Montague DeRose & Associates LLC — $40,000
• PFM Financial Advisors LLC — $250,000
• Phoenix Advisors LLC — $40,000
• Public Resources Advisory Group Inc. — $184,000
• Specialized Public Finance Inc. — $250,000
• Zions Public Finance Inc. — $47,000

Yesterday, the Treasury Department reported that OFAC has designated 12 individuals in connection with the Iranian regime’s ongoing, violent repression of the Iranian people, both within Iran’s borders and abroad. These designations target members of the Islamic Revolutionary Guard Corps (IRGC), officials of Iran’s Prisons Organization, and those responsible for lethal operations overseas.

For the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update.

The Federal Housing Finance Agency yesterday released an interactive tool for tracking data on multifamily mortgages that enables users to review details about loans and properties at both the state and national levels. The tool, known as a data visualization dashboard, provides a more accessible way to view and understand data on multifamily mortgages. It is derived from the Enterprise Multifamily Public Use Database (PUDB) of mortgage acquisitions by Fannie Mae and Freddie Mac (the Enterprises).

The Enterprise Multifamily PUDB Dashboard includes data snapshots of key statistics, time series charts, and state maps of multifamily housing characteristics such as median loan amount, number of properties, average number of units per property, and unit affordability. The underlying aggregate statistics presented in the dashboard come from three multifamily data files in the Enterprise PUDB, updated annually since 2008, including two property-level datasets and a data file on the size and affordability of individual units. The dashboard shows characteristics about multifamily loan, property, and unit characteristics at the national level and loan and property characteristics at the state level.

The FDIC Board of Directors approved yesterday a notice of proposed rulemaking that would strengthen recordkeeping for bank deposits received from third party, non-bank companies accepting those deposits on behalf of consumers and businesses. The proposal seeks to address risks related to these third-party arrangements, protect depositors, and promote public confidence in insured deposits.

Non-banks may deposit funds together into a single custodial account at a bank. These custodial accounts may hold funds of many thousands of consumers and businesses, and the bank may not readily know or be able to determine the individual owners of funds in the custodial account. Under the proposed rule, FDIC-insured banks holding certain custodial accounts, as defined in the proposal, would be required to take certain steps to ensure accurate account records are maintained in order to determine the individual owner of the funds, including a requirement to reconcile the account for each individual owner on a daily basis. These requirements, as well as others, apply if the bank uses a third party to maintain records.

The proposal’s provisions also provide for oversight by the banks’ primary federal supervisor to review for compliance with this rule and enforcement authority to compel compliance if the bank fails to meet these requirements.

The FDIC invites public comments on all aspects of the proposal. Public comments on the proposal are due 60 days after publication in the Federal Register.

Yesterday, the FDIC's Board of Directors approved a final Statement of Policy on Bank Merger Transactions (Final SOP). The Final SOP addresses the scope of transactions subject to FDIC approval, the FDIC’s process for evaluating merger applications, and the principles that guide the FDIC’s consideration of the applicable statutory factors as set forth in the Bank Merger Act.

With respect to the statutory factors, the Final SOP:

• Confirms that the FDIC’s evaluation of a merger’s competitive effects may take into account concentrations beyond deposits, including small business or residential loan originations;
• Clarifies that the proposed merger should result in less financial risk than the risk posed by the institutions on a standalone basis;
• Elaborates on the FDIC’s expectation that a merger will enable the resulting institution to better meet the convenience and needs of the community to be served;
• Applies additional scrutiny to the evaluation of financial stability for transactions resulting in an institution with $100 billion or more in total assets; and
• Communicates the FDIC’s expectation to hold public hearings for mergers resulting in an institution with over $50 billion in total assets.

The Final SOP supersedes the existing Statement of Policy, which was last updated in 2008. The updates approved by the FDIC Board yesterday account for the significant changes that have occurred in the banking industry and financial system over the last several decades. The Final SOP refines, and in some cases, broadens the description of the analytical considerations for each statutory factor.

The CFPB has announced it has published Consumer Financial Protection Circular 2024-05 on "Improper Overdraft Opt-In Practices" to address whether a financial institution can violate the law if there is no proof that it has obtained consumers' affirmative consent before levying overdraft fees for ATM and one-time debit card transactions.

According to CFPB Director Rohit Chopra, “The CFPB has found instances where banks have no evidence that they obtained consent for overdraft. No Americans should be hit with bank account fees that they never agreed to.”

The CFPB reports it has observed that in many circumstances, financial institutions have created serious obstacles to consumers taking steps to anticipate and avoid overdraft fees, and cites several enforcement actions the Bureau has taken against banks that failed to properly adhere to the requirements of section 1005.17 of Regulation E.

The Bureau's press release suggests that consumer protection law enforcers "should assume consumers have not opted into overdraft [service for ATM and one-time debit card transactions] unless the banks can prove otherwise," and that "some banks have been unable to provide such evidence." The Circular lists three examples of forms of records that banks might use to document consumer consent, depending on the channel through which the consumer opts in. The examples are not all-inclusive or exhaustive:

• For consumers who opt into covered overdraft services in person or by postal mail, a copy of a form signed or initialed by the consumer indicating the consumer’s affirmative consent to opting into covered overdraft services would constitute evidence of consumer consent to enrollment.
• For consumers who opt into covered overdraft services over the phone, a recording of the phone call in which the consumer elected to opt into covered overdraft services would constitute evidence of consumer consent to enrollment.
• For consumers who opt into covered overdraft services online or through a mobile app, a securely stored and unalterable “electronic signature” as defined in the E-Sign Act (15 U.S.C. 7006(5)) conclusively demonstrating the specific consumer’s action to affirmatively opt in and the date that the consumer opted in would constitute evidence of consumer consent to enrollment.

The OCC has reported it has approved a final rule updating its regulations for business combinations involving national banks and federal savings associations and a policy statement clarifying its review of applications under the Bank Merger Act (BMA).

The final rulemaking is part of the OCC’s effort to enhance transparency around its process of reviewing transactions under the BMA. It also provides additional guidance to stakeholders around the OCC’s review of applications. The policy statement specifically discusses:

• general principles for the OCC’s review of applications under the BMA, including:
  • indicators for applications that are more likely to withstand scrutiny and be approved expeditiously; and
  • indicators for applications that raise supervisory or regulatory concerns which most likely need to be resolved prior to OCC approval;
• the OCC’s consideration of the financial stability; managerial and financial resources and future prospects; and convenience and needs statutory factors under the BMA; and
• the OCC’s decision process for extending the public comment period or holding a public meeting.

Publication and effective date information: Published [89 FR 78207] on 9/25/2024, with an effective date of 1/1/2025.

OFAC has published [89 FR 75955] in this morning’s Federal Register a final rule updating provisions related to blocking and other actions related to specific property or interests in property.

The rule is meant to clarify OFAC’s process for issuing certain orders that block or identify as blocked specific property or interests in property, or that impose other prohibitions less than full blocking with respect to specific property or interests in property. OFAC is adding information about these orders in regulatory notes in 35 of OFAC’s sanctions regulations — 31 CFR Parts 510, 525, 526, 536, 542, 544, 546, 547, 548, 549, 550, 551, 552, 553, 555, 558, 560, 562, 569, 570, 576, 578, 579, 582, 583, 584, 585, 587, 588, 589, 590, 591, 594, 598, and 599. The rule is effective upon publication.

The Treasury Department has issued announcements of designations under OFAC's Global Magnitsky and Cyber-related sanctions programs.

The Global Magnitsky sanctions designations included individuals who have undermined fundamental freedoms, including freedom of expression, in the country of Georgia. Specifically, the Department of the Treasury sanctioned two Georgian government officials associated with brutal crackdowns on peaceful protestors and political opponents, and two private Georgian citizens that are responsible for or complicit in, or have directly or indirectly engaged in violently suppressing the exercise of the freedom of peaceful assembly of Georgians engaged in the democratic process and peaceful expression.

OFAC also designated five individuals and one entity associated with the Intellexa Consortium under its Cyber-related sanctions for their role in developing, operating, and distributing commercial spyware technology that presents a significant threat to the national security of the United States.

For the names and identification information of the designated parties covered by both announcements, see the September 16, 2024, BankersOnline OFAC Update.

FinCEN has published [89 FR 76187] in this morning's Federal Register a notice and request for comments on its proposed renewal, without change, of existing information collection requirements found in Bank Secrecy Act regulations [31 CFR § 1010.415] that require financial institutions to maintain records related to the issuance or sale of bank checks and drafts, cashier’s checks, money orders, and traveler’s checks when the issuance or sale involves the use of currency in an amount between $3,000 and $10,000, inclusive.

Comments will be accepted through November 18, 2024.

The FDIC, OCC, and Federal Reserve Board have jointly announced they will extend until October 30, 2024, the comment period on a request for information on bank-fintech arrangements involving banking products and services.

The agencies are seeking input on the nature and implications of bank-fintech arrangements and effective risk management practices. Extending the comment period will allow the public more time to consider the request, prepare comments, and address the questions posed by the agencies. Comments were originally due by September 30, 2024.

• Federal Register Extension Notice

The CFPB has announced it has sued Horizon Card Services and its CEO Robert Kane for tricking consumers into signing up for its expensive membership credit card. Horizon’s credit card, which could come with almost $300 in annual fees on a card with a $500 credit limit, could only be used to purchase goods from the company’s overpriced online store and nowhere else. The CFPB alleges Horizon and Kane lured consumers into the membership program through deceptive marketing. Horizon charged consumers illegal and excessive fees, and also made it unreasonably difficult for consumers to cancel memberships and obtain refunds. The CFPB is asking the court to end Horizon and Kane’s illegal conduct, and to order them to pay a fine and redress to consumers.

The Horizon Card Services membership came with periodic fees, and was targeted toward financially vulnerable, subprime consumers. Between 2017 and 2021, Horizon enrolled nearly 900,000 consumers in its membership program who collectively paid more than $51 million in fees. 93% of those consumers never used any Horizon product yet paid over $45 million in fees.

Although marketed as a regular credit card, the line of credit from Horizon could be used only to purchase goods from an online store called Horizon Outlet. The outlet has a limited selection of overpriced or off-brand goods. Between 2017 and 2021, only 6% of consumers ever used their cards at the outlet.

According to the CFPB's Complaint, from 2017 to 2021, Horizon required customers to pay up to $24.99 a month, or about $300 a year, in “membership fees” for the credit line. These fees amounted to 60% of the $500 credit limit provided by Horizon for the first year of membership, which far exceeds the 25% cap set by the Truth in Lending Act and its implementing regulation, Regulation Z.

The FDIC has issued FIL-62-2024 with guidance to provide regulatory relief to financial institutions and facilitate recovery in areas of Pennsylvania — Lycoming, Potter, Tioga, and Union Counties — affected by Tropical Storm Debby August 9–10, 2024.

The Treasury Department has reported that OFAC has sanctioned Cambodian businessman Ly Yong Phat, his conglomerate L.Y.P. Group Co., and O‑Smach Resort for their role in serious human rights abuse related to the treatment of trafficked workers subjected to forced labor in online scam centers. OFAC also designated Cambodia-based Garden City Hotel, Koh Kong Resort, and Phnom Penh Hotel for being owned or controlled by Ly.

Treasury also announced that OFAC has designated 16 Maduro-aligned officials who obstructed a competitive and inclusive presidential election process in Venezuela and violated the civil and human rights of the people. The individuals sanctioned under the authority of Executive Order 13692 include leaders of the Maduro-aligned National Electoral Council and the Supreme Tribunal of Justice who impeded a transparent electoral process and the release of accurate election results, as well as the military, intelligence, and government officials responsible for intensifying repression through intimidation, indiscriminate detentions, and censorship.

For a link to the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update, which also includes information on a new Global Magnitsky General License and new and amended FAQs.

The OCC has announced it has entered into a Formal Agreement with Wells Fargo Bank, N.A.

The Formal Agreement identifies deficiencies relating to the bank’s financial crimes risk management practices and anti-money laundering internal controls in several areas including suspicious activity and currency transaction reporting, customer due diligence, and the bank’s customer identification and beneficial ownership programs.

The agreement requires the bank to take comprehensive corrective actions to enhance its Bank Secrecy Act/anti-money laundering and U.S. sanctions compliance programs.

Yesterday, the CFPB announced it has filed a proposed stipulated final judgment and order against the student loan servicer Navient for years of failures and lawbreaking. If entered by the court, the proposed order would permanently ban the company from servicing federal Direct Loans and would forbid the company from directly servicing or acquiring most loans under the Federal Family Education Loan Program . These bans would largely remove Navient from a market where it, among other illegal actions, steered numerous student loan borrowers into costly repayment options. Navient also illegally deprived student borrowers of opportunities to enroll in more affordable income-driven repayment plans and forced them to pay much more than they should have. Under the terms of the order, Navient would have to pay a $20 million penalty and provide $100 million in redress for harmed borrowers.

The CFPB’s investigation of Navient kicked off a series of efforts by state and federal agencies to examine forbearance steering and other breakdowns in the income-driven repayment program. Those efforts have resulted in more than $50 billion in debt relief for more than 1 million borrowers who were wrongly steered into forbearance, as well as those who had payments miscounted. Yesterday’s order complements actions already taken by the Department of Education and state attorneys general to provide redress to borrowers harmed by Navient.

According to the CFPB’s press release, Navient is a repeat offender with a long history of regulatory violations. After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers. In 2021, the Department of Education ordered Navient to return more than $22 million in overcharges. In 2022, 39 state attorneys general announced a $1.85 billion settlement with Navient for originating predatory student loans in addition to its forbearance steering practices.

In 2021, Navient’s contract with the Department of Education to service Direct Loans finally ended. Navient announced in early 2024 that it intended to transfer the servicing of its remaining loans to another servicer.