From the federal financial institution regulators
OCC proposes rules to revise merger approval process
On Jan. 29, 2024, the Office of the Comptroller of the Currency (OCC) issued for public comment a proposal on its review process for business combinations involving national banks and federal savings associations with other depository institutions under the Bank Merger Act. The proposal includes a policy statement and a regulatory amendment. If adopted, the policy statement would provide additional insight into the OCC’s assessment of proposed bank mergers by discussing:
- Principles used by the OCC in reviewing applications, including a list of indicators typical to approved applications and a list of indicators that often give rise to supervisory concerns and a need for remediation prior to approval
- Other statutory factors considered in the review process, including financial stability, financial and managerial resources and future prospects, and convenience and needs
- Criteria informing the OCC’s decision to extend a comment period or to hold a public meeting on a bank merger transaction
The proposed regulatory amendment would eliminate the option of a less detailed, streamlined business combination application. It also would eliminate a provision allowing for an expedited review process for qualified applicants.
Per the OCC, the proposed regulatory amendment would apply to all national banks, federal savings associations, and federal branches and agencies of foreign banks. The proposed policy statement would apply to insured national banks, federal savings associations, and federal branches of foreign banks.
Comments are due April 15, 2024.
Fed announces end to bank term funding program
On Jan. 24, 2024, the Federal Reserve Board (Fed) announced that the Bank Term Funding Program (BTFP) will not be extended and will end on its original termination date of March 11, 2024. Institutions will continue to have access to the discount window after this date.
In ongoing support of the program’s goals in the current interest-rate environment, the Fed announced that the interest rate applicable to new BTFP loans has been adjusted as the program winds down. The rate on new loans made from the announcement date until the termination date will be no lower than the interest rate on reserve balances in effect on the day the loan is made. All other program terms remain unchanged.
FFIEC issues statement on examination principles related to bias in real estate valuations
On Feb. 12, 2024, the Federal Financial Institutions Examination Council (FFIEC) issued a statement on examination principles for identifying and mitigating discrimination or bias in residential property valuations. Emphasizing the importance of sound valuation practices, the FFIEC noted the risks that valuation discrimination poses to institutions that rely on real estate valuations to make residential credit decisions as well as the potential downstream harm to consumers.
The statement details critical principles used in consumer compliance and safety and soundness examinations. These principles include evaluation of an institution’s board and management oversight, consumer compliance and collateral valuation programs, risk management and governance, and valuation and credit risk review functions. According to the FFIEC, while the statement provides further insight into the examination process, it should not be interpreted as new guidance nor as a change in focus on valuation practices.
CFPB proposes ban on NSF fees for instantaneous transactions
On Jan. 24, 2024, the Consumer Financial Protection Bureau (CFPB) issued a proposal to ban covered financial institutions from charging nonsufficient fund (NSF) fees on transactions that are declined immediately or almost immediately upon a consumer’s attempt – including point-of-sale (POS) debit card transactions, ATM withdrawals, and certain person-to-person applications. The proposal would not apply to check or Automated Clearing House transactions, which are not instantaneously declined.
While the CFPB acknowledged that NSF fees are uncommon for ATM or POS transactions, the agency asserted the importance of establishing proactive regulations to address the growing ubiquity of instantaneous transactions and use of newer noncash payment methods, such as digital applications.
Comments are due March 25, 2024.
FinCEN issues proposal to impose BSA/AML requirements on investment advisers
On Feb. 13, 2024, the Financial Crimes Information Network (FinCEN) issued a proposal that, if adopted, would classify certain investment advisers as “financial institutions” per the Bank Secrecy Act (BSA), subjecting them to anti-money laundering and countering the financing of terrorism (AML/CFT) requirements under the BSA. Among other provisions, registered investment advisers and exempt reporting advisers would be required to implement AML/CFT programs, file suspicious-activity reports, and fulfill recordkeeping and information sharing requirements. -activity reports, and fulfill recordkeeping and information sharing requirements.
Comments are due April 15, 2024.
FinCEN updates FAQ on beneficial ownership information reporting
FinCEN updated its FAQ list on beneficial ownership information reporting throughout January, addressing inquiries such as:
- What should a reporting company report if its ownership is in dispute?
- Who does a reporting company report as a beneficial owner if a corporate entity owns or controls 25% or more of the ownership interests of the reporting company?
- Is a third-party courier or delivery service employee who only delivers documents that create or register a reporting company a company applicant?
- If an individual used an automated incorporation service, such as through a website or online platform, to file the creation or registration document for a reporting company, who is the company applicant?
- Does a subsidiary whose ownership interests are partially controlled by an exempt entity qualify for the subsidiary exemption?
