Consumer Compliance Outlook
News from Washington: Regulatory Updates
On November 17, 2011, the four federal prudential regulators — the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration — and the Consumer Financial Protection Bureau (CFPB) issued a supervisory statement to clarify how and when they will determine the total assets of an insured depository institution or an insured credit union for purposes of their supervisory and enforcement responsibilities. Under §1025 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the CFPB has exclusive authority to examine for compliance with federal consumer financial laws and primary authority to enforce those laws for institutions with total assets of more than $10 billion and their affiliates. Section 1026 confirms that the four prudential regulators retain supervisory and enforcement authority for other institutions. The policy statement clarifies the measure to determine asset size and the schedule for making such determinations. After an initial asset size determination based on call report data as of June 30, 2011, an institution generally will not be reclassified unless four consecutive quarterly reports indicate that a change in supervisor is warranted. The joint announcement and the policy statement are available at http://1.usa.gov/threshold-cfpb.
On October 13, 2011, the CFPB released version 1.0 of its supervision and examination manual, which is divided into three parts. The first part discusses the CFPB's supervision and examination process, the second part outlines examination procedures, and the third part contains templates that CFPB staff will use in documenting information about supervised entities, including a template for CFPB examination reports. The manual reviews the statutes and implementing regulations that the CFPB enforces for the institutions it supervises, and the CFPB's examination procedures for these laws, including the Equal Credit Opportunity Act; §1031 of the Dodd-Frank Act (unfair, deceptive, or abusive acts or practices); the Home Mortgage Disclosure Act; the Truth in Lending Act; the Real Estate Settlement Procedures Act; the Consumer Leasing Act; the Fair Credit Reporting Act; the Fair Debt Collection Practices Act; the Electronic Fund Transfer Act; the Truth in Savings Act; and the privacy provisions of the Gramm-Leach-Bliley Act. The manual is available on the CFPB's website at http://www.consumerfinance.gov/guidance/supervision/manual/.
On October 19, 2011, the FFIEC announced that beginning in 2012, it will calculate the annual MFI data that are published each June by using data from the U.S. Census Bureau's American Community Survey and will be referred to as FFIEC median family income data. Previously, the MFI was calculated by HUD. MFI data are calculated annually for each metropolitan and nonmetropolitan area using the geographic changes released by the Office of Management and Budget in December of the previous year. These data are used by the agencies to compile Home Mortgage Disclosure Act data and analyses of Community Reinvestment Act examinations. The FFIEC's announcement is available at http://www.ffiec.gov/press/pr101911.htm.
On October 14, 2011, the four federal agencies that supervise banks, thrifts, and credit unions, and the Farm Credit System (agencies) published guidance to update the Interagency Questions and Answers Regarding Flood Insurance (Flood Q&As) that were most recently published on July 21, 2009. When the agencies issued this guidance in 2009, they sought comments on proposed questions 9 and 10 for insurable value and question 61 for force placement of flood insurance. The revised guidance makes questions 9 and 61 final and withdraws question 10. In addition, the agencies requested comments on newly proposed questions 60 and 62 (force placement) and a revision to existing question 57 (force placement) to make it consistent with the other proposed changes. Comments were due by December 1, 2011. Outlook discusses the changes in the cover story of the current issue. The Federal Register notice and announcement are available at http://1.usa.gov/flood-FRB.
On September 20, 2011, the Board issued a final rule amending Regulation B to provide that motor vehicle dealers are not required to comply with new data collection requirements in the Dodd-Frank Act until the Board issues final regulations to implement the statutory requirements. The Equal Credit Opportunity Act was amended by the Dodd-Frank Act to require creditors to collect information about credit applications made by women- or minority-owned businesses and by small businesses. The provision must be implemented by the CFPB for all creditors except certain motor vehicle dealers who are subject to the Board's jurisdiction. The CFPB previously announced that creditors are not obligated to comply with the data collection requirements until the CFPB issues detailed rules to implement the law. The Board is amending Regulation B to apply the same approach to motor vehicle dealers. The Board's notice can be found at http://1.usa.gov/cars-RegB.
On September 7, 2011, the CFPB announced it is seeking comments on consumer financial products and services tailored to service members and their families. The information provided will help the CFPB's Office of Servicemember Affairs (OSA) to develop financial education and outreach initiatives for military families. The Dodd-Frank Act charged the CFPB with educating and empowering service members and their families to make better informed decisions when choosing financial services and products. Input from military families and financial services providers will inform the OSA on education and outreach initiatives. The OSA seeks information on products and services, education, programs, homeowner assistance, and marketing and communication. The press release is available at http://1.usa.gov/cfpb-service.
On July 14, 2011, the Board announced the approval of a final rule to repeal Regulation Q, which prohibits the payment of interest on demand deposits by institutions that are member banks of the Federal Reserve System. The final rule implements §627 of the Dodd-Frank Act, which repealed §19(i) of the Federal Reserve Act in its entirety, effective July 21, 2011. The repeal of §19(i) eliminates the statutory authority under which the Board established Regulation Q and eliminates the Board's published interpretation of Regulation Q by removal of references to Regulation Q found in the Board's other regulations, interpretations, and commentary. The Board's notice is available at http://1.usa.gov/repeal-Q.
On July 12, 2011, the Board published lists of institutions that are subject to, and exempt from, the debit card interchange fee standards in Regulation II, which implements provisions of the Dodd-Frank Act. These lists are intended to help payment card networks and others determine which issuers qualify for the statutory exemption from interchange fee standards. The statute exempts a debit card issuer that, together with its affiliates, has assets of less than $10 billion. The interchange fee standards became effective on October 1, 2011 and will be updated annually by the Board. The Board's notice and a link to the lists of exempt institutions are available at www.federalreserve.gov/newsevents/press/bcreg/20110712a.htm.