The Bureau of Consumer Financial Protection (CFPB) has issued an interpretive and procedural rule implementing and clarifying changes to HMDA made by S. 2155 The Economic Growth, Regulatory Relief, and Consumer Protection Act (Act or S.2155). S. 2155 was signed into law May 24, 2018, the Act amends HMDA by adding partial exemptions from HMDA’s requirements for certain transactions made by certain financial institutions. The Act also increases the HMDA reporting threshold to 500 open-end lines of credit, meaning institutions that originated fewer than 500 open-end lines of credit in the two preceding calendar years do not need to collect and report certain data.

This new rule clarifies which data points in HMDA’s Regulation C are covered by the partial exemptions and that only loans and lines of credit that are otherwise reportable under the Regulation count toward the thresholds for the partial exemptions.

S. 2155 also provides that the above partial exemptions are not available to institutions that have received a CRA rating of “needs to improve record of meeting community credit needs” in each of their two most recent CRA examinations, or a rating of “substantial noncompliance in meeting community credit needs” in their most recent exam. The rule clarifies that the CRA examination assessment that would disqualify an institution from the partial exemptions must be made as of December 31 of the preceding calendar year.

CFPB also addresses transition issues with the implementation of the rule. The rule applies to data collected or reported under HMDA on or after May 24, 2018. An institution that is eligible for a partial exemption for a transaction does not need to collect exempt data points on or after May 24, 2018. In addition, such institutions are not required to report certain data that may have been collected on or before May 24, 2018. However, an institution may opt to voluntarily report data that are covered by a partial exemption.

The rule will be effective Sept. 7, 2018.

Click here for the full rule.

Click here for the executive summary.

By, Ally Bates

Preparation is fully underway among Wisconsin's banks for the new CECL standards, which were issued by FASB on June 16, 2016 and fundamentally change how banks estimate losses in their allowance for loan and lease losses (ALLL). Among other considerations, banks must develop or purchase new systems and/or processes to conduct those calculations. One hotly debated question: whether or not banks can utilize a simpler solution than software, namely an Excel spreadsheet.

The answer: banks can use Excel, but that doesn't necessarily mean they should

There are several key considerations for banks when selecting a tool for CECL compliance, including the capabilities of that tool, the bank's complexity, staff expertise, and cost. Prior to any of that, however, bank management must determine which model is the right fit for their institution. "We've seen a number of different allowance calculations," said Mark A. Zeihen, assistant deputy controller with the OCC's Milwaukee/Iron Mt. Field Office. "Banks can use a variety of calculations today and going forward under CECL." While the more complex models aren't inherently bad, it is important to select the right tool for the job. "The selection of the methodology is important," said Ryan Abdoo, CPA, partner at Plante Moran. "That decision will have a long-term impact. With increased complexity comes increased data requirements and, thus, risk of error, so if you're an institution that has historically not complicated things, I would advise not complicating them." 

Tom Danielson, principal – financial institutions at CliftonLarsonAllen, LLP, recommends the "remaining life method"—which was outlined in a regulatory webinar on Feb. 27, 2018—as a good starting point for most community banks. If necessary, they can move to a more complex model in the future. "A key consideration is whether the model is right for your organization," he said. "Does it give you an ALLL computation that is correct, understandable, and easy for you to explain to shareholders, board members, auditors, and examiners?"

Along with selecting the most appropriate model, bank management must evaluate the data capabilities of their chosen solution. "CECL will require banks to maintain, manage, and store larger amounts of data," said Zeihen. "Each tool will vary greatly, so it's important for banks to consider how quickly they can retrieve and tailor reports." A key component of that evaluation is determining whether or not the bank's CECL solution integrates with its core. "Whether they integrate with your core processer is a big piece for making sure you have historic data points," explained Tom Mews, president, First National Community Bank, New Richmond, adding that a vendor who can supply industry data is also important. 

When evaluating different solutions for CECL compliance, bank management must first consider the level of complexity of the model that best fits their bank's needs. "When purchasing or building a model, we believe simple banks do not need complex models," said Danielson. "There are certain pros and cons with each option. Some of the software tools available are more complex than what many community banks need, which could lead to higher costs and some complexities within the model that are not needed by the user," added David Braden, CPA, manager – financial institutions at CliftonLarsonAllen, LLP. "However, the one concern with using an Excel-based model is you might not have enough staff who are comfortable modifying the spreadsheet accurately over time, and maintaining a proper control structure around that process." Bank management should also keep in mind that their institution's complexity may change. Software can be more flexible than a spreadsheet by supplying different methodology options, which could be an important feature for growth-oriented banks, according to Abdoo. "CECL allows for half a dozen different methodologies that range in complexity," he explained. "Due to the fact that the more complex the methodology gets, the more data the software needs, that flexibility allows you to start with a less complex methodology and then transfer to a more complex one as you grow without changing products."

Another important factor to consider is the expertise and time required by bank staff in order to effectively use the chosen tool. "Value the time your people put into managing the components and training backups," Mews advised. "Under the current CECL requirements, to train multiple people under that model is very difficult, with time constraints being the biggest component." That evaluation is likely one of the most difficult bank leadership will face when it comes to CECL implementation. "The difficult decision is the analysis of the skillset of your current employees and an honest assessment about the challenges and skills needed to build, maintain, and validate a CECL model using Excel," said Danielson. "Many banks may conclude that while it's possible, it's not cost-beneficial to do." Staff aren't the only ones responsible for understanding the model; management are required to fully comprehend how the model works. "Management has to be in charge of the internal control structure, and that escalates as the community bank grows in size," Braden explained. "The individuals at the bank need to understand how the inputs go into the structure and interpret what the outputs mean." 

Finally, bank management must weigh the costs of a potential CECL solution against its benefits. The key is to include all of the costs involved. "Don't consider just the initial cost but also the ongoing costs," said Zeihen, using employee training and implementation costs as an example. "Cost definitely plays into every decision a community bank makes," said Mews. "We could train one person internally, but because of the in-depth knowledge it takes, it would be difficult to have any backup." It's critical for bank leadership to consider the long-term costs and benefits of each potential solution rather than selecting the least expensive option in the short-term. "It doesn't make sense to pay for more than you need, but one of the poorest business decisions you can make is to buy the cheapest solution out there and find out later that it is ineffective," said Danielson. Bank management should also factor in the staff time required to utilize a software solution. "Each institution has someone responsible for loan loss allowance calculation," Abdoo pointed out. "Whether you use Excel or not, that person will still be putting in time documenting and entering data. You still will have to put in time and effort to calculations, no matter what the tool."

Ultimately, regulators are more concerned about compliance with the principles of CECL than the specific tools being used. "The bottom line is banks will continue to have flexibility in choosing a solution that meets their needs as long as the CECL principles are followed and objectives are met," said Zeihen. "The OCC isn't expecting or requiring banks to purchase from a third party vendor or purchase a new system. It's possible for banks to use the tools they already have, but some modifications will be required. We expect them to have proper controls over the input, the appropriate calculations, and controls over changes in outputs."

If a bank does decide to pursue using Excel for CECL compliance, be sure to leave plenty of time for testing and adjustments during implementation. "Community banks who want to consider using Excel will need to start very early in building their models so they can develop or hire the skills they need and change course if necessary," said Danielson. "It can be done, but don't make that decision lightly."


Helpful Resources


Plante Moran is a WBA Silver Associate Member. 
CliftonLarsonAllen, LLP is a WBA Bronze Associate Member.

By, Amber Seitz

Why and How to Incorporate Ancillary Benefits Into Your Compensation Package

The global workforce shortage now impacts nearly half of all employers. According to Manpower Group's 2018 talent shortage report, 45 percent of employers say they can't find the skills they need, up from 40 percent in 2017 and the highest figure in over a decade. In Wisconsin, the unemployment rate has plunged to an historic low and many businesses are struggling to find talent. "We have a saying at MRA: the war for talent is over, and the candidates have won," said MRA Director, Total Rewards Deborah Schultz, GPHR, SPHR, SHRM-SCP. Traditional, cookie-cutter benefits aren't effective attractors for today's empowered candidates. "The one-size-fits-all approach no longer works well with benefits," said Brian Siegenthaler, director – sales at WBA Employee Benefits Corporation. "Employees are looking for flexibility and choice. The right benefits package can make a huge difference, especially in the current environment of small salary increases."

As a result, many employers—including banks—are turning to ancillary benefits in an effort to stand out to the most qualified job seekers. "Organizations, banks included, are taking more of a total rewards approach," Schultz explained. "In the competitive talent community today, it's all about differentiation." Ancillary benefits are the "extras" beyond the retirement, health insurance, and life insurance products that round out a traditional rewards package, sometimes including other insurance products such as vision or hearing, cancer, and critical illness, or non-insurance perks such as remote work options and tuition reimbursement. 

While quantitative research proving that ancillary benefits cause employees to join or leave an organization is limited, they are a motivating factor that can keep top talent engaged for a longer period of time. "Many employees put a high value on ancillary benefits," said Ed Caillier, human resources director, MRA. For many employees, the benefits carry more weight than salary alone. "Better benefits are usually more valuable than higher-than-average pay," said Kaydi Sobottka, human resources officer at The First National Bank of River Falls. 

Five Keys to Success 

If your bank is considering complementing your total rewards package by adding ancillary benefits, consider the following five keys to a successful rollout:

  1. Align with the bank's mission and strategy. The most successful benefits packages closely align with the company's strategic plan and also reinforce its mission and/or values, and often it's the ancillary benefits that do the most to create that synergy. "Benefits encompass more than insurance, 401(k) plans, and PTO," explained Molly Bauer, vice president – human resources officer at the Bank of Wisconsin Dells and Chair of the 2018-2019 WBA Human Resources Committee. "Culture and benefits are tightly entwined." For example, if the bank has a strong culture of community service, then paid volunteer time might be a good ancillary benefit to introduce. "Make sure you stay in alignment with the culture you're trying to create and your business strategy," Schultz advised. 
  2. Determine what the bank can afford. Careful cost analysis is a critical component in launching any changes to a compensation and benefits plan. "Organizations need to do a careful assessment of what the organization can afford and sustain," said Schultz. Many banks provide benefits in an unofficial capacity, so it is important to factor in those costs, as well. For example, Bauer knows of one bank that offers unlimited bereavement leave simply because "for them, it's just the right thing to do," she said. "Generally, community banks look out for their employees in times of need. It's not always just about the written benefits." In order to offer that kind of support and flexibility, the bank needs to understand the costs it will need to absorb in order to do so. Working with the right vendor can help keep costs in check, Siegenthaler says. "Partnering with the right carriers is important," he explained. "Price is, of course, a major consideration, but working with a partner carrier that understands our industry is key."
  3. Communicate clearly, early, and often. Human resources leaders must establish clear communication with all staff before, during and after the implementation of any changes. "It's really all about communication," Siegenthaler said. "If employees don't understand how to utilize the benefits, the value of the programs isn't fully realized." In addition to increasing utilization, open communication can provide direction on what kinds of benefits employees will appreciate the most. "Doing an employee survey is a great way to cast a net out there to gauge interest in different types of ancillary benefits," said Kelly Greinke, survey project lead at MRA. 
  4. Involve staff. Every company will have a unique benefits package because no two employees need the same things. "There is no one-size-fits-all package," said Bauer. She recommends polling staff or creating a committee with all levels of the organization represented to discuss benefits. "Most people are willing to tell you what they like and don't like if you ask," she said. Involving staff in the design and implementation of a custom benefits package not only increases the changes that package will meet the specific needs of your staff, but also provide the right number of choices so employees can further customize their options to fit their situation. "Each employee is uniquely different," said Sobottka. "Choice is key to meeting the needs of each employee."
  5. Demonstrate support from the top. Like any significant change at the bank, support from senior leadership is critical to rolling out new or updated benefits successfully. "Senior leadership's visible support and actions around a company's benefits program is very important in overcoming skepticism," said Caillier. He used the example of paid time off to volunteer. "If that's not fully supported by senior leaders with their words and actions, employees will view it as something they shouldn't take advantage of," he explained.

 ​Ancillary Benefits
Across industries, organizations have added a wide variety of ancillary benefits to their rewards packages. Here are a few of the most common and creative: 

Additional Insurance
Siegenthaler said offering dual or triple option health plans is one innovative approach he's seen. "Offering voluntary or supplemental coverages that allows the employee to pick and choose what's most important to them is also a good option," he said. Providers like Aflac often offer this type of coverage at no cost to the employer. In a recent banking industry survey, MRA found that cancer insurance and critical illness insurance were two popular ancillary benefits; vision and/or hearing insurance are also fairly common.

Flexibility 
"We've definitely seen an influx of the kinds of benefits that work toward work/life flexibility," said Schultz, who says the term "work/life balance" is difficult as a goal because each individual brings his or her own definition. Additionally, MRA employer surveys have found that opportunities for time off and social interaction are very popular, especially among younger workers. Greinke cited spontaneous time off to leave early, summer hours, teambuilding events, and sporting events as examples. 

Paid Volunteer Hours
Having paid time off to volunteer in the community "can tie in with the overall mission, vision, and values of the organization," said Caillier. "Building communities is a large part of what the financial industry is about." A related benefit banks might consider is charitable contribution gift-matching. 

Wellness Programs
A company-sponsored wellness program is a good way to incentivize healthy living, and several banks have found them very popular with their employees. "Our wellness program has been incredibly successful," said Sobottka. "It's become a main pillar of our culture, aiding retention." Long-term, such programs can also lead to healthier employees and therefore lower insurance costs and less productivity lost due to sick days. 

Wisconsin Banking Industry Compensation & Benefits Report 
Do you need easy-to-understand, usable, and meaningful compensation and benefits data about Wisconsin's banking industry? As a banking HR professional, of course you do! Now available to you, the 2018 Wisconsin Banking Industry Compensation & Benefits Report is the largest Wisconsin-specific report, containing salary and benefit information for 113 different jobs with data from 111 participating Wisconsin banks! Visit www.wisbank.com/WICompensation for a sneak peek at this year's data and to order your report.

Cathy Yanke, human resources director at Bank of Prairie du Sac, and Kari Davis, VP – human resources director at State Bank of Cross Plains, also contributed to this article. 
WBA Employee Benefits Corporation (EBC) is a wholly owned subsidiary of the Wisconsin Bankers Association.  

By, Amber Seitz

Update: Efforts to slow the spread of the COVID-19 virus have meant many more workers than usual (including bankers) are working remotely. WBA is republishing this August 2018 article with actionable advice and examples for banks as they make the transition to remote work.

Eric Walters' morning commute only takes him a few minutes, even though his job is over 300 miles away. Walters, vice president of credit administration at Madison-based Settlers bank, is among the growing number of bankers who work remotely on a regular basis. He has been working remotely since February 2011, when his family needed to relocate from Madison to Marquette, Mich. Despite only working for Settlers for a year and a half, Walters decided to pursue telecommuting as a way to keep his role with the bank. He proposed the arrangement to his manager and the bank's executive team. "They ran with it, and I was as surprised as anyone!" Walters said. "The transition worked so well, it's now been seven and a half years of working remote, and I love it." 

Walters is one of the estimated nine million Americans working from home at least half-time (2.9 percent of the total U.S. labor force). That number rises dramatically when you include occasional remote work—43 percent of American employees reported working remotely in 2016. As more and more companies begin offering remote work opportunities as an employee benefit, the banking industry will need to adapt its historically conservative stance on the issue in order to attract and retain top talent. Adopting a more permissive stance on working remotely provides tangible benefits for both the bank and its employees, so long as both parties work to address three key challenges.

Bank Point-of-View

Banks that are considering allowing remote work must weigh the potential risks—including employee productivity and security concerns—against one major benefit: standing out in the talent market. "We're going to have to become much more creative and flexible in offering telecommuting, especially with the millennials and the shortage of employees, if we want to attract and retain quality employees," said Sue Mares, senior vice president – human resources/administration, Premier Community Bank, Marion. "This is one of the benefits they are looking for when searching for a job." And they're finding it. A 2017 Deloitte survey found 64 percent of millennials report having "flexible locations," up from 21 percent in 2016

In today's tight labor market, it can be especially difficult for employers to attract talent to rural areas. "It gives us the opportunity to attract candidates who would not have otherwise applied, or to retain employees because of that opportunity," said Renee Peterson, talent acquisition and development officer at Horicon Bank. Other benefits for banks that permit remote work include a reduced need for expensive office space, less wasted "windshield time" for employees with long commutes, and staff involvement in communities and markets where the bank currently doesn't have a presence but may want to enter in the future.

One of the primary barriers banks face to implementing more robust remote work policies is the very nature of being a service industry. "It's a little more difficult in the banking environment to implement telecommuting for all employees because of the fact that we are a financial services organization," said Mares. "For many of our positions, we need to be in front of our customers to portray our image that we are here to serve them." Many customer-facing positions in banking are difficult—if not impossible—to perform well outside of a branch. "Thinking about banking and how much we assist our customers in person, people have the mindset that you need to be in a branch, and sometimes that's true but not always," Peterson explained. "There just aren't as many positions in banking where someone could work remotely."

Staff Perspective

For the employee, working remotely provides flexibility and demonstrates the bank's confidence in them. The additional autonomy allows the employee to balance family, social, and work obligations, which doesn't require working outside the office on a regular basis. In fact, the Gallup report found most individuals who report working remotely do so infrequently—25 percent say they work remotely less than 20 percent of the time, and 20 percent say it's between 20 and 40 percent. That flexibility is important to a growing number of workers, as well. Over half of the employees surveyed by Gallup (53 percent) say a role that allows them to have greater work-life balance is "very important" to them when considering whether to take a new job. 

Another significant benefit to the employee is the empowerment that comes with the bank's demonstration of trust. "You know that the institution has to trust you on a fairly substantial level to allow you to work remotely, both with respect to productivity and data security. Having that trust is a very big appreciative factor for me," said Walters. "It shows the bank is willing to grow with me. When you're looking at whether your employer values you, that's a huge impact."

One unique challenge telecommuters face is difficulty staying connected to other staff and the culture of the bank. While Walters returns to Madison every four or five months for an on-site day, it's not a substitute for the many social interactions coworkers have that leads to feeling connected. "One way to make remote staff feel connected is using video conferencing tools," he said. "Being able to see the other person makes you feel like you're there."

Key Challenges to Address

In order to implement remote work successfully, banks and their employees must work together to overcome three primary challenges, each of which should be addressed in the bank's formal policy (if there is one). The first challenge is to clearly define "remote work" and set guidelines for where and when employees may choose to work outside the office. "Have clear guidelines and expectations," Peterson advised. "When you're rolling out something like this, you need to have the qualifications and follow-up laid out. That makes it easier to decide what positions and employees can work remotely." When considering this question, bank leadership should remember that "working remotely" could mean working from a different branch location than the rest of that employee's department, for example. One bank responding to a recent WBA survey said they require employees to have a home office or dedicated workspace in order to work remotely. Another supplies tablets that allow employees to securely connect to their in-branch workstations. The bank and employee must determine which of the many types of remote work are the best fit for their situation. 

Another challenge is identifying the appropriate roles and individuals for remote work. "Make sure that the job requirements, responsibilities, and duties are compatible with working from a different site and still allow the employee to be efficient and productive, and that the employee is a good fit for working remotely," Mares advised. Some employees may be in a role compatible for telecommuting, but lack the personality or work style to do so successfully. Conversely, some employees thrive working remotely and find they are less distracted outside the office. "If the employee is happy working remotely or from another branch location, they will work more efficiently," said Mares. "It's not for every employee, but we have seen positive results with the ones that we have provided this benefit." 

Clear expectations and concrete goals will help both the bank and employee measure productivity to determine if telecommuting is effective. "When someone is going to work remotely, they must have regular communication with their manager to ensure tasks are completed by their deadline," said Peterson. Walters recommends beginning the remote work program with an employee who has a "history of high performance and motivation," he said. "You then have a productivity baseline to measure from." 

One major obstacle for telecommuting in the banking industry is the critical need for security. Multifactor authentication, bank-provided electronic devices, and strict security protocols can help mitigate those risks. In addition, for many banking positions, an electronic filing system at the bank is the only way to make telecommuting feasible with regards to data protection. Compliance and IT personnel should be directly involved in rolling out any remote work practices at the bank. 

Despite the challenges telecommuting presents, Walters believes it's worth the process of trying. "The bank should absolutely consider it, but it won't be for everyone," he said. "If it isn't working, terminate the remote work option for that employee and move on." Ultimately, successful telecommuting relies on the bank and employee working together. "You want it to be a mutually beneficial relationship," said Walters. "There has to be open communication between the employee and the bank in order to reach that balance."

By, Amber Seitz

Dane County – Banks are the backbones of their communities, supporting them in difficult times. The recent flooding in southern Wisconsin is no different. Several banks have taken important steps to help their friends and neighbors in the wake of the historic rainfalls and flooding affecting many communities.

  • The Peoples Community Bank, Mazomanie, has established the Mazomanie Area Flood Assistance Fund (www.thepeoplescommunitybank.com)
  • The State Bank of Cross Plains has orchestrated a Disaster Recovery Account in connection with the United Way (https://info.sbcp.bank/floods), as well as coordinated and volunteered in wide-ranging relief efforts in the bank’s communities. Additionally, the bank is providing impacted employees $500 in cash, directly deposited into their account, no questions asked.
  • Wisconsin Bank and Trust, Madison, will be donating $5 to the American Red Cross for each person who visits their Main, Fitchburg, or Cottage Grove Banking Centers, up to $2,500.00.
  • Monona Bank, Monona, has established two funds to help those affected by the ongoing flooding and storm issues. Donations for either fund can be sent to or dropped off at any of the bank's nine locations. The first account created is for donations that will be used to help people in the bank's communities all around Dane County. The bank has already committed more than $10,000 to this fund and many of the bank’s board members are also contributing as well. Checks should be made out to “Dane County Area 2018 Flood Relief Fund.” The bank has also opened an account to help one of its clients, the Prochaska family who lost their entire house and contents when lightning struck their home last week. Checks for this fund can be made out to “Daniel or Doretta Prochaska”
  • Farmers State Bank, in conjunction with Organic Valley, established a Flood Disaster Recovery fund to be distributed to local organizations for Vernon, Juneau, Richland, Sauk, and Monroe counties. Farmers State Bank and Organic Valley are each donating to this fund an initial $1,000. To contribute to this fund, checks should be made out to "Farmers State Bank Flood Disaster Fund" and can be dropped off at any branch or mailed to Farmers State Bank P.O. Box 405 Hillsboro, WI 54634. Funds will be distributed to local 501c3 organizations or per the recommendations of county's Emergency Management Department. 
  • Farmers & Merchants Bank, Tomah, has opened a Disaster Recovery Account for Monroe County (https://www.fmnetbank.com/resources/monroe-county-disaster-relief) and the bank will match the first $1000 donated. The bank is also donating to another community business' "Stuff the Trailer" initiative to collect cleaning supplies, bottled water, and non-perishable food items.
  • Community First Bank, Boscobel, donated $10,000 to the Greater Sauk Community Foundation for those affected and displaced here in Sauk County.
  • Royal Bank, Elroy, teamed up with the La Valle Fire Rescue to establish the La Valle Area Flood Relief Fund. All proceeds will benefit local residents and businesses of the La Valle area impacted by the flooding. Donations can be made at any Royal Bank location or mailed to Royal Bank, PO Box 5, La Valle, WI 53941. Checks should be made payable to La Valle Area Flood Relief Fund or to La Valle Fire  Rescue with a designation to the La Valle Area Flood Relief Fund. 

Several banks (including some listed above) are also offering special low- or no-cost loans to those impacted by the flooding. Those affected by the floods should contact their local bank for more details on these services.

It should be noted that several banks and their employees have been impacted by the flooding, as well. Despite these challenges, the banks have made strong efforts to care for the needs of their communities. The Wisconsin Bankers Association commends banks for taking these steps to help in the recovery efforts of their friends and neighbors.

Community banks have always been and will continue to be an integral part in assisting their communities during times of need. We are proud to serve the banking industry because of the way they serve their communities. The above-mentioned banks are simply the latest examples of this community dedication.

By, Ally Bates

The below article is the Compliance Notes section of the August 2018 Compliance Journal. The full issue may be viewed by clicking here.

WBA, along with 51 other state bankers associations, signed on to the American Bankers Association’s comment letter to HUD regarding the reconsideration of HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard. The letter points out that the HUD rule stands in direct conflict with the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project. In that decision, the Court established that “disparate impact” analysis to demonstrate discrimination claims is recognized under the Fair Housing Act, but it included key limitations that placed the burden of proof in disparate impact cases with the plaintiffs. ABA and the state bankers associations called on HUD to amend the rule to include a proper definition of a disparate impact claim; articulate the cautionary standards, safeguards, limitations and other requirements described by the Supreme Court in its Inclusive Communities decision; and provide further guidance to the industry. The full letter may be viewed at: https://www.aba.com/Advocacy/commentletters/Documents/ABA-Comments-to-HUD-on-ANPR-re-Disparate-Impact-Rule.pdf 


FRB launched the Consumer Compliance Supervision Bulletin, a new publication that will provide bankers and others interested in consumer protection with high-level summaries of pertinent supervisory issues. The Bulletin, which will be published by FRB’s Division of Consumer and Community Affairs, is intended to enhance transparency regarding the Federal Reserve’s consumer compliance supervisory program, and highlight violations that have been identified. It will also provide practical steps for institutions to consider when managing consumer compliance risks. The full announcement and first issue may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20180726a.htm


FRB issued the August 2018 Report to Congress on Government-Administered, General-Use Prepaid Cards. The report shows that for calendar year 2017, government agencies disbursed $144 billion through prepaid cards across reported programs. Consistent with years prior, the Supplemental Nutritional Assistance Program (SNAP) disbursed the largest share of total funds through prepaid cards across all reported programs in 2017. The full report may be viewed at: https://www.federalreserve.gov/publications/files/government-prepaid-report-201808.pdf 


CFPB and FFIEC have made available a HMDA File Format Verification Tool. The tool is a resource for testing whether files meet certain formatting requirements specified in the HMDA Filing Instructions Guide. There is a unique File Format Verification Tool for each HMDA data collection year. The tool may be accessed at: https://ffiec.cfpb.gov/tools/file-format-verification


FRB released the June 2018 Consumer Credit report which shows consumer credit increased at a seasonally adjusted annual rate of 4-1/2 percent during the second quarter. Revolving credit increased at an annual rate of 4 percent, while nonrevolving credit increased at an annual rate of 5 percent. In June, consumer credit increased at an annual rate of 3 percent. The report may be viewed at: https://www.federalreserve.gov/releases/g19/current/default.htm


CFPB working in collaboration with 11 financial regulators and related organizations, announced an initiative to create the Global Financial Innovation Network (GFIN). The network will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for cooperation between financial services regulators on innovation-related topics. The announcement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/bcfp-collaborates-regulators-around-world-create-global-financial-innovation-network/


FDIC released the summer 2018 edition of its Consumer News newsletter which celebrates the 25th anniversary of the publication. The anniversary edition of the newsletter features information drawn from updated versions of some of Consumer News’ best articles throughout the years. The publication may be viewed at: https://www.fdic.gov/consumers/consumer/news/cnsum18/


FATF issued Financial Flows from Human Trafficking, a report discussing the financial implications of human trafficking. It is estimated that forced labor generates $150.2 billion each year, the study identifies the challenges national authorities frequently face in detecting, investigating and prosecuting money laundering and terrorist financing from human trafficking. The study also identifies good practices to mitigate some of these challenges. The report may be viewed at: http://www.fatf-gafi.org/media/fatf/content/images/Human-Trafficking-2018.pdf


CFPB announced it will be hosting a day- long symposium on access to fair and responsible credit. The symposium will be held 09/17/2018 in Washington D.C. Further information may be viewed at: https://www.consumerfinance.gov/about-us/blog/save-date-building-bridge-credit-visibility-symposium/


OCC issued an updated Version 1.1 of “Business Combinations” booklet of the Comptroller’s Licensing Manual that makes minor technical corrections and to reflect a change in the public comment period calculation. The updated booklet may be viewed at: https://www.occ.gov/publications/publications-by-type/licensing-manuals/bizcombo.pdf


Treasury released a report identifying improvements to the regulatory landscape that will better support nonbank financial institutions, embrace financial technology, and foster innovation. reasury’s report identifies just over 80 recommendations that are designed to embrace the efficient and responsible use of consumer financial data and competitive technologies; streamline the regulatory environment to foster innovation and avoid fragmentation; modernize regulations for an array of financial products and activities; and facilitate “regulatory sandboxes” to promote innovation. The report may be viewed at: https://home.treasury.gov/sites/default/files/2018-08/A-Financial-System-that-Creates-Economic-Opportunities—Nonbank-Financials-Fintech-and-Innovation_0.pdf


OCC announced it will begin accepting applications for national bank charters from nondepository financial technology (fintech) companies engaged in the business of banking. The decision was documented in a policy statement and supplement to the OCC’s Comptroller’s Licensing Manual. Fintech companies that apply and qualify for, and receive, special purpose national bank charters will be supervised like similarly situated national banks, to include capital, liquidity, and financial inclusion commitments as appropriate. The release may be viewed at: https://www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-74.html


FATF has issued a professional money laundering report which looks at the techniques and tools used by professional money launderers, to help countries identify and dismantle them. The report identifies the key characteristics of the individual professional money launderer, the professional money laundering organization and the professional money laundering network of associates and contacts that work together to facilitate money laundering. The report may be viewed at: http://www.fatf-gafi.org/media/fatf/documents/Professional-Money-Laundering.pdf


FHFA announced it will not make a decision in 2018 about updating the credit score model used by Fannie Mae and Freddie Mac (the Enterprises) as previously announced and, instead, is shifting its focus to implementation of Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174) enacted in May (the Act).  The Act requires FHFA to define, through rulemaking, the standards and criteria the Enterprises will use to validate credit score models. The announcement may be viewed at: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Decision-to-Stop-Credit-Score-Initiative.aspx 


OCC issued the “Capital and Dividends” booklet of the Comptroller’s Handbook. The revised booklet presents the regulatory capital framework and discusses the regulatory capital rules that define regulatory capital and establish minimum capital standards. The booklet also provides guidance to examiners for assessing banks’ capital adequacy and compliance with capital and dividend regulations. The booklet may be viewed at: https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/capital-accounts-dividends/pub-ch-capital-and-dividends.pdf


FDIC issued a FIL summarizing the recent changes made to all three versions of the Consolidated Reports of Condition and Income (Call Report) which are taking effect as of the June 30, 2018, report date. The FIL may be viewed at: https://www.fdic.gov/news/news/financial/2018/fil18040.html 

By, Ally Bates

The below article is the Regulatory Spotlight section of the August 2018 Compliance Journal. The full issue may be viewed by clicking here.

Agencies Finalize Rule on Short-Term Limited Duration Insurance.

The Department of the Treasury (Treasury), the Department of Labor (DOL), and the Department of Health and Human Services (HHS) finalized a rule amending the definition of short-term, limited-duration insurance for purposes of its exclusion from the definition of individual health insurance coverage. This action is being taken to lengthen the maximum duration of short-term, limited-duration insurance, which will provide more affordable consumer choices for health coverage. The rule is effective 10/02/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16568.pdf. Federal Register, Vol. 83, No. 150, 08/03/2018, 38212-38243.

Agencies Propose Resolution Planning Guidance for Eight Large, Complex U.S. Banking Organizations.

The Board of Governors of the Federal Reserve System (FRB), and the Federal Deposit Insurance Corporation (FDIC) proposed guidance for the 2019 and subsequent resolution plan submissions by the eight largest, complex U.S. banking organizations. The proposed guidance is meant to assist these firms in developing their resolution plans, which are required to be submitted pursuant to Section 165(d) of the Dodd-Frank Act. The proposed guidance, which is largely based on prior guidance issued to these firms, describes the Agencies’ expectations regarding a number of key vulnerabilities in plans for an orderly resolution under the U.S. Bankruptcy Code (i.e., capital; liquidity; governance mechanisms; operational; legal entity rationalization and separability; and derivatives and trading activities). The proposed guidance also updates certain aspects of prior guidance based on the Agencies’ review of these firms’ recent resolution plan submissions. Comments are due 09/14/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-16/pdf/2018-15066.pdf. Federal Register, Vol. 83, No. 136, 07/16/2018, 32856-32871.

Agencies Propose Amendments to the Bank Holding Company Act.

The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) proposed amendments to the regulations implementing section 13 of the Bank Holding Company Act. Section 13 contains certain restrictions on the ability of a banking entity and nonbank financial company supervised by FRB to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. The proposed amendments are intended to provide banking entities with clarity about what activities are prohibited and to improve supervision and implementation of section 13. Comments are due 09/17/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-17/pdf/2018-13502.pdf. Federal Register, Vol. 83, No. 137, 07/17/2018, 33432-33605.

Agencies Propose Amendments to Enterprise Capital Requirements.

The Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) proposed a new regulatory capital framework for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises), which includes a new framework for risk-based capital requirements and two alternatives for an updated minimum leverage capital requirement. The risk-based framework would provide a granular assessment of credit risk specific to different mortgage loan categories, as well as market risk, operational risk, and going-concern buffer components. The proposed rule would maintain the statutory definitions of core capital and total capital. Comments are due 09/17/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-17/pdf/2018-14255.pdf. Federal Register, Vol. 83, No. 137, 07/17/2018, 33312-33430.

Agencies Extend Comment Period for Proposed Amendments to Enterprise Capital Requirements.

The Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) proposed a new regulatory capital framework for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) in the Federal Register on 07/17/2018. The Agencies are extending the comment period for the proposal from 09/17/2018 to 11/16/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16654.pdf. Federal Register, Vol. 83, No. 150, 08/03/2018, 38085-38086.

CFPB Finalizes Amendments to Annual Privacy Notice Requirements Under Regulation P.

The Bureau of Consumer Financial Protection (CFPB) finalized amendments to Regulation P, which requires, among other things, that financial institutions provide an annual notice describing their privacy policies and practices to their customers. The amendment implements a December 2015 statutory amendment to the Gramm-Leach-Bliley Act providing an exception to this annual notice requirement for financial institutions that meet certain conditions. The amendments will be effective 30 days after the notice is published in the Federal Register. The notice may be viewed at: https://files.consumerfinance.gov/f/documents/bcfp_glba-privacy-notices_final-rule_amendment_2018-08.pdf

CFPB Requests Comment on Information Collection. 

CFPB announced it seeks comment on the information collection titled Consumer and College Credit Card Agreements. CFPB also gave notice that it sent the collection to OMB for review. Comments are due 08/20/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-20/pdf/2018-15581.pdf. Federal Register, Vol. 83, No. 140, 07/20/2018, 34555.    

FRB Issues Final Rule on Single-Counterparty Credit Limits for Bank Holding Companies and Foreign Banking Organizations.

The Board of Governors of the Federal Reserve System (FRB) finalized a rule to establish single-counterparty credit limits for bank holding companies and foreign banking organizations with $250 billion or more in total consolidated assets, including any U.S. intermediate holding company of such a foreign banking organization with $50 billion or more in total consolidated assets, and any bank holding company identified as a global systemically important bank holding company under FRB’s capital rules. The final rule implements section 165(e) of the Dodd-Frank Act, which requires FRB to impose limits on the amount of credit exposure that such a bank holding company or foreign banking organization can have to an unaffiliated company in order to reduce the risks arising from the company’s failure. The final rule is effective 10/05/2018. The final rule may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-06/pdf/2018-16133.pdf. Federal Register, Vol. 83, No. 151, 08/06/2018, 38460-38511.

FRB Extends Information Collections.

  • FRB is adopting a proposal to extend for three years, with revision, the following information collections: Financial Statements of U.S. Nonbank Subsidiaries of U.S. Holding Companies, and the Abbreviated Financial Statements of U.S. Nonbank Subsidiaries of U.S. Holding Companies; the Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations and the Abbreviated Financial Statements of Foreign Subsidiaries of U.S. Banking Organizations; and the Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations, Abbreviated Financial Statements of U.S. Nonbank Subsidiaries Held by Foreign Banking Organizations, and the Capital and Asset Report of Foreign Banking Organizations. The revisions are effective for reports reflecting the 06/30/2018, report date. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-08/pdf/2018-16916.pdf. Federal Register, Vol. 83, No. 153, 08/08/2018, 39091-39093.
  • FRB is adopting a proposal to extend for three years, without revision, the Senior Financial Officer Survey. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-08/pdf/2018-16918.pdf. Federal Register, Vol. 83, No. 153, 08/08/2018, 39093.

FRB Requests Comment on Information Collections.

  • FRB announced it seeks comment on the information collection titled Country Exposure Report for U.S. Branches and Agencies of Foreign Banks. FRB also gave notice that it sent the collection to OMB for review. Comments are due 08/29/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-30/pdf/2018-16173.pdf. Federal Register, Vol. 83, No. 146, 07/30/2018, 36592-36593.
  • FRB announced it seeks comment on the information collection titled Capital Assessments and Stress Testing. FRB also gave notice that it sent the collection to OMB for review. Comments are due 10/09/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-08/pdf/2018-16917.pdf. Federal Register, Vol. 83, No. 153, 08/08/2018, 39093-39095.

FDIC Finalizes Statement of Policy Pursuant of Section 19 of the Federal Deposit Insurance Act.

The Federal Deposit Insurance Corporation (FDIC) is finalizing changes to its statement of policy (SOP) concerning participation in banking of a person convicted of a crime of dishonesty or breach of trust or money laundering or who has entered a pretrial diversion or similar program in connection with the prosecution for such offense pursuant to Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. 1829. The policy is applicable 07/19/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16634.pdf. Federal Register, Vol. 83, No. 150, 08/03/2018, 38143-38149.

FDIC Proposes Amendments to Rules of Practice and Procedure.

FDIC proposes to amend its rules of practice and procedure to remove duplicative, descriptive regulatory language related to civil money penalty (CMP) amounts that restates existing statutory language regarding such CMPs, codify Congress’s recent change to CMP inflation adjustments in the FDIC’s regulations, and direct readers to an annually published notice in the Federal Register—rather than the Code of Federal Regulations (CFR)—for information regarding the maximum CMP amounts that can be assessed after inflation adjustments. Comments are due 10/02/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16548.pdf. Federal Register, Vol. 83, No. 150, 08/03/2018, 38080-38085.

FDIC Requests Comment on Information Collections.

  • FDIC announced it seeks comment on the information collection titled Notice of Branch Closure. FDIC also gave notice that it sent the collection to OMB for review. Comments are due 08/13/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-12/pdf/2018-14864.pdf. Federal Register, Vol. 83, No. 134, 07/12/2018, 32290-32293.
  • FDIC announced it seeks comment on the information collection titled Resolution Plans Required for Insured Depository Institutions With $50 Billion or More in Total Assets. FDIC also gave notice that it sent the collection to OMB for review. Comments are due 09/28/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-30/pdf/2018-16186.pdf. Federal Register, Vol. 83, No. 146, 07/30/2018, 36589-36590.
  • FDIC announced it seeks comment on the information collection titled Notice Regarding Assessment Credits. FDIC also gave notice that it sent the collection to OMB for review. Comments are due 10/09/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-07/pdf/2018-16846.pdf. Federal Register, Vol. 83, No. 152, 08/07/2018, 38692-38693.

FDIC Issues Terminations of Receiverships.

  • FDIC as Receiver for former depository institutions, intends to terminate its receivership for the institutions listed in the notices. The liquidation of the assets for each receivership has been completed. To the extent permitted by available funds and in accordance with law, the Receiver will be making a final dividend payment to proven creditors. Based upon the foregoing, the Receiver has determined that the continued existence of the receiverships will serve no useful purpose. Consequently, notice is given that the receiverships shall be terminated, to be effective no sooner than thirty days after the date of this notice. If any person wishes to comment concerning the termination of any of the receiverships, such comment must be made in writing, identify the receivership to which the comment pertains, and be sent within thirty days of the date of this notice to: Federal Deposit Insurance Corporation, Division of Resolutions and Receiverships, Attention: Receivership Oversight Department 34.6, 1601 Bryan Street, Dallas, TX 75201. No comments concerning the termination of the above-mentioned receiverships will be considered which are not sent within this time frame. The notices may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-30/pdf/2018-16185.pdf. Federal Register, Vol. 83, No. 146, 07/30/2018, 36589. https://www.gpo.gov/fdsys/pkg/FR-2018-08-07/pdf/2018-16832.pdf. Federal Register, Vol. 83, No. 152, 08/07/2018, 38693.
  • FDIC as Receiver was charged with the duty of winding up the affairs of former depository institutions and liquidating all related assets. The Receiver has fulfilled its obligations and made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary, including but not limited to releases, discharges, satisfactions, endorsements, assignments, and deeds. Effective on the termination dates listed in the final column of the chart in the notice, the Receiverships have been terminated, the Receiver has been discharged, and the Receiverships have ceased to exist as legal entities. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-07/pdf/2018-16833.pdf. Federal Register, Vol. 83, No. 152, 08/07/2018, 38693-38694.

OCC Requests Comment on Information Collections.

  • The Office of the Comptroller of the Currency (OCC) announced it seeks comment on the information collection titled Subordinated Debt Licensing Requirements. OCC also gave notice that it sent the collection to OMB for review. Comments are due 08/13/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-12/pdf/2018-14941.pdf. Federal Register, Vol. 83, No. 134, 07/12/2018, 32335-32337.
  • OCC announced it seeks comment on the information collection titled Appraisal Management Companies. OCC also gave notice that it sent the collection to OMB for review. Comments are due 09/04/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16639.pdf. Federal Register, Vol. 83, No. 150, 08/03/2018, 38204-38206.
  • OCC announced it seeks comment on the information collection titled Release of Non-Public Information. OCC also gave notice that it sent the collection to OMB for review. Comments are due 09/04/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16641.pdf. Federal Register, Vol. 83, No. 150, 08/03/2018, 38206-38208.

HUD Issues Adjustments of Civil Monetary Penalty Amounts for 2018.

The Department of Housing and Urban Development (HUD) issued 2018 inflation adjustments of civil monetary penalty amounts required by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The adjustments are effective 08/15/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-16/pdf/2018-15116.pdf. Federal Register, Vol. 83, No. 136, 07/16/2018, 32790-32794. 

HUD Issues Debenture Interest Rates.

HUD announced changes in the interest rates to be paid on debentures issued with respect to a loan or mortgage insured by the Federal Housing Administration (FHA) under the provisions of the National Housing Act (the Act). The interest rate for debentures issued under Section 221(g)(4) of the Act during the 6-month period beginning 07/01/2018, is 3 percent. The interest rate for debentures issued under any other provision of the Act is the rate in effect on the date that the commitment to insure the loan or mortgage was issued, or the date that the loan or mortgage was endorsed (or initially endorsed if there are two or more endorsements) for insurance, whichever rate is higher. The interest rate for debentures issued under these other provisions with respect to a loan or mortgage committed or endorsed during the 6-month period beginning 07/01/2018, is 3.125 percent. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-30/pdf/2018-16255.pdf. Federal Register, Vol. 83, No. 146, 07/30/2018, 36614-36616.

HUD Announces Multifamily and Healthcare Loan Sale.

HUD announced its intention to sell three unsubsidized multifamily and fifteen unsubsidized healthcare mortgage loans, without Federal Housing Administration (FHA) insurance, in a competitive, sealed bid sale on or about 08/15/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-23/pdf/2018-15630.pdf. Federal Register, Vol. 83, No. 141, 07/23/2018, 34860-34861.

HUD Requests Comment on Information Collections.

  • HUD announced it seeks comment on the information collection titled Pre-Purchase Homeownership Counseling Demonstration and Impact Evaluation collection. HUD also gave notice that it sent the collection to OMB for review. Comments are due 08/15/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-16/pdf/2018-15130.pdf. Federal Register, Vol. 83, No. 136, 07/16/2018, 32888-32889.
  • HUD announced it seeks comment on the information collection titled Home Mortgage Disclosure Act (HMDA) Loan/Application Register. HUD also gave notice that it sent the collection to OMB for review. Comments are due 10/02/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16661.pdf. Federal Register, Vol. 83, No. 150, 08/03/2018, 38161-38162.

FEMA Issues Final Rule on Suspensions of NFIP Community Eligibility.

The Federal Emergency Management Agency (FEMA) issued a final rule which identifies communities in the state of Michigan, where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on the effective dates listed within the final rule because of noncompliance with the floodplain management requirements of the program. If FEMA receives documentation that the community has adopted the required floodplain management measures prior to the effective suspension date given in the final rule, the suspension will not occur and a notice of this will be provided by publication in the Federal Register on a subsequent date. The effective date of each community’s scheduled suspension is the third date listed in the third column of the tables in the final rule. The final rule may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-25/pdf/2018-15838.pdf. Federal Register, Vol. 83, 143, 07/25/2018, 35147-35147.

FEMA Issues Final Notices of Changes in Flood Hazard Determinations.

  • FEMA issued new or modified Base (1% annual-chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) for communities in the states of Illinois, Indiana, Iowa, and Minnesota. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. The flood hazard determinations modified by each LOMR will be used to calculate flood insurance premium rates for new buildings and their contents. The effective date for each LOMR is indicated in the table in the final notice. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-19/pdf/2018-15385.pdf. Federal Register, Vol. 83, No. 139, 07/19/2018, 34150-34152.
  • FEMA issued new or modified Base (1% annual-chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) for communities in the state of Illinois. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. The flood hazard determinations modified by each LOMR will be used to calculate flood insurance premium rates for new buildings and their contents. The effective date for each LOMR is indicated in the table in the final notice. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-25/pdf/2018-15839.pdf. Federal Register, Vol. 83, No. 143, 07/25/2018, 35282-35284.
  • FEMA issued new or modified Base (1% annual-chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) for communities in the states of Illinois, Minnesota, and Wisconsin. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. The flood hazard determinations modified by each LOMR will be used to calculate flood insurance premium rates for new buildings and their contents. The effective date for each LOMR is indicated in the table in the final notice. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-08/pdf/2018-16902.pdf. Federal Register, Vol. 83, No. 153, 08/08/2018, 39111-39113.

FEMA Issues Proposed Flood Hazard Determinations.

FEMA has requested comments on proposed flood hazard determinations, which may include additions or modifications of any Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area (SFHA) boundary or zone designation, or regulatory floodway on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports for communities in the states of Iowa, and Minnesota. The FIRM and FIS report are the basis of the floodplain management measures that the community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). Comments are due 11/07/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-09/pdf/2018-17077.pdf. Federal Register, Vol. 83, No. 154, 08/09/2018, 39455-39457.

FEMA Proposes Amendments to NFIP.

FEMA proposed amendments to revise the National Flood Insurance Program (NFIP), implementing regulations to codify certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014 that FEMA has already implemented and to clarify certain existing NFIP rules relating to NFIP operations and the Standard Flood Insurance Policy. Comments are due 09/14/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-16/pdf/2018-13292.pdf. Federal Register, Vol. 83, No. 136, 07/16/2018, 32956-33015.

FEMA Issues Correction to Proposed Amendments to NFIP.

On 07/16/2018, FEMA published a proposed rule which would revise the National Flood Insurance Program’s (NFIP’s) regulations to codify certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014 that FEMA has already implemented and to clarify certain existing NFIP rules relating to NFIP operations and the Standard Flood Insurance Policy. In the preamble to the proposed rule, an incorrect web address appeared. This correction fixes that address. In proposed rule document 2018–13292 appearing on pages 32956 through 33015 in the issue of 07/16/2018, make the following correction: On page 32957, in the third column, in the first full paragraph, correct the web address “www.nfipservice.com” to read “https://www.nfipdirect.fema.gov.”  The correction is effective 08/07/2018. The closing of the comment period for the proposed rule published 07/16/2018, at 83 FR 39256, remains 11/14/2018.The correction may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-07/pdf/2018-16718.pdf. Federal Register, Vol. 83, No. 152, 08/07/2018, 38676.

FinCEN Extends Limited Exception from Beneficial Ownership Requirements.

The Financial Crimes Enforcement Network (FinCEN) issued a 90-day limited exceptive relief to covered financial institutions from the obligations of the Beneficial Ownership Rule for Legal Entity Customers (Beneficial Ownership Rule) on 05/16/2018 for certain financial products and services (i.e., certificate of deposit or loan accounts) that were established before the Beneficial Ownership Rule’s Applicability Date, 05/11/2018. The exception originally expired on 08/09/2018. FinCEN is extending the limited exception for an additional 30 days, up to and including 09/08/2018, from the obligations of the Beneficial Ownership Rule for rollover or renewal of certain financial products and services (i.e., certificate of deposit or loan accounts) that were established before 05/11/2018 to further consider the issue. The notice may be viewed at: https://www.fincen.gov/sites/default/files/administrative_ruling/2018-08-08/Extension_Temp_Exceptive_Relief.pdf

FinCEN Requests Comment on Information Collections.

  • FinCEN announced it seeks comment on the information collection titled Anti-Money Laundering Programs for Insurance Companies, 31 CFR 1025.210 and Non-Bank Residential Mortgage Lenders and Originators, 31 CFR 1029.210. FinCEN also gave notice that it sent the collection to OMB for review. Comments are due 09/17/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-19/pdf/2018-15401.pdf. Federal Register, Vol. 83, No. 139, 07/19/2018, 34298-34299.
  • FinCEN announced it seeks comment on the information collection titled Suspicious Activity Report by Money Services Businesses. FinCEN also gave notice that it sent the collection to OMB for review. Comments are due 09/17/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-19/pdf/2018-15400.pdf. Federal Register, Vol. 83, No. 139, 07/19/2018, 34298.
  • FinCEN announced it seeks comment on the information collection titled Suspicious Activity Report by Non-Bank Residential Mortgage Lenders and Originators. FinCEN also gave notice that it sent the collection to OMB for review. Comments are due 09/17/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-19/pdf/2018-15402.pdf. Federal Register, Vol. 83, No. 139, 07/19/2018, 34300-34301.
  • FinCEN announced it seeks comment on the information collection titled Registration of Money Services Business. FinCEN also gave notice that it sent the collection to OMB for review. Comments are due 09/17/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-19/pdf/2018-15399.pdf. Federal Register, Vol. 83, No. 139, 07/19/2018, 34299-34300.

Treasury Finalized Definitions of Qualified Matching Contributions and Qualified Nonelective Contributions.

The Department of the Treasury (Treasury) issued final regulations that amend the definitions of qualified matching contributions (QMACs) and qualified nonelective contributions (QNECs) under regulations regarding certain qualified retirement plans that contain cash or deferred arrangements under section 401(k) or that provide for matching contributions or employee contributions under section 401(m). Under the regulations, an employer contribution to a plan may be a QMAC or QNEC if it satisfies applicable nonforfeitability requirements and distribution limitations at the time it is allocated to a participant’s account, but need not meet the requirements or limitations when it is contributed to the plan. The regulations affect participants in, beneficiaries of, employers maintaining, and administrators of tax-qualified plans that contain cash or deferred arrangements or provide for matching contributions or employee contributions. The rule is effective 07/20/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-20/pdf/2018-15495.pdf. Federal Register, Vol. 83, No. 140, 07/20/2018, 34469-34471.

Treasury Issues Correction to Filing Requirements for Information Returns Required on Magnetic Media. 

Treasury issued a technical correction to a proposed rulemaking that was published in the Federal Register on 05/31/2018 regarding rules for determining whether information returns must be filed by using magnetic media (electronically). Comments on the proposed rule are still due 07/30/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-17/pdf/2018-15164.pdf. Federal Register, Vol. 83, No. 137, 07/17/2018, 33165.

Treasury Announces Capital Management Fund 2018 Funding Round.

Treasury announced the Community Development Financial Institutions Fund (CDFI Fund) plans to award approximately $142.9 million in grants for the Capital Magnet Fund (CMF) FY 2018 round. A table of significant dates for applicants is included in the notice. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-20/pdf/2018-15473.pdf. Federal Register, Vol. 83, No. 140, 07/20/2018, 34685-34698.

Treasury Announces Bank Enterprise Award Program 2018 Funding Round.

Treasury announced the fiscal year 2018 funding round of the Bank Enterprise Award Program and invites applications. A table of significant dates for applicants is included in the notice. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-23/pdf/2018-15618.pdf. Federal Register, Vol. 83, No. 141, 07/23/2018, 34913-34925.

Treasury Requests Comment on Information Collection.

Treasury announced it seeks comment on the information collection titled U.S. Individual Income Tax Return. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 09/18/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-20/pdf/2018-15627.pdf. Federal Register, Vol. 83, No. 140, 07/20/2018, 34698-34700.

FHFA Repeals Definitions in Finance Board Regulations.

The Federal Housing Finance Agency (FHFA) is repealing two parts of the Federal Housing Finance Board (Finance Board) regulations, which define terms used in Finance Board regulations, and which describe the process by which the Finance Board conducted its monthly interest rate survey (MIRS). The repealed definitions are either obsolete or duplicate definitions that FHFA has previously adopted. The regulation relating to the MIRS has become outdated because it does not accurately describe the manner in which FHFA currently conducts the survey. The final rule also repeals a number of subchapters of the Finance Board regulations that it had previously reserved, but which no longer serve any purpose because they include no regulatory text, corrects inaccurate cross-references in regulations described in this rulemaking, and amends a table to update information relating to information collections under the Paperwork Reduction Act. The final rule is effective 09/10/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-09/pdf/2018-16972.pdf. Federal Register, Vol. 83, No. 154, 08/09/2018, 39323-39326.

FHFA Requests Comment on Information Collections.

  • FHFA announced it seeks comment on the information collection titled Minority and Women Inclusion. FHFA also gave notice that it sent the collection to OMB for review. Comments are due 08/29/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-30/pdf/2018-16230.pdf. Federal Register, Vol. 83, No. 146, 07/30/2018, 36591-36592.
  • FHFA announced it seeks comment on the information collection titled Minimum Requirements for Appraisal Management Companies. FHFA also gave notice that it sent the collection to OMB for review. Comments are due 08/30/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-31/pdf/2018-16350.pdf. Federal Register, Vol. 83, No. 147, 07/31/2018, 36931-36935.

SBA Announces 504 Loan Program Rural Initiative.

The Small Business Administration (SBA) announced the 504 Loan Program Rural Initiative Pilot Program (504 Rural Pilot). The 504 Rural Pilot waives the restrictions on the authority of Certified Development Companies (CDCs) to make 504 loans outside their Area of Operations to allow each CDC to make loans for 504 Projects with an address located in any rural county if the 504 Project is located in the same SBA Region in which the CDC is incorporated. The 504 Rural Pilot will be available from 07/19/2018 to 07/20/2020. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-19/pdf/2018-15312.pdf. Federal Register, Vol. 83, No. 139, 07/19/2018, 34021-34022.

SBA Issues Military Reservist Economic Injury Disaster Loans Interest Rate.

SBA publishes an interest rate for Military Reservist Economic Injury Disaster Loans (13 CFR 123.512) on a quarterly basis. The rate will be 3.675 for loans approved on or after 07/27/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-23/pdf/2018-15650.pdf. Federal Register, Vol. 83, No. 141, 07/23/2018, 34907.

FSA Finalizes Rule on 2017 Wildfires and Hurricanes Indemnity Program.

The Farm Service Agency (FSA) finalized a rule which specifies the administrative provisions, eligibility requirements, and application procedures for the 2017 Wildfires and Hurricanes Indemnity Program (2017 WHIP). 2017 WHIP will provide payments to eligible producers who suffered eligible crop, tree, bush, and vine losses resulting from hurricanes and wildfires that occurred in the 2017 calendar year. The rule is final 07/18/2018, comments are due 09/17/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-18/pdf/2018-15346.pdf. Federal Register, Vol. 83, No. 138, 07/18/2018, 33795-33809.

RHS Proposes Guarantee Underwriting User Fee for Automated Guaranteed Loan Systems.

The Rural Housing Service (RHS) has proposed the implementation of a guarantee underwriting user fee (also known as a technology fee) that would be assessed and collected from lenders for their use of RHS’s automated guaranteed loan systems. The collection of the fee will enable RHS to fund future information technology enhancements needed to improve program delivery and reduce burden to the public. The fee amount will be published in the Single Family Housing Guaranteed Loan Program (SFHGLP) Handbook HB–1– 3555, available at https://www.rd.usda.gov/publications/regulations-guidelines/handbooks. The fee will not exceed $50 per loan, and constitutes a reasonable and customary cost that is an authorized loan purpose in accordance with the Guaranteed Rural Housing Program. The primary method of collecting the fee will be through RHS’s Lender Loan Closing (LLC) system when a loan goes to closing. Comments are due 09/11/2018. The notice may be viewed at:  https://www.gpo.gov/fdsys/pkg/FR-2018-07-13/pdf/2018-14995.pdf. Federal Register, Vol. 83, No. 135, 07/13/2018, 32624-32625.

FTC Requests Comment on Information Collections. 

  • The Federal Trade Commission (FTC) announced it seeks comment on the information collection titled Regulations Promulgated Under the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq. FTC also gave notice that it sent the collection to OMB for review. Comments are due 08/27/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-26/pdf/2018-15979.pdf. Federal Register, Vol. 83, No. 144, 07/26/2018, 35477-35485.
  • FTC announced it seeks comment on the information collection titled Regulations Promulgated Under the Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq. FTC also gave notice that it sent the collection to OMB for review. Comments are due 08/27/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-26/pdf/2018-15979.pdf. Federal Register, Vol. 83, No. 144, 07/26/2018, 35477-35485.
  • FTC announced it seeks comment on the information collection titled Regulations Promulgated Under the Consumer Leasing Act, 15 U.S.C. 1667 et seq. FTC also gave notice that it sent the collection to OMB for review. Comments are due 08/27/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-26/pdf/2018-15979.pdf. Federal Register, Vol. 83, No. 144, 07/26/2018, 35477-35485.
  • FTC announced it seeks comment on the information collection titled Regulations Promulgated Under the Truth-In-Lending Act, 15 U.S.C. 1601 et seq. FTC also gave notice that it sent the collection to OMB for review. Comments are due 08/27/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-26/pdf/2018-15979.pdf. Federal Register, Vol. 83, No. 144, 07/26/2018, 35477-35485.
  • FTC announced it seeks comment on the information collection titled FTC Red Flags, Card Issuers, and Address Discrepancies Rules. FTC also gave notice that it sent the collection to OMB for review. Comments are due 10/09/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-08/pdf/2018-16936.pdf. Federal Register, Vol. 83, No. 153, 08/08/2018, 39096-39100.

FASB Requests Comment on Classified Proposal.

The Federal Accounting Standards Advisory Board (FASB) has issued an exposure draft of a classified Interpretation of Federal Financial Accounting Standards 56: Classified Activities. Due to the classified nature of the proposal, the exposure draft will only be made available to those individuals who have been designated as having a need to know and who hold the proper clearances. Comments are due 08/13/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-17/pdf/2018-15234.pdf. Federal Register, Vol. 83, No. 137, 07/17/2018, 33221.

FASB Issues Staff Implementation Guidance 6.1. 

FASB staff have issued Staff Implementation Guidance (SIG) 6.1, Clarification of Paragraphs 40–41 of SFFAS 6, Accounting for Property, Plant, and Equipment, as amended. The SIG is available on the FASB website at http://www.fasab.gov/accounting-standards/. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-23/pdf/2018-15733.pdf. Federal Register, Vol. 83, No. 141, 07/23/2018, 34847-34848.  

NCUA Finalizes Suspension and Debarment Procedures. 

The National Credit Union Administration (NCUA) finalized its procedures for suspension and debarment and established administrative processes for contractors subject to the procedures. The final procedures will appear on the NCUA’s public website. The final procedures are applicable 09/10/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-09/pdf/2018-17086.pdf. Federal Register, Vol. 83, No. 154, 08/09/2018, 39464-39469.

NCUA Proposes Rule on Loans to Members and Lines of Credit to Members.

NCUA proposed amendments to its regulations regarding loans to members and lines of credit to members. The proposal would require loan maturity requirements to identify in one section all of the various maturity limits applicable to federal credit union loans. NCUA also proposed to make explicit in its regulations that the maturity date for a new loan under generally accepted accounting principles is calculated from the new date of origination. Additionally, NCUA seeks comment on whether it should provide longer maturity limits for 1–4 family real estate loans and other loans permitted by the Federal Credit Union Act such as home improvement, mobile home, and second mortgage loans. Finally, NCUA proposes to more clearly express the limits for loans to a single borrower or group of associated borrowers. Comments are due 10/09/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-08-10/pdf/2018-17087.pdf. Federal Register, Vol. 83, No. 155, 08/10/2018, 39622-39626.

NCUA Requests Comment on Information Collections. 

  • NCUA announced it seeks comment on the information collection titled Designation of Low Income Status, 12 CFR 701.34(a). NCUA also gave notice that it sent the collection to OMB for review. Comments are due 09/24/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-24/pdf/2018-15796.pdf. Federal Register, Vol. 83, No. 142, 07/24/2018, 35028-35029.
  • NCUA announced it seeks comment on the information collection titled Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 08/27/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-26/pdf/2018-15983.pdf. Federal Register, Vol. 83, No. 144, 07/26/2018, 35501-35502.
  • NCUA announced it seeks comment on the information collection titled Purchase of Assets and Assumption of Liabilities. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 09/24/2018. The notice may be viewed at: https://www.gpo.gov/fdsys/pkg/FR-2018-07-26/pdf/2018-15982.pdf. Federal Register, Vol. 83, No. 144, 07/26/2018, 35501.

NCUA Proposes Delay of Risk-Based Capital Rule Effective Date.

NCUA has proposed a rule amending NCUA’s previously revised regulations regarding prompt corrective action (PCA). The proposal would delay the effective date of NCUA’s 10/29/2015 final rule regarding risk-based capital (2015 Final Rule) for one year, moving the effective date from 01/01/2019 to 01/01/2020. During the extended delay period, NCUA’s current PCA requirements would remain in effect. The proposal would also amend the definition of a “complex” credit union adopted in the 2015 Final Rule for risk-based capital purposes by increasing the threshold level for coverage from $100 million to $500 million. These proposed changes would provide covered credit unions and NCUA with additional time to prepare for the rule’s implementation, and would exempt an additional 1,026 credit unions from the rule without subjecting the National Credit Union Share Insurance Fund to undue risk. Comments are due 09/07/2018. https://www.gpo.gov/fdsys/pkg/FR-2018-08-08/pdf/2018-16888.pdfFederal Register, Vol. 83, No. 153, 08/08/2018, 38997-39004. 

By, Ally Bates

Wisconsin has implemented an Industrial Hemp Pilot Research Program (Program) through 2017 Wisconsin Act 100 (Act). The Act allows Wisconsin farmers to obtain a permit to grow and sell industrial hemp. The Program is administered by Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). Participants that obtain a license, and follow DATCP’s requirements, are exempt from criminal prosecution, and products made from industrial hemp, including CBD, are lawful under Wisconsin law. While the Act provides protections under Wisconsin law, Federal law is another matter that will be discussed later in this article.

WBA expects that Wisconsin financial institutions will begin receiving requests from Program participants for deposit and loan products. While the Act does not place any specific requirements upon financial institutions, it is still prudent to ensure customers are operating within the law, and such accounts should be treated as a greater compliance risk. The following article presents the Act for financial institutions to better understand the requirements placed upon Program participants.

2017 Wisconsin Act 100

The Act was enacted November 30, 2017 and permits participants to plant, grow, cultivate, harvest, sample, test, process, transport, transfer, take possession of, sell, import, and export industrial hemp in this state to the greatest extent allowed under federal law. It directs DATCP to directs promulgate rules regulating such activities. Thus, industrial in hemp in Wisconsin will depend on DATCP regulation. However, it is still important to understand the provisions of The Act.

The Act defines industrial hemp as:

The plant Cannabis sativa, or any part of the plant including the seeds, having a delta−9−tetrahydrocannabinol concentration of no more than 0.3 percent on a dry weight basis or the maximum concentration allowed under federal law up to 1 percent, whichever is greater. “Industrial hemp” includes a substance, material, or product only if it is designated as a controlled substance under the federal Controlled Substances Act under 21 USC 801 to 971 or the Uniform Controlled Substances Act under ch. 961 or both.

The definition, and scope of The Act, refers to the Federal Controlled Substances Act, which will be discussed later in this article.

To that extent, the scope of the Program is primarily one of research, but is broad in its applicability. Its purpose is to study the growth, cultivation, and marketing of industrial hemp. DATCP is to issue licenses and registrations to Program participants. Licensed participants, acting in accordance with the rules, receive safe harbor protections from prosecution when:

  • Growing hemp within 0.7% THC of the 0.3% allowable amount.
  • Buying and selling industrial hemp.
  • Buying, selling, and processing hemp from certified seed.
  • Processing hemp from certified seed.
  • Sampling hemp.

Controlled Substances Act

While the possession, production, and sale of hemp and CBD oil is not illegal in Wisconsin when certain requirements are met, there is still a lack of clarity as to how industrial hemp is regulated on a Federal level. The concern is whether the activities permitted by The Act would conflict with the Federal Controlled Substances Act (CSA). The CSA regulates the manufacture, importation, possession, use, and distribution of certain substances. Certain substances are exempt, but the status of hemp is still unclear. Specifically excluded from the CSA are the:

Mature stalks, fiber, oil or cake from seeds, any other compound, manufacture, salt, derivative, mixture, or preparation of mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed.

How this specifically applies to the industrial hemp industry in Wisconsin remains unclear. The Agricultural Act of 2014 (Farm Bill) was enacted in February of 2014 and authorizes certain agricultural programs for the period of 2014-2018. Contained within the Farm Bill are provisions relating to State Industrial Hemp Pilot Programs. In August of 2016, the Federal Government released a Statement of Principles on Industrial Hemp (Statement of Principles) in accordance with the Farm Bill.

Pursuant to the Farm Bill and the Statement of Principles the term “industrial hemp:”

Includes the plant Cannabis sativa L. and any part or derivative of such plant, including seeds of such plant, whether growing or not, that is used exclusively for industrial purposes (fiber and seed) with a tetrahydrocannabinols concentration of not more than 0.3 percent on a dry weight basis. The term “tetrahydrocannabinols” includes all isomers, acids, salts, and salts of isomers of tetrahydrocannabinols.

The Statement of Principles discusses how the Farm Bill legalized the growing and cultivating of industrial hemp for research purposes in States where such growth and cultivation is legal under State law, notwithstanding existing Federal statutes that would otherwise criminalize such conduct. The statutorily sanctioned conduct, however, was limited to growth and cultivation by an institution of higher education or State department of agriculture for purposes of agricultural or other academic research or under the auspices of a State agricultural pilot program for the growth, cultivation, or marketing of industrial hemp. 

Practical Considerations

While The Act authorizes the possession, production, and sale of hemp and CBD oil in Wisconsin, and the Farm Bill authorized State departments of agriculture to promulgate regulations to carry out these pilot programs, the status and treatment of industrial hemp under these programs is still in its infancy and financial institutions will want to stay abreast of developments as they occur. DATCP’s current licensure includes limited activities. The Program creates a framework, enough to get growing and processing started, but does not cover everything that’s possible under the Act. For example, while DATCP issues licenses to growers and processors, there is no “sale license” yet. So while The Act appears to authorize the sale of, for example, CBD oil, DATCP has yet to implement rulemaking regulating such activities.

Financial institutions working with customers participating the Wisconsin Program will want to fully understand the scope of those activities, and ensure the customer is in compliance with DATCP’s requirements and remains in compliance. WBA expects that inevitably, growers and processors will seek loan products, which will carry additional considerations. In addition to all of the above considerations, financial institutions will need to make risk assessments based on the activity of the potential borrower. For example, as discussed above there are certified seed requirements, and THC level requirements. If DATCP finds a grower to be in violation of such requirements, it may require the entire crop to be destroyed.

Conclusion

Financial institutions in Wisconsin will want to consider their policies and procedures related to customers engaged in the growing, processing, and selling of industrial hemp and related products. While such activities are permissible in Wisconsin, financial institutions will want to work carefully with their legal counsel to develop appropriate policies and procedures, and likewise work carefully with their customers, and treat such accounts as a greater compliance risk. WBA will continue to monitor and report the developments in the hemp industry to its members.

For additional resources consider:

2017 Wisconsin Act 100: https://docs.legis.wisconsin.gov/2017/related/acts/100.pdf

The Wisconsin Department of Justice notice on industrial hemp: https://www.doj.state.wi.us/news-releases/ag-schimel-and-stakeholders-resolve-questions-surrounding-datcp-industrial-hemp

The Federal Statement of Principles: https://www.gpo.gov/fdsys/pkg/FR-2016-08-12/pdf/2016-19146.pdf 

By, Ally Bates

The August 2018 edition of the WBA Compliance Journal has been published.

This month's Special Focus article discusses Wisconsin’s Industrial Hemp Pilot
Research Program. Regulatory Spotlight includes proposed amendments to the Bank Holding Comapny Act and final amendments to Reg P's annual privacy notice requirements. Compliance Notes addresses the comment letter from the ABA that WBA signed on to.

Click here to download the August 2018 Compliance Journal.

By, Ally Bates

FOR IMMEDIATE RELEASE                                                                            
August 23, 2018

For more information, contact:
Ally Bates, Wisconsin Bankers Association
608-441-1207 | abates@wisbank.com
Twitter: @wisbank

Statement on the release of second quarter 2018 FDIC numbers from Rose Oswald Poels, president/CEO of the Wisconsin Bankers Association

“Wisconsin banks continue to perform strongly overall per the latest FDIC quarterly numbers.

Lending continues to grow in a year-to-year analysis with commercial lending showing the biggest growth (8.0%), and farm loans showing the second most growth (6.7%). Total deposits grew 4.8% to over $90 million, while noncurrent loans decreased 6.7% since second quarter 2017.

These latest FDIC numbers continue to highlight the fact that Wisconsin banks remain committed to helping businesses grow and families prosper, creating thriving communities. 

Wisconsin’s banking industry reflects Wisconsin’s current healthy economy as well as the overall national trends. Overall bank employment increased 1.2% from 2017, indicating banks are generally optimistic about the future. Businesses, including banks, in Wisconsin have benefitted from federal tax reform, but bankers are expected to remain watchful on credit quality issues.”

FDIC Reported WI Numbers*

 

06/31/18

06/31/17

Change

Total Loans & Leases

$83,684,705

$80,258,001

+ 4.3%

Total Deposits

$90,054,853

$85,920,748

+ 4.8%

Commercial & Industrial Loans

$14,073,172

$13,031,571

+ 8.0%

Residential Loans

$23,632,126     

$22,883,552

+ 3.3%

Farm Loans

4,729,078         

$4,432,700

+ 6.7%

Farmland Loans

$3,482,019

$3,322,567

+ 4.8%

Total Assets

$114,674,967

$110,260,549

+ 4.0%

Noncurrent Loans & Leases

$698,537

$748,769          

– 6.7%

* dollar figures in thousands

###

The Wisconsin Bankers Association is the state’s largest financial industry trade association, representing nearly 240 commercial banks and savings institutions, their nearly 2,300 branch offices and 23,000 employees.

By, Ally Bates