September 2018 Compliance Journal Compliance Notes

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

September 21, 2018, a new federal law went info effect allowing consumers to freeze and unfreeze their credit for free. Consumers who are parents of children under the age of 16, someone’s guardian, conservator or have a valid power of attorney, can get a free freeze for that person as well. More information may be viewed at: https://www.consumerfinance.gov/about-us/blog/free-credit-freezes-are-here/


OCC issued an updated the “Deposit-Related Credit” booklet of the Comptroller’s Handbook. The updated “Deposit-Related Credit” booklet replaces the booklet of the same title issued in March 2015. Also replaced is OCC Bulletin 2015-17, “Deposit-Related Credit: Revised Comptroller’s Handbook Booklet.” The “Deposit-Related Credit” booklet applies to examinations of all national banks and federal savings associations engaged in deposit-related credit. The updated booklet provides general guidance on the risks associated with deposit-related credit products, such as check credit, overdraft protection, and deposit advance products. The full booklet may be viewed at: https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/deposit-related-credit/pub-ch-deposit-related-credit.pdf


FRB, CFPB, FDIC, OCC, and NCUA issued a joint statement explaining the role of supervisory guidance for regulated institutions which confirms that supervisory guidance does not have the force and effect of law, and the agencies do not take enforcement actions based on supervisory guidance. The joint statement explains that supervisory guidance can outline the agencies’ supervisory expectations or priorities and articulate the agencies’ general views regarding appropriate practices for a given subject area. The full statement may be viewed at: https://www.federalreserve.gov/supervisionreg/srletters/sr1805.htm


FDIC issued a proposal to retire certain Financial Institution Letters (FILs) to an inactive status. The proposal is part of a continuing effort to reduce regulatory burden, and would target 374 of the 664 risk management supervision-related FILs issued between 1995 through 2017. The proposal may be viewed at: https://www.fdic.gov/news/news/financial/2018/fil18046.pdf


OCC issued its quarterly report on bank trading and derivatives activities for second quarter 2018. The report found that insured U.S. commercial banks and savings associations reported trading revenue of $6.9 billion in the second quarter of 2018, $1.3 billion less (16.2 percent) than in the previous quarter and $0.2 billion more (3.5 percent) than a year earlier. The full report may be viewed at: https://www.occ.gov/topics/capital-markets/financial-markets/derivatives/dq218.pdf 


HUD, FEMA, and the Census Bureau have released the 2017 American Housing Survey (AHS). The biennial AHS is the nation’s most comprehensive housing survey, providing current data on a wide range of housing subjects. Topics unique to the AHS include characteristics and physical condition of the nation’s housing units, indicators of housing and neighborhood quality, and home improvement activities. The report may be viewed at: https://www.census.gov/programs-surveys/ahs/data.2017.html 


NCUA released the second quarter 2018 Credit Union System Performance Data. Total assets in federally insured credit unions rose by $79 billion, or 5.8 percent, over the year ending in the second quarter of 2018, to $1.43 trillion. Federally insured credit unions added 4.8 million members over the year, and credit union membership in these institutions reached 114.1 million in the second quarter of 2018. The full report may be viewed at: https://www.ncua.gov/analysis/Pages/call-report-data/reports/paca-facts/paca-facts-2018-q2.pdf 


President Donald Trump issued Executive Order 13847 on strengthening retirement security in America. The executive order requires the Federal Government to expand access to workplace retirement plans for workers. The full order may be viewed at: https://www.federalregister.gov/documents/2018/09/06/2018-19514/strengthening-retirement-security-in-america 


OCC issued the updated “Other Real Estate Owned” booklet of the Comptroller’s Handbook, which provides guidance to examiners on banks’ acquisition, reporting, management, and disposition of other real estate owned (OREO). The updated booklet includes accounting changes for foreclosed property under contract, in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Subtopic 360-20, Subtopic 610-20, and Topic 606. The updated booklet details changes to the accounting for sales of OREO by public business entities. The changes became effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. The full booklet may be viewed at: https://www.occ.gov/news-issuances/bulletins/2018/bulletin-2018-26.html


IRS has issued guidance on the application of section 162(m) of the Internal Revenue Code, as amended by section 13601 of “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” Public Law 115-97 (2017) (the Act). Section 162(m)(1) generally limits the allowable deduction for a taxable year for remuneration paid by any publicly held corporation with respect to a covered employee. Section 13601 of the Act made significant amendments to section 162(m) and provided a transition rule applicable to certain outstanding arrangements (commonly referred to as the grandfather rule). The full guidance may be viewed at: https://www.irs.gov/pub/irs-drop/n-18-68.pdf


FDIC’s Consumer News has moved from a quarterly to a monthly format to provide more frequent and timely content. The August 2018 article is on managing finances for college students. The full article may be viewed at: https://www.fdic.gov/consumers/consumer/news/august2018.html


CFPB released a blog post titled “Helpful Tips for Using Mobile Payment Services and Avoiding Risky Mistakes” to aid consumers in making secure decisions when using payment apps. The article urges consumers to use caution, do their research, and set up their app to require some form of authentication before sending funds. The full article may be viewed at: https://www.consumerfinance.gov/about-us/blog/helpful-tips-using-mobile-payment-services-and-avoiding-risky-mistakes/


OCC issued guidance to national banks, federal savings associations, and federal branches and agencies regarding the role of informal or implied expressions of support from foreign governments (implied sovereign support) in determining a borrower’s obligor and facility credit risk ratings. Because implied sovereign support is not a legally binding guarantee, the guidance reminds banks that such expressions of informal or implied support should be viewed as no more than a mitigating factor when evaluating a borrower’s credit risk. The full guidance may be viewed at: https://www.occ.gov/news-issuances/bulletins/2018/bulletin-2018-25.html 


CFPB has issued a WARNO regarding new security clearance rules for servicemembers. The Department of Defense (DoD) will now “continuously” monitor the financial status of servicemembers with security clearances. This means that a past-due bill or an error on a credit report could jeopardize a servicemember’s clearance status. The full WARNO may be viewed at: https://www.consumerfinance.gov/about-us/blog/warno-new-security-clearance-guidelines-make-it-more-important-ever-servicemembers-monitor-their-credit/

By, Ally Bates