The below article is the Compliance Notes section of the January 2020 Compliance Journal. The full issue may be viewed by clicking here.

OCC issued an alert that Stephenson National Bank & Trust, Marinette, Wis., has reported that counterfeit cashier’s checks using the bank’s routing number of 075901011 are being presented for payment nationwide in connection with secret shopper employment scams. There are a variety of counterfeit items in circulation, none of which resemble the bank’s authentic item. Further information may be viewed in the full alert: https://www.occ.gov/news-issuances/alerts/2020/alert-2020-2.html


On Dec. 20, 2019, President Donald Trump signed into law the provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) which contains several provisions that will impact qualified retirement plans. A summary of the Act may be viewed at: https://www.wisbank.com/articles/2020/01/secure-act-summary/


The Wisconsin Department of Financial Institutions, Division of Banking, has calculated the interest rate to be paid on escrow accounts subject to s. 138.052 (5) (am) 2., Stats., to be 0.17% for 2020. The interest rate shall remain in effect through December 31, 2020. The notice may be viewed at: https://docs.legis.wisconsin.gov/code/register/2019/768A2/register/public_notices/public_notice_2020_interest_rate_on_escrow_accounts/public_notice_2020_interest_rate_on_escrow_accounts.pdf


FRB has issued the December 2019 Consumer Compliance Supervision Bulletin. This issue discusses FRB supervisory observations regarding fintech, and the use of technological innovation to provide financial products and services. The bulletin may be viewed at: https://www.federalreserve.gov/publications/files/201912-consumer-compliance-supervision-bulletin.pdf


FinCEN released a new tool to visualize aggregated Suspicious Activity Reports filed by financial institutions in the United States. The interactive maps may be viewed at: https://www.fincen.gov/Reports/sar-stats/sar-stats-map


FDIC released its Fall 2019 Supervisory Insights. With the volume of commercial real estate loans held by FDIC-insured banks reaching a record of $2.4 trillion in 2019, FDIC focused on CRE risk management in the report. The report also focuses on leveraged lending. The report may be viewed at: https://www.fdic.gov/regulations/examinations/supervisory/insights/sifall19/si-fall-2019.pdf


OCC announced Brian James as Deputy Comptroller for the Central District. In this role, James will oversee 320 community banks and federal savings associations in Illinois, Indiana, Michigan, North Dakota, Ohio, Wisconsin, and parts of Kentucky, Minnesota and Missouri. James will manage more than 380 examiners and other professional personnel who ensure the financial institutions they supervise operate in a safe, sound, and fair manner. James assumes these duties in January 2020. OCC’s announcement may be viewed at: https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-3.html


FRB issued and updated User’s Guide for the Bank Holding Company Performance Report which provides definitions of the financial ratios and items presented on each page of the report. The guide may be viewed at: https://www.federalreserve.gov/publications/files/_A_Users_Guide_for_the_Bank_Holding_Company_Performance_Report_Final.pdf


Treasury announced it plans to issue a 20-year nominal coupon bond in the first half of calendar year 2020. Consistent with Treasury’s longstanding issuance practice, Treasury plans to issue this product in a regular and predictable manner in benchmark size. Additional information regarding the launch of the 20-year bond will be provided in Treasury’s quarterly refunding statement on Wednesday, February 5, 2020. The announcement may be viewed at: https://home.treasury.gov/news/press-releases/sm878


FDIC and SBA released two updates to the popular Money Smart for Small Business curriculum. The updated modules focus on banking and credit, and are now available for banks and small business development organizations to use to help small business owners succeed. The updated Banking Services module now includes a discussion of traditional banking products, non-bank financing options and sources, and how to avoid fraud and scams. Similarly, the updated Building Strong Credit module explains how a business owner’s personal credit history can impact their business, how business credit reporting works, and how a potential lender evaluates the overall creditworthiness of a small business. A case study brings both modules together and asks participants to put the lessons they have learned into practice. The materials were updated based on input from industry experts and other practitioners, including more than two dozen organizations that have used previous versions of the Money Smart materials. The updated modules may be viewed at: https://www.fdic.gov/consumers/banking/businesslending/index.html


OCC and FDIC issued an interagency statement on heightened cybersecurity risk. The statement focuses on risk management principles that can reduce the risk of a cyber-attack and minimize business disruptions. The statement elaborates on standards articulated in the Interagency Guidelines Establishing Information Security Standards as well as resources provided by FFIEC members, such as the FFIEC Statement on Destructive Malware. The statement may be viewed at: https://www.fdic.gov/news/news/financial/2020/fil20003a.pdf


The latest edition of the Consumer Compliance Outlook is now available. This issue focuses on fintech topics such as internet marketing, and developments in fintech regulation. The publication may be viewed at: https://consumercomplianceoutlook.org/


FRB has issued frequently asked questions (FAQs) in response to questions from institutions regarding the final rules to tailor certain prudential standards for large domestic and foreign banking organizations to more closely match their risk profiles. The FAQs may be viewed at: https://www.federalreserve.gov/supervisionreg/srletters/SR2002a1.pdf


CFPB announced it has filed suit against several companies and individuals involved in offering student loan debt-relief services for allegedly obtaining consumer reports illegally, charging unlawful advance fees, and engaging in deceptive conduct. The announcement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-action-against-monster-loans-lend-tech-loans-and-student-loan-debt-relief-companies/


Treasury’s Bureau of the Fiscal Service (Fiscal Service) today announced the selection of Comerica Bank as the financial agent for the Direct Express® prepaid debit card program. The new agreement is for five years, beginning in January 2020. The Direct Express® program provides 4.5 million Americans – the majority of whom do not have a bank account – with a prepaid debit card to receive their monthly Social Security or Veterans benefit payments. For most cardholders, this payment is their sole source of income and is essential for basic living needs such as housing, food, and medicine. The announcement may be viewed at: https://www.fiscal.treasury.gov/news/comerica-bank-continues-debit-card-for-unbanked.html


NMLS issued a reminder that its Reinstatement Period will start January 2, 2020 and end at midnight ET on February 29, 2020. Further information on reinstatement may be viewed at: https://fedregistry.nationwidelicensingsystem.org/Institutions/Pages/Renew.aspx


FRB, FDIC, and OCC issued an interagency statement to explain that the federal banking agencies will exercise discretion to not take enforcement action against depository institutions or asset managers that become principal shareholders of institutions with respect to certain extensions of credit by institutions that otherwise would violate Federal Reserve Regulation O. The statement may be viewed at: https://www.fdic.gov/news/news/financial/2019/fil19085a.pdf


FRB has published its January 2020 Financial Accounting Manual for Federal Reserve Banks. The manual contains the accounting standards that should be followed by the Federal Reserve Banks. The manual may be viewed at: https://www.federalreserve.gov/aboutthefed/files/BSTfinaccountingmanual.pdf


CFPB issued its Financial Literacy Annual Report for fiscal year 2019. The report may be viewed at: https://files.consumerfinance.gov/f/documents/bcfp_financial-literacy_annual-report_2019.pdf


FRB released Uncertain Terms: What Small Business Borrowers Find When Browsing Online Lender Websites, a report that examines the information that prospective small business borrowers encounter when researching and comparing credit products offered by online lenders. Nonbank online lenders are becoming more mainstream alternative providers of financing to small businesses. In 2018, nearly one-third of small business owners seeking credit reported having applied at a nonbank online lender. The industry’s growing reach has the potential to expand access to credit for small firms, but also raises concerns about how product costs and features are disclosed. The report’s analysis of a sampling of online content finds significant variation in the amount of upfront information provided, especially on costs. The full report may be viewed at: https://www.federalreserve.gov/publications/files/what-small-business-borrowers-find-when-browsing-online-lender-websites.pdf


CFPB has published additional guidance relating to disclosing construction and construction-permanent loans under the TRID Rule. There are two new guides, one on disclosing construction and construction-permanent loans with a separate loan estimate and closing disclosure for each phase of the transaction, and one on using one combined loan estimate and one combined closing disclosure for both phases of a construction-permanent transaction. The guides may be viewed at:
https://files.consumerfinance.gov/f/documents/cfpb_trid-separate-construction-loan-guide.pdf
https://files.consumerfinance.gov/f/documents/cfpb_trid-combined-construction-loan-guide.pdf 

By, Ally Bates

Join Rose as she speaks to Ellie Reineck at Incredible Bank about branding. What’s in a name? You’re about to find out in this edition!

By, Eric Skrum

The below article is the Regulatory Spotlight section of the January 2020 Compliance Journal. The full issue may be viewed by clicking here.

Agencies Finalize Regulatory Capital Treatment for High Volatility Commercial Real Estate (HVCRE) Exposures.

The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) are adopting a final rule to revise the definition of “high volatility commercial real estate (HVCRE) exposure” in the regulatory capital rule. This final rule conforms this definition to the statutory definition of “high volatility commercial real estate acquisition, development, or construction (HVCRE ADC) loan,” in accordance with section 214 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The final rule also clarifies the capital treatment for loans that finance the development of land under the revised HVCRE exposure definition. The final rule is effective 04/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-13/pdf/2019-26544.pdf. Federal Register, Vol. 84, No. 240, 12/13/2019, 68019-68034.

Agencies Finalize Amendment to Community Reinvestment Act Regulations.

The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) are amending their Community Reinvestment Act (CRA) regulations to adjust the asset-size thresholds used to define “small bank” or “small savings association” and “intermediate small bank” or “intermediate small savings association.” As required by the CRA regulations, the adjustment to the threshold amount is based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W). The rule is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-27288.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 71738-71740.

Agencies Propose Community Reinvestment Act Regulations.

The Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) propose regulations that could encourage banks to provide billions more each year in Community Reinvestment Act-qualified lending, investment, and services by modernizing the Community Reinvestment Act (CRA) regulations to better achieve the law’s underlying statutory purpose of encouraging banks to serve their communities by making the regulatory framework more objective, transparent, consistent, and easy to understand. To accomplish these goals, this proposed rule would strengthen the CRA regulations by clarifying which activities qualify for CRA credit, updating where activities count for CRA credit, creating a more transparent and objective method for measuring CRA performance, and providing for more transparent, consistent, and timely CRA-related data collection, recordkeeping, and reporting. Comments are due 03/09/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-09/pdf/2019-27940.pdf. Federal Register, Vol. 85, No. 6, 01/09/2020, 1204-1265.

Agencies Announce Review of Definitions in Credit Risk Retention Regulations.

The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency (OCC), the Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), and the Securities and Exchange Commission (SEC) are providing notice of the commencement of the review of the definition of qualified residential mortgage; the community-focused residential mortgage exemption; and the exemption for qualifying three-to-four unit residential mortgage loans, in each case as currently set forth in the Credit Risk Retention Regulations as adopted by the agencies. Comments on the review are due 02/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-20/pdf/2019-27490.pdf. Federal Register, Vol. 84, No. 245, 12/20/2019, 70073-70076.

Agencies Extend Comment Period for Application of the Uniform Financial Institutions Rating System.

The Board of Governors of the Federal Reserve System (FRB), and the Federal Deposit Insurance Corporation (FDIC) published a request for information (RFI) in the Federal Register on 10/31/2019 seeking information and comments from interested parties regarding the consistency of ratings assigned by the agencies under the Uniform Financial Institutions Rating System (UFIRS). The agencies have determined that an extension of the comment period until 02/28/2020, is appropriate. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-27/pdf/2019-27848.pdf. Federal Register, Vol. 84, No. 248, 12/27/2019, 71413-71414.

Agencies Extend Comment Period for Margin and Capital Requirements for Covered Swap Entities.

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 Federal Housing Finance Agency (FHFA), and the Farm Credit Administration (FCA) are reopening the comment period for the notice of proposed rulemaking published in the Federal Register on 11/07/2019, to amend the agencies’ regulations that require swap dealers and security-based swap dealers under the agencies’ respective jurisdictions to exchange margin with their counterparties for swaps that are not centrally cleared (Proposed Swap Margin Amendments). Reopening the comment period that closed on 12/09/2019, will allow interested persons additional time to analyze and comment on the Proposed Swap Margin Amendments. The new comment due date is 01/23/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-28052.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 71833-71834.

CFPB Issues Fall 2019 Supervisory Highlights.

The Bureau of Consumer Financial Protection (CFPB) is issuing its twentieth edition of its Supervisory Highlights. In this special issue of Supervisory Highlights, CFPB reports examination findings in the areas of consumer reporting and furnishing of information to consumer reporting companies, pursuant to the Fair Credit Reporting Act and Regulation V. The report does not impose any new or different legal requirements, and all violations described in the report are based only on those specific facts and circumstances noted during those examinations. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-11/pdf/2019-26669.pdf. Federal Register, Vol. 84, No. 238, 12/11/2019, 67725-67732.

CFPB Amends Official Commentary on Regulation C.

CFPB is amending the official commentary that interprets the requirements of CFPB’s Regulation C (Home Mortgage Disclosure) to reflect the asset-size exemption threshold for banks, savings associations, and credit unions based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W). Based on the 1.6 percent increase in the average of the CPI–W for the 12-month period ending in November 2019, the exemption threshold is adjusted to $47 million from $46 million. Therefore, banks, savings associations, and credit unions with assets of $47 million or less as of 12/31/2019, are exempt from collecting data in 2020. The commentary is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-20/pdf/2019-27522.pdf. Federal Register, Vol. 84, No. 245, 12/20/2019, 69993-69995.

CFPB Amends Official Commentary of Regulation Z.

CFPB is amending the official commentary that interprets the requirements of the Bureau’s Regulation Z (Truth in Lending) to reflect a change in the asset-size threshold for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan. This amendment is based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W). Based on the 1.6 percent increase in the average of the CPI–W for the 12-month period ending in November 2019, the exemption threshold is adjusted to $2.202 billion from $2.167 billion. Therefore, creditors with assets of less than $2.202 billion (including assets of certain affiliates) as of 12/31/2019, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2020. The commentary is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-23/pdf/2019-27523.pdf. Federal Register, Vol. 84, No. 246, 12/23/2019, 70410-70413.

CFPB Issues Semiannual Regulatory Agenda. 

CFPB published its agenda as part of the Fall 2019 Unified Agenda of Federal Regulatory and Deregulatory Actions. CFPB reasonably anticipates having the regulatory matters identified below under consideration during the period from 10/01/2019, to 09/30/2020. The next agenda will be published in spring 2020 and will update this agenda through spring 2021. Publication of this agenda is in accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The information is current as of 07/25/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-26636.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 71232-71236.

FSOC Finalizes Interpretive Guidance on Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies. 

The Financial Stability Oversight Council (FSOC) issued a final interpretive guidance, which replaces FSOC’s existing interpretive guidance on nonbank financial company determinations, describes the approach FSOC intends to take in prioritizing its work to identify and address potential risks to U.S. financial stability using an activities-based approach, and enhancing the analytical rigor and transparency in the processes FSOC intends to follow if it were to consider making a determination to subject a nonbank financial company to supervision by the Board of Governors of the Federal Reserve System (FRB). The guidance is effective 01/29/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-27108.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 71740-71770.

FRB Issues Risk-Based Capital Surcharges for Global Systemically Important Bank Holding Companies.

The Board of Governors of the Federal Reserve System (FRB) is providing notice of the 2019 aggregate global indicator amounts, as required under FRB’s rule regarding risk-based capital surcharges for global systemically important bank holding companies (GSIB surcharge rule). The aggregate global indicator amounts are in the table in the notice. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-19/pdf/2019-27414.pdf. Federal Register, Vol. 84, No. 244, 12/19/2019, 69744-69745.

FRB Issues Correction to Capital Simplification for Qualifying Community Banking Organizations.

FRB issued a notice regarding a final rule published in the Federal Register on 11/13/2019 that provides for a simple measure of capital adequacy for certain community banking organization. The final rule had two erroneous amendment instructions. The notice corrects those errors. The correction is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-27717.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 70887.

FDIC Proposes Amendments to Policy Regarding Requests for Participation in the Affairs of an Insured Depository Institution by Convicted Individuals.

The Federal Deposit Insurance Corporation (FDIC) proposes to revise the existing regulations requiring persons convicted of certain criminal offenses to obtain prior written consent before participating in the conduct of the affairs of any depository institution to incorporate the FDIC’s existing Statement of Policy, and to amend the regulations setting forth the FDIC’s procedures and standards applicable to an application to obtain the FDIC’s prior written consent. Following the issuance of final regulations, the FDIC’s existing Statement of Policy would be rescinded. The proposed incorporation of the Statement of Policy into the FDIC’s regulations would provide for greater transparency as to its application, provide greater certainty as to the FDIC’s application process and help both insured depository institutions and affected individuals to understand its impact and to potentially seek relief from its provisions. Comments are due 02/14/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-16/pdf/2019-26351.pdf. Federal Register, Vol. 84, No. 241, 12/14/2019, 68353-68363.

FDIC Rescinds Outdated Statements of Policy.

FDIC initiated a comprehensive review of its Statements of Policy to identify those that were outdated. Additionally, FDIC, in the 2017 report required by the Economic Growth and Regulatory Paperwork Reduction Act, committed to reviewing published guidance to identify any guidance that should be revised or rescinded because it is out-of-date or otherwise no longer relevant. In furtherance of these initiatives, the FDIC Board of Directors approved a proposal to rescind four FDIC Statements of Policy, which was published in the Federal Register on 09/30/2019, with a 30-day comment period. FDIC did not receive any comments on the proposed rescission of these Statements of Policy and is rescinding them effective 12/31/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-23/pdf/2019-27225.pdf. Federal Register, Vol. 84, No. 246, 12/23/2019, 70413-70415.  

FDIC Requests Comment on Information Collections.

  • FDIC announced it seeks comment on the information collection titled Transfer Agent Registration and Amendment Form. FDIC also gave notice that it sent the collection to OMB for review. Comments are due 01/15/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-16/pdf/2019-26981.pdf. Federal Register, Vol. 84, No. 241, 12/16/2019, 68446-68449.
  • FDIC announced it seeks comment on the information collection titled Notification of Performance of Bank Services. FDIC also gave notice that it sent the collection to OMB for review. Comments are due 02/07/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-08/pdf/2020-00058.pdf. Federal Register, Vol. 85, No. 5, 01/08/2020, 895-901.

FDIC Issues Notice of Designated Reserve Ratio for 2020.

FDIC designates that the Designated Reserve Ratio (DRR) for the Deposit Insurance Fund shall remain at 2 percent for 2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-18/pdf/2019-27235.pdf. Federal Register, Vol. 84, No. 243, 12/18/2019, 69373.

FDIC Issues Response to Exception Requests Pursuant to Recordkeeping for Timely Deposit Insurance Determination.

FDIC is providing notice to covered institutions that it has granted a time-limited exception concerning the requirement to maintain official custodian information in deposit account records for government deposit accounts, a time-limited exception concerning the requirement to maintain accurate beneficiary information in deposit account records for informal revocable trust accounts, and an indefinite exception concerning the requirement to maintain certain identifying information for beneficial owners of deposits in low balance, short-term prepaid card accounts. The grants of exception relief were effective 11/26/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-23/pdf/2019-27626.pdf. Federal Register, Vol. 84, No. 246, 12/23/2019, 70527-70528.

FDIC Issues Termination Receiverships.

FDIC as Receiver for former depository institutions, intends to terminate its receivership for the institutions listed in the notice. 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 notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-19/pdf/2019-27397.pdf. Federal Register, Vol. 84, No. 244, 12/19/2019, 69743-69744.

OCC Proposes Amendments to Employment Contract Rule. 

The Office of the Comptroller of the Currency (OCC) issued a proposed rule that would implement changes recommended in the March 2017 Economic Growth and Regulatory Paperwork Reduction Act report, including the repeal of the OCC’s employment contract rule for Federal savings associations, and amend the OCC’s fiduciary rules. The proposed rule also would amend the OCC’s rule for conversions from mutual to stock form of a savings association to reduce burden, increase flexibility, and update cross-references. Additionally, the proposed rule would update cross-references to repealed and integrated rules, remove unnecessary definitions, and make technical changes to other OCC rules. Comments are due 03/09/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-08/pdf/2019-28074.pdf. Federal Register, Vol. 85, No. 5, 01/08/2020, 1052-1081.

OCC Requests Comment on Information Collections.

  • OCC announced it seeks comment on the information collection titled Extensions of Credit to Insiders and Transactions with Affiliates. OCC also gave notice that it sent the collection to OMB for review. Comments are due 02/10/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26809.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 68010-68011.
  • OCC announced it seeks comment on the information collection titled Financial Management Policies— Interest Rate Risk. OCC also gave notice that it sent the collection to OMB for review. Comments are due 02/10/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26808.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 68011-68012.
  • OCC announced it seeks comment on the information collection titled Guidance on Sound Incentive Compensation Policies. OCC also gave notice that it sent the collection to OMB for review. Comments are due 02/10/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26807.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 68012-68013.
  • OCC announced it seeks comment on the information collection titled Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies and Diversity Self-Assessment Template for OCC-Regulated Entities. OCC also gave notice that it sent the collection to OMB for review. Comments are due 01/15/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-16/pdf/2019-27051.pdf. Federal Register, Vol. 84, No. 241, 12/16/2019, 68544-68545.
  • OCC announced it seeks comment on the information collection titled Retail Foreign Exchange Transactions. OCC also gave notice that it sent the collection to OMB for review. Comments are due 03/10/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-10/pdf/2020-00232.pdf. Federal Register, Vol. 85, No. 7, 01/10/2020, 1373-1374.

OCC Issues Correction to Regulatory Capital Rule.

OCC is making technical corrections to the Capital Simplification for Qualifying Community Banking Organizations final rule that appeared in the Federal Register on 11/13/2019. The technical corrections align the rule text in the final rule with changes made by other final rules. The technical corrections also include a conforming edit. The correction is effective 01/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-18/pdf/2019-27168.pdf. Federal Register, Vol. 84, No. 243, 12/18/2019, 69296-69298.

OCC Issues Inflation Adjustments for Civil Money Penalties.

OCC is providing notice of its maximum civil money penalties as adjusted for inflation. The inflation adjustments are required to implement the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The adjusted maximum amount of civil money penalties in this notice are applicable to penalties assessed on or after 01/01/2020, for conduct occurring on or after 11/02/2015. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-28053.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 71735-71737.

OCC Issues Correction to Other Real Estate Owned Rule.

OCC is correcting a final rule originally published in the Federal Register on 10/22/2019 revising the other real estate owned rule and making related technical amendments. The final rule had an effective date of 12/01/2019. On 11/21/2019, the OCC published a correction to that final rule in the Federal Register amending the final rule’s effective date to 01/01/2020. This document corrects and supplements the 11/21/2019, final rule. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-28054.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 71735.

HUD Requests Comment on Information Collections.

  • The Department of Housing and Urban Development (HUD) announced it seeks comment on the information collection titled FHA-Insured Mortgage Loan Servicing Involving the Loss Mitigation Program. HUD also gave notice that it sent the collection to OMB for review. Comments are due 01/13/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26697.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 67951-67952.
  • HUD announced it seeks comment on the information collection titled National Standards for the Physical Inspection of Real Estate (NSPIRE) Demonstration. HUD also gave notice that it sent the collection to OMB for review. Comments are due 01/13/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26695.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 67952-67953.
  • HUD announced it seeks comment on the information collection titled Nonprofit Application and Recertification for FHA Mortgage Insurance Programs. HUD also gave notice that it sent the collection to OMB for review. Comments are due 01/13/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26696.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 67951.
  • HUD announced it seeks comment on the information collection titled Housing Counseling Federal Advisory Committee (HCFAC). HUD also gave notice that it sent the collection to OMB for review. Comments are due 03/06/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-06/pdf/2019-28522.pdf. Federal Register, Vol. 85, No. 249, 01/06/2020, 522-523.

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 states of Iowa, and Minnesota, 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.govinfo.gov/content/pkg/FR-2019-12-16/pdf/2019-26956.pdf. Federal Register, Vol. 84, No. 241, 12/16/2019, 68346-68348.

FEMA Issues Final Flood Hazard Determinations.

FEMA has issued a final notice which identifies communities in the states of Missouri, and Nebraska, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The final notice is effective 05/01/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-13/pdf/2019-26888.pdf. Federal Register, Vol. 84, No. 240, 12/13/2019, 68182-68184.

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, and Indiana. 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.govinfo.gov/content/pkg/FR-2019-12-27/pdf/2019-27962.pdf. Federal Register, Vol 84, No. 248, 12/27/2019, 71446-71448.
  • 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, Michigan, and Ohio. 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.govinfo.gov/content/pkg/FR-2020-01-09/pdf/2020-00183.pdf. Federal Register, Vol. 85, No. 6, 01/09/2020, 1173-1176.

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 state of Iowa. 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 03/26/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-27/pdf/2019-27960.pdf. Federal Register, Vol. 84, No. 248, 12/27/2019, 71444-71446.
  • 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 state of Michigan. 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 04/08/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-09/pdf/2020-00184.pdf. Federal Register, Vol. 85, No. 6, 01/09/2020, 1172-1173.

FEMA Withdraws Proposed Flood Hazard Determinations.

FEMA is withdrawing its proposed notice concerning proposed flood hazard determinations, which may include the addition or modification of any Base Flood Elevation, base flood depth, Special Flood Hazard Area boundary or zone designation, or regulatory floodway (herein after referred to as proposed flood hazard determinations) on the Flood Insurance Rate Maps and, where applicable, in the supporting Flood Insurance Study reports for Winneshiek County, Iowa and Incorporated Areas. The withdrawal is effective 12/13/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-13/pdf/2019-26889.pdf. Federal Register, Vol. 84, No. 240, 12/13/2019, 68186.

FinCEN Requests Comment on Information Collections.

  • The Financial Crimes Enforcement Network (FinCEN) announced it seeks comment on the information collection titled Renewal of Information Collection Requirements in connection with the Imposition of a Special Measure concerning Commercial Bank of Syria, including its subsidiary Syrian Lebanese Commercial Bank, as a financial institution of primary money laundering concern. FinCEN also gave notice that it sent the collection to OMB for review. Comments are due 02/18/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-19/pdf/2019-27359.pdf. Federal Register, Vol. 84, No. 244, 12/19/2019, 69822-69824.
  • FinCEN announced it seeks comment on the information collection titled Beneficial Ownership Requirements for Legal Entity Customers. FinCEN also gave notice that it sent the collection to OMB for review. Comments are due 02/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-28037.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 72137-72138.

FinCEN Solicits Applications for Bank Secrecy Act Advisory Group.

FinCEN is inviting the public to nominate financial institutions, trade groups, and non-federal regulators or law enforcement agencies for membership on the Bank Secrecy Act Advisory Group. New members will be selected for three-year membership terms. Nominations are due 01/21/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-19/pdf/2019-27358.pdf. Federal Register, Vol. 84, No. 244, 12/19/2019, 69822.

Treasury Finalizes Regulations Relating to Withholding and Reporting Tax on Certain U.S. Source Income Paid to Foreign Persons. 

The Department of the Treasury (Treasury) issued final regulations that provide guidance on certain due diligence and reporting rules applicable to persons making certain U.S. source payments to foreign persons, and guidance on certain aspects of reporting by foreign financial institutions on U.S. accounts. The final regulations affect persons making certain U.S.-related payments to certain foreign persons and foreign financial institutions reporting certain U.S. accounts. The final regulations are effective 01/02/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-02/pdf/2019-27979.pdf. Federal Register, Vol. 85, No. 1, 01/02/2020, 192-206.

Treasury Proposes Regulations on Misdirected Direct Deposit Refunds.

Treasury issued proposed regulations to provide guidance on section 6402(n) of the Internal Revenue Code (Code), concerning the procedures for identification and recovery of a misdirected direct deposit refund. The regulations reflect changes to the law made by the Taxpayer First Act. The proposed regulations affect taxpayers who have made a claim for refund, requested the refund be issued as a direct deposit, but did not receive a refund in the account designated on the claim for refund. Comments are due 02/21/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-23/pdf/2019-27653.pdf. Federal Register, Vol. 84, No. 246, 12/23/2019, 70462-70466.

Treasury Proposes Amendments to Source of Income from Certain Sales of Personal Property.

Treasury issued proposed regulations modifying the rules for determining the source of income from sales of inventory produced within the United States and sold without the United States or vice versa. These proposed regulations also contain new rules for determining the source of income from sales of personal property (including inventory) by nonresidents that are attributable to an office or other fixed place of business that the nonresident maintains in the United States. Finally, these proposed regulations modify certain rules for determining whether foreign source income is effectively connected with the conduct of a trade or business within the United States. Comments are due 02/28/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-27813.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 71836-71851.

Treasury Proposes Amendments to Federal Government Participation in the Automated Clearing House. 

Treasury is proposing to amend its regulation governing the use of the Automated Clearing House (ACH) Network by Federal agencies. Our regulation adopts, with some exceptions, the Nacha Operating Rules developed by Nacha, formerly known as NACHA—The Electronic Payments Association (Nacha), as the rules governing the use of the ACH Network by Federal agencies. Treasury is issuing this proposed rule to address changes that Nacha has made to the Nacha Operating Rules since the publication of the 2016 Nacha Operating Rules & Guidelines book. These changes include amendments set forth in the 2017, 2018, and 2019 Nacha Operating Rules & Guidelines books, including supplements thereto, with an effective date on or before 06/30/2021. Comments are due 02/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-03/pdf/2019-27261.pdf. Federal Register, Vol. 85, No. 2, 01/03/2020, 265-271.

Treasury Issues QFC Recordkeeping Requirement Exemption.

Treasury is issuing a determination regarding a request for an exemption from certain requirements of the rule implementing the qualified financial contracts (QFC) recordkeeping requirements of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The exemption is granted 01/02/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-02/pdf/2019-27801.pdf. Federal Register, Vol. 85, No. 1, 01/02/2020, 1-3.

Treasury Requests Comment on Information Collections.

  • Treasury announced it seeks comment on the information collection titled U.S. Business Income Tax Return. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/21/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-19/pdf/2019-27297.pdf. Federal Register, Vol. 84, No. 244, 12/19/2019, 69825-69830.
  • Treasury announced it seeks comment on the information collection titled Allocation and Qualified Equity Investment Tracking System. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 02/24/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-27786.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 71078.
  • Treasury announced it seeks comment on the information collection titled New Markets Tax Credit Program Community Development Entity (CDE) Certification Application. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 02/24/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-27788.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 71077.
  • Treasury announced it seeks comment on the information collection titled Relief for Certain Spouses of Military Personnel. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 02/24/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-27751.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 71081-71082.
  • Treasury announced it seeks comment on the information collection titled Form 8233—Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/27/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-27/pdf/2019-27888.pdf. Federal Register, Vol. 84, No. 248, 12/27/2019, 71531-71534.
  • Treasury announced it seeks comment on the information collection titled Troubled Asset Relief Program—Making Home Affordable Participants. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/29/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-28143.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 72140.
  • Treasury announced it seeks comment on the information collection titled Tax Exempt Forms and Schedules. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 01/30/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-31/pdf/2019-28274.pdf. Federal Register, Vol. 84, No. 250, 12/31/2019, 72435.
  • Treasury announced it seeks comment on the information collection titled Application By Survivors for Payment of Bond or Check Issued Under the Armed Forces Leave Act of 1946, as amended. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 03/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-03/pdf/2019-28422.pdf. Federal Register, Vol. 85, No. 2, 01/03/2020, 416-417.
  • Treasury announced it seeks comment on the information collection titled Request to Reissue U.S. Savings Bonds to a Personal Trust. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 03/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-03/pdf/2019-28423.pdf. Federal Register, Vol. 85, No. 2, 01/03/2020, 417.
  • Treasury announced it seeks comment on the information collection titled Minority Bank Deposit Program (MBDP) Certification Form for Admission. Treasury also gave notice that it sent the collection to OMB for review. Comments are due 03/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-03/pdf/2019-28423.pdf. Federal Register, Vol. 85, No. 2, 01/03/2020, 417.

Treasury Establish Prices for 2019 and 2020 United States Mint Numismatic Products.

Treasury is announcing pricing for United States Mint numismatic products. The pricing for the products may be viewed in the table in the notice. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-03/pdf/2019-28401.pdf. Federal Register, Vol. 85, No. 2, 01/03/2020, 418.

FHFA Proposes Amendments to Stress Test Rule.

The Federal Housing Finance Agency (FHFA) issued a proposed rule that would amend its stress testing rule, consistent with section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). Specifically, the proposed rule would revise the minimum threshold for the regulated entities to conduct stress tests from $10 billion to $250 billion, remove the requirements for Federal Home Loan Banks (Banks) subject to stress testing, and remove the adverse scenario from the list of required scenarios. These amendments align FHFA’s rule with rules adopted by other financial institution regulators that implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) stress testing requirements, as amended by EGRRCPA. The proposed rule also makes certain conforming and technical changes. Comments are due 01/15/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-16/pdf/2019-26950.pdf. Federal Register, Vol. 84, No. 241, 12/16/2019, 68350-68353.

SBA Issues Peg Rate.

The Small Business Administration (SBA) publishes an interest rate called the optional “peg” rate (13 CFR 120.214) on a quarterly basis. This rate is a weighted average cost of money to the government for maturities similar to the average SBA direct loan. This rate may be used as a base rate for guaranteed fluctuating interest rate SBA loans. This rate will be 1.88 percent for the January–March quarter of FY 2020. Pursuant to 13 CFR 120.921(b), the maximum legal interest rate for any third party lender’s commercial loan which funds any portion of the cost of a 504 project (see 13 CFR 120.801) shall be 6% over the New York Prime rate or, if that exceeds the maximum interest rate permitted by the constitution or laws of a given State, the maximum interest rate will be the rate permitted by the constitution or laws of the given State. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-28188.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 72101.

SBA Requests Comment on Information Collections.

  • SBA announced it seeks comment on the information collection titled Statement of Personal History. SBA also gave notice that it sent the collection to OMB for review. Comments are due 03/03/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-09/pdf/2020-00175.pdf. Federal Register, Vol. 85, No. 6, 01/09/2020, 1189.
  • SBA announced it seeks comment on the information collection titled Generic Clearance for SBA Customer Experience Data Collections. SBA also gave notice that it sent the collection to OMB for review. Comments are due 02/10/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-10/pdf/2020-00209.pdf. Federal Register, Vol. 85, No. 7, 01/10/2020, 1368-1369.

FCA Proposes District Financial Reporting.

The Farm Credit Agency (FCA) proposes amending the regulation governing how a Farm Credit bank presents information on its related associations when preparing annual bank financial statements on a standalone basis. FCA proposes to provide an additional presentation option that would allow the related association financial information to be in a supplement. Comments are due 03/09/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-07/pdf/2019-27573.pdf. Federal Register, Vol. 85, No. 4, 01/07/2020, 647-649.

RHS Finalizes Amendments to Single Family Housing Guaranteed Loan Program.

The Rural Housing Service (RHS) has finalized changes to the single family housing guaranteed loan program (SFHGLP) regulation to streamline the loss claim process for lenders who have acquired title to property through voluntary liquidation or foreclosure; clarify that lenders must comply with applicable laws, including those within the purview of the Bureau of Consumer Financial Protection (CFPB); and better align loss mitigation policies with the mortgage industry. The final rule is effective 04/24/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-27504.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 70881-70887.

RBC Finalizes Advanced Biofuel Payment Program.

The Rural Business-Cooperative Service (RBC) published an interim rule in the Federal Register on 02/11/2011. Through this action, RBS finalizes the rule based on public comments and new program requirements established in the Agricultural Improvement Act of 2018 (2018 Farm Bill). The final rule is effective 12/27/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-27/pdf/2019-27396.pdf. Federal Register, Vol. 84, No. 248, 12/27/2019, 71297-71303.

CCC Finalizes Amendments to Technical Assistance for Specialty Crops Program.

The Commodity Credit Corporation (CCC) issued a rule revising the Technical Assistance for Specialty Crops (TASC) program regulations to incorporate legislative changes introduced in the Agriculture Improvement Act of 2018 and to incorporate changes that conform the operation of the program to the requirements in the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (Uniform Guidance) and Federal grant-making best practices. The rule is effective 12/23/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-23/pdf/2019-27248.pdf. Federal Register, Vol. 84, No. 246, 12/23/2019, 70393-70399.

CCC Finalizes Amendments to Foreign Market Development Program. 

CCC issued a rule revising the Foreign Market Development (FMD) program regulations to incorporate changes that conform the operation of the program to the requirements in the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (Uniform Guidance) and Federal grant-making best practices. The rule is effective 01/09/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-09/pdf/2019-27964.pdf. Federal Register, Vol. 85, No. 6, 01/09/2020, 1083-1096.

CCC Issues Interim Final Rule on Environmental Quality Incentives Program.

CCC issued an interim final rule making changes to the Environmental Quality Incentives Program (EQIP) to conform to the Agriculture Improvement Act of 2018 (the 2018 Farm Bill). EQIP helps agricultural producers conserve and enhance soil, water, air, plants, animals (including wildlife), energy, and related natural resources on their land. Eligible lands include cropland, grassland, rangeland, pasture, wetlands, nonindustrial private forest land, and other agricultural land on which agricultural or forest-related products or livestock are produced and natural resource concerns may be addressed. Participation in the program is voluntary. The interim rule is effective 12/17/2019, comments are due 01/17/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-17/pdf/2019-26872.pdf. Federal Register, Vol. 84, No. 242, 12/17/2019, 69272-69293.

CCC Issues Interim Rule on Agricultural Conservation Easement Program.

CCC issued an interim rule that makes changes to the Agricultural Conservation Easement Program policies and procedures in the regulations to conform with the Agriculture Improvement Act of 2018 (the 2018 Farm Bill). The interim rule is effective 12/30/2019. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2020-01-06/pdf/2019-27883.pdf. Federal Register, Vol. 85, No. 3, 01/06/2020, 558-590.

CFTC Finalizes Amendments to Public Rulemaking Procedures.

The Commodity Futures Trading Commission (CFTC) is issuing a final rule that amends CFTC’s regulations to eliminate the provisions that set forth the procedures for the formulation, amendment, or repeal of rules or regulations. Because the Administrative Procedure Act (APA) governs CFTC’s rulemaking process, CFTC believes that it is unnecessary to codify the rulemaking process in a Commission regulation. The amended regulation is comprised solely of the procedure for filing petitions for rulemakings, as the APA does not address this process. The rule is effective 01/16/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-17/pdf/2019-27103.pdf. Federal Register, Vol. 84, No. 242, 12/17/2019, 68787-68790.

FASB Proposes Statement of Federal Financial Accounting Standards.

The Federal Accounting Standards Advisory Board (FASB) has issued an exposure draft of a proposed Statement of Federal Financial Accounting Standards titled Deferral of the Effective Date of SFFAS 54, Leases. The exposure draft is available on the FASB website at https://www.fasab.gov/documents-forcomment/. Copies can be obtained by contacting FASB at (202)512–7350. Respondents are encouraged to comment on any part of the exposure draft. Comments are due 01/31/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-27679.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 70968-70969.

FTC Requests Comment on Information Collection.

The Federal Trade Commission (FTC) announced it seeks comment on the information collection titled Rule Governing Pre-sale Availability of Written Warranty Terms. FTC also gave notice that it sent the collection to OMB for review. Comments are due 03/02/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-31/pdf/2019-28194.pdf. Federal Register, Vol. 84, No. 250, 12/31/2019, 72362-72364.

FCC Requests Comment on Advanced Methods to Target and Eliminate Unlawful Robocalls.

The Federal Communications Commission (FCC) solicits input for the first staff report on call blocking. FCC seeks data and other information on the availability and effectiveness of call-blocking tools offered to consumers, the impact of FCC actions on illegal calls, the impact of call blocking on 911 services and public safety, and any other information that may inform FCC’s analysis of the state of deployment of advanced methods and tools to eliminate illegal and unwanted calls. Comments are due 01/29/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-30/pdf/2019-28136.pdf. Federal Register, Vol. 84, No. 249, 12/30/2019, 71888-71889.

NCUA Requests Comment on Information Collections.

  • The National Credit Union Administration (NCUA) announced it seeks comment on the information collection titled Monitoring Bank Secrecy, 12 CFR part 748.2. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 01/13/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26767.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 67963.
  • NCUA announced it seeks comment on the information collection titled Written Reimbursement Policy, 12 CFR 701.33. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 01/21/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-20/pdf/2019-27530.pdf. Federal Register, Vol. 84, No. 245, 12/20/2019, 70213-70214.
  • NCUA announced it seeks comment on the information collection titled Advertising of Excess Insurance. NCUA also gave notice that it sent the collection to OMB for review. Comments are due 01/30/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-31/pdf/2019-28240.pdf. Federal Register, Vol. 84, No. 250, 12/31/2019, 72383.

NCUA Delays Effective Date of Prompt Corrective Action Regulations.

NCUA issued a final rule to delay the effective date of both NCUA’s 10/29/2015 final rule regarding risk-based capital (2015 Final Rule) and NCUA’s 11/06/2018 supplemental final rule regarding risk-based capital (2018 Supplemental Rule), moving the effective date from 01/01/2020 to 01/01/2022. During the extended delay period, NCUA’s current PCA requirements will remain in effect. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-17/pdf/2019-27141.pdf. Federal Register, Vol. 84, No. 242, 12/17/2019, 68781-68787.

NCUA Issues CFR Correction.

NCUA issued a correction to the Code of Federal Regulations (CFR). In Title 12 of CFR, Parts 600 to 899, revised as of 01/01/2019, on page 700, in § 703.114, remove paragraph (3) that appears below paragraph (d). The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-18/pdf/2019-27403.pdf. Federal Register, Vol. 84, No. 243, 12/18/2019, 69298.

SSA Issues Rate for Assessment on Direct Payment of Fees to Representatives.

The Social Security Administration (SSA) announced that the assessment percentage rate under the Social Security Act (Act) is 6.3 percent for 2020. A claimant may appoint a qualified individual as a representative to act on his or her behalf in matters before SSA. If the claimant is entitled to past-due benefits and was represented either by an attorney or by a non-attorney representative who has met certain prerequisites, SSA withholds up to 25 percent of the past-due benefits and use that money to pay the representative’s approved fee directly to the representative. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-12/pdf/2019-26752.pdf. Federal Register, Vol. 84, No. 239, 12/12/2019, 67987-67988.

DOL Finalizes Regular Rate Under the Fair Labor Standards Act.

The Department of Labor (DOL) issued the regular rate under the Fair Labor Standards Act (FLSA). FLSA generally requires that covered, nonexempt employees receive overtime pay of at least one and one-half times their regular rate of pay for time worked in excess of 40 hours per workweek. The regular rate includes all remuneration for employment, subject to the exclusions outlined in section 7(e) of the FLSA. In this final rule, DOL updates a number of regulations on the calculation of overtime compensation both to provide clarity and to better reflect the 21st-century workplace. These changes will promote compliance with the FLSA, provide appropriate and updated guidance in an area of evolving law and practice, and encourage employers to provide additional and innovative benefits to workers without fear of costly litigation. The final rule is effective 01/15/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-16/pdf/2019-26447.pdf. Federal Register, Vol. 84, No. 241, 12/16/2019, 68736-68776.

VA Proposes Specialty Education Loan Repayment Program. 

The Department of Veterans Affairs (VA) proposes to amend its regulations that govern scholarship programs to certain health care professionals. This rulemaking would implement the mandates of the VA MISSION Act of 2018 by establishing a Specialty Education Loan Repayment Program, which would assist VA in meeting the staffing needs of VA physicians in medical specialties for which VA has determined that recruitment or retention of qualified personnel is difficult. Comments are due 02/24/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-26/pdf/2019-27511.pdf. Federal Register, Vol. 84, No. 247, 12/26/2019, 70908-70913.

HHS Finalizes Amendments to Exchange Program Integrity.

The Department of Health and Human Services (HHS) issued a final rule revising standards relating to oversight of Exchanges established by states and periodic data matching frequency. This final rule also includes new requirements for certain issuers related to the collection of a separate payment for the portion of a plan’s premium attributable to coverage for certain abortion services. The final rule is effective 02/25/2020. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2019-12-27/pdf/2019-27713.pdf. Federal Register, Vol. 84, No. 248, 12/27/2019, 71674–71711.

By, Ally Bates

The below article is the Special Focus section of the January 2020 Compliance Journal. The full issue may be viewed by clicking here.

There are several recently enacted state legislative items which impact financial institutions. The following article discusses select aspects of three laws that have been passed this session. For more comprehensive information on each law, please review the applicable Act, each of which is included at the end of this article. This article is focused on law that has been passed. At time of this article’s publication, the legislature is still in session. Bills that are later signed into law will be discussed in future publications.  

Financial Institutions Modernization Act 

The Financial Institutions Modernization Act, or Omnibus Bill, implemented by 2019 Wisconsin Act 65, is a piece of legislation that makes several changes to statutes relating to banking practices. Each change is presented with both a summary and detailed explanation below. 

Banking Review Board 

Summary: Combines the Banking Review Board with the Savings Institutions Review Board into a single Banking Institutions Review Board. 

Detailed Explanation: The Wisconsin Department of Financial Institutions has two five-member boards which advise DFI’s division of banking. The Banking Review Board advises and reviews administrative actions on matters related to banks and banking. The Savings Institution Review Board advises and reviews administrative actions on matters related to savings banks and savings and loan associations. This provision combines both authorities and purposes into a single review board. 

Lost, Destroyed, or Stolen Cashier’s Check  

Summary: Reduces the period, from 90 days to 30 days, after certain checks or issued, during which the issuing bank must pay the item after it has been claimed as lost, stolen, or destroyed.  

Detailed Explanation: The Wisconsin Uniform Commercial Code Section 403.312 describes the procedure by which a financial institution may place a stop payment on a lost, destroyed, or stolen cashier’s check, teller’s check, or certified check. Under that procedure, a claim to such an item becomes enforceable, generally, on the 90th day following the date of the check. Meaning, that a financial institution must, generally, pay an item claimed as lost, destroyed, or stolen if it is presented during the 90 day period following the date of the check or risk liability for an improper stop payment. This provision reduces that period from 90 days to 30 days.  

Mortgage Loan Originators  

Summary: Provides temporary authority to act as a mortgage loan originator (MLO) while a license application is pending.  

Detailed Explanation: This provision gives temporary authority to act as an MLO to an individual who applies to DFI for a license so long as that individual is employed by a licensed mortgage banker or mortgage broker and was a registered MLO in another state under certain conditions and time requirements. In addition, the individual must not have been previously denied a license, subject to a cease and desist by the Bureau of Consumer Financial Protection (CFPB), and not been convicted of a disqualifying crime. If eligible, the temporary authority beings when the individual furnishes application information to the NMLSR and ends upon the earlier of DFI granting or denying the license, withdrawal of the application for an MLO license, the application is determined to be incomplete, or the license is granted. During the temporary period, the individual is considered to be associated with the mortgage banker or mortgage broker employing them and is considered to have MLO authority subject to all applicable requirements and duties.  

Possession of Property Subject to Garnishment  

Summary: Grants financial institutions two business days to respond to certain legal process.

Detailed Explanation: A garnishee financial institution in possession of property subject to garnishment is liable for the surrender of that property only upon expiration of two business days to comply with or respond to the garnishee summons and complaints.  

Data Processing Services Provided to Financial Institutions  

Summary: A financial institution retains property rights of any data transferred to an independent data processing servicer.  

Detailed Explanation: Under this provision an independent data processing servicer is an entity that provides to a financial institution electronic data processing services. It excludes the exchange of data and settlement of funds between unaffiliated financial institutions through terminals, remote service units, and customer bank communications terminals. If a financial institution transfers data to an independent data processing servicer, the financial institution retains all right, title, interest, and legal claim to the data. The transfer only permits temporary control of the data for purposes of the contracted services. This provision also places required contract disclosures upon data processing servicers.  

Federal Home Loan Bank Loans  

Summary: Eliminates certain limitations on loans to state banks made by a Federal Home Loan Bank.  

Detailed Explanation: This provision eliminates the current 20-year term limitation and the limitation on the value of bank assets that may be pledged as collateral by a Federal Home Loan Bank. 

Effective Date 

The Omnibus Bill became effective November 27, 2019, except for three provisions. The provisions creating the banking institutions review board takes effect on May 2, 2021. The provisions affecting licensing and employment transition for MLOs took effect on November 28, 2019. The provisions for independent data processing servicers takes effect on March 1, 2020. 

Industrial Hemp 

2019 Wisconsin Act 68 was enacted to make several changes to the law governing industrial hemp. Act 68 aligns Wisconsin law to be consistent with the 2018 Federal Farm Bill. An important consideration for banks to keep in mind is that Act 68 directs the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) to write new rules. It is WBA’s understanding that DATCP will continue under the 2014 Farm Bill provisions, and existing Wisconsin regulation at the time of this article’s publication, in 2020. DATCP is preparing to write rules pursuant to Act 68 and expects to begin the new program in 2021. Select provisions from Act 68 are included below. 

  • The term “hemp” instead of “industrial hemp” is used, which is defined as “Cannabis sativa L." and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol (THC) concentration of not 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.”  
  • No person may produce hemp in Wisconsin without a license from DATCP if required under federal law.  
  • DATCP is provided authority to establish procedures for the following:  
    • Maintaining information relating to hemp production, 
    • Testing for THC concentrations in hemp, 
    • Disposing of hemp plants grown illegally, 
    • Complying with enforcement provisions, and 
    • Conducting annual inspections of hemp producers.  
  • Redefines “marijuana,” for the purposes of the controlled substances act, to exclude hemp.  
  • Excludes THC contained in hemp from the list of Schedule I controlled substances.  
  • Changes the current hemp pilot program under DATCP to a permanent program and sunsets the pilot program.  
  • Allows DATCP to set criteria for approving persons to undertake any sampling and testing of hemp that DATCP requires by rule and to approve persons that meet the criteria.  
  • Requires DATCP to issue a fit for commerce certificate after hemp is tested, or if DATCP determines that hemp is not required to be tested.  
  • Allows a person, whose personally identifying information relating to the hemp program is in DATCP’s possession, to authorize the disclosure of that information. 

Agricultural Development Loan Guarantee Program 

2019 Wisconsin Act 62 (Act 62) creates a pilot loan guarantee program under the Agricultural Development Loan Guarantee Program administered by the Wisconsin Housing and Economic Development Authority (WHEDA) along with other changes. 

Specifically, Act 62 makes the following changes to WHEDA’s existing Agricultural Development Loan Guarantee Program:  

  • The term of a loan guarantee may not exceed ten years for land and buildings, five years for inventory, equipment, and machinery, and two years for permanent working capital and marketing expenses.  
  • The closing fee for a loan guarantee under the program may not exceed 1.5 percent. 

Act 62 requires WHEDA to allocate $3,000,000 to the pilot program. WHEDA may guarantee collection of 25 percent of the principal of an eligible loan or $750,000, whichever is less. The fixed amount guaranteed is payable to the lender for the entire term of the guarantee. Otherwise, a loan guarantee under the pilot program is subject to all prior requirements. The pilot program sunsets as of July 1, 2024.

Conclusion 

In general, recent legislative activity has been favorable for the banking industry. WBA will continue to monitor existing bills and update the membership on any significant changes. If you have any additional questions on any of the above laws, do not hesitate to contact us at wbalegal@wisbank.com

Click here for Act 65.

Click here for Act 68.

Click here for Act 62.

By, Ally Bates

The below article is the Special Focus section of the January 2020 Compliance Journal. The full issue may be viewed by clicking here.

On January 9, 2020 the OCC, Treasury, and FDIC (agencies) issued a joint notice of proposed rulemaking (proposed rule) to modernize Community Reinvestment Act (CRA) regulations. The proposed rule contains four main elements designed to encourage banks to serve their communities by making the regulatory framework more objective, transparent, consistent, and easy to understand. Specifically, the agencies have proposed to (1) clarify which activities qualify for CRA credit, (2) update where activities count for CRA credit, (3) create a more transparent and objective method for measuring CRA performance, and (4) provide for more transparent, consistent, and timely CRA-related data collection, recordkeeping, and reporting. Comments on the proposed rule are due March 9, 2020. 

Background 

Congress enacted the CRA in 1977 with the purpose of encouraging sound lending to all areas of a bank’s community. The OCC, FDIC, and Board of Governors of the Federal Reserve have since issued regulations to implement the statute. The proposed rule presents the first major revisions to CRA regulation since 1995.  

The agencies have acknowledged that over the past 25 years, technology and the expansion of interstate banking have transformed the financial services industry, how banks deliver their services, and how customers choose to bank. Recognizing the need for modernization, the agencies issued an Advance Notice of Proposed Rulemaking (ANPR) in 2018. WBA, along with bankers, trade groups, and other industries, offered feedback on the CRA framework through comments on the ANPR. Comments discussed how current CRA framework has not kept pace with changes in banking or technology and that the CRA regulations and guidance has become cumbersome, outdated, and complex. WBA’s comment letter highlighted points received by member banks, specifically challenges presented when:  

  • An activity qualifies for CRA credit during one exam, but not the next, 
  • A bank believes that an activity will receive CRA credit, but does not, and 
  • A bank is unable to obtain confirmation in advance that an activity will receive credit.   

The proposed rule would address these comments by clarifying and expanding what qualifies for CRA credit. That aspect of the rule is discussed below, along with select provisions. Note that this article is intended to summarize key provisions of the proposed rule rather than provide a comprehensive overview. For the complete rule please see the link at the end of the article. This article covers the four main elements of the rule: what counts for CRA credit, where activities count for CRA credit, measuring CRA performance, and CRA-related data collection. 

Clarifying and Expanding What Qualifies for CRA Credit 

Under the current CRA framework, qualifying activities generally fall into the category of retail banking or community development (CD) activities, depending on various considerations. Most banks face uncertainty as to what types of activities meet those considerations and thus, qualify for CRA credit. The proposed rule aims to remedy this in a few ways. Two are presented below: an expansion upon the definition of “qualifying activities” and the creation of a qualifying activities confirmation process alongside an illustrative list of qualifying activities. 

Qualifying Activities Criteria 

The proposed rule would define a “qualifying activity” as an activity that helps meet the credit needs of a bank’s community, particularly those individuals, areas, and populations with needs. Those criteria generally include activities that currently qualify for CRA credit while establishing the following new categories: 

  • A retail loan provided to: 
    • A low or moderate-income (LMI) individual or family,
    • A small business, or 
    • A small farm. 
  • A retail loan provided in Indian country. 
  • A retail loan that is a small loan to a business or a small loan to a farm located in a low- or moderate-income census tract. 
  • A CD activity that provides financing for or supports certain criteria. Examples include: 
    • Essential community facilities that partially or primarily benefit or serve LMI individuals or areas of identified need, 
    • Family farms, 
    • Financial literacy programs or education or homebuyer counseling, 
    • See the proposed rule at the end of this article for the complete list. 

Qualifying Activities Confirmation and Illustrative List 

Under the proposed rule, the agencies would establish an online process for a bank to seek confirmation as to whether an activity qualifies for credit.1 The agencies would inform the bank whether the activity qualifies, or the activity does not qualify, and then place the activity on a publicly available list. Through this process, the list would contain examples of activities, submitted by banks, that the agencies have determined qualify or do not qualify for credit. 

The list would also be revised at least every three years, through a public notice and comment process, to add activities that meet the criteria and to remove activities that no longer meet the criteria (e.g., if broadband were universally available and no longer considered to be essential infrastructure). An initial proposed list is available on the agencies’ websites and in section IV of the proposed rule. 
 
Expanding Where CRA Activity Counts 

Assessment areas under current CRA rules depend on brick-and-mortar bank locations, creating difficulties for reaching outside that area. The agencies have proposed to address this by creating two categories of assessment areas: “facility-based” and “deposit-based.”  

Facility-Based Assessment Area 
 
The proposed rule requires banks to delineate an assessment area encompassing each location where the bank maintains a main office, a branch, or a non-branch deposit-taking facility as well as the surrounding locations in which the bank has originated or purchased a substantial portion of its qualifying retail loans. The area must consist of:  

  • One whole metropolitan statistical area (using the metropolitan statistical area boundaries that were in effect as of January 1 of the calendar year in which the delineation is made),  
  • The whole nonmetropolitan area of a state, 
  • One or more whole, contiguous metropolitan divisions in a single metropolitan statistical area (using the metropolitan division boundaries that were in effect as of January 1 of the calendar year in which the delineation is made), or  
  • One or more whole, contiguous counties or county equivalents in a single metropolitan statistical area or nonmetropolitan area.  

Deposit-Based Assessment Area 
 
The proposed rule would require banks that receive more than 50 percent of their retail domestic deposits from outside of their facility-based assessment areas to delineate separate, non-overlapping “deposit-based” assessment areas in the smallest geography where they receive five percent or more of their retail domestic deposits. These deposit-based assessment areas must be delineated to consist of: 

  • One whole state,  
  • One whole metropolitan statistical area (using the metropolitan statistical area boundaries that were in effect as of January 1 of the calendar year in which the delineation is made),  
  • The whole nonmetropolitan area of a state, 
  • One or more whole, contiguous metropolitan divisions in a single metropolitan statistical area (using the metropolitan division boundaries that were in effect as of January 1 of the calendar year in which the delineation is made),  
  • The remaining geographic area of a state, metropolitan statistical area, nonmetropolitan area, or metropolitan division other than where it has a facility-based assessment area, or  
  • One or more whole, contiguous counties or county equivalents in a single metropolitan statistical area or nonmetropolitan area. 

Activity Outside of Assessment Area 

The proposed rule would permit banks to receive CRA credit for qualifying activities conducted outside of their assessment areas at the bank level. Under this approach, banks would still be encouraged to meet local community needs where they have branches and depositors but would be given flexibility to serve other communities with distinct needs as these activities would be considered when calculating the overall dollar value of their qualifying activities under the proposed rule. The goal of this framework would be to reduce the number of areas where there are more banks that want to engage in CD activities than there is need for those activities (known as CD hot spots) and areas where there is a great need for CD activities but few banks that engage in those activities (known as CD deserts). 

Providing an Objective Method to Measure CRA Activity

Current CRA regulations evaluate a bank’s CRA performance on generally undefined terms through a relatively unspecified process. The proposed rule would attempt to provide a more objective, clear, and consistent assessment by establishing new, general performance standards for institutions that are not small banks. Small banks could opt into the general performance standards, while those that do not would be evaluated under the small bank performance standards consistent with current regulation. 

Under the general performance standards, banks would receive a presumptive rating based on what performance standards are met within a given category. Banks would be evaluated on CRA performance at a bank-level and in each assessment area. The bank-level performance standards are based upon: 

  • CRA evaluation measures, 
  • Assessment area ratings (see below), and 
  • Community development minimums.

The assessment area performance standards are based upon:  

  • Retail lending distribution tests, 
  • CRA evaluation measures, and 
  • Community development minimums. 

CRA Evaluation Measure 
 
A bank’s bank-level CRA evaluation measure is the sum of:  

  • The bank’s annual bank-level qualifying activities values2 divided by the average quarterly value of the bank’s retail domestic deposits as of the close of business on the last day of each quarter for the same period used to calculate the annual qualifying activities value, and  
  • The number of the bank’s branches located in low- or moderate-income census tracts, distressed areas, underserved areas, and Indian country divided by its total number of branches as of the close of business on the last day of the same period used to calculate the annual qualifying activities value multiplied by .01. 

A bank’s assessment area CRA evaluation measure is determined in each assessment area and is the sum of:  

  • The bank’s annual assessment area qualifying activities value divided by the average quarterly value of the bank’s assessment area retail domestic deposits as of the close of business on the last day of each quarter for the same period used to calculate the annual assessment area qualifying activities value,  
  • The number of the bank’s branches located in low- or moderate-income census tracts in the assessment area divided by its total number of branches in the assessment area as of the close of business on the last day of the same period used to calculate the annual assessment area qualifying activities value multiplied by .01, and 
  • Annual assessment area CRA evaluation measures for each year in the evaluation period, separately for each assessment area. 

Retail Lending Distribution Tests 

The retail lending distribution tests would evaluate a bank’s originations in each assessment area using both a geographic distribution test and a borrower distribution test. Both the geographic distribution test and the borrower distribution test would apply for small loans to businesses and farms. The borrower distribution test would apply, in addition, for home mortgage and consumer lending. 

To pass the geographic distribution test for both the small loan to a business product line and the small loan to a farm product line, a bank’s percentage of such loans in low- or moderate income census tracts originated during the evaluation period in the assessment area must meet or exceed the threshold established for either the associated geographic demographic comparator or the associated geographic peer comparator.  

  • The geographic demographic comparator threshold is 55 percent of the percentage of businesses or farms in low- and moderate-income census tracts in the assessment area.  
  • The geographic peer comparator threshold is 65 percent of the percentage of small loans to businesses or farms in low- and moderate income census tracts originated by all banks evaluated under the general performance standards. 

To pass the borrower distribution test for the home mortgage lending product line, a bank’s percentage of home mortgage loans to low- and moderate income individuals and families originated during the evaluation period in the assessment area must meet or exceed the threshold established for either the associated borrower demographic comparator or the associated borrower peer comparator.  

  • The borrower demographic comparator threshold is 55 percent of the percentage of low- and moderate income families in the assessment area.  
  • The demographic peer comparator threshold is 65 percent of the percentage of home mortgage loans to low- or moderate-income individuals and families originated by all banks evaluated under the general performance standards. 

Community Development Minimum 

The community development minimum would be determined by taking the quantified value of community development loans and community development investments in the assessment area during the evaluation period, divided by the average quarterly value of the bank’s assessment area retail domestic deposits as of the close of business on the last day of each quarter of the evaluation period. To achieve a rating of outstanding or satisfactory, this value must meet or exceed 2 percent. 

Data Collection, Recordkeeping, and Reporting 

Reporting The current CRA framework requires banks to collect and report a variety of data on loans. However, small banks, as defined under the current rule, generally are exempt from these requirements. The current framework also does not collect data on all CRA activity. Under the proposed rule, there would be separate data collection and reporting requirements for banks subject to the general performance standards and for banks subject to the small bank performance standards. Banks evaluated under the general performance standards would be required to collect and maintain extensive information such as retail lending distribution tests results, CRA evaluation measures calculations, and presumptive ratings determinations. Banks would also be required to collect and maintain records of all qualifying and non-qualifying retail loans, assessment area lists, qualifying activities data, and the location of retail loans, and retail domestic deposit data.  

Conclusion 

The proposed rule is the industry’s opportunity to comment on its experiences under current CRA, and what it would like to see in a new rule. The Federal Reserve did not join on the proposed rule, but has indicated its own plans to update its CRA regulations. As the process continues, with House Financial Services hearings being conducted in January of 2020, WBA will continue to monitor all activity on CRA reform to keep its membership informed. WBA plans to submit comments on the proposed rule. To craft a meaningful comment letter, WBA encourages banks to provide us with their thoughts and concerns. In addition, WBA encourages all members to consider writing comments on the proposed rule their own.  

The proposed rule can be found by clicking here.
 
To assist WBA in crafting a meaningful comment letter, reach out to WBA’s Scott Birrenkott at: sbirrenkott@wisbank.com

  1. This process would be optional, and banks would not be required to use this process.
  2. To better understand “bank-level qualifying activities” the proposed rule provides an example: [qualifying loans on balance sheet for at least 90 days and CD investments] + [twenty five percent of the origination value of qualifying loans sold within 90 days of origination] = [CD services and monetary and in-kind donations].

By, Ally Bates

On Dec. 20, 2019, President Donald Trump signed into law the provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) which contains several provisions that will impact qualified retirement plans. Below is a high-level summary of some of the changes contained in the SECURE Act and the effective dates for these changes.  

Age-Related Required Minimum Distributions

For participants that attain age 70.5 after Dec. 31, 2019, required minimum distributions need not begin until April 1 of the year following the year they turn 72. Participants who are not 5% (or greater) owners may continue to delay beginning required minimum distributions until they retire.  

Post-death Required Minimum Distribution for Beneficiaries  

The SECURE Act eliminates the ability to “stretch” required minimum distributions over the life expectancy of a designated beneficiary. Under the new rules, a deceased participant’s plan account balance must generally be completely distributed (to a designated beneficiary) by the end of the tenth year following the year of the participant’s death. This new rule does not apply if the designated beneficiary is a surviving spouse, disabled, chronically ill, not more than 10 years younger than the participant, or a minor child of the participant. This new rule is effective for distributions related to participants who die after Dec. 31, 2019. 

Lifetime Income Disclosures Required on Participant Statements  

The SECURE Act mandates that participant statements include lifetime income estimates at least once per year. The SECURE Act further requires the Department of Labor (DOL) to issue model disclosures and appropriate assumptions. The lifetime income disclosure requirement will become effective 12 months after the DOL issues its guidance.  

Required Eligibility for Long-term Part-time Employees  

If an employer offers a 401(k) plan, effective for plan years beginning after Dec. 31, 2020, part-time employees that work at least 500 hours in three consecutive 12-month periods must be allowed to make deferrals into the 401(k) plan. As long as no employer contributions are required for these long-term part-time employees under the terms of the plan, they need not be included in the plan’s compliance testing.  

Penalty-free Withdrawal Allowed Upon Birth or Adoption

Effective for plan years beginning after Dec. 31, 2019, plans may allow participants to withdraw up to $5,000 penalty-free for expenses related to the birth or adoption of a child. The withdrawal must be made within one year of the birth or adoption. The withdrawal may be recontributed to the plan as a rollover contribution.

Increase in Maximum Auto-Increase Limit for Qualified Automatic Contribution Arrangement Plans

Effective for plan years beginning after Dec. 31, 2019, plans that use the 401(k) Qualified Automatic Contribution Arrangement Safe Harbor are permitted to automatically increase participants' deferral election percentage up to a maximum of 15%. The previous maximum auto-increase limit was 10%.

Nonelective 401(k) Safe Harbor Plan Changes

Effective for plan years beginning after Dec. 31, 2019, the SECURE Act makes the following changes for nonelective 401(k) safe harbor plans:  

  • The safe harbor notice requirement is eliminated. 
  • Plan sponsors may adopt the 3% nonelective safe harbor mid-year as long as the plan is amended at least 30 days prior to the end of the plan year. 
  • Plan sponsors may adopt a 4% nonelective safe harbor anytime prior to the due date for making Average Deferral Percentage (ADP) refunds (generally the last day of the following plan year). 

Pooled Employer Plans (Open Multiple Employer Plans)

Effective for plan years beginning after Dec. 31, 2020, the SECURE Act allows unrelated employers to participate in a single plan. Pooled employer plans are intended to allow small employers/plans to generate some economies of scale. 

Late 5500 Filing Penalties Increase 

Effective for forms due after Dec. 31, 2019, the IRS late filing fee for Forms 5500 increases from $25/day to $250/day with the maximum per form going from $15,000 to $150,000. If eligible, these late filing fees may be reduced by filing under the Delinquent Filer Voluntary Correction Program. 

There are many more changes made by this legislation. The focus of this update has been on the issues that will have the greatest impact on Associated Bank’s retirement plan clients.

Landon is Senior ERISA & Compliance Advisor | Wealth Management & Institutional Services, Associated Trust Company, N.A. 

By, Ally Bates

Homeownership—the cornerstone of the proverbial American Dream—is coming back to life… slowly. According to U.S. Census Bureau data, homeownership in the U.S. dropped significantly between 2005 and 2016, where it bottomed out at just under 63%. Over the past three years, however, rates have begun a slow ascent, reaching 64.8% in Q3 2019 (the latest data available at the time of this writing). 

While Wisconsin's average homeownership rate (67.9%) is higher than the national average, the Badger State faces a unique challenge: our workforce is growing as our housing inventory stagnates. While our state unemployment rate hovers around 3%—an historic low—those same workers are struggling to find homes they can afford, as the median sales price of a Wisconsin home skyrocketed from $131,737 in 2011 to over $200,000 in summer 2019. 

Despite the challenges in Wisconsin's workforce housing market, there is reason for optimism. Stakeholders in all areas of the housing market (including bankers, builders, and lawmakers) are working together to find and implement solutions.

The Prevailing Challenge: Inventory

The primary cause of the housing market's current challenges is a lack of inventory. So, why aren't there enough affordable homes for Wisconsin workers? The basic economics of supply and demand is one reason. "Because of the large demand and lack of supply, the price of housing is rising faster than wages," explained Doug Gordon, CEO of WaterStone Bank, Wauwatosa. "More houses are moving out of the 'affordable' category because of the demand." In addition to a growing workforce, demand is also rising because Wisconsinites are living longer, healthier lives, and as those older-yet-healthy citizens see their kids off to college and downsize, they are competing for the same inventory as first-time homebuyers. 

It has also become more expensive to build a new home, which contributes to the current shortage of workforce housing. Regulatory expenses (such as permits, fees, and code requirements) and an uptick in lumber prices both make the final sticker price of a new home higher. Another factor is rising labor costs due to a shortage of workers in the skilled trades post-recession. During the housing crisis, many builders closed up shop and apprenticeship programs are rare today. 

It also takes much longer to create more inventory of houses than, say… cell phones or coffee mugs. "The big issue in some markets is the fact that we had a number of years where it took a long time to move some lots that had stagnated during the housing crisis," said Brad Boycks, executive director at the Wisconsin Builders Association. "With housing, it takes time to create new inventory, especially on the land development side."

Finally, many Wisconsin workers struggle to purchase a home because they don't have enough bandwidth in their finances to make a significant downpayment due to the rising cost of non-house expenses such as healthcare and childcare. "When those expenses continue to rise, it makes it difficult to find housing that's affordable," explained Paul Kohler, president & CEO of Charter Bank, Eau Claire. A contributing factor is many potential homebuyers are millennials, who tend to be more debt-averse. "Millennials are much more conservative, with average debt-to-income ratios in the mid-30s," explained Gordon. "Rents have gone up so much it's hard for them to save enough for a downpayment."

Coalition of Stakeholders Seek Solutions 

Bankers, builders, and lawmakers must work together to guide Wisconsin's economy past its workforce housing challenges. For bankers, that means serving as expert advisers, both to homebuyers and developers. Mortgage lenders should encourage borrowers to work with government housing authorities if they qualify for those programs, and commercial real estate lenders should know all the ins-and-outs of their local market so they can guide their developer clients through the process in the most efficient way possible. In addition, innovative loan products could help first-time borrowers enter the market. "Banks try to do everything we can to help," Gordon explained. "We're in the business of providing financing for homes. The state housing authorities are great avenues for first-time homeowners. We continually work with mortgage insurers to come up with products that are insurable at a higher loan-to-value ratio, too."

In the Chippewa Valley, Kohler says bankers joined forces with developers, city council members, and other stakeholders to form a housing task for in 2018 to brainstorm solutions. In addition to potentially creating and expanding revolving loan programs, Kohler says it's also important to encourage renovation of existing properties. "Building new homes is only part of the solution," he explained. "It's cheaper to improve and remodel an existing structure. If we can come up with programs to incentivize individuals to do that, that will help." In another area of the state, local lenders work with community advocates, educators, and businesses to fund and operate the La Crosse Promise program, which offers scholarships to homeowners who buy, build, or renovate in select La Crosse neighborhoods.

On the other side of the equation, builders have worked with lawmakers at the state and local level to find ways to reduce expenses, including code updates and legislation to improve the building permit process. "Over the last eight years there has been a lot done at the state level to bring down the final cost of the home and for local units of government to be more transparent in what fees they are charging to construct a new home, like impact fees," said Boycks. Additionally, builders are working to recruit more workers into the skilled trades. There are dozens of programs (both state and local) designed to encourage students to enter the trades and then train them once they're there. For example, Associated Builders and Contractors of Wisconsin (ABC Wisconsin) has apprenticeship programs for 12 trades and 1,500 apprentices in over 880 Wisconsin companies.

While builders and bankers have important roles to play, the greatest potential for positive impact is in the hands of local governments. "Local government has the greatest ability to speed things up and reduce cost and encourage new residential housing," Boycks explained. Even relatively small price reductions have a tremendous impact on workers' ability to purchase a home. The National Association of Home Builders (NAHB) estimates a $1,000 increase "prices out" 4,081 families from the market in Wisconsin.*

Reducing regulatory burden could have a massive impact on those prices, considering regulatory expenses account for over 24% of the cost of building a new home, according to a report from the Wisconsin REALTORS® Association. Kohler says local governments should adopt more flexible zoning, and Boycks recommends adjusting lot size requirements. "If you want more workforce housing but have a minimum lot size of 2-3 acres, that math is never going to work," he said. 

Tax reform is another potential tool to reduce costs. Kohler says lawmakers should consider developer tax credits for low-income housing, and Gordon suggests making interest deductions more widely available. "With the most recent tax laws it's difficult to have interest deductibility," he said. "That hurts affordability."

Victory: Housing's Economic Impact

Addressing and overcoming Wisconsin's current challenges in workforce housing will benefit the entire state. Residential construction generates substantial economic activity, including income and jobs for residents and state and local tax revenue. In 2018, NAHB estimated the one-year economic impact of building 1,000 homes in Wisconsin to be 4,451 jobs, $56.3 million in tax revenue, and $298.8 million in income for residents. 

With those numbers as motivation for the public and private sector alike, consumers should be optimistic about the housing market. Boycks says there's been more conversation about the need for workforce housing in 2019. "It's out there and being talked about," he said. "The key for 2020 is to look for ways to act on that and try to improve the circumstances."

* Similar data, including median new home price, income needed to qualify, and households "priced-out" is available for all 50 states and over 300 metro areas on NAHB's website here.

Seitz is WBA operations manager and senior writer.

By, Amber Seitz

Join Rose as she flips the tables on the media and starts asking them questions! WisBusiness.com’s Alex Moe gives you pointers on making the most of interviews by reporters.

By, Eric Skrum

When I began as a part-time teller in college, I figured my banking career would start and end there. Flash forward 11 years and I’ve held multiple job within my current financial institution such as teller, marketing assistant, personal banker, and most recently, AVP Signature Banker. 

I love banking and helping customers find solutions they didn’t know they needed. Banking requires many skills—being able to listen and make connections as well as learning new and ever-changing systems, rules and regulations—it is not just numbers; it keeps you on your toes!

As much as I love working at my bank, I've always been the kind of person who strives to do more. Last spring, I was lucky enough to attend the WBA Women in Banking Conference with some of my co-workers. I left this conference feeling energized about my career and I immediately knew I wanted to become involved at a different level than I had been in the past. From there, I reached out to WBA’s Lori Kalscheuer. Lucky for me, it just so happened to be a great time to join the BOLT Board and represent the northern part of Wisconsin! 

So far, my engagement with BOLT has been a great learning experience and beneficial to not only me but also my bank. Collaborating with other people from across the state, learning from one another, and then bringing it all back to my institution to share with others are just a few rewarding takeaways from BOLT.  

BOLT is energizing, educational, and a great way to learn from your peers. I can’t wait to see what’s in store for us at the BOLT Summer Leadership Summit! This day-and-a-half conference is sure to have a stacked agenda with thought-provoking ideas and practical information that you can take back to your bank. I hope to see you there! June 11-12 at the Kalahari in Wisconsin Dells. 

Kerstyn Hendricks is AVP-Signature Banker with National Bank of Commerce in Superior and serves on the WBA BOLT Section Board of Directors.

 

By, Lori Kalscheuer

Community and regional banks need to remain competitive in the rapidly evolving payments market by offering secure, real-time payments.

We live in a "give it right now, need it yesterday" age. We can browse the web and watch videos on our smartphones and we can order items from Amazon that sometimes arrive on the same day, but banks have often struggled with meeting the demands of the digital age. Offering real-time payments to their customers is one way to meet the needs and expectations of customers in an increasingly "on demand" world. 

Although Americans still rely on cash, credit cards, and paper checks to pay bills and for goods and services, people have increasingly adopted electronic payment methods offered by fintechs, such as Venmo and PayPal, for seemingly instant payments, or have migrated to retailer-specific payment options, such as the Starbucks card and mobile app for convenience or rewards perks. Meanwhile, Apple Pay and Google Pay are gaining acceptance, which puts a layer or two (or three) between the payments relationship banks have historically shared with their customers. 

With all of these changes in the ways customers prefer to make payments, where does that leave banks? And for small businesses and bank customers who are looking for ways to make real-time payments that fit their lifestyle, what are their newer options? 

Let's first focus on why businesses and consumers are searching for ways to make real-time payments. Tech savvy small businesses, their customers, and suppliers need a faster and more robust way to pay bills, manage their cash flow, and protect themselves from hackers. Although we won't be in a totally cashless society in the foreseeable future, financial institutions of all sizes are working to allow customers to send payments the way they want to send them—this includes not only the method (cash, check, electronic), but also the timing (next day, same day, or real time). 

Small business gains with real-time payments
Real-time payments for goods and services and for payroll is not just for cutting-edge internet retailers. Small businesses see the benefits of instant payments as well. If your client runs a small business—say, a cozy gastro pub, plumbing company, or family restaurant—the owners often have to pay suppliers with either cash, a paper check, or credit card. Often these payments have to be made at the time of delivery from the owner after he or she counts in the inventory and signs for the goods. If you are a restaurant owner and the payment is for cases of beer or wine, you cannot leave this to the teenage server or host. 

With real-time payments, small business owners can avoid handing over a stack of cash or cutting a check by clicking on an icon on their smartphone or tablet. Through a trusted financial institution, the money is transferred in real-time with immediate verification to the sender that good funds have been transferred into the receiver's account. Traditional payment methods can take multiple business days to confirm and clear. Explaining the delays that may be associated with a traditional payment isn't an easy conversation for a small business owner to have with a suppliers on the Friday of a three-day weekend. 

Real-time payments, if integrated with a small business' accounting software or vendor management solution, also reduce the costly back-office tracking of invoices and reconciliation process. For instance on the RTP® network offered by The Clearing House, invoices and communication between the biller and receiver can be sent along with the transaction, which essentially creates the foundation for a real-time cash management system for small businesses. Real-time payments can add a real-time, up-to-the-minute view of a small business' cash flow and immediately update back office tracking systems. 

Employers are also looking for greater efficiencies and flexibility in the payroll process. All employers face emergency payroll situations where a payment doesn't go through for some reason and the employee needs to be paid immediately on pay day. Today, many small businesses will cut a check that the employee would need to take to the bank, or issue a same-day ACH payment, if possible. But what happens if the employee only realizes on a holiday or a weekend that their payroll deposit didn't go through? Most often, they would have to wait until the next business day to receive payment, which isn't ideal from the employee or employer's perspective. 

Likewise, some employers, such as gig economy companies or businesses in extremely tight labor markets, are looking to provide daily payroll as an incentive or to retain employees. And lastly, some states require employees to be paid in full immediately on the day they are terminated.

Real-time payments can also boost a small business owner's reputation. If they are known as a slow payer—one that takes days for the payments to come through—the word will spread in a strong economy and they may find themselves having a hard time hiring contract workers or vendors/suppliers for the next event or project. 

Consumers benefit from RTP
The success of PayPal and its "mobile first" subsidiary Venmo have blazed a path for Peer to Peer payments. CNBC reports that the P2P app—which spawned the phrase "Venmo me"—processed $62 billion in payments in 2018 and is poised to reach $100 billion by the close of 2019. Other P2P apps like Google Pay and Apple Pay are seeing growth as well. 

This means there are real opportunities for community and regional banks to step in and provide secure real-time P2P services to customers.

undefined

The RTP landscape
The real-time payments landscape may appear to be crowded with well-known and established fintechs, impressive apps, and fresh-faced upstarts, but banks still have time to act. 

As an alternative to fintech apps, Zelle, another P2P provider, is featured in banking apps for many financial institutions. While it may not be a household name, Zelle has proven to be even more popular compared to Venmo: In 2018, Zelle processed $122 billion in P2P payments, which is nearly double Venmo's $62 billion. 

Other so-called "faster payments" solutions include card or "Push to Card" payments and same day ACH. Push payments allow customers to send money directly to merchants either on a one-time or recurring basis. Likewise, lenders can push payments to a borrower's debit or prepaid card. Push payment providers boast of shorter settlement times and lower costs. And major players are taking notice. Push to card payments represent a $10 trillion opportunity in the United States, according to Visa.

Banks, large and small, are taking notice of the faster payment trends and are signing on to the RTP network provided by TCH. More than 51% of U.S. accounts already are able to receive RTP payments, and the number continues to grow.

The US Federal Reserve is also stepping into the faster payments market with its proposed FedNow system. Currently projected to debut in 2022 or 2023, the program aims to offer real time payments via a government built and operated system. How a new Federal Reserve payments system will fare once it debuts remains to be seen. Currently the Federal Reserve hasn't released many specifics about FedNow, as it is still under development. 

undefined

How a bank joins the real-time payments revolution
Small community and regional banks might feel that the real-time payments train has left the station. Hardly. There are plenty of business and technology resources to help community and regional players offer cutting-edge payment systems to their customers today.

In fact, companies located right here in Wisconsin are already helping banks looking to join the real-time payments revolution. Bankers' Bank of Wisconsin will play a key role in faster payments as a Funding Agent for community banks participating in the RTP network, and will participate as an early adopter of the technology. As a Funding Agent, Bankers' Banks will fund and manage positions in the RTP network joint account on behalf of its respondent community bank customers. This allows the bank to lower the requirements for participation and provide additional features and benefits around settlement and management of customers' RTP network participation. Bankers' Bank has chosen to work with CGI, a global end-to-end IT and business consulting services partner and leader in innovative payment programs and solutions, to develop a one-of-a-kind funding solution that manages the funding for settlement in the RTP network joint account for Bankers' Bank clients.

Another local company engaged in the changes is UFS, which provides technology and services exclusively to community banks. UFS, which was founded and is owned by twenty Midwest community banks, sees a unique role as a technology outfitter with a focus on guiding and empowering banks through payments change.  By providing freedom and flexibility to innovate, along with access to technology solutions and payments networks, UFS can focus on improving the operational processes and integration that allows banks to execute on their real time payments strategy with confidence.

Why make the move? To maintain customer relationships, community banks need to remain competitive by offering services that meet customer needs such as real-time payments. Not doing so risks losing the deposits that are at the heart of community bank business models. As any small bank knows, customers don't mind having money in different financial institutions so long as they can readily access it and can easily pay bills or pay a friend or family member quickly. With TCH's RTP network, which is available to financial institutions of all sizes now, banks can remain competitive and ease implementation time and expense with little to no technical adoption on the part of the bank by leveraging third-party providers like Bankers' Bank of Wisconsin, UFS, and others. Smaller financial institutions may not have the deep pockets that larger financial institutions have when it comes to making technology investments, but they can and do work with established core banking platform providers, many of which are actively rolling out real-time payments capabilities on the RTP network for their customers. 

And your bank is not the only financial institution mulling the move to real-time payments. According to the 2020 Real-Time Payments Report from Levvel, a technical execution services provider and consultancy, a large majority of financial institutions are prioritizing real-time payments over the next 12 to 18 months. Currently, 74% of FIs are now in progress with or considering the RTP network for at least one of their customer segments to meet growing demand and gain a competitive advantage. A majority—53%—are either planning or have completed a significant technology upgrade or a full digital transformation to offer real-time payments. Nearly three quarters—72%—say they will need to rely on third-party technology providers to help implement real-time payments. Further, 84% indicate they will use real-time payments to drive other technology changes.

Every journey starts with a single step
We are in the era of real-time payments and many banks are joining the real-time payments revolution. 

"Financial institutions and their customers like the benefits of real-time payments. They like to see the data, information and the clarity around the transactions," said Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group, in a recent podcast entitled, "A 5-Step Plan for Adopting Real Time Payments." 

She added that it's a "very interesting time for banks to be in real-time payments." 

Mills is vice president of RTP Network Business Development at The Clearing House in Chicago, a banking association and payments company that is owned by the largest commercial banks and dates back to 1853.
Skrum is WBA communications manager.

Bankers' Bank: Wisconsin Connections to Real-Time Payments

Bankers' Bank is becoming a Funding Agent for depository institutions looking to provide real-time payments capabilities to their customers. This will be through the RTP® network developed by The Clearing House (TCH).

As a Funding Agent, Bankers' Bank will fund and manage positions in the RTP network joint account on behalf of its respondent community bank customers. This allows them to manage the requirements for participation and provide more features and benefits around settlement and risk of customers' RTP network participation. 

Bankers' Bank has chosen CGI, a global end-to-end IT and business consulting services partner, to develop a funding solution that manages the funding for settlement in the RTP network joint account for Bankers' Bank clients.

To ensure banks have the tools necessary to compete, Bankers' Bank is building a 24/7 liquidity management solution for RTP transactions. The tool will be incorporated into the suite of Cash Management solutions Bankers' Bank already provides. Overall, this will allow banks of all sizes to more easily participate, compete, and transact on the RTP network.

The RTP network provided by TCH is a system delivering 24/7 clearing and interbank settlement, including the real-time movement of money and enriched data between participating financial institutions. The RTP network currently reaches more than 50% of U.S. accounts for real-time payment receipt.

Bankers' Bank has gotten in on the ground floor of faster payments, from the evaluation stage with the Federal Reserve task forces, to today with The Clearing House's RTP Network® as a Funding Agent, and into the future with developing services like FedNow. Our focus is always on creating ways to make community banks competitive, offering the forward-looking solutions needed in tomorrow's payment landscape. By developing our Funding Agent solution for RTP, Bankers' Bank lowers barriers to entry for a bank looking to offer both incoming and outgoing faster payments. By using Bankers' Bank's existing cash management tools to access the RTP settlement Joint Account, our customer banks will be able to easily manage the funding of real-time transactions.

Implementing real-time payments represents the biggest change in transaction processing since Check 21, and is a once-in-a-generation opportunity to offer a completely new service. While none of the existing payment rails are going away anytime soon, there are use cases that faster payments are uniquely suited to which community banks will want to make available to their consumer and small business customers. And this is just the beginning. "Bankers' Bank is committed to combining all of the services of a correspondent bank with the flexibility and capabilities of a technology company. To serve our bank customers we are committed to be both," said Matt Sitkowski, EVP/chief financial officer at Bankers' Bank.

Bankers' Bank, "Always your partner, never your competitorTM," is a WBA Gold Associate Member.

UFS, LLC: Wisconsin Connections to Real-Time Payments

It is an exciting time for community banks as innovations in payments continue to accelerate, creating many new options for banks. With multiple and growing options over the next five years, there will be choices that align with each bank's strategy and local community's needs. Often, the fintech innovators focus on the customer experience over the process. If the bank owns the business or consumer's core checking relationship, they get control of the process, data, and settlement. Improvements in real-time payments will likely increase the importance of the deposit account, as the disparate application's separate balance functions are no longer needed. At the same time, the complexity of managing the growing list of payments networks, end user's options, and payments exceptions in real-time will increase.

UFS's role in this evolution is to be the technology outfitter and guide, in a way that provides tools, market information, risk management, and innovations in the back-room process so that community banks retain flexibility, and remain in control and confident during this evolution. As banks gear up to support the real-time settlement and reporting needs of their customers, the value of a local, community bank relationship will be enhanced.

A key function of UFS in the 24×7 real-time payments ecosystem is to ensure accurate balances and settlements in a way that minimizes fraud and risk. Risk management is and will continue to be a key role played by bankers as they create confidence for their customers.

In addition, Mike Venaccio, UFS Product and Architecture executive noted: "In the context of changes in the payments market, we see the value of deposit balances being superseded by the value of the data. Almost every non-bank entering the faster payments space is prioritizing data collection. UFS is engaged in ensuring both customer confidentiality and empowering banks to leverage the data in a way that prioritizes the relationships with businesses and consumers."  

Mike Tenpas, UFS CEO clarified: "Ultimately as the technology outfitter for community banks, our job is to ensure flexibility and freedom in the options banks choose as the industry evolves, and wrap those options with process in a way that creates confidence for bankers to explore and listen to their customers for the ways that real-time payments will impact their financial lives."

UFS, LLC, a community created by bankers for bankers, is a WBA Silver Associate Member. 

By, Amber Seitz