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Fax: 501.376.9243
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Regulatory Comments

Click below to find background pertaining to certain regulatory proposals currently under consideration. We ask that you use this information as a basis to write your personal comment letter and send it to the appropriate regulator(s).

February 7, 2011

FDIC Finalizes New Assessment System to Take Effect in Q2
The FDIC Board at its meeting this afternoon approved a final rule that changes the assessment base from domestic deposits to average assets minus average tangible equity, adopts a new large-bank pricing assessment scheme, and sets a target size for the Deposit Insurance Fund.

The final rule combines November’s proposals on the assessment base and large-bank assessment pricing scheme, and an October proposal on the DIF. The changes will go into effect beginning with the second quarter and will be payable at the end of September.

The rule -- as mandated by the Dodd-Frank Act -- finalizes a target size for the Deposit Insurance Fund at 2 percent of insured deposits. It also implements a lower assessment rate schedule when the fund reaches 1.15 percent (so that the average rate over time should be about 8.5 basis points) and, in lieu of dividends, provides for a lower rate schedule when the reserve ratio reaches 2 percent and 2.5 percent.

Also as mandated by Dodd-Frank, the rule changes the assessment base from adjusted domestic deposits to a bank’s average consolidated total assets minus average tangible equity. The rule defines tangible equity as Tier 1 capital. The rule requires banks under $1 billion in assets to report average weekly balances during the calendar quarter, unless they elect to report daily averages.

The rule lowers overall assessment rates in order to generate the same approximate amount of revenue under the new larger base as was raised under the old base. The assessment rates in total would be between 2.5 and 9 basis points on the broader base for banks in the lowest risk category, and 30 to 45 basis points for banks in the highest risk category.

The FDIC noted that “[w]hile the rule is overall revenue neutral, it would, in aggregate, increase the share of assessments paid by large institutions, consistent with the express intent of Congress.” Based on Sept. 30, 2010, data, the FDIC said that the share of overall dollar assessments paid to FDIC would increase from 70 to 79 percent for banks over $10 billion and from 48 percent to 57 percent for banks over $100 billion.

The FDIC also acknowledged that “many large institutions would experience a significant change in their overall assessment.” The FDIC reported that, under the combined effect of both the assessment base change and the new large bank risk-based formula, 51 banks over $10 billion would pay more and 59 would pay less. The FDIC also noted that only 84 banks under $10 billion would pay higher assessments.

The rule eliminates the adjustment to the rate paid for secured liabilities, including Federal Home Loan Bank advances, since these will be part of the new assessment base. The proposal also creates a new depository institution debt adjustment that increases the assessment rate of an institution that holds long-term unsecured debt issued by another insured depository institution. This adjustment amounts to 50 basis points for every dollar of long-term unsecured debt held in excess of 3 percent of Tier 1 capital.

The rule also changes the amount of, and cap on, the unsecured debt adjustment to the assessment base and eliminates Tier 1 capital from the definition of unsecured debt.

The final rule also creates a scorecard-based assessment system for banks with more than $10 billion in assets. The scorecards include financial measures that the FDIC believes are predictive of long-term performance. In a change from the earlier proposals, the brokered deposit adjustment will not apply to banks over $10 billion that are well-capitalized and CAMELS 1 or 2, consistent with the treatment for smaller banks. Also, the “noncore funding to total liabilities” ratio is eliminated from the loss severity score and the liability run-off rates have been recalibrated. The FDIC will consider changes in the brokered deposit adjustment after completing a study on brokered deposits due in July, as mandated by Dodd-Frank.

The FDIC has issued revised assessment calculators to help banks budget for premiums under the new system. Go to the calculators. 

Read more. Read the final rule. 


February 1, 2011

Comment letter regarding the Federal Reserve’s Regulation Z proposal on jumbo loans and mandatory escrow requirements

January 24, 2011

SEC OKs New Rules Regulating Asset-Backed Securities
The Securities and Exchange Commission last week approved two new final rules regulating asset-backed securities. One rule requires asset-backed-securities issuers to disclose the history of requests they received and repurchases they made related to their outstanding asset-backed securities. The second rule requires issuers to perform a review of assets underlying those securities and disclose information relating to the review.

Read more.  Read the disclosure-history rule.  Read the assets-review rule. For more information, contact AmBA 's Cris Naser.

January 11, 2011

Federal Reserve Board NPRM on Interchange
On December 16, the Federal Reserve Board released a notice of proposed rule making on new Regulation II, Debit Card Interchange Fees and Routing, which established interchange fee standards and prohibits issuers and networks from restricting the number of network over which a transaction may be processed. Comments are due by February 22, 2011. To view the notice,  click here.


December 23, 2010

Fed Issues Interim Rule Amending Reg Z to Clarify Previous Rule
The Federal Reserve yesterday issued an interim rule amending Regulation Z that clarifies certain aspects of its Sept. 24 interim rule. The Sept. 24 interim rule implements Mortgage Disclosure Improvement Act provisions -- effective Jan. 30 -- requiring mortgage lenders to disclose examples of how a loan’s interest rate or monthly payments can change.

Under that rule, lenders’ cost disclosures must include a payment summary in the form of a table stating the initial rate and corresponding periodic payment and, for adjustable rate loans, the maximum rate and payment that can occur during the first five years, as well as a “worst-case” example showing the maximum rate and payment possible over the loan’s life.

Yesterday’s interim rule clarifies that creditors’ disclosure should reflect the first rate adjustment for a “5/1 ARM” loan because the new rate typically becomes effective within five years after the first regular payment due date. It also corrects the requirements for interest-only loans to clarify that creditors' disclosures should show the earliest date the consumer's interest rate can change rather than the due date for making the first payment under the new rate. Finally, it clarifies which mortgage transactions are covered by the special disclosure requirements for loans that allow minimum payments that cause the loan balance to increase.

Until Oct. 1, 2011, creditors have the option of complying with either the Sept 24 interim rule as originally published, or yesterday’s revised version. After that, compliance with the revised version will be mandatory. There will be a 60-day comment period on the revised version after its publication in the Federal Register. Read more.  Read the revised interim rule.
December 17, 2010

Fed Proposes ‘Reg II’ to Implement Debit-Card Interchange Price Controls
As reported in yesterday’s AmBA Daily Newsbytes special edition, the Federal Reserve issued a proposal to implement a provision in the Dodd-Frank Act -- the AmBA-opposed Durbin amendment -- that requires the agency to set debit-card interchange fees so they are “reasonable and proportional” to the cost of the transaction. AmBA believes the Fed interpreted the statute very narrowly, and that the proposal – dubbed Regulation II -- would significantly reduce banks’ debit-card interchange revenue if it is finalized in its current form.

The proposal outlines two alternatives for computing a “reasonable and proportional” fee. Under the first, each issuer would be permitted to determine its maximum allowable fee based on its costs -- with a safe harbor of 7 cents per transaction and a cap of 12 cents per transaction. The second alternative simply caps the fee at 12 cents per transaction. The Fed said that if either of these standards is adopted, the maximum allowable interchange fee received by covered issuers for debit card transactions would be more than 70 percent lower than the 2009 average.

Rather than include a specific adjustment for fraud prevention costs, the Fed proposed two general approaches to the fraud-prevention adjustment framework and solicited comments on each. (The Fed indicated that it may issue another proposal on the fraud issue after receiving comments on the approaches, and that a rule may not be finalized prior to the July 21, 2011 effective date.)

The first approach would require the Fed to identify innovative technologies that would reduce debit card fraud, and then determine the new technology’s implementation cost to establish an issuer’s fraud adjustment amount. The second approach would establish more general standards that an issuer must meet to be eligible for the adjustment.

The Fed’s proposal also includes two alternatives for implementing Dodd-Frank Act provisions that prohibit all issuers and networks from restricting the number of networks over which debit card transactions may be processed. One alternative would require at least two unaffiliated networks per debit card, and the other would require at least two unaffiliated networks per debit card for each type of cardholder authorization method (such as signature or PIN).

Though the rule technically does not apply to institutions with less than $10 billion, AmBA is concerned that the price controls will harm community banks, which will be pressured by the marketplace to lower their own interchange rates. “The [proposed] rules … are the result of retailers’ efforts to get Congress to interfere in market pricing, and will result in diminished revenue that banks currently use to fight fraud, make loans, and provide low-cost basic banking services,” AmBA President and CEO Ed Yingling said. “They will also discourage further innovation in the payments system.”

Comments on the proposal are due Feb. 22. The rule must be finalized by April 21, and will take effect July 21. Read Yingling’s statement.  Read the Newsbytes special edition. For more information, contact AmBA 's Ken Clayton.

December 16, 2010

Fed Issues Price-Control Proposal on Debit-Card Interchange Fees
The Federal Reserve today issued a proposal to implement a provision in the Dodd-Frank Act -- the AmBA-opposed Durbin amendment -- that requires the Fed to set debit-card interchange fees so they are “reasonable and proportional” to the cost of the transaction. AmBA 's assessment of the proposal is that the Fed took a very narrow reading of the statute and that if finalized as proposed, the rule would result in a significant reduction in banks' debit-card interchange revenue.

The proposal outlines two alternatives for computing a “reasonable and proportional” fee. Under the first alternative, each issuer would be permitted to determine its maximum allowable fee based on its costs -- with a safe harbor of 7 cents per transaction and a cap of 12 cents per transaction. The second alternative simply caps the fee at 12 cents per transaction.

Rather than include a specific adjustment for fraud prevention costs, the Fed’s proposal sets forth two general approaches to the fraud-prevention adjustment framework and asks several questions related to the alternatives. The first approach would require the Fed to identify innovative technologies that would reduce debit card fraud and then determine the costs of implementing the new technology in order to establish an issuer’s fraud adjustment amount.

The second approach would establish more general standards that an issuer must meet in order to be eligible for the adjustment. The adjustment would be set to reimburse the issuer for some or all of the costs of an issuer’s current fraud-prevention and data-security activities and the costs of research and development for new fraud-prevention techniques, perhaps up to a cap.

AmBA , which strenuously opposed the Durbin amendment, said that the rule relieves retailers from the responsibility of paying their fair share for a card payments system that offers them tremendous benefits, and that consumers would pay the price.

“The rules proposed today are the result of retailers’ efforts to get Congress to interfere in market pricing, and will result in diminished revenue that banks currently use to fight fraud, make loans, and provide low-cost basic banking services,” said AmBA President and CEO Ed Yingling. “They will also discourage further innovation in the payments system.”

mThough the rule technically does not apply to institutions with less than $10 billion, AmBA is concerned that the price controls will harm community banks, which will be pressured by the marketplace to lower their own interchange rates. The banker co-chairs of AmBA ’s Interchange Task Force relayed this concern in a recent letter to the Federal Reserve, as did several members of Congress.

Comments on the proposal are due Feb. 22, 2011. The rule must be finalized by April 21, and will take effect July 21.

AmBA ’s Interchange Task Force -- composed of bankers from institutions of all asset sizes -- has taken a leadership role in AmBA ’s aggressive fight to protect banks’ vital interchange revenue stream, and to defend against further government intrusion into the pricing of bank products.

Read more.
Read the proposal.
Read the AmBA Interchange Task Force letter to the Fed.
See who serves on the AmBA Interchange Task Force.
For more information, contact ABmA 's Ken Clayton.

November 20, 2010

FICO Payments Will Be Calculated on the New Assessment Base
AmBA has confirmed with the FDIC that banks’ Financing Corporation obligations will be calculated according to the new assessment base set by the Dodd-Frank Act: average assets less Tier 1 capital.

Under the current assessment base, the annual assessment rate for the FICO bonds is 1.04 basis points. Under the broader new assessment base, which will go into effect in 2011’s second quarter, it is estimated that the rate for banks will decline to 0.66 basis points while raising the same amount to cover the FICO interest obligation.

The change in the assessment base will mean that some large institutions will pay much more of the FICO assessment, while most banks will pay somewhat less. Read more on AmBA’s Dodd-Frank Tracker.

November 9, 2010

FDIC Proposes New Assessment System To Take Effect in Q2
The FDIC Board this morning issued a proposed rule that would change the assessment base -- beginning with the second quarter and payable at the end of September -- from adjusted domestic deposits to a bank’s average consolidated total assets minus average tangible equity, as required by the Dodd-Frank Act. The proposal defines tangible equity as Tier 1 capital.

Since the new base is larger than the current base, the FDIC proposal also would lower assessment rates to between 2.5 and 9 basis points on the broader base for banks in the lowest risk category, and 30 to 45 basis points for banks in the highest risk category.

The proposal would eliminate the adjustment to the rate paid for secured liabilities, including Federal Home Loan Bank advances, since these will be part of the new assessment base. The proposal also would create a new depository institution debt adjustment (DIDA) that increases the assessment rate of an institution that holds long-term unsecured debt issued by another insured depository institution. The DIDA amounts to 50 basis points for every dollar of long-term unsecured debt held.

FDIC’s proposal also would change the amount of, and cap on, the unsecured debt adjustment to the assessment base; eliminate Tier 1 capital from the definition of unsecured debt; and tweak the formula for the current brokered deposits adjustment.

Separately, the board issued a revised proposal that would create a scorecard-based assessment rate for banks with more than $10 billion in assets and for large, highly complex institutions. The scorecards would include financial measures that are predictive of long-term performance.

The proposal replaces one issued by the Board in April and includes an adjustment to the treatment of brokered deposits and unsecured liabilities and eliminates higher rates associated with excessive reliance on secured funding. The new proposal follows AmBA ’s suggestion that subjective adjustments on the final rate assessed be limited.

 

Risk Category I

Risk Category II

Risk Category III

Risk Category IV

Large & Highly Complex Institutions

Initial base assessment rate

5-9

14

23

35

5-35

Unsecured debt adjustment*

(4.5)-0

(5)-0

(5)-0

(5)-0

(5)-0

Brokered deposit adjustment

0-10

0-10

0-10

0-10

Total base assessment rate**

2.5-9

9-24

18-33

30-45

2.5-45
Amounts for all risk categories are in basis points annually.
* The unsecured debt adjustment could not exceed the lesser of 5 basis points or 50 percent of an institution’s initial base assessment rate.
** Total base assessment rates do not include the proposed depository institution debt adjustment.

AmBA has learned that FDIC will have a new assessment rate calculator available on its website later this week. Both proposals will have a 45-day comment period upon publication in the Federal Register. Read the new assessment base proposal.  Read the large bank assessment system proposal. For more information, contact AmBA 's Rob Strand.

November 8, 2010

AmBA Comments on FSOC's Heightened Supervision Authority
The Financial Stability Oversight Council should apply comparable prudential standards to systemically important financial companies with similar activities or functions as part of its criteria for determining when nonbank firms would require heightened supervision, AmBA said in a comment letter Friday. AmBA was commenting on the FSOC's advance notice of proposed rulemaking intended to help the new agency develop metrics for designating when nonbank financial firms would require heightened supervision under its Dodd-Frank Act authority.

"The designation criteria should be sufficiently inclusive to ensure that a ... company will be subject to enhanced prudential standards when [its] failure ... would create material risk that a meaningful number of other financial companies would fail, suffer material financial distress that could bring them -- or an important activity or function -- to the point of [failure], or be unable to meet their obligations," AmBA said.

The association recommended that the FSOC focus on activities/functions and not types of financial companies, and also interconnection and risk of contagion. AmBA also said, among other things, that size alone is an insufficient proxy for systemic significance; flexibility to act as needed should be preserved; there should be an appropriate focus on foreign firms; and the FSOC should create a banking industry advisory council. Read the letter. For more information, contact AmBA 's Cathy McTighe.

November 5, 2010

 AmBA : ‘Volcker Rule’ Definitions Could Affect Traditional Banking
 AmBA is concerned that that a number of definitions in the Dodd-Frank Act’s “Volcker Rule” could be interpreted so broadly that they could affect traditional banking activities, and not address the rule’s intended focus to prevent significant conflicts of interest, the association said yesterday in a comment letter.

The letter was in response to the newly created Financial Stability Oversight Council’s request for comments to help it conduct a study and make recommendations on the Volcker Rule. The rule prohibits financial entities from engaging in proprietary trading activities, and from investing in and sponsoring hedge funds and private equity funds. The FSOC is required to make recommendations by Jan. 22, 2011, to guide coordinated agency rulemaking on the rule.

AmBA ’s comments focused on rule’s unintended consequences to the trust and asset management industry that could occur unless appropriate clarifications are made through the FSOC study and the regulatory process. For example, the Volcker Rule defines the term “sponsor” to mean acting as a general partner, managing member, or trustee of a fund. “If interpreted too broadly, this definition of ‘sponsor’ would capture situations where the banking entity acts as a directed trustee, among other situations,” AmBA explained.

AmBA also noted that the rule’s definitions of “hedge fund” and “private equity fund” are overbroad and encompass investment vehicles that are beyond the intended scope of the Volcker Rule. AmBA requested clarification so that vehicles commonly used by banking entities to facilitate permissible activities -- such as acquisition vehicles or joint ventures relating to a single underlying investment, finance subsidiaries, credit funds, employee pension funds, and bank-owned life insurance policies -- are not swept into the rule.

Read the letter. For more information, contact AmBA 's Lisa Bleier.

October 28, 2010

FDIC:  PROPOSED LONG-RANGE MANAGEMENT PLAN FOR DEPOSIT INSURANCE FUND
In order to implement a comprehensive, long-range management plan for the Deposit Insurance Fund, the FDIC has issued a notice of proposed rulemaking and request for comment on its proposal to amend its regulations to: implement the dividend provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act; set assessment rates; and set the designated reserve ratio at 2 percent.  Comments are due by November 26, 2010.


Final Rules

November 29, 2010

FDIC Finalizes Overdraft Payment Program Guidance
The FDIC last week issued final guidance on how the banks it supervises should implement and maintain oversight of automated overdraft payment programs. The guidance -- essentially unchanged from the FDIC’s Aug. 11 proposal -- says, among other things, that banks should closely monitor their automated programs, actively inform chronic overdraft users of alternatives and allow opt-outs from nonelectronic overdraft programs.

AmBA in a Sept. 22 comment letter strongly recommended that the FDIC refrain from imposing such requirements when the state of overdraft programs and customer experience with them is unknown. “Moreover, if and when compliance gaps do become apparent, we urge the FDIC work with the other banking agencies to draft interagency guidance to address them …,” AmBA said.

The association emphasized that establishing arbitrary definitions of “excessive or chronic use” coupled with mandated intervention, or requiring caps on the coverage elected by customers are supervisory expectations contrary to the policies of consumer choice embedded in the previous Federal Reserve regulations and are tantamount to rulemaking beyond the FDIC’s authority.

Rich Riese, director of the AmBA Center for Regulatory Compliance, said that while the guidance invokes some acceptable general principles, its tone and specifics threaten to heighten supervisory risks by setting expectations that overreach the authorized regulatory standards for overdraft programs.

“It creates an expectation of intensive monitoring with personal customer intervention on what could be a recurring schedule, when customers clearly understand that they've elected a program and are willingly incurring the fees,” Riese said. “On top of this, the expectation is that people will be harassed in person or by telephone about whether they really understand that they're paying overdraft fees.”

Read more.
Read the guidance.
Read AmBA’s comment letter.
For more information, contact AmBA 's Riese.

November 24, 2010

FinCEN Issues Final Rule to Strengthen SAR Confidentiality
The Financial Crimes Enforcement Network yesterday issued a final rule designed to clarify and strengthen Suspicious Activity Report confidentiality. The rule, among other things, clarifies that SAR information may be shared with law enforcement; underlying information may be shared as long as the SAR itself or its existence is not disclosed; and information may be shared with certain affiliates within the holding company to fulfill reporting obligations and Bank Secrecy Act monitoring.

FinCEN also issued, in concert with the final rule, an advisory and two guidance documents to help clarify when SAR data can be shared with an affiliate. The guidance basically allows the sharing of such data with a domestic affiliate if that affiliate is subject to SAR requirements and appropriate federal supervision. It also clarifies that such sharing is not permitted with a foreign affiliate.

The final rule will become effective 30 days after its publication in the Federal Register. AmBA will post an analysis on aba.com in the near future. Read more.  Read the final rule. For more information, contact AmBA 's Rob Rowe.


Final Rule to Protect Distressed Homeowners From Mortgage Relief Scams
The Federal Trade Commission issued a final rule Friday -- the Mortgage Assistance Relief Services Rule -- that bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable. The rule requires mortgage relief providers to make certain disclosures and forbids them from making false or misleading claims about their services.

The rule, which goes into effect Dec. 29, applies only to entities within the FTC’s jurisdiction, which excludes banks, savings and loans, and federal credit unions. It also includes an exemption for third parties -- agents and contractors of lenders and servicers -- that provide modification services in connection with a loan the lender or servicer holds or services. Read more.  Read the final rule. For more information, contact AmBA 's Virginia O’Neill.


November 15, 2010

 AmBA Files Comments on Jumbo Loan Escrow Proposal

On October 25, the AmBA filed comments with the Federal Reserve Board regarding the recent proposal under Regulation Z on jumbo loans and mandatory escrow requirements (published in the Federal Register, Vol. 75, No. 185, on Friday, September 24, 2010). While AmBA appreciates the Federal Reserve Board's proposal to adjust the threshold interest rate spread that triggers mandatory escrow for jumbo loans, the association expressed concern about the piecemeal approach regulators are taking to escrow and other mortgage provisions of the Dodd-Frank Act.

“The regulatory framework affecting mortgage lending has been undergoing intense reformation for the past two years, and the DFA will add additional restructurings, including a wholesale reorganization to integrate [Truth in Lending Act] and [Real Estate Settlement Procedures Act] rules,” AmBA said in its comment letter. “These changes are significant, and there is a very real risk that intermittent and uncoordinated rulemaking will overwhelm lender systems.

AmBA asked the board to delay immediate implementation of the proposed rule and to allow for voluntary compliance until other rules governing higher priced loans could be appropriately harmonized, or until compliance is required under Dodd-Frank. Read the letter.

For more information, contact AmBA 's Rod Alba or Vincent Barnes.


AmBA Weighs In on Credit Ratings Alternatives Proposal

While inadequacies in the issuance and use of credit ratings contributed to recent financial disruptions in U.S. markets, a complete abandonment of credit ratings is ill-advised and an over-reaction, AmBA said in a comment letter to the federal banking agencies. The letter was a response to an advance notice of proposed rulemaking regarding alternatives to the use of credit ratings in the risk-based capital guidelines of the agencies.

“Other provisions of the Dodd-Frank [Act] and changes in industry practice render unnecessary the abandonment of the use of credit ratings as an indicator of creditworthiness,” AmBA said, noting that Dodd-Frank requires new credit rating agency disclosures, enhanced SEC oversight and new liability standards on rating agencies.

Eliminating the use of credit ratings could complicate adoption of the internationally agreed-upon Basel III standards and pose problems for community and regional banks, since they generally do not have advanced analytical capabilities, AmBA said. The association instead recommended that the use of credit ratings be supplemented by banks’ own analytics, which should be appropriate to the size and complexity of the bank and its exposures. Read the letter. For more information, contact AmBA 's Mary Frances Monroe.

November 2, 2010

Final Rules Governing ATM AccessibilityOn Friday, July 23, 2010, Attorney General Eric Holder signed final regulations revising the Department’s ADA regulations, including its ADA Standards for Accessible Design. The official text was published in the Federal Register on September 15, 2010 and the rules go into effect on March 15, 2011.The regulations apply to public accommodations and commercial facilities, including banks.  Of particular interest to bankers is the modification of accessibility standards for automatic teller machines (ATMs).  However, the new standards will only need to be met going forward.  Facilities will not be required to retrofit in order to meet these standards.220 and 707 Automatic Teller Machines and Fare MachinesSection 707 of the 2010 Standards adds specific technical requirements for speech output, privacy, tactilely-discernible input controls, display screens, and Braille instructions to the general accessibility requirements set out in the 1991 Standards. Machines shall be speech enabled and exceptions are provided that cover when audible tones are permitted, when advertisements or similar information are provided, and where speech synthesis cannot be supported. The 1991 Standards require these machines to be accessible to and independently usable by persons with visual impairments, but do not contain any technical specifications.

October 29, 2010

FED PUBLISHES INTERIM APPRAISAL RULE
As mandated by the Dodd-Frank Act, the Federal Reserve has published an interim final rule that is intended to ensure that real estate appraisers can use their independent judgment in assigning home values, and that they receive customary and reasonable payments for their services. The rule also includes several provisions that protect the integrity of the appraisal process when a consumer’s home is securing the loan. The comment deadline is Dec. 27. The rule’s mandatory compliance date is April 1, 2011. For more information, contact AmBA 's Rod Alba.
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October 22, 2010

New Appraisal Rules Issued
On October 18, the Federal Reserve Board issued anticipated interim final rules on appraisal independence. This rulemaking was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which mandated that the Board issue regulations within 90 days of the Act’s passage. Access the Board’s draft interim regulation here.

The interim final rule implements rules aimed at preventing undue influence or pressure upon appraisers from persons with interests in the transactions, and are designed to protect the integrity of the appraisal process when a consumer's home is securing the loan. The final regulations contain the following general provisions:

November 10, 2010

Temporary Unlimited Coverage for Noninterest-Bearing Transaction Accounts Approved
In related news, the FDIC Board yesterday also approved a final rule that will implement unlimited deposit insurance coverage on noninterest-bearing transaction accounts beginning on Dec. 31, 2010, and ending Dec. 31, 2012, as mandated by the Dodd-Frank Act. This coverage replaces the unlimited coverage under the Transaction Account Guarantee Program.

Coverage under this program is confined to noninterest-bearing accounts and will not cover interest-bearing NOW accounts or Interest on Lawyers Trust Accounts -- IOLTAs. Banks that opted into the current TAG program are required to notify affected account-holders by year’s end that coverage on low-interest NOW accounts and Interest on Lawyers Trust Accounts will be limited to $250,000 (i.e., the general coverage for FDIC insurance) starting Jan. 1, 2011.

The FDIC followed AmBA ’s recommendation to clarify what counts as a “noninterest-bearing transaction account,” and adopted the branch and website notification the association suggested: NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION ACCOUNTS

All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC's general deposit insurance rules.

The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, money-market deposit accounts, and Interest on Lawyers Trust Accounts (“IOLTAs”).

For more information about temporary FDIC insurance coverage of transaction accounts, visit www.fdic.gov.Read more.  Read the final rule. For more information, contact AmBA 's Rob Strand.

  • Prohibition on coercion and other similar actions designed to cause appraisers to base the appraised value of properties on factors other than their independent judgment;
  • Rules to prevent conflicts of interest, prohibiting appraisers and appraisal management companies hired by lenders as of 10/10/10 from having financial or other interests in the properties or the credit transactions;
  • Prohibitions against extending credit based on appraisals if creditors know of violations involving appraiser coercion or conflicts of interest, unless creditors determine that the property values are not materially misstated;
  • Mandatory reporting requirements providing that creditors or settlement service providers that have information about appraiser misconduct, or information that appraisers have not complied with ethical or professional requirements, file reports with the appropriate state licensing authorities; and
  • Requirement to pay reasonable and customary compensation to appraisers who are not employees of the creditors or of the appraisal management companies hired by the creditors. The rule provides two “presumptions of compliance.”
Compliance with the new rule provisions will be mandatory on April 1, 2011. The Board is soliciting public comments, to be submitted 60 days after the interim final rule is published in the Federal Register. The rule is expected to be officially published in the Federal Register in the coming several days. 

For more information, contact AmBA 's Rod Alba.

October 21, 2010

Final Rule Modifies Effective Date of Gift-Card Disclosures
The Federal Reserve on Tuesday finalized an interim final rule -- published in the Aug. 17 Federal Register -- that implements recent legislation modifying the effective date of certain required disclosures that apply to gift cards. For gift certificates, store gift cards and general-use prepaid cards produced before April 1, 2010, the final rule delays the Aug. 22, 2010, effective date of the disclosures to Jan. 31, 2011 -- if several conditions are met. Read more.  Read the final rule.

October 13, 2010

Agencies Publish CRA Rule
The federal banking agencies yesterday announced that they had published in the Federal Register a joint final rule that implements two statutory changes to Community Reinvestment Act regulations affecting the evaluation of meeting community credit needs. The first change -- mandated by the Higher Education Opportunity Act -- requires the agencies to consider low-cost education loans made to low-income borrowers when assessing a bank’s record for meeting community credit needs. The second change allows the agencies to consider activities undertaken with minority- and women-owned financial institutions and low-income credit unions. The final rule is effective on Nov. 3. Read more.  Read the final rule.

September 30, 2010

Rule Offers CRA Credit for Higher-Ed Loans
The federal banking and thrift agencies yesterday issued a joint final rule that requires them to consider low-cost higher education loans made to low-income borrowers as a positive factor in assessing a bank’s record for meeting community credit needs under the Community Reinvestment Act. The rule -- mandated by the Higher Education Opportunity Act-- also allows the agencies to consider a bank’s capital investment, loan participation and other ventures with minority-owned banks, women-owned institutions and low-income credit unions as factors in assessing its CRA record. Read more.  Read the joint final rule.
Agency Contacts

State Bank Dept.
Arkansas Bank Department
 400 Hardin Road, Suite 100
Little Rock , AR   72211

FDIC
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
 550 17th Street, N.W.
Washington , D.C. 20429

OCC
Office of the Comptroller of the Currency
250 E Street, SW
Mail Stop 2-3
Washington , DC 20219

Federal Reserve
Ms. Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue
NW Washington DC 20551
OTS
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street, NW
 Washington , DC 200552
NCUA
Mary Rupp
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria , Virginia 22314–3428
FHFA
Mr. Alfred M. Pollard
General Counsel
Federal Housing Finance Agency
Attention: Comments/RIN 2590-AA27
Fourth Floor
 1700 G Street, NW
 Washington , DC 20552
HUD
Regulations Division, Office of General Counsel
Department of Housing and Urban Development
 451 7th Street, S.W.
 Washington , D.C. 20410
FTC
Federal Trade Commission
Office of the Secretary
Room H-135 (Annex E)
600 Pennsylvania Avenue, NW
Washington , D.C. 20580
FinCEN
Financial Crimes Enforcement Network (FinCEN)
Department of the Treasury
P. O. Box 39
 Vienna , VA 22183
SEC
Ms. Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
 100 F Street, NE
 Washington , DC 20549-1090
IRS
Internal Revenue Service
Post Office Box 7604
Ben Franklin Station
 Washington , D.C. 20044


Other
November 5, 2010

Fed Opens New Financial Stability Office
The Federal Reserve has established an Office of Financial Stability Policy and Research and named agency economist J. Nellie Liang as its director, the Fed said yesterday. The office, which will bring together economists, banking supervisors and markets experts, will coordinate Fed staff efforts to identify and analyze potential risks to the financial system and the overall economy.

It also will support the supervision of large financial institutions and the Fed’s participation on the Financial Stability Oversight Council. “The financial stability team will play an important role in implementing the [Dodd-Frank Act], in our oversight of systemically important financial institutions, and in our overall surveillance of the financial markets and the economy,” Fed Chairman Ben Bernanke said. Read more.

August 30, 2010

AmBA Asks Fed to Put Dodd-Frank Borrowing Disclosures in Context
AmBA on Friday asked the Federal Reserve to include a paragraph that would provide context to Dodd-Frank Act-mandated disclosures on certain loans or other financial assistance -- including Term Auction Facility borrowing -- the agency provided between Dec. 1, 2007, and July 21, 2010. The act requires the Fed to publish on its website by Dec. 1, 2010, the names of entities that received assistance; the type, amount, and date of assistance; the terms of repayment; and the rationale for each program offered.

AmBA President and CEO Ed Yingling pointed out in a letter to the Fed that during the period the disclosure-requirement covers, the regulators frequently urged all insured depository institutions to establish contingency funding plans and to test those plans -- including government funding sources.

“In response, healthy institutions participated in programs such as the Term Auction Facility in an abundance of caution to ensure that they could access the source of liquidity if they ever needed it,” Yingling said. “However, the disclosures mandated by the Dodd-Frank Act could lead to the erroneous impression that these institutions are in a troubled condition.”

There is nothing in Dodd-Frank that prevents the Fed from helping those who read the disclosures to understand their significance by placing the required information in context, he said. Yingling provided a sample paragraph the Fed could use to preface the disclosures which would explain that different institutions had different reasons for participating in the borrowing programs.

The sample paragraph would further say: “For instance, some institutions will have participated in an abundance of caution to test the bank’s ability to access back-up lines of liquidity in the event the liquidity ever was needed. Thus we urge caution about drawing inferences from the inclusion of a bank in the information provided below.” Read the letter. more information, contact AmBA 's Mark Tenhundfeld.


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