Four Arkansas Community Development Banks Receive Critical Funding to Stimulate Economic Growth Throughout the State September 21, 2017
The US Department of Treasury’s Community Development Financial Institutions (CDFI) Fund awarded $3.5 million to four Arkansas banks this week for reinvestment in distressed communities to support small business lending and promote affordable housing, neighborhood revitalization, and expansion into new geographic markets. The recipients, all CDFI-certified, were FBT Bank & Mortgage, FNBC Bank, Bank of Lake Village, and Southern Bancorp.
Mississippi, Arkansas, and Louisiana banks received the largest proportion of the CDFI funds. The awards come at a time when more communities are falling further behind economically. Last week, the US Census Bureau released its annual benchmark data on income, poverty, and health insurance for 2016, which revealed that income inequality continues to rise. Arkansas is among the top ten states with the highest poverty rates.
Last year, CDFI Program recipients used their awards to:
- Finance over 13,300 businesses
- Provide funding for over 33,500 affordable housing units
- Provide over 427,000 individuals with financial literacy or other training
Click here to view more information about the FY 2017 CDFI Program awardees.
ABA Supports Basel III Pause, Recommends Changes to Capital Framework September 21, 2017
ABA yesterday submitted comments on a recent joint proposal by regulators to pause the transition to the Basel III capital framework for banks not using the Basel advanced approaches. The proposal -- which was requested by ABA in a letter submitted in June -- would halt the full transition to the Basel III treatment of mortgage servicing assets, certain tax deferred assets, investments in the capital of unconsolidated financial institutions and minority interest, pending a new rulemaking.
ABA supported the delay, noting that now is “an appropriate time to consider the effectiveness of prudential supervision standards… with a view toward simplifications and improvements that will not compromise safety and soundness.” ABA also called upon the regulators to expand the freeze to all banks noting that “[s]implification of the regulatory capital standards under consideration is important for all banking organizations, regardless of size.”
As the regulators work on a further proposal to adjust the overly complex capital rules, the association recommended several substantive changes to the Basel framework. Specifically, ABA called for changes to the treatment of MSAs, DTAs and holdings of regulatory capital instruments, including eliminating or raising certain deduction thresholds. ABA also urged the agencies to adjust the 150 percent risk weight given to high volatility commercial real estate; exclude unrealized gains and losses from banks’ capital calculations; remove restrictions on distributions for Subchapter S banks; and revise its methodology for securities financing transactions and its treatment of securities firms, among other things. Read the letter.
CFPB Harmonizes Regs B and C September 21, 2017
The Consumer Financial Protection Bureau yesterday modified the Equal Credit Opportunity Act (Regulation B) to provide flexibility for lenders around the collection of applicants’ demographic data under the Home Mortgage Disclosure Act (Regulation C). Reg B previously prohibited creditors from collecting information on consumers’ race or ethnicity, except to the extent required to monitor compliance with ECOA or comply with HMDA. The permissible inquiries under Reg B included only aggregate racial and ethnic categories. However, under the new HMDA rules, banks must permit applicants and borrowers to self-identify using disaggregated ethnic and racial categories.
Yesterday’s changes permit creditors to self-identify using disaggregated categories beginning on Jan. 1, 2017, enabling institutions to use Fannie Mae and Freddie Mac’s new Uniform Residential Loan Application prior to January 2018. The rule includes other optional model forms to assure compliance with Regulation B requirements. It also allows institutions not subject to HMDA reporting requirements to choose on an “application-by-application basis” between two approaches to collecting personal demographic data: either the more limited, aggregate race and ethnicity category required by Reg B, or the disaggregated and more expansive categories required for HMDA reporting institutions under Reg C effective in 2018.
The rule does not add the 2016 URLA to the Regulation B appendix; according to the bureau, that form is subject to a separate Federal Register notice that will be issued by the CFPB. in 2018. Read more.
CFPB Proposes Changes to Publicly Reported HMDA Data September 21, 2017
The CFPB yesterday issued policy guidance on the loan-level Home Mortgage Disclosure Act data it will make available to the public under the revised HMDA data collection rules, which take effect in 2018.
Noting concerns over consumer identity protection -- which ABA raised several times to the bureau in previous comments -- the CFPB is proposing to not publicly disclose a number of data points, including the universal loan identifier, the application date, the date of action taken by the bank on a covered loan or application, the address of the property securing the loan and the credit score or scores relied on in making the credit decision.
The bureau also proposed changes that would reduce the precision of values reported for several data fields, such as the amount of the covered loan applied for, the age of an applicant or borrower, or a borrower’s debt-to-income ratio.Read more.
ABA Urges Support for Hurricane Irma Relief Effort September 18, 2017
ABA President and CEO Rob Nichols on Friday announced that the association will contribute $100,000 for Hurricane Irma relief, as it did a few weeks ago after Hurricane Harvey. “Hurricane Irma has devastated communities in Florida and beyond in much the same way Harvey affected Texas,” said Nichols. “Knowing the need for relief is just as great, and even more dispersed, ABA has pledged to donate $100,000 to assist those harmed by Irma.”
The association will also match all ABA employee contributions to Irma relief efforts. ABA consulted with the Florida Bankers Association in directing its donation to the Florida Disaster Fund. However, ABA is matching employee contributions to hurricane relief in any area affected by Irma, including Georgia, Puerto Rico and the U.S. Virgin Islands.
In the wake of Harvey, ABA employees contributed $21,000 for relief, which ABA will match -- bringing the total contribution from ABA and its employees to more than $142,000. Learn more about and donate to the Florida Disaster Fund.
FTC Confirms Investigation into Equifax Breach September 15, 2017
The Federal Trade Commission yesterday confirmed that it has opened an investigation into the Equifax data breach disclosed last week. “The FTC typically does not comment on ongoing investigations,” FTC spokesman Peter Kaplan told Politico. “However, in light of the intense public interest and the potential impact of this matter, I can confirm that FTC staff is investigating the Equifax data breach.
Credit reporting bureaus like Equifax are subject to the consumer data privacy rules under the Gramm-Leach-Bliley Act, and the FTC enforces these rules for nonbank companies. The breach, which affected an estimated 143 million Americans as well as additional foreign nationals, is the subject of intense scrutiny on Capitol Hill. Equifax’s CEO has been summoned to testify before the House Energy and Commerce Committee on Oct. 3. Additional hearings are expected.
ABA resources on the Equifax breach include a customer FAQ, a message for banks to use on their website and talking points to help respond to media inquiries. In addition, ABA’s Crisis Communications Toolkit provides general data breach talking points, consumer tips, an FAQ for frontline staff, social media posts and more.
View the sample website language and FAQ.
ABA Concerned about Feasibility of Small Biz Data Collection September 15, 2017
View the talking points.
Access the Crisis Communications Toolkit.
As the Consumer Financial Protection Bureau prepares to implement Section 1071 of the Dodd-Frank Act -- which calls for the bureau to collect data on women-owned, minority-owned and small businesses -- ABA expressed concern yesterday that the data collection will prove unable to fulfill its statutory objectives of providing insight on fair lending and community development needs.
“Small business lending at banks is highly individualized, and underwriting and loan pricing depend on many heterogeneous variables that are inherently unsuitable for mass-data fair lending analysis,” ABA said. “[T]he great variations and unique attributes of individual small business loans will make legitimate comparisons excessively difficult, if not impossible.” Moreover, once such a database is established, its inherent exposure to statistical manipulation could be used to “contrive assertions of discrimination in small business lending.”
ABA urged the bureau to partner with the Small Business Administration to study to what degree the data collection envisioned would support fair lending enforcement and promote community development. ABA also provided feedback on a number of matters in a May 2017 request for information from the bureau. In addition to ABA's letter, several state bankers associations -- including those in Georgia, Oklahoma, Missouri, Maryland, Nebraska and Pennsylvania -- filed comments.
In a white paper for the Treasury Department in response to President Trump's executive order on financial regulation, ABA said that Section 1071's conflation of consumer and commercial lending is misguided and that Congress should repeal the provision. "We recommend the elimination of any vestige of Bureau regulatory, supervisory or enforcement authority over commercial credit or other commercial account and financial services," ABA said at the time. Read the comment letter.
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