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May 11, 2018

House to consider Senate reg relief bill;
will put forward yet another package

Action in the House on Senate-approved financial institution regulatory relief legislation is expected by the end of May, leaders said this week, with even more reg relief legislation expected to move from the House to the Senate this month. S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, containing a number of provisions affecting credit unions -- is expected to be addressed this “work period,” which ends just before the Memorial Day holiday, House Speaker Paul Ryan said this week.

The bill is strongly supported by credit union and other financial institution trade groups. For credit unions, the bill would: Require NCUA annually to hold a public hearing and publish details on its budget; provide more flexibility in business lending; establish regulatory relief from integrated mortgage disclosure rule provisions; extend immunity from lawsuits for disclosure of financial exploitation of senior citizens.

The Senate bill was passed in March on a vote of 67-31 and has been waiting since then for consideration in the House. However, House leaders had indicated they wanted to amend the bill with their own legislation, which Senate leaders resisted (and, in fact, warned the House would lead to the bill’s ultimate collapse).

To address the House (and Senate’s) positions, a regulatory reform package in addition to S.2155 will be developed in the House, and sent to the Senate, leaders said this week. “We’ve got an agreement to be moving different pieces of legislation,” Ryan said this week, noting that the deal followed a meeting over the recess with Senate Majority Leader Mitch McConnell (R., Ky.). “We look forward to an additional reform package coming together that can pass the House and Senate this year,” McConnell said in a statement of his own this week. However, it’s not clear what will be included in the House bill or what it’s prospects are in the Senate.


In the meantime, this week the House adopted a Senate resolution “disapproving” 2013 guidance issued by the Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) on indirect auto lenders’ compliance with federal fair lending requirements. The guidance, issued in 2013 (in Bulletin 2013-02), gives the bureau’s views on the applicability of federal fair lending laws to “indirect” auto lenders’ compliance with the fair lending requirements contained in the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B. It relates to policies used by some indirect auto lenders that allow dealers to mark up the interest rate charged to the consumer above the indirect auto lender’s “buy rate.” According to the bureau’s 2013 bulletin, incentives created by such policies allow for a significant risk for pricing disparities on the basis of race, national origin or other prohibited bases.

Late last year, however, in response to a letter from Sen. Patrick Toomey (R-Pa.), the Government Accountability Office (GAO) found that the guidance was a rule subject to the 1996 Congressional Review Act. CRA allows Congress to overturn a rule within 60 business days of its effective date. The Senate passed the resolution last month on a 51-47 vote; the House passed it this week, 234 to 175. The Senate and House action marks the first time Congress has successfully used to the CRA to block an agency action taken years ago and outside of the window provided by law. President Donald Trump is expected to sign the resolution into law.

Statement of Administration Policy on S.J.Res. 57

CFPB Bulletin 2013-02


Total originated home loans for all financial institutions fell by about 12.4% (or more than 1 million) in 2017 from the previous year, according to mortgage lending transactions data released this week by the Federal Financial Institutions Examination Council (FFIEC). However, the FFIEC report also showed mixed results for credit union home lending last year. According to the reports (which covers Home Mortgage Disclosure Act (HMDA) data for 2017 submitted by financial institutions on or before April 18, 2018), home purchase loans at credit unions rose by 5.16% over 2016 results; home improvement loans were up 10.8%. However, the HMDA data showed, refinancings at credit unions were down by 20.2% from last year. For all financial institutions, the numbers show:

  • The share of home purchase loans for 1–4 family properties made to black borrowers rose from 6.0% in 2016 to 6.4% last year; the share made to Hispanic-white borrowers remained unchanged at 8.8%, and those made to Asian borrowers rose from 5.5% to 5.8%.
  • the share of refinance loans made to black borrowers increased from 5.0% in 2016 to 6.0% last year; the share made to Hispanic-white borrowers increased from 6.2% to 6.8%, and those made to Asian borrowers fell from 5.5% to 4.0%.
  • In 2017, black and Hispanic-white applicants experienced higher denial rates for conventional home purchase loans than non-Hispanic white applicants. The denial rate for Asian applicants is more comparable to the denial rate for non-Hispanic white applicants.

FFIEC Announces Availability of 2017 Data on Mortgage Lending


Three new summaries of “requests for information” (RFIs) issued by the federal consumer financial protection agency have been posted by NASCUS, focusing on the final three of the requests issued (out of the 12 total). The three summaries address RFIs about: bureau guidance and implementation support (comments due: July 2); consumer financial education (July 9); and, the bureau’s consumer complaint and consumer inquiry handling processes (July 16).

The three summaries outline for each RFI the areas the Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) seeks comment on; feedback on specific topic areas; and (among other things) suggestions for improvements in some areas.

BCFP Acting Director Mick Mulvaney began issuing the RFIs in January in his “call for evidence” from the public about how (or whether) the agency was doing its job. Following that, the agency issued the dozen RFIs, which (in total) have generated more than 3,000 comment letters to date. However, just under three in four (78%) of the comment letters generated were submitted in response to the first RFI issued, on “civil investigative demands” (CIDs) issued by the bureau. (According to the American Bar Association, a CID is a subpoena-like tool often used by consumer protection offices that tends to be expansive, typically seeking specified documents.) The latest RFI comment period to close was earlier this week on “Rules of Practice for Adjudication Proceedings,” which generated 33 comment letters.

The three RFIs summarized by NASCUS have (as of Wednesday) generated 147 public comments (eight for “guidance and implementation,” 29 for financial education programs, and 110 for “consumer complaint and consumer inquiry handling processes.”)

NASCUS Summary: Request for Information on guidance and implementation

NASCUS Summary: Request for Information on Consumer Financial Education

NASCUS Summary: Request for Information on Consumer Complaints and Inquiries


Six regulatory actions – including those proposed on “overdraft services” – have been moved to the “inactive list,” the BCFP notes in its spring 2018 rulemaking agenda, released Thursday. “The Bureau’s Acting Director (Mick Mulvaney) has decided to reclassify as ‘inactive’ certain other rulemakings that had been listed in previous editions of our Unified Agenda in the expectation that final decisions on whether and when to proceed with such projects will be made by the Bureau’s next permanent director,” the agenda states in a blog post. “This change in designation is not intended to signal a substantive decision on the merits of the projects.” The other five items on the “inactive” list include: Alternative Mortgage Transaction Parity (Regulation D); Supervision of Larger Participants in Markets for Personal Loans; Consumer Financial Civil Penalty Fund; Defining Larger Participants in Certain Consumer Financial Product and Service Markets; and Student Loan Servicing.

BCFP Spring 2018 rulemaking agenda


Just a reminder that June 1 is the effective date of a final rule that removes a timing restriction for mortgage closing disclosures that could prevent a lender from charging otherwise valid closing cost increases, the result of a revised rule by the BCFP. The rule change revises its Truth in Lending Act/Real Estate Settlement Procedures Act (TILA/RESPA) combined mortgage disclosures rule, sometimes referred to in the industry as the TILA/RESPA “black hole.” (It also revises the “Know Before You Owe” mortgage disclosures rule.) The rule addresses when mortgage lenders with a valid justification may pass on increased closing costs to consumers and disclose them on a closing disclosure. The rule change was approved in April.

BCFP Final Rule, ‘Know Before You Owe’ (Federal Register, May 2)


A new summary of the NCUA’s rule (adopted in March) for calculating credit unions’ pro rata share of a declared equity distribution for the federal savings insurance fund has been developed and posted by NASCUS.

Key issues contained in the final rule are outlined in the summary, including the two methodologies the rule establishes to govern future distributions from the National Credit Union Share Insurance Fund (NCUSIF). As the summary points out, the first methodology governs future distributions until Dec. 31, 2022 (“reflecting the agency’s determination that any NCUSIF distributions between now and the end of 2022 are related to the merger of the insurance fund with the TCCUSF and represents a rebate to insured credit unions of excess stabilization fund assessments.”). The second methodology, the summary notes, will govern distributions declared after Dec. 31, 2022.

In addition, the summary outlines: the “four-quarter average method” for determining an eligible financial institution’s pro rata share of the distribution; termination of NCUSIF insurance; distributions related to the Corporate System Resolution Program (CSRP); Calculation of pro rata share of NCUSIF distribution; and rules for newly chartered credit unions and conversion of insurance.

NASCUS Final Rule Summary: NCUSIF Equity Distributions


Additional intrigue about the future of NCUA Board Chairman J. Mark McWatters surfaced this week when a trade publication reported that he remains under consideration by the White House to be nominated as the next director of the BCFP. However, the report indicated, that nomination may be only a mechanism for keeping current Acting Director Mulvaney in the bureau job longer.

According to the American Banker (a trade publication), a McWatters nomination is under new consideration by the Trump Administration (after a nomination had been rumored early this year) as a method for keeping Mulvaney on the job at the BCFP. Possibly inspiring the nomination, the Banker reported: Mulvaney’s appointment as “acting” head of the consumer agency ends on June 22, unless a permanent successor to the BCFP post is nominated. (The Federal Vacancies Reform Act stipulates that an “acting” role may be filled only for six months.) However, once the nomination is made, the acting appointee can stay in office as long as the nomination is pending, the Banker reported, which could last for months.

Allowing Mulvaney to stay on the job beyond late June would let him to continue his efforts to direct changes at the agency (such as changing the commonly used name of the bureau to BCFP, and downsizing its funding request from the Federal Reserve). The White House had no comment on the report.

BRIEFLY: Curry takes on fintech role; 'Customer due diligence' rule takes effect; Cybersecurity Conference coming; Summit just over the horizon …

Former state regulator and U.S. Comptroller of the Currency Tom Curry has been appointed chair of the Milken Institute’s Fintech Advisory Committee; while in office at the OCC, he launched a debate over creation of federal charter for fintechs. The OCC continues to weigh the suggestion ... The Treasury's Financial Crimes Enforcement Network (FinCEN) sent out a reminder this morning that compliance with the new "customer due diligence" (CDD) rules begins today. FinCEN said it issued the CDD Rule, which amends Bank Secrecy Act regulations, to improve financial transparency and prevent criminals and terrorists from "misusing companies to disguise their illicit activities and launder their ill-gotten gains" ... The NASCUS/CUNA Cybersecurity Conference is just under a month away, June 3-5 in Nashville. This year’s program is the fifth straight year the two organizations have jointly sponsored the event, which examines cyber threats and the best practices for neutralizing them effectively and safely; see the link for more details (including registration) ... And the NASCUS 2018 State System Summit is now just a little more than two months away, July 16-19 in Orlando (at the Disney Yacht Club). It’s a four-day program of mutual exchange and dialog among credit union regulators and practitioners, focusing on the issues for the state system. See the link below for more about the program, and registration.

FinCEN rule: Customer Due Diligence Requirements for Financial Institutions 

NASCUS/CUNA Cybersecurity Conference

NASCUS State System Summit

Information Contact:
Patrick Keefe,