Special message from Mike Percy, Managing Partner, Financial Services
Dear FIEB readers,
I continue to hope this message finds you, your friends, your family, and your colleagues safe. With the fall season just around the corner, starting Sept. 23, the conference season will be here. Of course, it is not going to be the typical season experience as most conferences will be held online this year. Two of the largest conferences for our industry are hosted by the American Institute of Certified Public Accountants (AICPA). While we will not be heading to Washington, D.C., or Las Vegas, participants will have a virtual experience. You can save an additional $100 with these codes:
2020 AICPA National Conference on Banks & Savings Institutions
Sept. 14-16, 2020
Use coupon code “SCS” to receive a $100 discount off regular registration price. This discount may be applied in addition to the early bird discount of $100 – for a total savings of $200 off the regular registration fee – for those who register by Aug. 31, 2020.
2020 AICPA Online Conference on Credit Unions
Oct. 19-21, 2020
Use coupon code “SIO” to receive a $100 discount off the regular registration price. This discount may be applied in addition to the early bird discount of $100 – for a total savings of $200 off the regular registration fee – for those who register by Sept. 4, 2020.
Given this continuing unusual environment, we once again have organized this month’s Financial Institutions Executive Briefing to focus on the most critical issues and will strive to keep you updated as events unfold.
Matters of importance from the financial regulators
CFPB seeks input on creating more inclusive financial system
On July 28, 2020, the Consumer Financial Protection Bureau (CFPB) issued a request for information seeking input on creating a regulatory environment that will expand credit access and protect consumers and communities from discrimination, consistent with the goals of the Equal Credit Opportunity Act (ECOA). Specifically, the CFPB is looking for input on the following topics:
- Disparate impact
- Limited English proficiency
- Special-purpose credit programs
- Affirmative advertising to disadvantaged groups
- Small-business lending
- Sexual orientation and gender identity discrimination
- Scope of federal preemption of state law
- Public assistance income
- Artificial intelligence and machine learning
- ECOA adverse action notices
Comments are due Oct. 2, 2020.
OCC releases update to the Bank Accounting Advisory Series
On Aug. 17, 2020, the OCC released an update to the Bank Accounting Advisory Series (BAAS). The BAAS covers a variety of topics and promotes consistent application of accounting standards among national banks and federal savings associations. This edition of the BAAS reflects accounting standards issued by the FASB and includes recent answers to frequently asked questions from the industry and examiners.
The 2020 BAAS includes new questions on topics such as, but not limited to, the following:
- Bank-owned life insurance
- Tax sharing arrangements
- Reasonably expected troubled debt restructurings
- Acquired loans
- Accrued interest receivable
- Collateral dependent financial assets
Updates to topics include, but are not limited to, the following:
- Debt and equity securities
- Other real estate owned
- CECL: Freestanding insurance contracts
The BAAS does not represent official rules or regulations of the OCC. Rather, it represents the OCC’s Office of the Chief Accountant’s interpretations of generally accepted accounting principles and regulatory guidance based on the facts and circumstances presented. While the BAAS is published by the OCC, the information in the BAAS is relevant to all financial institutions.
OCC creates exception to withdrawal period for CIFs
On Aug. 4, 2020, the Office of the Comptroller of the Currency (OCC) issued an interim final rule to clarify rules for withdrawals from collective investment funds (CIF) and established a limited exception to the withdrawal period. Typically, a bank administering certain CIFs is allowed to require a prior notice period of up to one year for withdrawals from the fund. The interim final rule codifies that standard withdrawal period and creates a limited exception allowing an extension of that period with prior OCC approval.
The interim final rule took effect Aug. 13, 2020, and comments are due Sept. 14, 2020.
Fed releases survey results on bank lending practices
The Federal Reserve Board (Fed) has released the results of the July 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices, which correlate to experience over the second quarter of 2020. The survey covers changes in the standards, terms, and demand for bank loans to businesses and households over the previous three-month period.
Responses to the survey indicated that banks tightened their standards and terms on commercial and industrial (C&I) loans to firms of all sizes, all three major commercial real estate (CRE) loan categories, all categories of residential real estate (RRE) loans, and all three consumer loan categories. Banks reported weaker demand for C&I loans from firms of all sizes, all three major CRE loan categories, and all categories of consumer loans. However, banks reported stronger demand for all categories of RRE loans.
Banks reported that their lending standards across all loan categories currently are at the tighter end of the range of standards between 2005 and the present.