Friday's News

October 22, 2021

In Washington this week, Democrats continue to try to build support for a spending plan by attempting to scale back the controversial IRS reporting measure. Other agencies were squarely focused on climate-risk. In New York, employees will have access to a new state-sponsored retirement savings plan.

Federal Legislative Developments

• Democrats working to trim a proposed $3.5 trillion spending package to garner more bipartisan support have offered a scaled-back version of the controversial bank reporting measure that would require banks to report to the IRS of aggregate account inflows and outflows for accounts with a value of $10,000 or more, rather than the $600 threshold contained in the previous proposal. The new proposal also exempts certain benefits-related transactions from reporting. Banking industry representatives rejected the new plan based on privacy concerns, also noting that the exemptions will further complicate the banks’ reporting process. Senator Mike Crapo (R-ID), Ranking Member of the Finance Committee, has written to Treasury Secretary Janet Yellen with a series of questions on the proposal. Despite the revisions, NYBA continues to actively oppose this measure. Senator Tim Scott (R-FL) has introduced a bill to essentially block the IRS from establishing any new bank reporting requirements. If you have not already done so, please join NYBA’s Grassroots Action Alert campaign to defeat this proposal.

Federal Regulatory Developments

• The OCC is providing an updated self-assessment tool for banks to evaluate their preparedness for the transition from the London Interbank Offered Rate (LIBOR).
  
  
• The Office of the Comptroller of the Currency and other federal financial institution regulatory agencies, in conjunction with the state bank regulators, issued a statement to emphasize the importance of an orderly transition away from the London Interbank Offered Rate.
  
  
• Last week, the White House released a report on climate change and the “serious and systemic risks to the U.S. economy and financial system.” An additional report by the Financial Stability Oversight Council (FSOC), released yesterday, discussed potential climate-related regulations on mortgage lending, insurance, investment disclosures and a broad range of activity. Among the 30 specific recommendations in the report is a call for the use of enhanced climate-related risk disclosures.
  
  
• In a speech to international policymakers, Federal Reserve Governor Randal Quarles said “non-bank financial intermediation remains at the top of the Financial Stability Board's priority list because of the urgency to address vulnerabilities. Our policy proposals for enhancing money market fund resilience give jurisdictions a good start on assessing and addressing vulnerabilities in their jurisdictions. Other areas, such as short-term funding markets, open-ended funds, and margin requirements, also require further assessment. The FSB is actively engaged in work in each of those areas.”
  
  
• FHFA plans to expand refinance programs (Refi Now and Refi Possible) for low to moderate income borrowers by providing eligibility for borrowers with incomes at or below 100% of Area Median Income (AMI).
  
  
• Credit Union Service Organizations (CUSOs) have been granted expanded lending authority in a close vote of the National Credit Union Administration board. Since CUSOs may serve non-members, the move further blurs the boundaries of field-of-membership limits for credit unions.

State Legislative Developments

• Governor Kathy Hochul signed a bill requiring New York State businesses with ten or more employees to automatically enroll their employees in the New York State Secure Choice Retirement Savings Program if they don’t otherwise offer access to a retirement benefit or plan.  Under the Program, IRA accounts are entirely funded by employee contributions made through automatic payroll deductions, and employees may opt-out at any time.   The Program is overseen by an appointed, nine-member Board, with administrative and technical support provided by the Department of Taxation and Financial Services. 

State Regulatory Developments

• On October 20^th the Department of Financial Services published in the State Register a Notice of Proposed Rule Making regarding disclosure requirements for certain providers of commercial financing transactions under the NYS Financial Services Law, adding Part 600 to Title 23 NYCRR. This proposal is part of the implementation of the Commercial Finance Disclosure Law (CFDL) which was signed into law this year and takes effect January 1, 2022. Among other things, the proposed rule provides instructions for compliance with the CFDL, including definitions and explanations for calculation of the finance charge and annual percentage rate.  Comments on the proposed rule are due to the Department by December 18, 2021, and NYBA is in the process of gathering feedback from members. 
  
  
• This week the Department of Financial Services issued its Annual Report for 2020.  The Report, which is required by Article 2, Section 207 of the Financial Services Law, is a review of the Department's regulatory activities over the previous year, as well as an overview of significant developments in the State’s banking sector and the broader financial services industry. 

Legal Developments

• The U.S. Court of Appeals for the Fifth Circuit has effectively delayed the compliance date of June 13, 2022 for the CFPB’s 2017 rule on payday lending, pending the outcome of an appeal related to that rule.

 Resources

• The OCC has released its semiannual Interest Rate Risk Statistics Report.
  
  
• The OCC has released a revised Payment Systems booklet of the Comptroller's Handbook, which provides an overview of payment systems, primary payment types, associated risks, and risk management practices.

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