Wednesday, December 11, 2019

Week of Oct. 7

In This Issue…

Reviewing CFPB’s latest supervisory highlights

The Consumer Financial Protection Bureau recently released its Summer 2019 Supervisory Highlights, which includes key findings from the CFPB’s exams for the most part between December 2018 to March 2019.

In each edition, the Bureau chooses the areas where it has seen the most supervisory activity, and for this one, it highlighted auto loan origination, credit card account management, debt collection practices, FCRA information furnishing, and mortgage loan origination.

Victoria Stephen, with Compliance Alliance, did a review of the highlights for bankers, which can be viewed by clicking here.

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Preparing comment letter about FedNow

Over the past several weeks, we’ve been working with bankers and their trade groups (including the ABA) across the country in an effort to develop meaningful comments about the Fed’s recent announcement that it would create its own version of a real-time payments system. There are many aspects to this ongoing conversation but interoperability seems to be at the top of most “must have” lists.

The ability to originate a real-time payment on one platform and have it received on another platform is the essence of interoperability. Without it, banks would be forced to choose between offering a non-ubiquitous payment network or networks (and a poor customer experience), or operate multiple networks that can’t accept payments from one another. It’s not unlike what happened when ATM networks were introduced more than 40 years ago.

The first choice (operating a non-ubiquitous network) would result in a fragmented system that wouldn’t properly or efficiently serve bank customers. The second choice would result in significant inefficiencies and would be very expensive to operate, especially for traditional community banks.

Much to the chagrin of smaller banks, the Fed’s most recent notice makes no commitment to achieving interoperability from the outset. The apparent reasoning is an in-market solution (The Clearing House) already exists, is available now and will remain available the moment FedNow is introduced.

Those of us participating in the discussion think that’s a huge mistake. Interoperability should be the highest priority for FedNow as the Federal Reserve begins to develop its RTP system. The consensus of the group is that the group responsible for developing FedNow should start working today to enable interoperability.

Interoperability is not an easy goal, but it is essential. For openers, there is a need for common rules, specifications and message formats. We believe interoperability will actually foster more competition and redundancy than if there are two separate, independent systems available.

There is also consensus on access to the new FedNow system. At the end of the day, non-bank entities should not be granted access to the new RTP system.

Today, in conformity with federal law, banks are the only entities permitted to access the existing Fed payment systems. Banks are chartered by both federal and state authorities. They are regularly examined for compliance with regulations.

Today’s rules are intended to protect consumer funds, data and privacy. The consensus of the group is the Fed should reinforce current restrictions for access on the basis of the need to maintain safety and soundness inherent with the current payment system.

It’s the group’s view the Federal Reserve should make every effort to get FedNow operational and interoperable sooner than the estimated three-to-five years. The longer it takes, the more likely it will stall and fragment the market. The quicker it can be done, the more attractive it will be for others to use.

Let us know what you think, please. Are we on the right track, either individually or as the group? What other elements should be included in our focus? Call or email Adrian Beverage (adrian@oba.com) or Roger Beverage (roger@oba.com).

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OBA education corner …

The cool weather is here! It no longer feels like its simply July 71st outside! As we enjoy the blessed end of what seemed to be an endless Oklahoma’s summer, check out the upcoming seminar, webinars, schools and conferences:

  • Opening Business Accounts, Oct. 15, webinar — This two-hour fast-paced webinar examines not only the documentation requirements on business entities available in most states but provides clarity on how to identify who has authority to open and transact on behalf of the entity.
  • Loan Underwriting Mistakes, Oct. 17, webinar — This program is focused on underwriting primarily commercial and industrial (C&I) loans and will cover common underwriting mistakes that can ultimately lead to problem loans and loan losses.
  • Annual BSA Training for the Frontline, Oct. 17, webinar — This is a look at all the key components of BSA from the frontline point of view including Customer Due Diligence (CDD) rules and their impact on our policy and procedures.
  • Mortgage Servicing Compliance, Oct. 18, webinar — This interactive session will provide an in-depth understanding of rules, which is imperative for anyone performing duties in consumer mortgage servicing areas of your financial institution.
  • E-Sign for Lending and Critical E-Sign Implementation Issues, Oct. 22, webinar — This informative session will be helpful to ensure compliance with e-banking and is targeted for compliance officers, lending staff and loan operations, operations managers, and others responsible for managing online banking, E-SIGN compliance, e-statements, and e-disclosures.
  • BSA/AML & OFAC Compliance: Two-Part Series, Oct. 23 & Nov. 15, webinar — This is a two-part series, where we’ll discuss in Part 1 the Bank Secrecy Act provisions in general, including program requirements, risk assessments, CTRs, SARs, and the Beneficial Owner provisions, among other things. In Part 2, we’ll discuss the Customer Identification Program rules, other BSA reporting, including funds transfer recordkeeping, PEPs, pouch rules and the Office of Foreign Asset Control regulations.
  • Loan Denials & Other Adverse Action Notices, Oct. 24, webinar — This webinar will cover the compliance requirements and best practices for Adverse Action Notices under the Equal Credit Opportunity Act and Fair Credit Reporting Act.
  • Basic Bankruptcy for Bankers, Oct. 24, webinar — This webinar will introduce you to the world of bankruptcy. It is designed for lenders and support staff with the goal of educating them on the fundamentals of both consumer and commercial bankruptcy law.
  • Countdown to Nonresident Alien Changes!, Oct. 29, webinar — During this program we will focus on writing nonresident alien procedures for your frontline and back-of-the-house staff.
  • 10 Check Legal Issues to Save You Thousands, Oct. 30, webinar — Having an understanding of endorsements and handling checks is crucial to making sound check-cashing decisions.
  • IRA Basics Seminar and IRA Update/Review Seminars, Nov. 5, Tulsa; Nov. 6, Tulsa; Nov. 7. Oklahoma City; and Nov. 8, Oklahoma City — There are so many pieces to building the IRA foundation of knowledge that it takes a lot of nuts and bolts and “brain-power” to hold it all together. Just when you finally grasp it, they change the rules again! The goal of these two days at each location is to raise your comfort level if you are a rookie and to reinforce your knowledge if you have a higher level of experience.
  • 2019 Security Seminar, Dec. 3, Oklahoma City — This interaction session is broken into four parts, covering security regulations, physical security, trending fraud and workplace violence planning/active shooter preparedness.

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