FDIC's new Consumer Compliance Supervisory Highlights publication is intended to provide institutions with information and observations related to the agency's consumer compliance supervision activities. The first issue highlights findings from the approximately 1,200 consumer compliance examinations conducted by the FDIC in 2018.

 

Among the key issues flagged by the FDIC was improper disclosure of overdraft programs, which can lead to potential unfair or deceptive practices violations. The FDIC noted that these issues can arise particularly with processing systems that use an "available balance" method to assess overdraft fees. To help mitigate overdraft-related risks, institutions can provide clear disclosures detailing how overdraft fees are assessed, FDIC noted. Additionally, they can ensure that when using an available balance method, any transaction authorized against a positive available balance does not incur an overdraft fee, even if the transaction later settles against a negative available balance.

 

The FDIC also flagged recurrent issues related to RESPA Section 8; Regulation E; loan programs that allow customers to skip a payment; and the calculation of finance charges and disclosures related to lines of credit.

 

Consumer Compliance Supervisory Highlights  >> 

Almost 50% of all mortgage originations sold to Fannie Mae or Freddie Mac last year came from non-depository institutions, according to FHFA Director Mark Calabria. Noting that "there are some key differences between banks and non-banks that we need to address in a responsible way," Calabria said that under his leadership, FHFA will work to improve counterparty risk standards at Fannie and Freddie. "Our goal is to ensure that originators have the financial strength to continue lending through any market weakness or stressed environment," he said.

 

Calabria also outlined his plan for removing the GSEs from conservatorship. A critical step in that process will be building capital at Fannie and Freddie, a process he expects to be underway by next year. He added that he will continue to work with Congress on a legislative solution to housing finance reform, which could include, among other things, an explicit guarantee. Should Congress create an explicit guarantee, he emphasized that "it should be limited, clearly defined and paid for."

The FDIC is actively looking for ways to enable banks to offer small-dollar loans, FDIC Chairman Jelena McWilliams said at a recent Cato Institute event, drawing an important link between the availability of these products and financial inclusion.

 

"If banks do not offer small-dollar products, consumers who need small-dollar loans do not even have an opportunity to become banked and start building credit histories," McWilliams explained. She added that the agency is working to revise its policy framework "to encourage banks to offer small-dollar loan products to customers in need."

 

She also touched on the importance of innovation but acknowledged that an overly complex regulatory environment may be hindering progress, especially for community banks. "If we want banks to focus on innovation and reaching more consumers, we have to relieve some of the unnecessary regulatory burden on those institutions so they can get back to the business of banking."