September 23, 2020--------------------------------------------------------------------------------------------------No copyright infringement intended
Vendor * Spotlight
PPP Asset-Threshold Impact

The FDIC is exploring options to address the impact of Paycheck Protection Program loans on regulatory asset thresholds, FDIC Chairman Jelena McWilliams told ICBA.
 
Responding to ICBA's call for federal regulators to exclude PPP loan balances from bank and bank holding company thresholds, McWilliams said the FDIC appreciates this concern and is considering targeted adjustments to mitigate unintended consequences from PPP lending.
 
In its letter, ICBA said the agencies should quickly amend regulations so the PPP won't push community banks over regulatory thresholds, subjecting them to additional burdens.
 
ICBA noted that while it has already asked House and Senate lawmakers to pass legislation directing the agencies to exclude PPP loans from asset thresholds, regulators are already authorized to do so.
 
ICBA will continue working with regulators and Congress to ensure community banks are not punished for their leading role in supporting small businesses during the coronavirus pandemic.
 
Source: Independent Community Bankers of America
Increasing AML Flexibility
 
The Financial Crimes Enforcement Network requested public comment on potential Bank Secrecy Act amendments to provide financial institutions greater flexibility. The advance notice of proposed rulemaking seeks comment on incorporating an “effective and reasonably designed” component to anti-money-laundering programs.
 
This component would seek to implement a common understanding between supervisory agencies and financial institutions regarding the necessary AML program elements. It also would seek to impose minimal additional obligations on AML programs that already comply under the existing supervisory framework.
 
Comments are due within 60 days of publication in the Federal Register.
 
Source: Financial Crimes Enforcement Network
Modernizing CRA Rules
 
The Federal Reserve Board requested public comment on modernizing its Community Reinvestment Act regulations four months after the OCC issued its CRA final rule for national banks.
 
The Fed's advance notice of proposed rulemaking includes promising provisions to define activities that qualify for CRA credit, create an illustrative list of qualifying activities and a pre-approval process, provide dashboards to track progress, and avoid mandates on geographically tracking deposits for small banks, which is required under the OCC rule.
 
The ANPR also seeks comment on allowing smaller community banks to remain under the existing CRA framework, as supported by ICBA. However, the Fed has proposed to set the small bank asset threshold at either $750 million or $1 billion, lower than its current intermediate small bank threshold of $1.305 billion and less than half the $2.5 billion ISB threshold in the OCC’s new CRA rule.
 
Source: Federal Reserve
Assessment Rates Maintained Under DIF Plan
 
The FDIC board of directors adopted a restoration plan to restore the Deposit Insurance Fund reserve ratio to at least 1.35 percent within eight years, as required by law.

The reserve ratio fell to 1.30 percent from its recent peak of 1.41 percent due to an inflow of more than $1 trillion in insured deposits caused by the coronavirus pandemic and federal response.
 
Under its restoration plan, the FDIC will monitor trends affecting the reserve ratio, maintain the current assessment rate schedule, and provide semiannual updates to its loss and income projections. The agency said it projects the DIF will return to 1.35 percent without further action.
 
Source: FDIC
Main Street Lending Program FAQ's Updated

The Federal Reserve Board updated its frequently asked questions on the Main Street Lending Program to clarify expectations regarding lender underwriting. The revised FAQs emphasize that lender underwriting should look back to the borrower's pre-pandemic condition and forward to their post-pandemic prospects. The FAQs also clarify supervisory expectations for program lenders.

 Source: Federal Reserve
Deposits as Reserves Against Cryptocurrency

The Office of the Comptroller of the Currency's chief counsel issued a letter giving banks clearance to accept deposits as reserves against certain types of cryptocurrency.

The letter is limited to "stablecoins," a certain type of cryptocurrency designed to maintain a stable value by tying the coin's value to fiat currency or commodities. The letter only addresses stablecoins that can be exchanged for a fiat currency on a 1:1 basis, not more complex stablecoins that are backed by commodities or other assets.

Stablecoin issuers have expressed the desire to deposit reserves with national banks as an assurance to customers that the issuer has sufficient funds behind the stablecoins. The OCC's guidance stipulates that banks are allowed to receive those deposits as long as they comply with the Bank Secrecy Act and other legal requirements.

The guidance is limited to stablecoins where a bank verifies on a daily basis that the issuer's reserve account balance is equal to or greater than the number of outstanding stablecoins and to those associated with "hosted wallets," which are operated by the issuer, and not "un-hosted wallets," which are maintained by individuals.

Source: OCC
Accelerated Digital Banking Investments

The coronavirus has changed how customers access many traditional banking services and will likely accelerate institutions' plans to invest in digital offerings and rationalize their branch networks.

Approximately 58% of respondents to S&P Global Market Intelligence's annual U.S. consumer mobile banking survey visited branches less frequently after COVID-19 restrictions began. Over 60% of those respondents, or nearly 36% of the overall sample, began using their mobile banking apps more frequently during the same time. The survey was conducted between June 22 and July 16.

As COVID-19 pushes consumers away from bank branches and toward their mobile apps, many are encountering an array of highly valued digital services for the first time. Anticipation of these new behaviors becoming entrenched will likely influence bank investment decisions beyond the pandemic.

Source: S&P Global Market Intelligence