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Proposal would require banks to verify U.S. Treasury checks
The Treasury Department’s Bureau of the Fiscal Service issued a proposed rule to amend its regulations governing the payment of checks drawn on the U.S. Treasury.
The bureau’s proposal would:
- Require financial institutions to use the Treasury Check Verification System, or other similar authorized system, to verify that Treasury checks are authentic and valid.
- Require Federal Reserve Banks to decline payment of a Treasury check to include prior cancellation of the check, so the Fiscal Service may place a “true stop” on Treasury checks.
The proposal is designed to prevent Treasury checks from being negotiated after cancellation by Treasury or a payment certifying agency, also known as payments over cancellation, or POC.
Comments are due by April 3.
Source: ICBA
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DOJ cracks down on redlining
Banks are racing to ensure there is no discrimination in their lending operations as the Department of Justice ramps up its efforts to combat redlining, attorneys told S&P Global Market Intelligence.
Redlining is a discriminatory practice in which a financial institution denies lending to a consumer "because of the race, color, or national origin of the residents in those communities," according to the DOJ. In October 2021, the agency announced a new crackdown on the practice, with multimillion-dollar settlements increasingly seen in the latter half of 2022 and into 2023.
The DOJ is expected to continue to turn up the heat, and banks should be paying close attention, said Chris Willis, co-leader of the financial services industry group at Troutman Pepper.
"We know that the DOJ has a large number of redlining cases under investigation right now," Willis told Market Intelligence. "It is important for lenders to get a handle on their risk level as rapidly as possible, before they become the subject of a regulatory examination."
Many banks are also taking proactive steps to avoid landing in regulatory hot water by marketing in minority communities, engaging with community groups and offering a broad set of products for all consumers, according to Jeff Naimon, a partner who works with banks and nonbanks at Orrick.
The DOJ is looking for a broad variety of clues in its work to determine whether redlining occurred, financial attorneys said.
While the proportion of loans in minority communities and neighborhoods compared to total loans has long been a key component of the DOJ's review, the agency is increasingly focusing on issues such as branch locations, whether the bank has minority loan officers, and what the company's outreach and advertising in communities of color is, experts said. The DOJ is also scrutinizing emails and other communications inside banks to determine whether discrimination has occurred.
Source: S&P Global Market Intelligence
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FDIC update on amended HMDA threshold
The FDIC issued a Financial Institution Letter on changes to the loan-origination threshold for reporting Home Mortgage Disclosure Act data on closed-end mortgage loans following a recent court decision. The OCC previously issued a similar bulletin.
The FIL notes that the threshold for reporting is now 25 closed-end mortgage loans originated in each of the two preceding calendar years, down from the 100-loan threshold set by the 2020 HMDA rule.
A U.S. district court in September vacated the higher loan-volume threshold. The Consumer Financial Protection Bureau in December amended its regulations and released updated enforcement guidance.
ICBA is cautioning policymakers that the regulatory burden on community banks that were previously exempt from HMDA reporting outweighs any benefits to the agency and consumer groups of accessing the aggregate data points.
Source: ICBA
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Fannie, Freddie fee updates
Fannie Mae and Freddie Mac will reduce their upfront fee for commingled securities to 9.375 basis points after announcing a 50-point fee last year, the Federal Housing Finance Agency announced.
Citing stakeholder feedback, the FHFA last year said it would explore alternatives to the 50-point fee, which the government-sponsored enterprises announced to help address their cost of capital. ICBA has opposed the capital charge under the Enterprise Regulatory Capital Framework given the potential impact on the fungibility of the GSEs’ mortgage-backed securities.
The FHFA separately announced changes to the single-family pricing framework for Fannie and Freddie by introducing redesigned and recalibrated upfront fee matrices for purchase, rate-term refinance, and cash-out refinance loans. The updated fees will take effect for deliveries and acquisitions beginning May 1.
Source: Fannie Mae; Freddie Mac; ICBA
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Mobile app use reaches 87%
Consumer banking apps have continued their steady climb in popularity, with 87% of consumers saying that they use their bank’s app at least monthly — and 66% saying they can’t live without it.
“People are using mobile banking apps more than ever and rely on them to manage their finances, including sending money to family and friends and managing everyday transactions,” said Sonali Divilek, JPMorgan Chase’s head of digital products and channels.
Consumers, the survey found, aren’t just logging on to check their balances these days. Nine in 10 respondents said they prefer to use just one app to manage their finances, from depositing checks to checking their credit to applying for a mortgage.
Chase found that managing credit is a high priority for respondents, with almost half (46%) saying they check their credit scores at least once a month and “do everything they can to get as high a score as possible.”
Millennials use credit monitoring services more than any generation (75%), but Gen X is close behind (71%).
The features of banking apps that have seen the largest jump in usage include ones that help request card replacements (54% usage, a 5 percentage-point increase year over year) and peer-to-peer payment features (50% usage, up 4 percentage points year over year).
The numbers have continued to rise as banks have made their apps more and more sophisticated.
Survey results from IT company Forrester last year found that beyond account and credit management, consumers like when their banking apps offer subscription management tools that help them avoid making monthly payments for services they no longer wish to use, as well as easy digital wallet integration.
Source: Arkansas Business; Banking Dive
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M&A likely for many in '23
Faced with slowing loan growth and rising employee costs, more than 40% of U.S. bankers believe they likely will consider an acquisition this year, according to S&P Global Market Intelligence's 2023 U.S. Bank Outlook Survey.
- Forty-three percent of respondents believe their company is "somewhat likely" or "very likely" to consider an acquisition this year, while one-in-10 respondents believe their company is at least "somewhat likely" to consider selling.
- Over two-thirds of respondents expect total loans will increase at their institution over the next 12 months.
- Average compensation is expected to increase by roughly 4% this year.
Source: S&P Global Market Intelligence
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contact information for any purpose.
With the exception of official announcements, the Arkansas Community Bankers Association Board of Directors, Officers and staff disclaim any responsibility for opinions expressed and statements made in articles published in Arkansas Community Bankers NewsWatch 2023.
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