Liquidity Coverage Ratio

The Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency finalized a rule to strengthen the liquidity positions of large financial institutions. The rule will for the first time create a standardized minimum liquidity requirement for large and internationally active banking organizations. Read more...

Proposed Repeal of Regulation AA

The Federal Reserve proposed repealing Regulation AA, which includes the credit practices rule, as required by the Dodd-Frank Act. Read more in the Interagency Guidance released on August 22, 2014.

NYS MLO Regulations Adopted on an Emergency Basis

The Department of Financial Services published a notice of Emergency Rulemaking to implement license, financial responsibility, education and test requirements for mortgage loan originators (MLOs) to comply with Banking Law and to conform the regulation of MLOs in New York to federal legislation. 

Click here for the Department of Financial Services notice on the rule.

What's New? NYS ATM Security Rules

On July 1, 2014, institutions were sent a letter from the Department of Financial Services regarding their July and January 15th reporting dates for compliance with the ATM Safety Act.  Superintendent's Regulation Part 301.6 accompanied that letter and contains the form that must be completed by those dates. Please see New York State ATM Safety Act for information on this new reporting requirement.

Youth Savings Pilot Program

FDIC-insured institutions are invited to apply and participate in the FDIC's Youth Savings Pilot Program.

The program seeks to identify and highlight promising approaches to offering financial education tied to the opening of safe, low-cost savings accounts for school-aged children.

The pilot program is open to institutions currently working with schools or nonprofit organizations that help students open savings accounts in conjunction with financial education programs. Phase two is expected to target new programs that begin during the 2015–16 school year. 

For more information, click here:

https://www.fdic.gov/consumers/banking/youthsavingspilot/

OCC Hosts Risk Assessment and Compliance Risk Workshops in Syracuse

he Office of the Comptroller of the Currency will host two workshops in Syracuse, N.Y., at the Sheraton Syracuse University Hotel, Aug. 5-6, for directors of national community banks and federal savings associations.

The Compliance Risk and Risk Assessment workshops are designed exclusively for directors of institutions supervised by the OCC. Both workshops are taught by seasoned OCC supervision staff.   

The compliance risk workshop focuses on major compliance risk and consumer protection regulations, such as the Qualified Mortgage Rule, Bank Secrecy Act, and Community Reinvestment Act, along with key elements of an effective compliance risk management program.  

The risk assessment workshop discusses the OCC’s approach to risk-based supervision, and best practices to identify, measure, monitor and control risk. The interactive sessions also cover industry hot topics such as credit risk, strategic risk, and the regulatory environment.  

The fee is $99 for each workshop. Participants receive a pre-workshop reading package and course materials, and assorted supervisory publications. Each workshop is limited to the first 35 registrants.

The workshops are among 35 offered nationwide to expand the skills of directors of national community banks and federal savings associations. For more information, such as a complete list of available workshops, or to register for a workshop, please visithttps://www.seiservices.com/occ/ or call (240) 485-1700.

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's Report Bulletin last month. Compare your answer to the correct answer below:

Q: A father opened an “in trust for account” for his minor child to receive direct deposit of social security. The father died last month.  The child is under 18 and the account has $20,000 in it.  The mother came to the bank and she wants to open an account to continue to receive the social security benefits.  How does this get accomplished?

 A: Since the account is an I/T/F account and the child is a minor, with an account balance of over $10,000, she will need a guardianship order from the local supreme or surrogates court to manage the account for her child.  The account may be opened as a custodian account.  If she wishes to bypass these rules she can apply directly to the social security administration for status as a representative payee for the direct deposit of social security benefits for the child.

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's Report Bulletin last month. Compare your answer to the correct answer below:

Q: We acquired a branch in an area that is largely Hispanic.  All our documents are in English and customers who are not fluent in English are directed to branch staff who are bilingual.  None of our disclosures are in English nor are any of our agreements, contracts and statements.  We use different systems for different products.  Do we need to provide Spanish speaking documents at the branch? 

A: A goods idea and one almost born out of necessity because of the large per centage of Spanish and perhaps non-English speaking applicants.  A failure to do so could result in CRA and fair lending issues in later compliance exams.  The bank will be faced with legal problems when they are faced with delinquent and other bad customer behavior that is defended on the basis that the customer did not understand what he was signing.  Having an interpreter for the customer won’t do on a long term basis.  Consider having English and Spanish versions for mortgage loan documents but have the customer sign the English version with the Spanish version attached or referenced or with a separately signed acknowledgment that he understood what he signed and all questions were answered.

NY Court of Appeals Decision

On May 8, 2014, the New York State Court of Appeals issued a decision in Clemente Brothers v. Aprile Hafner-Milazzo and Capital One. The case presented the issue of whether a bank and its customer may shorten the statutory time period provided for in UCC 4-406 within which a customer must notify its bank of an improperly paid item in order to recover the payment.

The court found for defendants on the facts of this case, calling it “not manifestly unreasonable” for the bank to shorten the time period from one year to 14 days because Clemente Brothers was a sophisticated customer with numerous employees who had the resources to make informed decisions about opening accounts. The Court specifically pointed to the fact that Clemente Brothers passed a corporate resolution acknowledging its obligation to notify Capital One of any irregularities in account statements within 14 days. It is important to note that the Court limited its holding to a case involving a sophisticated corporate entity but thought it could be unreasonable to impose a 14 day limit on unsophisticated customers, such as the elderly, disabled or small family businesses.

What's New? IRA Rollover Rules

IRS Announcement 2014-15 addresses a recent Tax Court opinion that limits the number of IRA-to-IRA rollovers an individual can make in a 12-month period. The interpretation indicates that the limitation applies on an aggregate basis, meaning that an individual could not make an IRA-to-IRA rollover if he or she had made such a rollover involving any of the individual’s IRAs in the preceding 1-year period. This rule is effective beginning January 1, 2015 and IRS Publication 590 will be updated accordingly.

Read more in The Gold Book under IRA Rollovers; General Rules and IRA Rollovers; Types; From One IRA to Another IRA.

Deposit Insurance Coverage: Free Seminars

The FDIC will conduct the following 12 free seminars on deposit insurance coverage for bank officers and employees between May 6, 2014, and December 4, 2014:

• Four sessions on "Fundamentals of Deposit Insurance Coverage" (Fundamentals Seminar), which will provide an overview of the rules for determining deposit insurance coverage for the nine most common account ownership categories.
• Four sessions on "Deposit Insurance Coverage for Revocable Trust Accounts" (Revocable Trust Seminar), which will focus on the rules for informal and formal revocable trust accounts.
• Four sessions on "Advanced Topics in Deposit Insurance Coverage" (Advanced Topics Seminar), which will focus on government accounts, mortgage servicing accounts, bank mergers, pass-through deposit insurance coverage, and other deposit insurance topics. 

For instructions and presentation links, click here.

What's New? Adult Guardianship in Other States

New York and New Jersey recently joined over thirty other states in their adoption of a Uniform Adult Guardianship Protective Proceedings Jurisdiction Act. Passing of these acts is to create uniform procedures for guardianships and protective proceedings and to prevent or minimize interstate jurisdictional disputes in adult guardianship cases. Read more about New York's Act and New Jersey's Act in The Gold Book. 

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's January 2014 Report Bulletin.

Compare your answer to the correct answer provided below.

Q: We want to make a loan to a customer for $300,000 to buy property; but we do not want to take a mortgage on the real estate.  Rather, we wish to secure our loan with the borrower’s brokerage account, which contains securities.  The loan to value ratio for this loan is 70% but we are concerned about Regulation U, the Federal Reserve Board’s margin stock Regulation.  Under Regulation U, a lender may not loan more than 50% against the value of the securities.  If Regulation U applies to this transaction, we would need additional collateral to secure our loan.  Since the borrower is not using the loan to buy securities, does the Regulation U limits apply to us here?

A: Yes.  The regulation applies to lenders who extend credit for the purpose of buying or carrying margin stock.  Here the borrower would be carrying margin stock for the purpose of securing the loan.  There are some Federal Reserve Board Interpretations (Regulation U, Section 221.101.101) that support this view.

What's New? New York City Human Rights Amendment

An amendment to the New York City Human Rights Law goes into effect on January 30th requiring employers with four (4) or more employees to provide “reasonable accommodations” for employees who are pregnant or have pregnancy or childbirth-related medical conditions. See The Gold Book for detailed information. 

What's New? Know Before You Owe

Consumer Financial Protection Bureau (CFPB) has issued rules and forms that combine certain disclosures that consumers receive in connection with applying for and closing on a mortgage loan under the Truth in Lending Act and the Real Estate Settlement Procedures Act. 

The new forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to compare the cost of different loan offers, including the cost of the loans over time.

The rule is effective August 1, 2015. See Know Before You Owe in The Gold Book for more information. 

What's New? Paying Agent Notification Requirements

On January 23, 2013, the Securities and Exchange Commission (SEC) amended Exchange Act Rule 17Ad-17 to implement the requirements of Section 929W of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The amendments add a requirement that "paying agents" send a one-time notification to "unresponsive payees" stating that the agent has sent a securityholder a check that has not yet been negotiated.

The effective date for the amendments is January 23, 2014. Therefore, the first potential notice to unresponsive payees would be due no later than August 23, 2014. 

See the The Gold Book for more information. 

Last Month's Q&A Answered

The following question appeared in the Q&A section of Banking Spectrum's November 2013 Report Bulletin.

Compare your answer to the correct answer provided below.

Q: We received a POA with a gifts rider.  There is one agent, X, appointed and a successor agent, Y.  Both agents signed on line O, thereby giving the impression that they are co-agents.  Y did not sign on line P where the successor agent is supposed to sign.  May we accept this POA?

A: The bank has two choices.  Note on the POA that only X is to act as a POA.  If and when X no longer can serve, then Y can later sign on line P as successor agent on the original POA and then bring a new copy to the bank.  Or, have Y sign now on the original POA as successor agent on the correct line P and resubmit a corrected copy to the bank for its file.

What's New? IRS Reporting Requirements Updated

Information and instructions on the following IRS reporting forms have been updated in The Gold Book:

Form 1098

Form 1099-K

Form 1099-R

Form 5498

OCC Final Regs on Direct Deposit Advances

The Office of the Comptroller of the Currency (OCC) on November 26, 2013, issued final “Guidance on Supervisory Concerns and Expectations Regarding Deposit Advance Products”. This guidance addresses safe and sound banking practices and consumer protection in connection with deposit advance products.

The guidance outlines appropriate underwriting policies and practices, including establishing customers’ eligibility and assessing their ability to repay while allowing borrowers to continue to meet typical recurring and other necessary expenses.

This final supervisory guidance is applicable to all OCC-supervised institutions.

Complete guidance may be found in the Federal Register.

What's New? 2014 Cost of Living Adjustments

The Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2014.

Updates are found primarily in the Cost of Living Adjustments for Pension Plans section and throughout the Pension Plans chapter.