August 2023 Compliance Journal

Compliance Journal

August 2023

Special Focus

WBA wishes to thank Jessica Schwantes, CPA and partner with Wipfli LLP for providing this article. Wipfli is a WBA Bronze Associate Member. For more information about the 2023-2025 Wisconsin State Budget be sure to review last month’s WBA Compliance Journal which may be found on the Compliance Resources page of the WBA website at: https://www.wisbank.com/resources/compliance/

Huge Tax Savings for Banks

On July 5, 2023, Governor Evers signed into law Section 71.05(1)(i) and 71.26(i) of the Wisconsin tax code with the 2023-2025 State Budget. These two sections provide significant tax savings for banks that provide business and agricultural loans to Wisconsin businesses. The estimated tax saving is $34 million in 2023 and $37 million in 2024.

The reason Section 71.05(1)(i) and Section 71.26(i) basically read the exact same is because one section is for the exclusion from individual income taxes and the other is from corporation income. The law states that effective for taxable years beginning after December 31, 2022, income of a financial institution as defined in s. 69.30(1)(b), including interest, fees, and penalties, derived from a commercial loan of $5 million dollars or less provided to a person residing or located in Wisconsin and used primarily for a business or agricultural purposes is exempt from tax.

The exclusion is effective for this year already. It applies to C-Corporations, S-Corporations, and S-Corporations that elect to be taxed as a C-Corporation for Wisconsin purposes. The interest, fees, and penalties earned on business and agricultural loans of $5 million or less to Wisconsin customers should be removed from your monthly state tax calculation.

We are waiting for additional guidance from the Wisconsin Department of Revenue. The current understanding is that it applies to business and agricultural loans that have a commercial loan agreement where the original principal is $5 million or less. It does not matter if the loan was issued prior to the effective date of the law of 01/01/2023. The intent of the $5 million threshold was not to create multiple smaller loans to achieve the exemption. We are expecting the additional guidance to clarify how aggregation of related transactions will occur.

The loan needs to be to a Wisconsin customer. It does not need to be a Wisconsin incorporated business or have the collateral located in Wisconsin. The customer needs to be located in Wisconsin and the use of the loan is primarily for business or agricultural purposes.

Many banks have already done the analysis to see how it impacts them. The new law may eliminate all of a bank’s Wisconsin taxable income. The thing to consider with this fact pattern is whether or not a bank should record a deferred tax asset for the net operating loss carryforward that is created. A bank will have 20 years to use a Wisconsin net operating loss carryforward. Banks should consult their tax advisor to discuss the implication for the bank or contact me, Jessica Schwantes at: JSchwantes@wipfli.com or at 608-270-2931.

Again, WBA wishes to thank Jessica Schwantes, CPA and partner with Wipfli LLP for providing this article. Wipfli is a WBA Bronze Associate Member.

FTC Releases Updated Guide Concerning Use of Endorsements and Testimonials in Advertising

Over the past several years, the Federal Trade Commission (FTC) began a review of its rules and guides to determine whether existing guidance should be updated to address new methods of advertising and to prevent misrepresentations in advertising; and, on July 26, 2023, the agency released an updated Guides Concerning the Use of Endorsements and Testimonials in Advertising (Guide) which includes (a) definitions and general considerations, (b) recommendations for consumer, expert, and organization endorsements, (c) a disclosure of material connection, and (d) considerations for endorsements directed to children.

The Guide represents administrative interpretations of laws enforced by FTC under section 5 of the Federal Trade Commission Act (FTCA), 15 U.S.C. 45, to the use of endorsements and testimonials in advertising and includes numerous examples to illustrate the principles set forth within the Guide. As financial institutions often use endorsements or testimonials of customers in advertisements, the following is a summary of the Guide.

Select Definitions

Endorsement means any advertising, marketing, or promotional message for a product that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.

Verbal statements, tags in social media posts, demonstrations, depictions of the name, signature, likeness or other identifying personal characteristics of an individual, and the name or seal of an organization can be endorsements.

The party whose opinions, beliefs, findings, or experience the message appears to reflect will be called the “endorser” and could be or appear to be an individual, group, or institution. FTC stated it intends to treat endorsements and testimonials identically in the context of its enforcement of the FTCA. The term endorsements is therefore generally used within the Guide to cover both terms and situations.

Product includes any product, service, brand, company, or industry.

An expert is an individual, group, or institution possessing, as a result of experience, study, or training, knowledge of a particular subject, which knowledge is superior to what ordinary individuals generally acquire.

Clear and conspicuous means that a disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers. If a communication’s representation necessitating a disclosure is made through visual means, the disclosure should be made in at least the communication’s visual portion; if the representation is made through audible means, the disclosure should be made in at least the communication’s audible portion; and if the representation is made through both visual and audible means, the disclosure should be made in the communication’s visual and audible portions.

FTC further sets forth in the Guide how a visual disclosure should stand out from other text, how an audible disclosure need be presented so that it is easy for consumers to hear and understand, and how disclosures should be made when communicating using an interactive electronic medium such as social media or the internet.

August 2023

Volume 29, Number 3

Wisconsin Bankers Association 4721 South Biltmore Lane, P.O. Box 8880, Madison, Wisconsin, 53708-8880

Senior Writers Heather MacKinnon

Scott Birrenkott

Editor Katie Reiser

Layout Sonja Vike

Copyright ©2023

Wisconsin Bankers Association. All rights reserved. Reproduction by any means of the entire contents or any portion of this publication without prior written permission is strictly prohibited. This publication is intended to provide accurate information in regard to the subject matter covered as of the date of publication; however, the information does not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent and professional person should be sought.

General Considerations and Potential Liabilities

FTC requires that endorsements reflect the honest opinions, findings, beliefs, or experience of the endorser. Furthermore, an endorsement may not convey any express or implied representation that would be deceptive if made directly by the advertiser.

An advertisement need not present an endorser’s message in the exact words of the endorser unless the advertisement represents that it is presenting the endorser’s exact words, such as through the use of quotation marks. However, the endorsement may not be presented out of context or reworded so as to distort in any way the endorser’s opinion or experience with the product. An advertiser may use an endorsement of an expert or celebrity only so long as it has good reason to believe that the endorser continues to subscribe to the views presented. FTC recommends that an advertiser may satisfy this obligation by securing the endorser’s views at reasonable intervals where reasonableness will be determined by such factors as new information about the performance or effectiveness of the product, a material alteration in the product, changes in the performance of competitors’ products, and the advertiser’s contract commitments.

When the advertisement represents that the endorser uses the endorsed product, FTC requires that the endorser must have been a bona fide user of it at the time the endorsement was given. Additionally, the advertiser may continue to run the advertisement only so long as it has good reason to believe that the endorser remains a bona fide user of the product.

The Guide also addresses liability for misleading endorsements. In particular, FTC reminds advertisers that advertisers are subject to liability for misleading or unsubstantiated statements made through endorsements or for failing to disclose unexpected material connections between themselves and their endorsers. FTC also cautions that an advertiser may be liable for a deceptive endorsement even when the endorser is not liable. FTC recommends advertisers should:

• Provide guidance to their endorsers on the need to ensure that their statements are not misleading and to disclose unexpected material connections;

• Monitor their endorsers’ compliance; and

• Take action sufficient to remedy non-compliance and prevent future noncompliance.

Endorsers themselves may be liable for statements made in the course of their endorsements, such as when an endorser makes a representation that the endorser knows or should know to be deceptive, including when an endorser falsely represents that they personally used a product. Also, an endorser who is not an expert may be liable for misleading or unsubstantiated representations regarding a product’s performance or effectiveness, such as when the representations are inconsistent with the endorser’s personal experience or were not made or approved by the advertiser and go beyond the scope of the endorser’s personal experience.

Endorsers may also be liable for failing to disclose unexpected material connections between themselves and an advertiser, such as when an endorser creates and disseminates endorsements without such disclosures.

Advertising agencies, public relations firms, review brokers, reputation management companies, and other similar intermediaries may be liable for their roles in creating or disseminating endorsements containing representations that they know or should know are deceptive. They may also be liable for their roles with respect to endorsements that fail to disclose unexpected material connections, whether by disseminating advertisements without necessary disclosures or by hiring and directing endorsers who fail to make necessary disclosures.

The use of an endorsement with the image or likeness of a person other than the actual endorser is deceptive if it misrepresents a material attribute of the endorser.

Consumer Endorsements

FTC provides that an advertisement employing endorsements by one or more consumers about the performance of an advertised product will be interpreted as representing that the product is effective for the purpose depicted in the advertisement. Therefore, the advertiser must possess and rely upon adequate substantiation, including,

when appropriate, competent and reliable scientific evidence, to support express and implied claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, i.e., without using endorsements. Consumer endorsements themselves are not competent and reliable scientific evidence.

FTC further sets forth that an advertisement containing an endorsement relating the experience of one or more consumers on a central or key attribute of the product will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product in actual, albeit variable, conditions of use. Therefore, FTC believes an advertiser should possess and rely upon adequate substantiation for the representation. If the advertiser does not have substantiation that the endorser’s experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation. FTC instructs that the disclosure of the generally expected performance should be presented in a manner that does not itself misrepresent what consumers can expect and to be effective, such disclosure must alter the net impression of the advertisement so that it is not misleading.

Advertisements presenting endorsements by what are represented, expressly or by implication, to be “actual consumers” should utilize actual consumers in both the audio and video, or clearly and conspicuously disclose that the persons in such advertisements are not actual consumers of the advertised product.

In procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, reporting, or editing consumer reviews of their products, advertisers should not take actions that have the effect of distorting or otherwise misrepresenting what consumers think of their products, regardless of whether the reviews are considered endorsements under the Guide.

Expert Endorsements

Whenever an advertisement represents, expressly or by implication, that the endorser is an expert with respect to the endorsement message, FTC then requires that the endorser’s qualifications must in fact give the endorser the expertise that the endorser is represented as possessing with respect to the endorsement.

This

Although an expert may, in endorsing a product, take into account factors not within the endorser’s expertise (such as taste or price), FTC requires the endorsement be supported by an actual exercise of the expertise that the expert is represented as possessing in evaluating product features or characteristics which are relevant to an ordinary consumer’s use of or experience with the product. FTC requires the evaluation have included an examination or testing of the product at least as extensive as someone with the same degree of represented expertise would normally need to conduct in order to support the conclusions presented in the endorsement. To the extent that the advertisement implies that the endorsement was based upon a comparison to another product or other products, such comparison must have been included in the expert’s evaluation; and as a result of such comparison, the expert must have concluded that, with respect to those features on which the endorser is represented to be an expert and which are relevant and available to an ordinary consumer, the endorsed product is at least equal overall to the competitors’ products. Moreover, where the net impression created by the endorsement is that the advertised product is superior to other products with respect to any such feature or features, then the expert must in fact have found such superiority.

Endorsements by Organizations

Endorsements by organizations, especially expert ones, FTC believes are viewed as representing the judgment of a group whose collective experience exceeds that of any individual member, and whose judgments are generally free of the sort of subjective factors that vary from individual to individual. Therefore, FTC requires that an organization’s endorsement be reached by a process sufficient to ensure that the endorsement fairly reflects the collective judgment of the organization. Moreover, if an organization is represented as being expert, then, in conjunction with a proper exercise of its expertise in evaluating the product as set forth in the preceding paragraph, it must utilize an expert or experts recognized as such by the organization or standards previously adopted by the organization and suitable for judging the relevant merits of such products.

Disclosure of Material Connections

When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement, and that connection is not reasonably expected by the audience, FTC requires that such connection be disclosed clearly and conspicuously. Material connections can include a business, family, or personal relationship. They can include monetary payment or the provision of free or discounted products (including products unrelated to the endorsed product) to an endorser, regardless of whether the advertiser requires an endorsement in return. FTC further provides that material connections can also include other benefits to the endorser, such as early access to a product or the possibility of being paid, of winning a prize, or of appearing on television or in other media promotions. Some connections may be immaterial because they are too insignificant to affect the weight or credibility given to endorsements. A material connection needs to be disclosed when a significant minority of the audience for an endorsement does not understand or expect the connection. A disclosure of a material connection does not require the complete details of the connection, but it must clearly communicate the nature of the connection sufficiently for consumers to evaluate its significance.

Endorsements Directed at Children

The last section of the Guide addresses endorsements that are directed at children. In particular, FTC cautions that endorsements in advertisements addressed to children may be of special concern because of the character of the audience. Practices that would not ordinarily be questioned in advertisements addressed to adults might be questioned in such cases.

Examples

As previously mentioned, FTC has provided many examples throughout the Guide to further illustrate the principles set forth by FTC. Review of the examples is helpful to further understand FTC instruction and expectations. The Guide may be viewed at: www.govinfo.gov/content/pkg/FR-2023-07-26/pdf/2023-14795.pdf

New Resources Available to All WBA-Member Bankers: WBA Legal In-House Compliance Training, WBA Account Titling Video Series, and other Banker Guides

As part of the Wisconsin Bankers Association’s (WBA) mission to support bankers across the state, our team — often in collaboration with the membership — regularly creates resources to assist WBA-member bankers in expanding their knowledge and expertise. Recently, WBA launched several valuable compliance resources that your staff will find useful in maneuvering the ever-changing banking compliance landscape. Our objective with these services is to continue to make training accessible and more flexible for all WBA members at a reasonable cost.

WBA Legal is excited to announce its new WBA Legal In-House Compliance Training resource for member banks to take advantage of where the WBA Legal team brings compliance training directly to your bank. The training may be conducted in-person or as a virtual meeting and will be customized to your bank’s needs. All training will be conducted by WBA Legal; the presenter selected is dependent on the topic and timing of the training.

Additionally, WBA Legal is also excited to share that the new WBA Account Titling Video Series is now available. This series is designed for your bank to use as a new employee onboarding tool or a refresher for frontline retail staff. The series is built upon WBA’s longstanding and popular, comprehensive account titling workshop and is meant to help frontline staff develop an awareness of the laws related to account titling, analyze a variety of deposit account ownerships and fiduciary roles of deposit account relationships, recognize the legal and practical importance of an account title, and identify various documents which make up a deposit contract and understand their significances.

The new series provides information about account titling in short, topic-specific videos. Each video is supported by written materials. When utilizing the videos as training, there are also exercises to illustrate concepts shared within the videos. Managers are encouraged to supplement the information in the series with bank-specific policies, procedures, and operational requirements, so frontline staff know of any additional actions bank management expects frontline staff to execute.

The new resource consists of 11 modules, covering 60 topics with over five hours of video material! Each video ranges between two and 10 minutes in length — making training very flexible. Also included are manager/trainer resources such as a viewing sequence listing, tracking resource, examples, and test questions with an answer key.

As the WBA Legal team has provided for decades, new materials and resources are routinely added to the WBA Compliance page on the WBA website, and WBA Legal encourages your compliance team to monitor this site and WBA e-publications for updates. The newest release is a Lender’s Guide to the Marital Property Act . The guide answers frequently asked questions lenders have regarding the Act and is just one of several other available guides for members. Other such resources include a Banker’s Guide to LLCs and a Transfer by Affidavit Guide.

Finally, many other resources created by bankers serving on various WBA Sections and Committees may be found in the WBA Best Practices Library, also on the WBA website. The Best Practices Library is password protected. If you do not have the password, please reach out to WBA Legal at wbalegal@wisbank.com

WBA strives to provide comprehensive compliance resources for its members. If you have requests for new content or other materials, please let WBA Legal know and we will incorporate all feedback into our new product development process.

Resources:

WBA Legal In-House Compliance Training: www.wisbank.com/resources/compliance/compliance-training/

WBA Account Titling Video Series: https://web.cvent.com/event/f0f44782-65f4-4122-82cd-b24fce138dd0/summary

Special Focus

WBA Legal Compliance Page: www.wisbank.com/resources/compliance/

WBA Legal Lender’s Guide to Marital Property Act: www.wisbank.com/wp-content/uploads/2023/07/Lenders-Guide-to-Marital-Property-Act-Final.pdf

WBA Best Practice Library: www.wisbank.com/resources/best-practices-library/

Regulatory Spotlight

Agencies Issue Semi-Annual Regulatory Agendas.

The Bureau of Consumer Financial Protection Bureau (CFPB) published an agenda as part of the Spring 2023 Unified Agenda of Federal Regulatory and Deregulatory Actions. CFPB reasonably anticipates having the regulatory matters identified in the agenda under consideration during the period from 06/01/2023, through 05/31/2024. The next agenda will be published in Fall 2023 and will update this agenda through Fall 2024. Publication of the agenda is in accordance with the Regulatory Flexibility Act. The information is current as of 03/22/2023. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-14564.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48632-48633.

The Board of Governors of the Federal Reserve System (FRB) issued a semiannual agenda under the Regulatory Flexibility Act and FRB’s Statement of Policy Regarding Expanded Rulemaking Procedures. FRB anticipates having under consideration regulatory matters as indicated in the agenda during the period 05/01/2023, through 10/31/2023. The next agenda will be published in Fall 2023. Comments may be submitted any time during the next 6 months. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-14556.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48682-48683.

The Department of the Treasury (Treasury) issued a notice pursuant to the requirements of the Regulatory Flexibility Act and Executive Order 12866, which require the publication by Treasury of a semi-annual agenda of regulations. The agenda includes regulations that Treasury has issued or is expected to issue and rules currently in effect that are under review. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-14550.pdf

Federal Register, Vol. 88, No. 143, 07/27/2023, 48592-48596.

The Small Business Administration (SBA) issued its semi-annual regulatory agenda which is a summary of current and projected rulemakings and completed actions of SBA. SBA invites comments regarding the agenda. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-14552.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48614-48616.

The Department of Labor (DOL) issued its semi-annual agenda of regulations. The internet has become the means for disseminating the entirety of DOL’s semi-annual regulatory agenda. However, the Regulatory Flexibility Act requires publication of a regulatory flexibility agenda in the Federal Register. The notice contains DOL’s regulatory flexibility agenda. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-14548.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48576-48580.

The Federal Communications Commission (FCC) published its semi-annual regulatory agenda. Twice a year, in spring and fall, FCC publishes in the Federal Register a list in the Unified Agenda of the major items and other significant proceedings under development or review that pertain to the Regulatory Flexibility Act. The Unified Agenda also provides the Code of Federal Regulations citations and legal authorities that govern the proceedings. The complete Unified Agenda will be published at: www.reginfo.gov. The notice may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2023-07-27/pdf/2023-14555.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48642-48680.

Regulatory Spotlight

The Securities Exchange Commission (SEC) issued its agenda of rulemaking actions pursuant to the Regulatory Flexibility Act. The items listed in the Regulatory Flexibility Agenda for Spring 2023 reflect only the priorities of the Chair of SEC, and do not necessarily reflect the views and priorities of any individual Commissioner. Information in the agenda was accurate on 04/10/2023, the date on which SEC staff completed compilation of the data. To the extent possible, rulemaking actions by SEC since that date have been reflected in the agenda. SEC’s complete agenda will be available at: www.reginfo.gov. Comments are due 08/28/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-27/pdf/2023-14566.pdf. Federal Register, Vol. 88, No. 143, 07/27/2023, 48694-48702.

Agencies Seek Information Regarding Medical Payment Products.

The Bureau of Consumer Financial Protection (CFPB), Department of Health and Human Services (HHS), and Department of the Treasury (Treasury) (collectively, the agencies) seek comment on medical credit cards, loans, and other financial products used to pay for health care. The agencies seek to understand the prevalence, nature, and impact of the products, including disparities across different demographic groups. Additionally, the agencies seek comment on whether the products may contribute to health care cost inflation, displace hospitals’ provision of financial assistance, lead patients to pay inaccurate or inflated medical bills, increase the amount patients must pay due to financing costs, or otherwise harm patients’ mental, physical, and financial well-being, including through downstream credit reporting and debt collection practices. Comments are due 09/11/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-12/pdf/2023-14726.pdf Federal Register, Vol. 88, No. 132, 07/12/2023, 44281-44290.

Agencies Issue Proposed Guidance on Reconsiderations of Value of Residential Real Estate Valuations.

The Bureau of Consumer Financial Protection (CFPB), Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and National Credit Union Administration (NCUA) (collectively the agencies) issued proposed guidance to highlight risks associated with deficient residential real estate valuations and describe how financial institutions may incorporate reconsiderations of value processes and controls into established risk management functions. The proposed guidance also highlights examples of policies and procedures that a financial institution may choose to establish to help identify, address, and mitigate the risk of discrimination impacting residential real estate valuations. Comments are due 09/19/2023. The proposed guidance may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-21/pdf/2023-12609.pdf Federal Register, Vol. 88, No. 139, 07/21/2023, 47071-47077.

CFPB Publishes Summer 2023 Supervisory Highlights, Issue 30.

The Consumer Financial Protection Bureau (CFPB) published its thirtieth edition of Supervisory Highlights. The report covers examination findings in the areas of auto origination, auto servicing, consumer reporting, debt collection, deposits, fair lending, information technology, mortgage origination, mortgage servicing, payday and small dollar lending, and remittances that were completed from 07/01/2022, to 03/31/2023. CFPB released the edition on its website on 07/26/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-07/pdf/2023-16764.pdf. Federal Register, Vol. 88, No. 150, 08/07/2023, 52131-52142.

FRB Issues Final Rules to Revise Regulation D.

The Board of Governors of the Federal Reserve System (FRB) issued a final rule to amend two sections of Regulation D to conform the provisions to prior regulatory amendments. The references to §204.2(c)(1)(iv)(E) in the heading and the introductory text are amended to refer to §204.2(c)(1)(iii)(E) in order to conform the heading and the introductory text to Regulation D amendments finalized in 2020. Second, the heading and the introductory text are amended to add a reference to the definition of “nonpersonal time deposit,” 12 CFR 204.2(f)(1)(iv)(E), to conform the heading and the introductory text to Regulation D amendments finalized in 1991. The amendments are effective 07/14/2023. The rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-14/pdf/2023-14637.pdf

Federal Register, Vol. 88, No. 134, 07/14/2023, 45057-45058.

FRB issued a final rule to adopt amendments to Regulation D to revise the rate of interest paid on balances (IORB) maintained at Federal Reserve Banks by or on behalf of eligible institutions. The final amendments specify that IORB is 5.4 percent, a 0.25 percentage point increase from its prior level. The amendment is intended to enhance the role of IORB in maintaining the federal funds rate in the target range established by the Federal Open Market Committee. The amendments are effective 08/02/2023. The IORB rate change was applicable 07/27/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-02/pdf/2023-16386.pdf Federal Register, Vol. 88, No. 147, 08/02/2023, 50761-50762.

FRB Revises Regulation A.

FRB issued a final rule to adopt amendments to Regulation A to reflect FRB’s approval of an increase in the rate for primary credit at each Federal Reserve Bank. The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under the programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of the Federal Reserve Banks, subject to review and determination of FRB. On 07/26/2023, FRB voted to approve a 0.25 percentage point increase in the primary credit rate, thereby increasing the primary credit rate from 5.25 percent to 5.5 percent. In addition, FRB had previously approved the renewal of the secondary credit rate formula, the primary credit rate plus 50 basis points. Under the formula, the secondary credit rate increased by 0.25 percentage points as a result of FRB’s primary credit rate action, thereby increasing the secondary credit rate from 5.75 percent to 6.0 percent. The final rule is effective 08/02/2023. The rate changes for primary and secondary credit were applicable 07/27/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-02/ pdf/2023-16381.pdf. Federal Register, Vol. 88, No. 147, 08/02/2023, 50760-50761.

FRB Announces Final Approval of Information Collections.

FRB announced final approval of an information collection titled, Ongoing Intermittent Survey of Households. FRB revised the survey to include one to two new questions. The voluntary survey is used to study consumer financial decisions, attitudes, and payment behavior. The notice may be viewed at: https://www.govinfo.gov/content/pkg/ FR-2023-07-19/pdf/2023-15241.pdf. Federal Register, Vol. 88, No. 137, 07/19/2023, 46161.

FRB announced final approval of an information collection titled, Reporting and Recordkeeping Requirements Associated with Regulation KK. Regulation KK establishes capital requirement and initial and variation margin requirements for certain entities on certain non-cleared swaps and non-cleared security-based swaps. The information collection is used in connection with the reporting and recordkeeping requirements of Regulation KK. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-19/pdf/2023-15239.pdf Federal Register, Vol. 88, No. 137, 07/19/2023, 46163-46164.

FRB announced final approval of an information collection titled, Joint Statement for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies. Standards in the statement encourage a regulated entity in a manner reflective of its size and other characteristics, to voluntarily conduct a self-assessment of its diversity policies and practices and to report information pertaining to its self-assessment to the Office of Minority and Women Inclusion of its primary federal financial regulator, as well as to publish information pertaining to its efforts with respect to the standards. FRB has developed a voluntary reporting template titled, Diversity Self-Assessment Template, for use by institutions regulated by FRB to facilitate the provision of self-assessment information. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-19/pdf/2023-15240.pdf

Federal Register, Vol. 88, No. 137, 07/19/2023, 46165-46166.

FRB Seeks Comment on Information Collections.

FRB seeks comment regarding an information collection titled, Consolidated Holding Company Report of Equity Investments in Nonfinancial Companies and the Annual Report of Merchant Banking Investments Held for an Extended Period. The data is information collected from certain holding companies on their equity investments in nonfinancial companies. FRB seeks to revise the collection as further discussed in the notice. Comments are due 09/18/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-19/pdf/2023-15242.pdf

Federal Register, Vol. 88, No. 137, 07/19/2023, 46161-46162.

Regulatory Spotlight

FRB seeks comment regarding an information collection titled, Reporting Requirements Associated with Regulation XX. Regulation XX implements section 14 of the Bank Holding Company Act which establishes a financial sector concentration limit that generally prohibits a financial company from merging or consolidating with, or otherwise acquiring, another company if the resulting company’s liabilities upon consummation would exceed 10 percent of the aggregate liabilities of all financial companies. Regulation XX requires financial companies that do not report consolidated financial information to FRB or other appropriate federal banking agency to report information on their total liabilities. FRB has implemented the requirement through the information collection. Comments are due 09/18/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-19/pdf/2023-15243.pdf Federal Register, Vol. 88, No. 137, 07/19/2023, 46162-46163.

FRB seeks comment regarding an information collection titled, Recordkeeping Requirements Associated with Regulation H (Real Estate Lending Standards Regulation for State Member Banks). The information collection includes a recordkeeping requirement associated with Regulation H that implements section 304 of the Federal Deposit Insurance Corporation Improvement Act. Pursuant to Regulation H, state member banks must adopt and maintain written real estate lending policies. Additionally, the information collection includes certain voluntary recordkeeping provisions in the Interagency Guidelines for Real Estate Lending Policies. Comments are due 09/18/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-19/pdf/2023-15245.pdf. Federal Register, Vol. 88, No. 137, 07/19/2023, 46164-46165.

FDIC Updates List of Financial Institutions in Liquidation.

The Federal Deposit Insurance Corporation (FDIC) announced appointment as sole receiver for the financial institution listed in the notice. The list (as updated from time to time in the Federal Register) may be relied upon as “of record” notice that FDIC has been appointed receiver for purposes of the statement of policy published in the 07/02/1992, issue of the Federal Register. For further information concerning the identification of any institutions which have been placed in liquidation, please contact FDIC at the contact information provided in the notice. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-08-04/pdf/2023-16696.pdf Federal Register, Vol. 88, No. 149, 08/04/2023, 51814.

FDIC Seeks Comment on Several Information Collections.

FDIC seeks comment regarding three information collections. The first collection, titled Certified Statement for Semiannual Deposit Insurance Assessment, consists of the reporting requirement associated with certifying the review by officials of the insured institutions to confirm that the assessment data are accurate and, in cases of inaccuracy, submission of corrected data. The second collection, Summary of Deposits, is the annual survey of branch office deposits as of June 30 for all FDIC-insured institutions that operate a main office and one or more branch locations as of June 30 each year. The third collection, Procedures for Monitoring Bank Secrecy Act Compliance, relates to records evidencing training provided to appropriate personnel. Comments are due 08/14/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-13/pdf/2023-14823.pdf Federal Register, Vol. 88, No. 133, 07/13/2023, 44803-44805.

FDIC seeks comment regarding an information collection titled, Reporting Requirements Associated with Resolution Planning. The collection comprises the reporting requirements associated with 12 CFR part 381.1 Section 381 implements the resolution planning requirements of section 165(d) of the Dodd-Frank Act which require certain financial companies to report periodically to FDIC and the Board of Governors of the Federal Reserve System their plans for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure. Comments are due 09/18/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-18/pdf/2023-15142. pdf Federal Register, Vol. 88, No. 136, 07/18/2023, 45902-45903.

FDIC seeks comment regarding an information collection titled, Reverse Mortgage Products and an information collection titled, Volcker Rule Restrictions on Proprietary Trading and Relationships with Hedge Fund and Privacy Equity fund. The reverse mortgage related collection is data collected from insured stated nonmember banks and state savings associations that make reverse mortgages. The second collection relates to section 13 of the Bank Holding Company Act which contains certain restrictions on the ability of a banking entity to engage in proprietary trading and to have certain interests in, or relationships with, a hedge fund or private equity fund. Comments are due 08/23/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-24/pdf/2023-15565.pdf Federal Register, Vol. 88, No. 140, 07/24/2023, 47500-47503.

FDIC seeks comment regarding an information collection titled, Forms Relating to Processing Deposit Insurance Claims and a second collection titled, Margin and Capital Requirements for Swap Entities [Interagency] IFR. If an insured depository institution is closed by its regulator and requisite information about insured deposits is not available in the failed institution’s records, the data is used by FDIC to make its deposit insurance determinations. The second collection is used in connection with part 349 subpart A which imposes reporting and recordkeeping on any FDIC-insured statechartered savings association that is registered as a swap entity. Comments are due 09/22/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-24/pdf/2023-15563.pdf Federal Register, Vol. 88, No. 140, 07/24/2023, 47503-47505.

HUD Issues Notice of FY 2023 Housing Trust Fund Allocation Amounts.

The Department of Housing and Urban Development (HUD) issued a notice to announce the fiscal year 2023 funding awards allocated to each state. The Housing and Economic Recovery Act (HERA) established the Housing Trust Fund (HTF) to be administered by HUD. Pursuant to the Federal Housing Enterprises Financial Security and Soundness Act, as amended by HERA, eligible HTF grantees are the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of Northern Mariana Islands, and the United States Virgin Islands. The notice announces the formula allocation amount for each eligible HTF grantee. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-07-11/pdf/2023-14649.pdf Federal Register, Vol. 88, No. 131, 07/11/2023, 44143-44144.

HUD Issues Debenture Interest Rates.

HUD announced changes in the interest rates to be paid on debentures issued with respect to a loan or mortgage insured by the Federal Housing Administration under the provisions of the National Housing Act (the Act). The interest rate for debentures issued under the Act during the 6-month period beginning 07/01/2023, is 3½ percent. The interest rate for debentures issued under any other provision of the Act is the rate in effect on the date that the commitment to insure the loan or mortgage was issued, or the date that the loan or mortgage was endorsed (or initially endorsed if there are two or more endorsements) for insurance, whichever rate is higher. The interest rate for debentures issued under these other provisions with respect to a loan or mortgage committed or endorsed during the 6-month period beginning 07/01/2023, is 3⅞ percent. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-0807/pdf/2023-16738.pdf Federal Register, Vol. 88, No. 150, 08/07/2023, 52200-52203.

HUD Proposes Revisions to Requirements for Investing Lenders and Mortgagees.

HUD proposed revisions to the requirements for investing lenders and investing mortgagees to gain or maintain status as a Federal Housing Administration (FHA) approved lender or mortgagee. The proposed revision would make FHA’s approval requirements consistent with investing mortgagees’ and investing lenders’ risk, reduce barriers to FHA approval for new investing mortgagees and investing lenders, and increase access to capital for all FHA-approved mortgagees and lenders. HUD also proposed to make clarifying edits to ensure that certification language is applicable to investing lenders and investing mortgagees. In addition, HUD proposed to define the Government-Sponsored Enterprises (GSEs) separately from other governmental-type entities to ensure that FHA requirements specific to loan origination do not improperly apply to GSEs. Finally, HUD proposed to eliminate obsolete language related to lender and mortgagee net worth requirements. Comments are due 09/18/2023. The proposed rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-18/pdf/2023-15033.pdf Federal Register, Vol. 88, No. 136, 07/18/2023, 45863-45867.

HUD Issues Proposed Rule to Modernize Engagement With Mortgagors in Default.

HUD issued a proposed rule to modernize engagement with mortgagors in default. HUD regulations require that mortgagees of Federal Housing Administration (FHA) insured single-family mortgages (mortgagees) meet in person, or make a reasonable effort to meet in person, with mortgagors who are in default on their mortgage payments. HUD proposed to modernize its regulation to better align with advances in electronic communication technology and mortgagor engagement preferences, while preserving consumer protections. Specifically, the rule updates HUD current in-person, face-to-face meeting requirements by permitting mortgagees to utilize methods of communication most likely to receive a response from the mortgagor as determined by HUD, including electronic and other remote

communication methods, such as telephone calls or video calls, to meet with mortgagors who are in default on their mortgage payments. The proposed rule would also expand the meeting requirement to all mortgagors in default, including mortgagors who do not reside in the mortgaged property and those with a mortgaged property not within 200 miles of their mortgagee, its servicer, or a branch office of either. Comments are due 09/29/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-31/pdf/2023-16128.pdf Federal Register, Vol. 88, No. 145, 07/31/2023, 49392-49397.

HUD Seeks Comment on Several Information Collections.

HUD seeks comment regarding an information collection titled, Title I Property Improvement and Manufactured Home Loan Programs. Title I loans are made by private sector lenders and insured by HUD against loss from default. HUD uses information about Title I loan borrowers to evaluate individual loans on their overall program performance. The information collected is used to determine insurance eligibility and claim eligibility. HUD has proposed to adopt the uniform residential loan application and amend forms 56001 and 56001-MH to capture Title I Loan program specific information which will simplify the form, avoid unnecessary duplication, and reduce burden to users. The information is necessary for HUD to capture information effective in determining overall program performance, insurance and claim eligibility, and risk management. Comments are due 09/25/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-26/pdf/2023-15820.pdf. Federal Register, Vol. 88, No. 142, 07/26/2023, 48259-48260.

HUD seeks comment regarding an information collection titled, Application for FHA-Insured Mortgages. Specific forms and related documents are needed to determine the eligibility of the borrower and proposed mortgage transaction for FHA’s mortgage insurance endorsement. There are additional documentation requirements for refinances with partial claims. Comments are due 08/28/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-202307-27/pdf/2023-15938.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48490-48491.

HUD seeks comment regarding an information collection titled, Quality Control Requirements for Direct Endorsement Lenders. Per 24 CFR 202.8(a)(3), a Direct Endorsement (DE) lender that sponsors third party originators (TPOs) is responsible for the actions of its TPOs or mortgages in originating loans or mortgage. As a result, DE lenders are responsible for conducting quality control reviews on TPO originations of FHA-insured mortgage loans and ensuring that their Quality Control Plans contain oversight. Comments are due 09/25/2023. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-15819.pdf. Federal Register, Vol. 88, No. 143, 07/27/2023, 48491-48492.

FEMA Issues Final Flood Hazard Determinations.

The Federal Emergency Management Agency (FEMA) issued a notice which identifies communities in the states of Minnesota and Ohio, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The date of 12/07/2023, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-15877.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48480-48481.

FEMA issued a notice which identifies communities in the state of Ohio, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The date of 11/30/2023, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2023-07-27/pdf/2023-15876.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48483-48485.

Regulatory Spotlight

FEMA issued a notice which identifies communities in the state of Ohio, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The date of 12/21/2023, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-15878.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48485-48486.

FEMA Issues Final Changes in Flood Hazard Determinations.

New or modified Base (1-percent annual chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) have been made final for communities in the state of Minnesota, as listed in the table in the notice. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. Each LOMR was finalized as indicated in the table in the notice. The final notice may be viewed at: https://www.govinfo.gov/content/pkg/ FR-2023-07-11/pdf/2023-14631.pdf Federal Register, Vol. 88, No. 131, 07/11/2023, 44135-44137.

New or modified Base (1-percent annual chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) have been made final for communities in the state of Michigan, as listed in the table in the notice. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. Each LOMR was finalized as indicated in the table in the notice. The final notice may be viewed at: https://www.govinfo.gov/content/pkg/ FR-2023-08-07/pdf/2023-16742.pdf Federal Register, Vol. 88, No. 150, 08/07/2023, 52191-52193.

FEMA Issues Notices of Changes in Flood Hazard Determinations.

FEMA issued a notice which lists communities in the states of Illinois, Minnesota, Ohio, and Wisconsin, where the addition or modification of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or the regulatory floodway (hereinafter referred to as flood hazard determinations), as shown on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports, prepared by FEMA for each community, is appropriate because of new scientific or technical data. The FIRM, and where applicable, portions of the FIS report, have been revised to reflect the flood hazard determinations through issuance of a Letter of Map Revision (LOMR), in accordance with federal regulations. The flood hazard determinations will be finalized on the dates listed in the table in the notice and revise the FIRM panels and FIS report in effect prior to the determination for the listed communities. From the date of the second publication of notification of the changes in a newspaper of local circulation, any person has 90 days in which to request through the community that the Deputy Associate Administrator for Insurance and Mitigation reconsider the changes. The flood hazard determination information may be changed during the 90-day period. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-202307-11/pdf/2023-14633.pdf Federal Register, Vol. 88, No. 131, 07/11/2023, 44137-44142.

FEMA issued a notice which lists communities in the states of Illinois, Indiana, Michigan, Minnesota, and Wisconsin, where the addition or modification of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or the regulatory floodway (hereinafter referred to as flood hazard determinations), as shown on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports, prepared by FEMA for each community, is appropriate because of new scientific or technical data. The FIRM, and where applicable, portions of the FIS report, have been revised to reflect the flood hazard determinations through issuance of a Letter of Map Revision (LOMR), in accordance with federal regulations. The flood hazard determinations will be finalized on the dates listed in the table in the notice and revise the FIRM panels and FIS report in effect prior to the determination for the listed communities. From the date of the second publication of notification of the changes in a newspaper of local circulation, any person has 90 days in which to request through

Regulatory Spotlight

the community that the Deputy Associate Administrator for Insurance and Mitigation reconsider the changes. The flood hazard determination information may be changed during the 90-day period. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-07/pdf/2023-16743.pdf. Federal Register, Vol. 88, No. 150, 08/07/2023, 52193-52196.

FEMA Issues Proposed Flood Hazard Determinations.

FEMA seeks comment regarding proposed flood hazard determinations, which may include additions or modifications of any Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area (SFHA) boundary or zone designation, or regulatory floodway on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports for communities in the state of Michigan, as listed in the table in the notice. The FIRM and FIS report are the basis of the floodplain management measures that the community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). Comments are due 10/25/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-07-27/pdf/2023-15874.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48482-48483.

FHFA Proposes to Amend Suspended Counterparty Program.

The Federal Housing Finance Agency (FHFA) issued a proposed rule to amend the Suspended Counterparty Program regulation. FHFA proposed to expand the categories of covered misconduct on which a suspension could be based to include sanctions arising from certain forms of civil enforcement. The proposed rule would also eliminate the requirement that any final suspension order be preceded by a proposed suspension order, but only when the suspension is based on an administrative sanction. Comments are due 09/19/2023. The proposed rule may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-07-21/pdf/2023-14723.pdf Federal Register, Vol. 88, No. 139, 07/21/2023, 47077-47084.

IRS Issues Final Rule on Carryback of Consolidated Net Operating Losses.

The Internal Revenue Service (IRS) issued a final rule that affects corporations filing consolidated returns. The final rule permits consolidated groups that acquire new members that were members of another consolidated group to elect in a year subsequent to the year of acquisition to waive all or part of the pre-acquisition portion of the carryback period for certain losses attributable to the acquired members where there is a retroactive statutory extension of the net operating loss carryback period. The final rule is effective 07/10/2023. The final rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-12/pdf/2023-14644.pdf. Federal Register, Vol. 88, No. 132, 07/12/2023, 44210-44216.

IRS Issues Final Rule on Recapture of Excess Employment Tax Credits Under COVID-19 Legislation.

IRS issued a final rule affecting regulations under sections 3111, 3131, 3132, 3134, and 3221 of the Internal Revenue Code (Code) issued under the authority granted by the Families First Coronavirus Response Act, the Coronavirus Aid, Relief, and Economic Security Act, and the American Rescue Plan Act. The final rule authorizes the assessment of any erroneous refund of tax credits paid under sections 7001 and 7003 of the Families First Coronavirus Response Act (including any increases in the credits under section 7005 thereof), and section 2301 of the Coronavirus Aid, Relief, and Economic Security Act, as well as under sections 3131, 3132 (including any increases in credits under section 3133), and 3134 of the Code. The final rule is effective 07/24/2023. The final rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-26/pdf/2023-15690.pdf. Federal Register, Vol. 88, No. 142, 07/26/2023, 48118-48125.

IRS Issues Proposed Rule to Identify Monetized Installment Sale Transactions as Listed Transactions.

IRS issued a proposed rule that would identify monetized installment sale transactions and substantially similar transactions as listed transactions, a type of reportable transaction. Material advisors and participants in the listed transactions would be required to file disclosures with IRS and would be subject to penalties for failure to disclose. Comments are due 10/03/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-202308-04/pdf/2023-16650.pdf. Federal Register, Vol. 88, No. 149, 08/04/2023, 51756-51763.

IRS Issues Proposed Rule to Revise Consolidated Return Regulations.

IRS issued a proposed rule to amend regulations applicable to affiliated groups of corporations that file consolidated federal income tax returns. The proposed rule would modify the regulations to reflect statutory changes, update language to remove antiquated or regressive terminology, and enhance clarity. Additionally, the proposed rule partially or completely withdraws certain proposed rules and withdraws certain temporary regulations as further outlined in the proposed rule. Comments are due 11/06/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2023-08-07/pdf/2023-14098.pdf. Federal Register, Vol. 88, No. 150, 08/07/2023, 52057-52082.

SBA Issues Final Rule on Investment Company Diversification and Growth.

The Small Business Administration (SBA) issued a final rule to implement changes to the Small Business Investment Company (SBIC) program. On 10/19/2022, SBA proposed revisions to SBIC to significantly reduce barriers to program participation for new SBIC fund managers and funds investing in underserved communities and geographies, capital intensive investments, and technologies critical to national security and economic development. The proposed rule introduced an additional type of SBIC (Accrual SBICs) to increase program investment diversification and patient capital financing for small businesses, modernize rules to lower financial barriers to program participation, and incorporate the statutory requirements of the Spurring Business in Communities program. The final rule is effective 08/17/2023

The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-18/pdf/2023-13981.pdf Federal Register, Vol. 88, No. 136, 07/18/2023, 45982-46014.

SBA Issues Final Rule to Adjust Monetary-Based Industry Size Standards for Inflation.

SBA issued a final rule to adjust monetary-based industry size standards (i.e., receipts- and assets-based) for inflation. The rule finalizes an additional 13.65 percent inflation increase to the industry-based monetary small business size standards to account for the inflation that occurred since the last adjustment to size standards for inflation in 2019. The final rule also implements inflation adjustments to three program-specific monetary size standards: the size standards for sales or leases of government property, the size standards for stockpile purchases, and the alternative size standard based on tangible net worth and net income for the Small Business Investment Company program. Lastly, the final rule implements inflation adjustments to the economic disadvantage thresholds applicable to the 8(a) Business Development and Economically Disadvantaged Women-Owned Small Business programs, and the dollar limit for combined total 8(a) contracts. The final rule is effective 07/19/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/ FR-2023-07-19/pdf/2023-15078.pdf Federal Register, Vol. 88, No. 137, 07/19/2023, 46048-46055.

SBA Adjusts CMPs for Inflation.

SBA issued a final rule to amend its regulations to adjust for inflation the amount of certain civil monetary penalties (CMPs) that are within the jurisdiction of SBA. The adjustments comply with the requirement in the Federal Civil Penalties Inflation Adjustment Act, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act, to make annual adjustments to the penalties. The final rule is effective 08/01/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-01/pdf/2023-16217.pdf Federal Register, Vol. 88, No. 146, 08/01/2023, 50003-50005.

SBA Proposes to Adjust Small Business Size Standards for 7(a) and CDC/504 Loan Programs and Surety Bond Limits for Inflation.

SBA proposed to amend its Small Business Size Regulations to increase the alternative size standard for its 7(a) Business and Certified Development Company (CDC/504) Loan Programs by 34.46% to account for inflation that has occurred since the size standard’s establishment in 2010. The inflation adjustment would increase the size standard’s level for tangible net worth to $20 million and for net income to $6.5 million. SBA also adjusted for inflation the applicable statutory limits for contract size under the Surety Bond Guarantee (SBG) Program. The adjustment would increase the contract limit to $9 million and to $14 million for federal contracts if a federal contracting officer certifies that such a guarantee is necessary. Comments are due 09/26/2023. The proposed rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-07-28/pdf/2023-15899.pdf. Federal Register, Vol. 88, No. 144, 07/28/2023, 48739-48760.

Regulatory Spotlight

FSA Seeks Comment on Farm Loan Programs Information Collection.

The Farm Service Agency (FSA) seeks comment regarding an information collection titled, Farm Loan Programs, Direct Loan Making. The Farm Loan Programs provide loans to family farmers to purchase real estate and equipment, and to finance agricultural production. FSA simplified the program application. To further improve the customer experience and service delivery for applicants, FSA is developing an online loan application to submit requests for direct loan assistance electronically. Future releases and iterations of the online application software will include expansion of functionality for direct loan making and provide ability for primary loan servicing application submission. Comments are due 09/19/2023 The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-21/pdf/2023-15536.pdf Federal Register, Vol. 88, No. 139, 07/21/2023, 47102-47103.

FSA Announces Fast Track Pilot Program.

FSA announced a pilot program titled, Application Fast Track that will expedite the processing of direct Operating Loans and Farm Ownership Loans to family farmers and ranchers if qualified. The Application Fast Track Pilot Program (AFT) provides an alternative underwriting process for applicants that meet certain financial benchmarks. AFT will be available in selected pilot office locations beginning 08/07/2023, and will be available in all locations nationwide beginning 01/01/2024. AFT will run through 09/30/2024. FSA will consider comments regarding AFT. Comments are due 10/02/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-03/pdf/2023-16489. pdf. Federal Register, Vol. 88, No. 148, 08/03/2023, 51260-51265.

RHS Waives Four Regulatory Requirements for Section 504 Home Repair Loans and Grants.

The Rural Housing Service (RHS) issued a notice to waive four regulatory requirements for the Section 504 Home Repair Loans and Grants in a Presidentially-declared disaster areas pilot program. RHS intends to evaluate the existing regulations and remove regulatory barriers to improve the program usage for very-low-income homeowners that seek to repair damaged homes. The notice discusses four waivers and provides contact information for additional details about the pilot. The waivers are effective 07/18/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-07-18/pdf/2023-15174.pdf. Federal Register, Vol. 88, No. 136, 07/18/2023, 45809-45810.

RHS Announces Pilot Programs for Single-Family Housing Section 502 Guaranteed Loan Program.

RHS announced the implementation of two pilot programs for the Section 502 Single-Family Housing Guaranteed Loan Program (SFHGLP), which are the Tribal Property Valuation Pilot Program and the Tribal Rehabilitation Pilot Program. Both pilot programs will provide flexible options for obtaining financing on tribal lands, one with a flexible appraisal option and the other permitting rehabilitation loans for homeowners. RHS intends to evaluate existing regulations, expand opportunities for economic development, and improve the quality of life in rural tribal communities. Details about the two pilot programs are provided within the notice. The effective date for the pilot programs is 07/26/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-26/pdf/2023-15759.pdf Federal Register, Vol. 88, No. 142, 07/26/2023, 48031-48035.

RHS Issues Correction to Rural Rental Housing Program.

RHS issued a correction of a rule published in the Federal Register on 04/28/2023 titled, Loan Guarantees Under the Section 538 Guaranteed Rural Rental Housing Program. The rule updated the process of submitting complete applications, updated contact information for key personnel, and changed priority scoring. The notice is to correct inadvertent errors in the previously published rule. The correction is effective 07/19/2023. The correction may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-19/pdf/2023-15202.pdf Federal Register, Vol. 88, No. 137, 07/19/2023, 46047-46048.

Agencies Seek Applications for Various Programs.

The Rural Business Cooperative Service (RBC) issued a notice of funding opportunity (NOFO) under the Rural Energy for America (REAP) Technical Assistance Grant Program for fiscal year 2023. The grant funds will be made to provide technical assistance to agricultural producers and rural small businesses applying to REAP, with priority for assisting distressed and disadvantaged communities, projects using underutilized technologies, and projects under $20,000. See the NOFO for deadlines and application details. The NOFO may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-07-14/pdf/2023-14832.pdf Federal Register, Vol. 88, No. 134, 07/14/2023, 45128-45133.

The Rural Housing Service (RHS) issued a notice of funding opportunity (NOFO) under the Community Facilities Program (CF) to repair essential community facilities damaged by Presidentially-declared disasters in calendar year 2022. The CF offers direct loans, loan guarantees, and grants to develop service and facilities in communities across rural America. Public bodies, non-profit organizations, and federally-recognized American Indian Tribes can use the funds to construct, expand, or improve facilities that provide health care, education, public safety, and public services. Projects include fire and rescue stations, village and town halls, health care clinics, hospitals, adult and childcare centers, assisted living facilities, rehabilitation centers, public buildings, schools, libraries, and many other community-based initiatives. See the NOFO for deadlines and application details. The NOFO may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-07-20/pdf/2023-15393.pdf Federal Register, Vol. 88, No. 138, 07/20/2023, 46732-46736.

The Rural Utilities Service (RUS) issued a notice of funding opportunity (NOFO) to announce its intent to solicit Letters of Interest for applications under the Empowering Rural America (New ERA) Program. The goal of the New ERA Program is to provide financial assistance to eligible entities to achieve the greatest reductions of greenhouse gas emission through the cooperatives’ voluntary transformation of rural electric systems. See the NOFO for deadlines and application details. The NOFO may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-27/pdf/2023-15897.pdf Federal Register, Vol. 88, No. 143, 07/27/2023, 48429-48430.

The Farm Service Agency (FSA) issued a notice of funding availability (NOFA) for the Emergency Grain Storage Facility Assistance Program (EGSFP). EGSFP provides financial assistance to eligible grain producers who were affected by an eligible disaster event that damaged or destroyed local commercial grain elevators. EGSFP is cost-share assistance to construct storage facilities needed to meet on-farm grain storage capacity and handling needs necessary to support the marketing of grain for producers. FSA previously published a NOFA on 03/16/2023, to announce the availability of $20 million for EGSFP. This NOFA updates the initial funding amount for the program from $20 million to $80 million and closes the application period for the program due to the current volume of applications received. See the NOFA for further details. The NOFA may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-07/pdf/2023-16745.pdf Federal Register, Vol. 88, No. 150, 08/07/2023, 52109-52110.

CFTC Issues Final Rule Regarding Governance Requirements for Derivatives Clearing Organizations.

The Commodity Futures Trading Commission (CFTC) issued a final rule to adopt amendments to require derivatives clearing organizations (DCOs) to establish and consult with one or more risk management committees (RMCs) comprised of clearing members and customers of clearing members on matters that could materially affect the risk profile of the DCO. In addition, CFTC has adopted minimum requirements for RMC composition and rotation, and requires DCOs to establish and enforce fitness standards for RMC members. CFTC also adopted requirements for DCOs to maintain written policies and procedures governing the RMC consultation process and the role of RMC members. Finally, CFTC adopted requirements for DCOs to establish one or more market participant risk advisory working groups (RWGs) that must convene at least two times per year, and adopt written policies and procedures related to the formation and role of the RWG. The final rule included new information collection requirements. Comments regarding the new information collection are due 09/11/2023. The final rule is effective 07/13/2023. The final rule may be viewed at: https://www. govinfo.gov/content/pkg/FR-2023-07-13/pdf/2023-14361.pdf

Federal Register, Vol. 88, No. 133, 07/13/2023, 4467544694. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-13/pdf/2023-14358.pdf Federal Register, Vol. 88, No. 133, 07/13/2023, 44781-44782.

Regulatory Spotlight

CFTC Issues Final Rule to Amend DCO Reporting and Information Regulations.

CFTC issued a final rule to amend certain reporting and information regulations applicable to derivatives clearing organizations (DCOs). The amendments, among other things, update information requirements associated with commingling customer funds and positions in futures and swaps in the same account, revise certain daily and eventspecific reporting requirements, and codify in an appendix the fields that a DCO is required to provide on a daily basis. In addition, CFTC adopted amendments to certain delegation provisions in its regulations. The final rule is effective 09/07/2023. See the final rule for mandatory compliance dates. The final rule may be viewed at: https://www.govinfo. gov/content/pkg/FR-2023-08-08/pdf/2023-16591.pdf Federal Register, Vol. 88, No. 151, 08/08/2023, 53664-53702.

CFTC Issues Proposed Rule Regarding Derivatives Clearing Organizations Recovery and Wind-Down Plans.

CFTC proposed amendments to certain regulations applicable to systemically-important derivatives clearing organizations (SIDCOs) and derivatives clearing organizations (DCOs) that elect to be subject to the provisions in CFTC’s regulations (Subpart C DCOs). The proposed amendments would, among other things, address certain risk management obligations, modify definitions, and codify existing staff guidance. CFTC also proposed to amend certain regulations to require DCOs that are not designated as systemically important, and which have not elected to be covered by CFTC regulations, to submit orderly wind-down plans. In addition, CFTC proposed to make conforming amendments to certain provisions, revise the Subpart C Election Form and Form DCO, and remove stale provisions. Comments are due 09/26/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-28/pdf/202314457.pdf. Federal Register, Vol. 88, No. 144, 07/28/2023, 48968-49055.

CFTC Proposes to Amend Margin Requirements for Uncleared Swaps.

CFTC issued a proposed rule to amend the margin requirements for uncleared swaps applicable to swap dealers (SDs) and major swap participants (MSPs) for which there is no prudential regulator. The proposed amendment would revise the definition of “margin affiliate” to provide that certain collective investment vehicles that receive all of their start-up capital, or a portion thereof, from a sponsor entity (seeded funds) would be deemed not to have any margin affiliates for the purposes of calculating certain thresholds that trigger the requirement to exchange initial margin (IM) for uncleared swaps. The proposed amendment would effectively relieve SDs and MSPs from the requirement to post and collect IM with certain eligible seeded funds for their uncleared swaps for a period of three years from the date on which the eligible seeded fund’s asset manager first begins making investments on behalf of the fund. CFTC also proposed to eliminate a provision disqualifying the securities issued by certain pooled investment funds that transfer their assets through securities lending, securities borrowing, repurchase agreements, reverse repurchase agreements, and similar arrangements from being used as eligible IM collateral, thereby expanding the scope of assets that qualify as eligible collateral. Additionally, CFTC proposed an amendment to the haircut schedule set forth in a CFTC Regulation to add a footnote that was inadvertently omitted when the rule was originally promulgated. Comments are due 10/10/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-08/pdf/2023-16572.pdf Federal Register, Vol. 88, No. 151, 08/08/2023, 53409-53431.

CFTC Issues ANPR on Risk Management Program for Swap and Futures Commission Merchants.

CFTC issued an advance notice of proposed rulemaking (ANPR) regarding potential regulatory amendments under the Commodity Exchange Act governing the risk management programs of swap dealers, major swap participants, and futures commission merchants. In particular, CFTC seeks information on several issues stemming from the adoption of certain risk management programs, including the governance and structure of such programs, the enumerated risks the programs must monitor and manage, and the specific risk considerations the programs must take into account. CFTC further seeks comment on how the related periodic risk reporting regime could be altered or improved. CFTC intends to use the information and comments received to inform potential future rulemaking with respect to risk management. Comments are due 09/18/2023. The ANPR may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-18/ pdf/2023-15056.pdf Federal Register, Vol. 88, No. 136, 07/18/2023, 45826-45836.

SEC Updates EDGAR Filer Manual.

The Securities and Exchange Commission (SEC) issued a final rule to adopt amendments to Volume II of the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) Filer Manual. See the final rule for the specific changes. The final rule is effective 07/18/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-18/ pdf/2023-15171.pdf. Federal Register, Vol. 88, No. 136, 07/18/2023, 45814-45815.

SEC Issues Final Rule on Money Market Fund Reforms.

SEC issued a final rule to adopt amendments to certain rules that govern money market funds under the Investment Company Act. The amendments are designed to improve the resilience and transparency of money market funds. The amendments revise the primary rule that governs money market funds to remove the ability for a fund board to temporarily suspend redemptions if the fund’s liquidity falls below a threshold. In addition, the amendments remove the tie between liquidity thresholds and the potential imposition of liquidity fees. The amendments also require certain money market funds to implement a liquidity fee framework that will better allocate the costs of providing liquidity to redeeming investors. In addition, SEC increased the daily liquid asset and weekly liquid asset minimum requirements to 25% and 50%, respectively. SEC also amended certain reporting requirements on Form N-MFP and Form N-CR and made certain conforming changes to Form N-1A to reflect amendments to the regulatory framework for money market funds. In addition, SEC is addressing how money market funds with stable net asset values may handle a negative interest rate environment, including by adopting amendments that will permit the funds to use share cancellation, subject to certain conditions. Further, SEC adopted rule amendments to specify how funds must calculate weighted average maturity and weighted average life. In addition, SEC adopted amendments to Form PF concerning the information large liquidity fund advisers must report for the liquidity funds they advise. Finally, SEC adopted two technical amendments to Form N-CSR and Form N-1A to correct errors from recent SEC rulemakings. The final rule amendments are effective 10/02/2023. See the final rule for the effective dates for form amendments. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-03/pdf/2023-15124.pdf. Federal Register, Vol. 88, No. 148, 08/03/2023, 51404-51549.

SEC Issues Final Cybersecurity Risk Management Rules.

SEC adopted new rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incidents by public companies that are subject to the reporting requirements of the Securities Exchange Act. Specifically, SEC adopted amendments to require current disclosure about material cybersecurity incidents. SEC also adopted rules requiring periodic disclosures about a registrant’s processes to assess, identify, and manage material cybersecurity risks, management’s role in assessing and managing material cybersecurity risks, and the board of directors’ oversight of cybersecurity risks. Lastly, the final rule requires cybersecurity disclosures to be presented in Inline eXtensible Business Reporting Language. The final rule is effective 09/05/2023. See Section II.I of the final rule for mandatory compliance dates. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-04/ pdf/2023-16194.pdf. Federal Register, Vol. 88, No. 149, 08/04/2023, 51896-51945.

SEC Proposes to Amend Broker-Dealer Customer Protection Rule.

SEC issued a proposed rule to amend the broker-dealer customer protection rule to require certain broker-dealers to perform their customer and broker-dealer reserve computations and make any required deposits into their reserve bank accounts daily rather than weekly. SEC also seeks comment on whether similar daily reserve computation requirements should apply to broker-dealers and security-based swap dealers with respect to their security-based swap customers. Comments are due 09/11/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-202307-18/pdf/2023-15200.pdf Federal Register, Vol. 88, No. 136, 07/18/2023, 45836-45863.

SEC Issues Proposed Rule to Exempt Certain Investment Advisors Operating Through the Internet.

SEC issued a proposed rule to amend rule 203A-(e) under the Investment Advisers Act, referred to as the Internet Adviser Exemption. The Internet Adviser Exemption provides an exemption from the prohibition on registration with

Regulatory Spotlight

SEC that may otherwise affect certain advisers seeking to register with SEC. The proposed amendments are designed to modernize the Internet Adviser Exemption’s conditions to account for the evolution in technology and the investment advisory industry since the adoption of the rule over twenty years ago. The proposal would also amend Form ADV to conform certain instructions and definitions to the amended rule and would require additional representations regarding an internet investment adviser’s reliance on the rule. Comments are due 10/02/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-01/pdf/2023-16287.pdf. Federal Register, Vol. 88, No. 146, 08/01/2023, 50076-50096.

SEC Issues Proposed Rule to Eliminate Conflicts of Interest with Use of Predictive Data Analytics.

SEC proposed new rules under the Securities Exchange Act and the Investment Advisers Act to eliminate, or neutralize the effect of, certain conflicts of interest associated with broker-dealers’ or investment advisers’ interactions with investors through the firms’ use of technologies that optimize for, predict, guide, forecast, or direct investment-related behaviors or outcomes. SEC also proposed amendments to rules under the Exchange Act and Advisers Act that would require firms to make and maintain certain records in accordance with the proposed conflicts rules. Comments are due 10/10/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-08-09/pdf/202316377.pdf Federal Register, Vol. 88, No. 152, 08/09/2023, 53960-54024.

FTC Adopts Revised Guides Concerning Use of Endorsements and Testimonials in Advertising.

The Federal Trade Commission (FTC) adopted revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Guides). After review of the comments received, FTC made revisions to the Guides. The Guides address: purpose and definitions; general considerations; consumer endorsements; expert endorsements; endorsements by organizations; disclosure of material connections; and endorsements directed to children. The final rule is effective 07/26/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-26/pdf/2023-14795. pdf Federal Register, Vol. 88, No. 142, 07/26/2023, 48092-48112.

FTC Issues Proposed Rule on Use of Consumer Reviews and Testimonials.

FTC issued a proposed rule to promulgate a trade regulation rule titled, Rule on the Use of Consumer Reviews and Testimonials. The rule would prohibit certain specified unfair or deceptive acts or practices involving consumer reviews or testimonials. FTC finds such practices to be prevalent based on the comments it received in response to an advance notice of proposed rulemaking and other information discussed in the proposed rule. FTC seeks comment, data, and arguments concerning the utility and scope of the proposed trade regulation rule to prohibit the specified unfair or deceptive acts or practices. Comments are due 09/29/2023. The proposed rule may be viewed at: https://www.govinfo. gov/content/pkg/FR-2023-07-31/pdf/2023-15581.pdf Federal Register, Vol. 88, No. 145, 07/31/2023, 49364-49392.

VA Proposes Servicer Regulation Changes.

The Department of Veterans Affairs (VA) issued a proposed rule to rename and clarify certain loss-mitigation terms used in VA regulations. VA proposed the changes to align the names and definitions with the general use in the housing finance industry. The proposed revisions are meant to avoid confusion and enable servicers and veterans to address loan defaults more quickly and effectively. Comments are due 09/18/2023. The proposed rule may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-07-20/pdf/2023-14478.pdf. Federal Register, Vol. 88, No. 138, 07/20/2023, 46720-46723.

VA Seeks Comment on Financial and Credit Counseling Services Study.

VA seeks comment regarding an information collection titled, Veteran Financial and Credit Counseling Services Study. The intent of the study is to identify financial and credit counseling needs of Veterans experiencing homelessness or at risk of experiencing homelessness, the financial and credit counseling services offered to Veterans, the specific barriers that Veterans have in accessing the financial and credit counseling services, and the effects of financial and

credit counseling services on such outcomes as employment, housing status, income, and credit score. The information collected will be used to inform VA about how to enhance financial and credit counseling services that are offered to Veterans experiencing homelessness or at risk of experiencing homelessness. Comments are due 09/25/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-25/pdf/2023-15681.pdf. Federal Register, Vol. 88, No. 141, 07/25/2023, 47948-47949.

NCUA Issues Final Rule on Federal Credit Union Bylaws.

The National Credit Union Administration (NCUA) issued a final rule regarding federal credit union bylaws. On 03/15/2022, Congress enacted the Credit Union Governance Modernization Act. Under the statute, NCUA has 18 months following the date of enactment to develop a policy by which a federal credit union (FCU) member may be expelled for cause by a two-thirds vote of a quorum of the FCU’s board of directors. NCUA issued the final rule to amend the standard FCU bylaws to adopt a policy by which an FCU member may be expelled for cause by a vote of two-thirds of a quorum of an FCU’s board of directors. The final rule also makes confirming changes to Article II of the FCU bylaws regarding members in good standing. The final rule is effective 08/25/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-07-26/pdf/2023-15715.pdf. Federal Register, Vol. 88, No. 142, 07/26/2023, 48055-48067.

Compliance Notes

WBA seeks to warn bankers of a recent marketing campaign which includes misinformation meant to cause fear and mistrust. The email incorrectly states that banks are “planning to replace the US dollar” and through the use of alarmist language scares customers into thinking their “entire life savings could be at risk.” The email also has links within it which have been identified as malicious.

The advertisement appears as an email with the subject: ““Blacklist” of U.S. banks released. See if your bank is on the list.” The email is addressed as “Dear Reader” and goes on to state, “A former Vice President of a Major Investment Bank just released this US bank “blacklist” with 110 banks.” The email closes with the name of Kendall Castillo Managing Editor, Palm Beach Letter and is sent by Finance and Investing Traffic LLC, listed as owner and operator of Global Market Headlines.

The referenced list is the list of banks which have voluntarily elected to participate in the FRB’s FedNow® Service as participants of the pilot program. The FedNow Service is an instant payment service developed by the Federal Reserve which allows for safe and efficient instant payment services.

WBA believes the deceptive email is an attempt to scare and misinform customers. The contents of the email confuse readers to believe banks participating in the FedNow instant payment service are putting customer deposits at risk. WBA believes the deceptive email is confusing the FedNow Service with digital currency.

Banks should be certain customer service staff are aware of the email to help answer customer questions and to share accurate information about the FedNow Service with concerned customers. FRB has several resources that clearly explain the service, including an FAQ which includes a specific Q&A item that the service is not replacing cash and is not digital currency. The FedNow Service FAQ may be viewed at: www.federalreserve.gov/paymentsystems/fednow_faq.htm

Regarding the FedNow Service, FRB announced that its new system for instant payments is now live. Banks of all sizes can sign up and use the tool to instantly transfer money for their customers, any time of the day, on any day of the year. To start, 35 early-adopting banks and credit unions, as well as the Treasury’s Bureau of Fiscal Service, are ready with instant payments capabilities via the service. In addition, 16 service providers are ready to support payment processing for banks. As an interbank payment system, the FedNow Service operates alongside other longstanding FRB payment services such has Fedwire® and FedACH®. The announcement and more information about the FedNow Service may be viewed at: www.federalreserve.gov/newsevents/pressreleases/other20230720a.htm

Compliance Notes

SBA announced that EIDLs are available for parts of Wisconsin for small businesses, small agricultural cooperatives, small business engaged in aquaculture, and most private nonprofit organizations affected by the drought that began 08/01/2023. The declaration covers the primary counties of Burnett, Sawyer, Washburn and the contiguous counties of Ashland, Barron, Bayfield, Douglas, Polk, Price, and Rusk in Wisconsin, and the contiguous counties of Chisago and Pine in Minnesota. The announcement may be viewed at: www.sba.gov/article/2023/08/10/sba-workingcapital-disaster-loans-available-wisconsin-due-secretary-agriculture-declaration-ongoing#:~:text=Disaster%20 loan%20information%20and%20application,to%20DisasterCustomerService%40sba.gov%20

OCC issued guidance regarding the applicability of the legal lending limit (LLL) to purchased loans. Unless an exception applies, all loans and extensions of credit made by banks are subject to the LLL, which provides limitations on the total amount of loans and extensions of credit to any one borrower. Whether a loan that a bank purchases is attributable to the seller under the LLL regulation depends on specific facts and circumstances. Consequently, bank management would typically consider more information than it would for in-house originations when determining compliance with the LLL regulation for purchased loans. The guidance further explains the impact of explicit and implied recourse when making a determination of whether a loan may be attributable to the seller under 12 CFR 32.2(q)(1)(iii). The guidance may be viewed at: www.occ.gov/news-issuances/bulletins/2023/bulletin-2023-27.html

As part of its Community Bank Outreach Program, FDIC has made available the Technical Assistance Video Program. The purpose of the program is to provide videos that convey fundamental information pertaining to various aspects of the examination process and areas of supervisory focus. The videos provide information to bank board members about their fiduciary role and responsibilities as well as other subjects pertaining to banking and regulatory issues. Video topics include Overview of the FDIC and the Examination Process; Information for New Board Members; Corporate Governance; Interest Rate Risk; and Current Expected Credit Losses. The videos may be viewed at: www.fdic. gov/resources/bankers/technical-assistance-videos/index.html

FRB provided additional information on its program to supervise novel activities of the banks it oversees. Novel activities include complex, technology-driven partnerships with non-banks to provide banking services to customers; and activities that involve crypto-assets and distributed ledger or “blockchain” technology. FRB also provided additional information on the process for a state bank supervised by FRB to follow before engaging in certain dollar token or stablecoin activity, including demonstrating to its FRB supervisors that it has appropriate safeguards to conduct the activity safely and soundly. The announcements are part of FRB’s ongoing work to create greater clarity for all parties as banks and related technologies continue to evolve. The Supervision and Regulation Letters may be viewed at: www. federalreserve.gov/newsevents/pressreleases/bcreg20230808a.htm

FFIEC released updates to the BSA/AML Examination Manual. The manual provides instruction to examiners for assessing a bank’s AML/CFT program and its compliance with other AML/CFT regulatory requirements. Manual updates include:

• Due Diligence Programs for Correspondent Accounts for Foreign Financial Institutions;

• Prohibition on Correspondent Accounts for Foreign Shell Banks;

• Records Concerning Owners of Foreign Banks and Agents for Service of Legal Process;

• Reporting Obligations on Foreign Bank Relationships with Iranian-Linked Financial Institutions;

• Summons or Subpoena of Foreign Bank Records;

• Termination of a Correspondent Relationship;

• Records Concerning Owners of Foreign Banks and Agents for Service of Legal Process;

• Due Diligence Programs for Private Banking Accounts; and

• Special Information Sharing Procedures to Deter Money Laundering and Terrorist Activity.

Banks should not interpret the updates as new instructions or an increased focus on certain areas; instead, the updates are intended to offer transparency into the examination process and support risk-focused examination work. Details may be viewed at: www.ffiec.gov/press/an080223.htm

FDIC published its 2023 Risk Review which is a report that summarizes conditions in the U.S. economy, financial markets, and banking industry. The Review provides a comprehensive summary of key developments and risks in the U.S. banking system, as in prior reports, and includes a new section focused on crypto-asset risk. The report is an annual publication and is based on year-end banking data from the prior year. This year’s expanded report incorporates data and insights related to the recent stress to the banking sector through first quarter 2023. The 2023 Risk Review may be viewed at: www.fdic.gov/news/press-releases/2023/pr23061.html.

FRB released results of a survey of senior financial officers at banks about their strategies and practices for managing reserve balances. The Senior Financial Officer Survey is used by FRB to obtain information about banks’ reserve balance management strategies and practices, their deposit pricing strategies, their expectations for potential changes in both the size and composition of their balance sheets, and their views regarding Federal Reserve facilities. The most recent survey was conducted in collaboration with the Federal Reserve Bank of New York between 05/05/2023 and 05/19/2023, and includes responses from banks that held a bit more than three-quarters of total banking system reserve balances at the time of the survey. The survey may be viewed at: www.federalreserve.gov/ newsevents/pressreleases/other20230801a.htm

FinCEN shared SAR filings by industry for the period of 01/01/2014 to 12/31/2022. The data is arranged by industry type and includes rankings by states/territories and suspicious activities. The data may be viewed at: www.fincen.gov/reports/sar-stats/sar-filings-industry

Insights of a Wisconsin Compliance Officer

WBA Legal wishes to share insights of another veteran compliance officer whose run as compliance officer is lightening as he contemplates retirement. This banker has always been willing to assist fellow compliance officers by sharing his perspective and expertise. His insight and recommendations have been invaluable to Wisconsin’s compliance and BSA communities, including when WBA Legal solicits data for purposes of creating comment letters on behalf of the industry.

Please enjoy some insights as shared from the eyes of Tom Omdahl, Vice President – BSA/Compliance, Bank First, Manitowoc, Wisconsin.

Q: When did you start in compliance? Why compliance?

Tom: Similar to most compliance professionals, it was a voluntold career path. When I was a bank examiner with the FDIC, I was informed I would be working in compliance for 6 months. As an internal auditor at AnchorBank, I was congratulated for my promotion to Vice President – Compliance/BSA Officer without knowing I was a candidate. I continued in compliance/BSA because I have had several opportunities to develop and enhance compliance operations at various financial institutions.

Q: Do you have any particular “trick” or how best do you tackle understanding a new reg or new requirement?

Tom: When gaining an understanding of new regulations, I participate in related training presentations to best see how experts in the industry recommend implementation. Also, I review regulatory commentary.

Q: TRID aside (as I think we would all pick TRID) what is your least fav regulation to manage? Why?

Tom: UDAAP is my least favorite area of regulation. UDAAP is so subjective and too open to regulator interpretation of what is unfair, deceptive, or abusive. It is difficult to determine what to review and the standard for identifying potential issues.

Insights of a Wisconsin Compliance Officer

Q: What are you most proud of accomplishing in your career?

Tom: For the various institutions for which I worked, I have been able to develop strong and effective compliance programs as recognized by bank management, auditors, and regulators.

Q: What will you miss the most?

Tom: In part, I am going to miss many of the friends and contacts (including regulatory examiners) I have made in the compliance community.

Q: Now at this side of your career, and with all of your compliance experience and all that you have helped to implement, what advice would you have given yourself when you first started in compliance?

Tom: Not everything has to be completed immediately.

Q: How did you successfully train fellow compliance staff and/or other bank staff on the importance of paying attention to compliance and for the need to get compliance right?

Tom: Through simple explanations of the purpose of the various regulations. When questions arise or errors occur, I try to be a positive source of information and offer solutions rather than being judgmental or critical.

Q: Funniest compliance or banking related story/experience?

Tom: One the most fun experiences was dressing up as Morrie the Sea Creature for a series of BSA training videos (see photo, left)

Q: What are you looking forward to the most after leaving compliance behind?

Tom: I am going to volunteer with the local Habitat for Humanity chapter to assist them with compliance issues (my home construction skills are negligible). In 2024, I am taking a 500 mile walking pilgrimage through Spain.

Q: Any parting thoughts for the new compliance guard?

Tom: Approach the job with a smile. You can accomplish a lot more with bank management and staff if you present yourself as an ally rather than an adversary.

WBA wishes Tom all the best as he moves towards retirement. It has been great working with Tom over the years and his interaction at WBA compliance events will be missed.

SEPTEMBER 2023

•Auditing Real Estate Loans Boot Camp

5–7 Madison or virtual; $795/attendee

• Secur-I.T. Conference

12–13 Wisconsin Dells

• Branch Manager Boot Camp: Session 1

20 Four-part series; virtual half-days; $800/attendee

• Management Conference

20–21 Madison; group pricing available

• Principles of Banking Course

26–27 Madison; $550/attendee

OCTOBER 2023

•Consumer Lending Boot Camp

3–4 Madison; $550/attendee

• Creating Content with a Click: Online Workshop

4 Virtual; $289/attendee

• Directors Summit

11 Stevens Point; $225/attendee

• FIPCO Software & Compliance Forum: Loan & Mortgage

11 Wisconsin Dells or virtual; $250/attendee

• Family-owned and Closely Held Bank Strategic Retreat

12–13 Madison

•Supervisor Boot Camp

16–17 Madison; $535/attendee

•Commercial Lending School

18–20 Madison; $895/attendee

• Community Bankers for Compliance (CBC) – Session IV

25 Wisconsin Dells or virtual; membership (pricing options vary)

• Principles of Banking Course

25–26 Tomah; $550/attendee

• BSA/AML Workshop

26 Wisconsin Dells or virtual; $245/attendee

• Understanding Bank Performance Virtual Series

30 Eight-part series; $1,000/attendee

 For more information or to register, visit www.wisbank.com/ education, email WBA Education at wbaeducation@ wisbank.com, or call 608-441-1252.

NOVEMBER 2023 (continued)

• IRA Essentials Workshop

1 Madison or virtual; $245/attendee

• Advanced IRA Workshop

2 Madison or virtual; $245/attendee

• Compliance Forum: Session 2

7 Wisconsin Dells; annual membership (pricing varies)

• BOLT Winter Leadership Summit

8 Wisconsin Dells; $150/attendee

•Personal Banker School

14–15 Madison; $495/attendee

• FLEX: Retail & Marketing Summit (formerly known as LEAD360)

15–16 Wisconsin Dells; $350/attendee

FEBRUARY 2024

• Bank Executives Conference

7–9 Wisconsin Dells

• Compliance Forum: Session 3

20 Wisconsin Dells; annual membership (pricing varies)

• Capitol Day

TBD Madison

MARCH 2024

• Advanced IRA Workshop

5 Madison or virtual; $245/attendee

• Health Savings Account Workshop

6 Madison or virtual; $245/attendee

•Loan Compliance School

11–15 Madison or virtual; $1,295/attendee

KEY: Color-Coded Event Descriptions…

• ConferencesI Summits – One or more days, based on hot topics, industry news and best practices; scheduled time for peer networking.

• SchoolsI Boot Camps – Focused on a particular area of banking, allowing for a deep dive into that focused area over the course of two to six days.

• WorkshopsI Seminars – One-day programs, sometimes in multiple locations, focused on a specific topic or area of banking.

• WBA-Hosted Webinars – Two-hour webinars instructed with a particular focus on Wisconsin state law and rules.

• Other Events