January 2023 Compliance Journal

Compliance Journal January 2023

Special Focus

FDIC’s Revised Guidelines for Appeals of Material Supervisory Determinations

The Federal Deposit Insurance Corporation (FDIC) recently adopted revised Guidelines for Appeals of Material Supervisory Determinations (Guidelines). The revisions expand and clarify the role of FDIC’s Ombudsman, add the Ombudsman to the Supervision Appeals Review Committee as a non-voting member, and require that materials considered by the Supervision Appeals Review Committee be shared with both parties to the appeal on a timely basis, subject to applicable legal limitations on disclosure. In addition, the revised Guidelines allow insured depository institutions to request a stay of a material supervisory determination while an appeal is pending. Insured depository institutions (IDIs) should know the process and timelines associated with the revised Guidelines to effectively file an appeal should the need arise. The revised Guidelines are effective December 13, 2022.

The Guidelines apply to IDIs that FDIC supervises (i.e., insured State nonmember banks, insured branches of foreign banks, and state savings associations), and to other IDIs for which FDIC makes material supervisory determinations.

Introduction

Section 309(a) of the Riegle Community Development and Regulatory Improvement Act required FDIC to establish an independent intra-agency appellate process to review material supervisory determinations made at IDIs that it supervises. The Guidelines describe the types of determinations that are eligible for review and the process by which appeals will be considered and decided. The procedures set forth in the Guidelines establish an appeals process for the review of material supervisory determinations by the Supervision Appeals Review Committee (SARC).

SARC Membership

The following individuals comprise the three (3) voting members of SARC: (1) One inside FDIC Board member, either the Chairperson, the Vice Chairperson, or the FDIC Director (Appointive), as designated by the FDIC Chairperson (this person would serve as the Chairperson of SARC); and (2) one deputy or special assistant to each of the inside FDIC Board members who are not designated as SARC Chairperson. The General Counsel and the Ombudsman are non-voting members of SARC.

The FDIC Chairperson may designate alternate member(s) to SARC if there are vacancies so long as the alternate member was not involved in making or affirming the material supervisory determination under review. A member of SARC may designate and authorize a member of his or her staff within the member’s area of responsibility related to cases before SARC to act on his or her behalf.

Determinations Subject to Appeal

An IDI may appeal any material supervisory determination pursuant to the procedures set forth in the Guidelines. Under the Guidelines, a material supervisory determination includes:

• CAMELS ratings under the Uniform Financial Institutions Rating System;

• IT ratings under the Uniform Rating System for Information Technology;

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• Trust ratings under the Uniform Interagency Trust Rating System;

• CRA ratings under the Revised Uniform Interagency Community Reinvestment Act Assessment Rating System;

• Consumer compliance ratings under the Uniform Interagency Consumer Compliance Rating System;

• Registered transfer agent examination ratings;

• Government securities dealer examination ratings;

• Municipal securities dealer examination ratings;

• Determinations relating to the appropriateness of loan loss reserve provisions;

• Classifications of loans and other assets in dispute the amount of which, individually or in the aggregate, exceeds 10 percent of an IDI’s total capital;

• Determinations relating to violations of a statute or regulation that may affect the capital, earnings, or operating flexibility of an IDI, or otherwise affect the nature and level of supervisory oversight accorded an IDI;

• Truth in Lending Act (Regulation Z) restitution;

• Filings made pursuant to 12 CFR 303.11(f), for which a request for reconsideration has been granted, other than denials of a change in bank control, change in senior executive officer or board of directors, or denial of an application pursuant to section 19 of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 1829 (which are contained in 12 CFR 308, subparts D, L, and M, respectively), if the filing was originally denied by the Director, Deputy Director, or Associate Director of the Division of Depositor and Consumer Protection (DCP) or the Division of Risk Management Supervision (RMS);

• Decisions to initiate informal enforcement actions (such as memoranda of understanding);

• Determinations regarding IDI’s level of compliance with a formal enforcement action; however, if FDIC determines that the lack of compliance with an existing formal enforcement action requires an additional formal enforcement action, the proposed new enforcement action is not appealable;

• Matters requiring board attention; and

• Any other supervisory determination (unless otherwise not eligible for appeal) that may affect the capital, earnings, operating flexibility, or capital category for prompt corrective action purposes of an IDI, or that otherwise affects the nature and level of supervisory oversight accorded an IDI.

The following are activities which are not considered material supervisory determinations under the Guidelines:

• Decisions to appoint a conservator or receiver for an IDI, and other decisions made in furtherance of the resolution or receivership process, including but not limited to determinations pursuant to parts 370, 371, and 381, and section 360.10 of FDIC’s rules and regulations;

• Decisions to take prompt corrective action pursuant to section 38 of the FDI Act, 12 U.S.C. 1831o;

• Determinations for which other appeals procedures exist (such as determinations of deposit insurance assessment risk classifications and payment calculations); and

• Formal enforcement-related actions and decisions, including determinations and the underlying facts and circumstances that form the basis of a recommended or pending formal enforcement action.

Formal Enforcement-Related Action or Decisions

A formal enforcement-related action or decision commences, and becomes unappealable, when FDIC initiates a formal investigation under 12 U.S.C. 1820(c) (Order of Investigation), issues a notice of charges or a notice of assessment under 12 U.S.C. 1818

January 2023

Volume 28, Number 8

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.

Special Focus

or other applicable laws (Notice of Charges), provides an IDI with a draft consent order, or otherwise provides written notice to an IDI that FDIC is reviewing the facts and circumstances presented to determine if a formal enforcement action is merited under applicable statutes or published enforcement-related policies of FDIC, including written notice of a referral to the Attorney General pursuant to the Equal Credit Opportunity Act (ECOA) or a notice to the Secretary of Housing and Urban Development (HUD) for violations of ECOA or the Fair Housing Act (FHA). Such notice may be provided in the transmittal letter accompanying a Report of Examination.

For the purposes of the Guidelines, remarks in a Report of Examination do not constitute written notice that FDIC is reviewing the facts and circumstances presented to determine if a proposed enforcement action is merited. Commencement of a formal enforcement-related action or decision will not suspend or otherwise affect a pending request for review or appeal that was submitted before the commencement of the formal enforcement-related action or decision.

Additional Appeal Rights

In the case of any written notice from FDIC to an IDI that FDIC is determining whether a formal enforcement action is merited, FDIC must issue an Order of Investigation, issue a Notice of Charges, or provide the IDI with a draft consent order within 120 days of such a notice, or the most recent submission of information from the IDI, whichever is later, or appeal rights will be made available pursuant to the Guidelines. If FDIC timely provides an IDI with a draft consent order and the IDI rejects the draft consent order in writing, FDIC must issue an Order of Investigation or a Notice of Charges within 90 days from the date on which the IDI rejects the draft consent order in writing, or appeal rights will be made available pursuant to the Guidelines. The FDIC may extend these periods, with the approval of the SARC Chairperson, after FDIC notifies the IDI that the relevant Division Director is seeking formal authority to take an enforcement action.

In the case of a referral to the Attorney General for violations of ECOA, beginning on the date the referral is returned to FDIC, FDIC must proceed in accordance with the requirements outlined in the preceding paragraph, including within the specified timeframes, or appeal rights will be made available pursuant to the Guidelines. The same process is to be followed for a case involving notice to HUD for violations of ECOA or FHA.

Written notification will be provided to an IDI within 10 days of a determination that appeal rights have been made available. The relevant FDIC Division and IDI may mutually agree to extend the timeframes outlined, if the parties deem it appropriate.

Good-Faith Resolution

The Guidelines provide that an IDI should make a good-faith effort to resolve any dispute concerning a material supervisory determination with the on-site examiner and/or the appropriate Regional Office. The on-site examiner and the Regional Office will promptly respond to any concerns raised by an IDI regarding a material supervisory determination. Informal resolution of disputes with the on-site examiner and the appropriate Regional Office is encouraged; however, seeking such a resolution is not a condition to filing a request for review with the appropriate Division, either DCP, RMS, or the Division of Complex Institution Supervision and Resolution (CISR), or to filing a subsequent appeal with SARC under the Guidelines.

Filing a Request for Review With the Appropriate Division

An IDI may file a request for review of a material supervisory determination with the Division that made the determination, either the Director, DCP, RMS, or CISR (Director or Division Director), 550 17th Street NW, Room F-4076, Washington, DC 20429, within 60 calendar days following the IDI’s receipt of a report of examination containing a material supervisory determination or other written communication of a material supervisory determination. Requests for review also may be submitted electronically. To ensure confidentiality, requests should be submitted through securemail. fdic.gov, directing the message to DirectorReviewRequest@fdic.gov

A request for review must be in writing and must include:

• A detailed description of the issues in dispute, the surrounding circumstances, the IDI’s position regarding the

Special Focus

dispute and any arguments to support that position (including citation of any relevant statute, regulation, policy statement, or other authority), how resolution of the dispute would materially affect the IDI, and whether a goodfaith effort was made to resolve the dispute with the on-site examiner and the Regional Office; and • A statement that the IDI’s board of directors or senior management has considered the merits of the request and has authorized that it be filed. Senior management is defined as the core group of individuals directly accountable to the board of directors for the sound and prudent day-to-day management of the IDI. If an IDI’s senior management files an appeal, it must inform the board of directors of the substance of the appeal before filing and keep the board of directors informed of the appeal’s status.

Within 45 calendar days after receiving a request for review as described above, the Division Director will: (a) review the appeal, considering whether the material supervisory determination is consistent with applicable laws, regulations, and policy, make his or her own supervisory determination without deferring to the judgments of either party, and issue a written determination on the request for review, setting forth the grounds for that determination; or (b) refer the request for review to SARC for consideration as an appeal under the Guidelines and provide written notice to the IDI that the request for review has been referred to SARC.

No appeal to SARC will be allowed unless an IDI has first filed a timely request for review with the appropriate Division Director. In any decision issued by the Division Director, the Director will inform the IDI of the 30-day time period for filing with SARC and will provide the mailing address for any appeal the IDI may wish to file. The Division Director may request guidance from the SARC Chairperson or the Legal Division as to procedural or other questions relating to any request for review.

Appeal to SARC

An IDI that does not agree with the written determination rendered by the Division Director may appeal that determination to SARC within 30 calendar days after the date of receipt of that determination. Failure to file within the 30-day time limit may result in denial of the appeal by SARC.

Filing With SARC

An appeal to SARC will be considered filed if the written appeal is received by FDIC within 30 calendar days after the date of receipt of the Division Director’s written determination or if the written appeal is placed in the U.S. mail within that 30-day period. The appeal should be sent to the address indicated on Division Director’s determination being appealed, or sent via email to ESS_Appeals@fdic.gov. An acknowledgment of the appeal will be provided to the IDI, and copies of the IDI’s appeal will be provided to the Office of the Ombudsman and appropriate Division Director. Copies of all relevant materials related to an appeal will be provided to the Office of the Ombudsman.

Contents of Appeal

The appeal should be labeled to indicate that it is an appeal to SARC and should contain the name, address, and telephone number of the IDI and any representative, as well as a copy of the Division Director’s determination being appealed. If oral presentation is sought, that request should be included in the appeal. If expedited review is requested, the appeal should state the reason for the request. Only matters submitted to the appropriate Division Director in a request for review may be appealed to SARC.

Evidence not presented for review to the Division Director is generally not permitted; such evidence may be submitted to SARC only if approved by the SARC Chairperson and with a reasonable time for the Division Director to review and respond. The IDI should set forth all of the reasons, legal and factual, why it disagrees with the Division Director’s determination. Nothing in the SARC administrative process shall create any discovery or other such rights.

Burden of Proof

The burden of proof as to all matters at issue in the appeal, including timeliness of the appeal if timeliness is at issue, rests with the IDI.

Special Focus

Submission From the Division Director

The Division Director may submit views regarding the appeal to SARC within 30 calendar days of the date on which the appeal is received by SARC.

Oral Presentation

The SARC will, if a request is made by the IDI or by FDIC staff, allow an oral presentation. The SARC may hear oral presentations in person, telephonically, electronically, or through other means agreed upon by the parties. If an oral presentation is held, the IDI and FDIC staff will be allowed to present their positions on the issues raised in the appeal and to respond to any questions from SARC.

Consolidation, Dismissal, and Rejection

Appeals based upon similar facts and circumstances may be consolidated for expediency. An appeal may be dismissed by SARC if it is not timely filed, if the basis for the appeal is not discernable from the appeal, or if the IDI moves to withdraw the appeal. The SARC will decline to consider an appeal if an IDI’s right to appeal is not yet available under the additional appeal rights outlined above.

Scope of Review and Decision

The SARC will be an appellate body and will make independent supervisory determinations. The SARC will review the appeal for consistency with the policies, practices, and mission of FDIC and the overall reasonableness of, and the support offered for, the positions advanced. The SARC’s review will be limited to the facts and circumstances as they existed prior to, or at the time the material supervisory determination was made, even if later discovered, and no consideration will be given to any facts or circumstances that occur or corrective action taken after the determination was made. The SARC will not consider any aspect of an appeal that seeks to change or modify existing FDIC rules or policy. The SARC, after consultation with the Legal Division, will refer any appeals that raise policy matters of first impression to the Chairperson’s Office for its consideration. The SARC will notify the IDI, in writing, of its decision concerning the disputed material supervisory determination(s) within 45 days after the date SARC meets to consider the appeal, which meeting will be held within 90 days after either the date of the filing of the appeal or the date that Division Director refers the appeal to SARC.

Other Communications

Materials considered by SARC will be shared with both parties to the appeal, subject to applicable legal limitations on disclosure, on a timely basis. The Ombudsman will verify that both parties have received all materials considered by SARC.

Publication of Decisions

Decisions of SARC will be published as soon as practicable, and the published decisions will be redacted to avoid disclosure of the name of the appealing IDI and any information exempt from disclosure under the Freedom of Information Act and FDIC’s document disclosure regulations found in 12 CFR part 309. In cases in which redaction is deemed insufficient to prevent improper disclosure, published decisions may be presented in summary form. Published SARC decisions may be cited as precedent in appeals to SARC. Annual reports on SARC’s decisions and Division Directors’ decisions with respect to IDIs’ requests for review of material supervisory determinations also will be published.

Appeal Guidelines Generally

Appeals to SARC will be governed by the Guidelines. The SARC, with the concurrence of the Legal Division, will retain discretion to waive any provision of the Guidelines for good cause. Supplemental rules governing SARC’s operations may be adopted.

Special Focus

An IDI may request extensions of the time period for submitting appeals under the Guidelines from either the appropriate Division Director or the SARC Chairperson, as appropriate. If a filing under the Guidelines is due on a Saturday, Sunday, or a Federal holiday, the filing may be made on the next business day.

An IDI may request a stay of a supervisory action or determination from the Division Director while an appeal of that determination is pending. The request must be in writing and include the reason(s) for the stay. The Division Director has discretion to grant a stay and will generally decide whether to grant a stay within 21 days of receiving an IDI’s request, providing the IDI with the reason(s) for his or her decision in writing. A stay may be granted subject to conditions, including time limitations, where appropriate.

Coordination with State Regulatory Authorities

In the event that a material supervisory determination subject to a request for review is the joint product of FDIC and a State regulatory authority (WDFI), the Director, DCP, RMS, or CISR, as appropriate, will promptly notify WDFI of the request, provide WDFI with a copy of the IDI’s request for review and any other related materials, and solicit WDFI’s views regarding the merits of the request before making a determination. In the event that an appeal is subsequently filed with SARC, SARC will notify the IDI and WDFI of its decision. Once SARC has issued its determination, any other issues that may remain between the IDI and WDFI will be left to those parties to resolve.

Effect on Supervisory or Enforcement Actions

The use of the procedures set forth in the Guidelines by an IDI will not affect, delay, or impede any formal or informal supervisory or enforcement action in progress during the appeal or affect FDIC’s authority to take any supervisory or enforcement action against that IDI.

Effect on Applications or Requests for Approval

Any application or request for approval made to FDIC by an IDI that has appealed a material supervisory determination that relates to, or could affect the approval of, the application or request will not be considered until a final decision concerning the appeal is made unless otherwise requested by the IDI.

Prohibition on Examiner Retaliation

The FDIC has an experienced examination workforce and is proud of its professionalism and dedication. FDIC policy prohibits any retaliation, abuse, or retribution by an FDIC examiner or any FDIC personnel against an IDI. Such behavior against an IDI that appeals a material supervisory determination constitutes unprofessional conduct and will subject the examiner or other personnel to appropriate disciplinary or remedial action. In light of this important principle, the Ombudsman will monitor the supervision process following an IDI’s submission of an appeal under the Guidelines. The Ombudsman will report to the FDIC Board on these matters periodically. Any IDI that believes they have been retaliated against are encouraged to contact the Regional Director for the appropriate FDIC region. Any IDI that believes or has any evidence that it has been subject to retaliation may file a complaint with the Director, Office of the Ombudsman, Federal Deposit Insurance Corporation, 3501 Fairfax Drive, Suite E-2022, Arlington, VA 22226, explaining the circumstances and the basis for such belief or evidence and requesting that the complaint be investigated, and appropriate disciplinary or remedial action taken. The Office of the Ombudsman will work with the appropriate Division Director to resolve the allegation of retaliation.

Conclusion

While IDIs are to make good-faith efforts to resolve any dispute concerning a material supervisory determination with the on-site examiner and/or the appropriate Regional Office, IDIs should know of the rights and procedures set forth within the revised Guidelines in the event an appeal of a material supervisory determination need be filed.

The Guidelines may be viewed at: www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27351.pdf

2023 Adjusted State and Federal Regulatory Thresholds and Limits

Happy New Year! As we step into 2023, there are several thresholds which have been adjusted by both state and federal regulators which go into effect now that the new year has arrived. Below is a collection of thresholds effective January 1, 2023, including a link to pull each publication for reference.

Regulation Z, TILA

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The exemption threshold for Regulation Z (Truth in Lending Act) will increase to $66,400, up from $61,000. www. govinfo.gov/content/pkg/FR-2022-10-20/pdf/2022-22819.pdf

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The exemption threshold for Regulation M (Consumer Leasing Act) will increase to $66,400, up from $61,000. www.govinfo.gov/content/pkg/FR-2022-10-20/pdf/2022-22818.pdf

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The exemption threshold under Regulation Z for HPML appraisals will increase to $31,000, up from $28,500.   www.govinfo.gov/content/pkg/FR-2022-10-20/pdf/2022-22820.pdf

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The asset-size threshold under Regulation Z which exempts creditors from the requirement to establish an escrow account for HPMLs will be:

o For creditors and their affiliates that regularly extended covered transactions secured by first liens, the assetsize threshold is adjusted to $2.537 billion, up from $2.336 billion; and

o The exemption threshold for certain insured depository institutions with assets of $10 billion or less is adjusted to $11.374 billion, up from $10.473 billion. www.govinfo.gov/content/pkg/FR-2022-12-30/ pdf/2022-28439.pdf

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The dollar amount thresholds under Regulation Z for HOEPA and QM-related loans have been adjusted as follows:

o For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages will be $24,866

o The adjusted points-and-fees dollar trigger for high-cost mortgages will be $1,243

o For QMs under the General QM loan definition in § 1026.43(e)(2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) will be:  2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $124,331;   3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $74,599 but less than $124,331;  6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $74,599;   6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $124,331;  3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599; or   6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599.

o For all categories of QMs, the thresholds for total points and fees will be:   3 percent of the total loan amount for a loan greater than or equal to $124,331;

$3,730 for a loan amount greater than or equal to $74,599 but less than $124,331;   5 percent of the total loan amount for a loan greater than or equal to $24,866 but less than $74,599;   $1,243 for a loan amount greater than or equal to $15,541 but less than $24,866; and   8 percent of the total loan amount for a loan amount less than $15,541

o For open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00 www.govinfo.gov/content/pkg/FR-2022-12-23/ pdf/2022-28023.pdf

Regulation C, HMDA

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Special Focus

The asset-size threshold to be exempt from collecting HMDA data in 2023 is adjusted to $54 million, up from $50 million. www.govinfo.gov/content/pkg/FR-2022-12-30/pdf/2022-28441.pdf

Community Reinvestment Act (CRA)

• The Board of Governors of the Federal Reserve System (FRB) and Federal Deposit Insurance Corporation (FDIC) CRA regulations have adjusted the asset-size thresholds used to define “small bank” and “intermediate small bank” to be:

o Small bank means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.503 billion; and

o Intermediate small bank means a small bank with assets of at least $376 million as of December 31 of both of the prior two calendar years and less than $1.503 billion as of December 31 of either of the prior two calendar years. www.govinfo.gov/content/pkg/FR-2022-12-23/pdf/2022-27922.pdf

• The Office of the Comptroller of the Currency (OCC) made the identical adjustments to the asset-size thresholds used to define “small bank or savings association” and “intermediate small bank or savings association.” www.occ. treas.gov/news-issuances/bulletins/2022/bulletin-2022-28.html

Required Escrow Rate under Wisconsin Law

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The Wisconsin Department of Financial Institutions (WDFI) has established the interest rate that must be paid on required escrow accounts under section 138.052(5) of the Wisconsin Statutes. The new rate is 0.11% www.wdfi. org/_resources/indexed/site/fi/banks/EscrowNotice.pdf

Other Regulatory Thresholds and Limits

• The dollar amount of the maximum allowable charge for disclosures by a consumer reporting agency to a consumer pursuant to Fair Credit Report Act (FCRA) section 609 for the 2023 calendar year is $14.50 www.govinfo.gov/ content/pkg/FR-2022-11-25/pdf/2022-25751.pdf

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The FDIC Designated Reserve Ratio remains 2 percent for 2023. www.govinfo.gov/content/pkg/FR-2022-10-24/ pdf/2022-22987.pdf

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The OCC assessment rates are reduced for the general assessment fee schedule. OCC has maintained assessment rates from 2022 for the independent trust and independent credit card fee schedules. Also, there is no inflation adjustment to assessment rates. www.occ.gov/news-issuances/news-releases/2022/nr-occ-2022-145.html

• Contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $22,500, up from $20,500. The limit on annual contributions to an IRA increased to $6,500, up from $6,000. www.irs.gov/newsroom/401k-limit-increases-to-22500-for-2023-ira-limit-rises-to-6500

• Multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $75 billion for each enterprise, for a combined total of $150 billion. The caps reflect an anticipated contraction of the multifamily originations market this year. FHFA will require that at least 50 percent of Fannie’s and Freddie’s multifamily business be mission-driven affordable housing. www.fhfa.gov//Media/PublicAffairs/Pages/FHFA-Announces-2023-Multifamily-Loan-PurchaseCaps-for-Fannie-Mae-and-Freddie-Mac.aspx

• The conforming loan limit values for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023 for oneunit properties will be $726,200, an increase from $647,200. www.fhfa.gov/Media/PublicAffairs/Pages/FHFAAnnounces-Conforming-Loan-Limits-for-2023.aspx

• New loan limits for FHA’s Single Family Title II Forward and Home Equity Conversion Mortgage (HECM) insurance programs, based upon property size and location, range from $472,030 to $3,142,800. www.hud.gov/press/ press_releases_media_advisories/HUD_No_22_244

Special Focus

• Beginning January 1, 2023, the standard IRS mileage rates for the use of a car (also vans, pickups or panel trucks) will be as follows. The rates apply to electric and hybrid-electric automobiles, as well as gasoline and dieselpowered vehicles.

o 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022;

o 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022; and

o 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2023-business-use-increases-3-cents-per-mile

Joint Statement on Crypto-Asset Risks to Banking Organizations

On January 3, 2023, the Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) (collectively, the agencies) issued a joint statement regarding crypto-asset risks to banks. By “crypto-asset” the agencies generally mean any digital asset implemented using cryptographic techniques.

Banks engaged in crypto-asset-related activities need work closely with their state and federal regulators given the recent activities involving the crypto-asset sector and the agencies’ heightened focus on risks associated with such activity. Additional agency-issued resources are provided at the end of the article.

Given the crypto-asset-related events which occurred in 2022, the agencies identified a number of key risks associated with the crypto-asset sector that the agencies believe banks should be aware of, including:

• Risk of fraud and scams among crypto-asset sector participants.

• Legal uncertainties related to custody practices, redemptions, and ownership rights, some of which are currently the subject of legal processes and proceedings.

• Inaccurate or misleading representations and disclosures by crypto-asset companies, including misrepresentations regarding federal deposit insurance, and other practices that may be unfair, deceptive, or abusive, contributing to significant harm to retail and institutional investors, customers, and counterparties.

• Significant volatility in crypto-asset markets, the effects of which include potential impacts on deposit flows associated with crypto-asset companies.

• Susceptibility of stablecoins to run risk, creating potential deposit outflows for banks that hold stablecoin reserves.

• Contagion risk within the crypto-asset sector resulting from interconnections among certain crypto-asset participants, including through opaque lending, investing, funding, service, and operational arrangements. These interconnections may also present concentration risks for banks with exposures to the crypto-asset sector.

• Risk management and governance practices in the crypto-asset sector exhibiting a lack of maturity and robustness.

• Heightened risks associated with open, public, and/or decentralized networks, or similar systems, including, but not limited to, the lack of governance mechanisms establishing oversight of the system; the absence of contracts or standards to clearly establish roles, responsibilities, and liabilities; and vulnerabilities related to cyber-attacks, outages, lost or trapped assets, and illicit finance.

The agencies state that it is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system. The agencies state they are supervising banks that may be exposed to risks stemming from the crypto-asset sector and are carefully reviewing any proposals from banks to engage in activities that involve crypto-assets.

The agencies state that through their current case-by-case approach, they continue to build knowledge, expertise, and understanding of the risks crypto-assets may pose to banks, their customers, and the broader U.S. financial system.

Given the significant risks highlighted by the recent failures of several large crypto-asset companies, the agencies continue to take careful and cautious approaches related to current or proposed crypto-asset-related activities and exposures at each bank.

Special Focus

The joint statement further reiterates that banks are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation. The agencies state they continue to assess whether or how current and proposed crypto-asset-related activities by banks can be conducted in a manner that adequately addresses safety and soundness, consumer protection, legal permissibility, and compliance with applicable laws and regulations, including anti-money laundering and illicit finance statutes and rules.

Of significance, within the joint statement, the agencies stated that based on their current understanding and experience to date, the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.

Further, the agencies have significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.

The agencies stated they will continue to closely monitor crypto-asset-related exposures of banks and as warranted, will issue additional statements related to engagement by banks in crypto-asset-related activities. The agencies also will continue to engage and collaborate with other relevant authorities, as appropriate, on issues arising from activities involving crypto-assets.

Each agency has developed processes whereby banks engage in robust supervisory discussions regarding proposed and existing crypto-asset-related activities. Banks should ensure that crypto-asset-related activities can be performed in a safe and sound manner, are legally permissible, and comply with applicable laws and regulations, including those designed to protect consumers (such as fair lending laws and prohibitions against unfair, deceptive, or abusive acts or practices). Banks should ensure appropriate risk management, including board oversight, policies, procedures, risk assessments, controls, gates and guardrails, and monitoring, to effectively identify and manage risks.

Resources:

As mentioned above, banks engaged in crypto-asset-related activities need work closely with their state and federal regulators given the recent activities involving the crypto-asset sector and the agencies’ heightened focus on risks associated with such activity. The following is a list of processes the agencies expect banks to follow when looking to engage in crypto-asset-related activities:

OCC Interpretive Letter 1179, “Chief Counsel’s Interpretation Clarifying: (1) Authority of a Bank to Engage in Certain Cryptocurrency Activities; and (2) Authority of the OCC the Charter a National Trust Bank,” (November 18, 2021): www. occ.gov/topics/charters-and-licensing/interpretations-and-actions/2021/int1179.pdf

Federal Reserve SR 22-6/CA 22-6, “Engagement in Crypto-Asset-Related Activities by Federal-Reserve-Supervised Banking Organizations,” (August 16, 2022): www.federalreserve.gov/supervisionreg/srletters/SR2206.htm

FDIC FIL-16-2022, “Notification and Supervisory Feedback Procedures for FDIC-Supervised Institutions Engaging in Crypto-Related Activities,” (April 7, 2022): www.fdic.gov/news/financial-institution-letters/2022/fil22016.html#letter

Joint Statement on Crypto-Asset Risks to Banking Organizations: www.fdic.gov/news/press-releases/2023/pr23002a.pdf

Regulatory Spotlight

Agencies Adjust CMPs for Inflation.

The Bureau of Consumer Financial Protection (CFPB) issued a final rule to adjust for inflation the maximum amount of each civil monetary penalty (CMP) within CFPB’s jurisdiction. The adjustments are required by the Federal Civil Penalties Inflation Adjustment Act as amended by the Debt Collection Improvement Act and further amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act. See the final rule for the specific adjustments. The final rule is effective 01/15/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-03/pdf/202228442.pdf Federal Register, Vol. 88, No. 1, 01/03/2023, 1-3.

The Federal Deposit Insurance Corporation (FDIC) issued a notice to adjust its maximum civil money penalties (CMPs) for inflation. The adjusted maximum amounts of CMPs in the notice are applicable to penalties assessed after 01/15/2023, for conduct occurring on or after 11/02/2015. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-01-05/pdf/2022-28655.pdf. Federal Register, Vol. 88, No. 3, 01/05/2023, 861-863.

The Office of the Comptroller of the Currency (OCC) issued a notice to announce changes to its maximum civil money penalties (CMPs) as adjusted for inflation. The inflation adjustments are required to implement the Federal Civil Penalties Inflation Adjustment Act, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act. The adjusted maximum amount of CMPs in the rule are applicable to penalties assessed on or after 01/04/2023, for conduct occurring on or after 11/02/2015. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-04/ pdf/2022-28539.pdf Federal Register, Vol. 88, No. 2, 01/04/2023, 289-291.

The Federal Housing Finance Agency (FHFA) issued a final rule to amend its Rules of Practice and Procedure and other FHFA regulations to adjust each civil money penalty (CMP) within its jurisdiction to account for inflation, pursuant to the Federal Civil Penalties Inflation Adjustment Act, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act. See the final rule for the specific adjustments. The final rule is effective 12/29/2022, and applicable beginning 01/15/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-29/pdf/202228161.pdf Federal Register, Vol. 87, No. 249, 12/29/2022, 80023-80026.

The Federal Communications Commission (FCC) issued a final rule to amend its forfeiture penalty rules to reflect annual adjustments for inflation. The civil monetary penalties (CMPs) are applicable beginning 01/15/2023. The final rule is effective 01/05/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-05/pdf/202228493.pdf Federal Register, Vol. 88, No. 3, 01/05/2023, 783-786.

The Department of Veterans Affairs (VA) issued a final rule to amend its regulations to adjust for inflation the amount of civil monetary penalties (CMPs) that are within VA’s jurisdiction. The final rule is effective 01/06/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-06/pdf/2022-28481.pdf Federal Register, Vol. 88, No. 4, 01/06/2023, 985-986.

The Social Security Administration (SSA) issued a notice of its updated maximum civil monetary penalties (CMPs). The amounts are effective 01/15/2023, through 01/14/2024. The figures represent an annual adjustment for inflation. The updated figures and notification are required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-29/pdf/2022-28284.pdf. Federal Register, Vol. 87, No. 249, 12/29/2022, 80245-80246.

The National Credit Union Administration (NCUA) issued a final rule to amend the maximum amount of each civil monetary penalty (CMP) within its jurisdiction to account for inflation. The adjustments are required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act. The final rule is effective 01/10/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-10/pdf/2023-00212.pdf Federal Register, Vol. 88, No. 6, 01/10/2023, 1323-1326.

Agencies Issue 2023 CRA Asset-Size Thresholds.

The Board of Governors of the Federal Reserve System (FRB) and Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) issued a final rule which amends the Community Reinvestment Act (CRA) regulations to

Regulatory Spotlight

adjust the asset-size thresholds used to define “small bank” and “intermediate small bank.” Small bank means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.503 billion. Intermediate small bank means a small bank with assets of at least $376 million as of December 31 of both of the prior two calendar years and less than $1.503 billion as of December 31 of either of the prior two calendar years. The final rule is effective 01/01/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-23/pdf/2022-27922. pdf Federal Register, Vol. 87, No. 246, 12/23/2022, 78829-78831.

Agencies Issue Joint Statement on Crypto-Asset Risks.

The Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) (collectively, the agencies) issued a joint statement highlighting key risks for banking organizations associated with crypto-assets and the crypto-asset sector. The joint statement describes the agencies’ approaches to supervision in this area. In particular, the statement describes several key risks associated with crypto-assets and the crypto-asset sector. The agencies stated each will continue to: (a) take a careful and cautious approach related to current and proposed crypto-asset-related activities and exposures at banking organizations; (b) assess whether or how current and proposed crypto-asset-related activities by banking organizations can be conducted in a manner that is safe and sound, legally permissible, and in compliance with applicable laws and regulations; and (c) closely monitor crypto-asset-related exposures of banking organizations. The agencies will issue additional statements related to engagement by banking organizations in crypto-asset-related activities, as warranted. The joint statement may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230103a.htm

Agencies Extend Comment Period for ANPR Regarding Resolution-Related Resources for Large Banking Organizations.

The Board of Governors of the Federal Reserve System (FRB) and Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) announced an extension of the comment period for an advance notice of proposed rulemaking (ANPR) which was published in the Federal Register on 10/24/2022, regarding whether an extra layer of loss-absorbing capacity could improve optionality in resolving a large banking organization or its insured depository institution, and the costs and benefits of such a requirement. The agencies have determined that an extension of the comment period until 01/23/2023, is appropriate. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-19/ pdf/2022-27475.pdf Federal Register, Vol. 87, No. 242, 12/19/2022, 77529.

CFPB Publishes Technical Amendment for HMDA Coverage Threshold for Closed-End Mortgage Loans.

The Bureau of Consumer Financial Protection (CFPB) published a technical amendment in the Federal Register to revise Regulation C due to a judicial vacatur of the coverage threshold for closed-end mortgage loans. The topic was first mentioned in the last edition of this publication. CFPB has since published the technical amendment in the Federal Register. In April 2020, CFPB issued a final rule (2020 HMDA Rule) to amend Regulation C to increase the threshold for reporting data about closed-end mortgage loans. The 2020 HMDA Rule increased the closed-end mortgage loan reporting threshold from 25 loans to 100 loans in each of the two preceding calendar years, effective 07/01/2020 On 09/23/2022, the United States District Court for the District of Columbia vacated the 2020 HMDA Rule as to the increased loan-volume reporting threshold for closed-end mortgage loans. As a result, the threshold for reporting data about closed-end mortgage loans is 25, the threshold established by the 2015 HMDA Rule. Accordingly, the technical amendment updates the Code of Federal Regulations to reflect the closed-end mortgage loan reporting threshold of 25 mortgage loans in each of the two preceding calendar years. The technical amendment is effective 12/21/2022. The technical amendment may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-21/pdf/2022-27204.pdf Federal Register, Vol. 87, No. 244, 12/21/2022, 77980-77982.

CFPB Adjusts 2023 Reporting and Exemption Thresholds.

CFPB issued a final rule to amend the regulation text and official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA), to adjust the credit cards, Home Ownership and Equity Protection Act (HOEPA), and qualified mortgage (QM) related thresholds for 2023. CFPB calculates the dollar amounts for several provisions in

Regulatory Spotlight

Regulation Z annually. The amounts have been adjusted, where appropriate, based on the annual percentage change reflected in the Consumer Price Index (CPI). Specifically, for open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages will be $24,866. The adjusted points-and-fees dollar trigger for high-cost mortgages will be $1,243. For QMs under the General QM loan definition in section 1026.43(e) (2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) will be: 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $124,331; 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $74,599 but less than $124,331; 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $74,599; 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $124,331; 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599; or 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599. For all categories of QMs, the thresholds for total points and fees in 2023 will be 3 percent of the total loan amount for a loan greater than or equal to $124,331; $3,730 for a loan amount greater than or equal to $74,599 but less than $124,331; 5 percent of the total loan amount for a loan greater than or equal to $24,866 but less than $74,599; $1,243 for a loan amount greater than or equal to $15,541 but less than $24,866; and 8 percent of the total loan amount for a loan amount less than $15,541. The final rule is effective 01/01/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-23/pdf/2022-28023. pdf Federal Register, Vol. 87, No. 246, 12/23/2022, 78831-78837.

CFPB issued a final rule to amend the official commentary that interprets the requirements of Regulation C (Home Mortgage Disclosure Act) to reflect the asset-size exemption threshold for banks, savings associations, and credit unions based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Based on the 8.6 percent increase in the average of the CPI-W for the 12-month period ending in November 2022, the exemption threshold is adjusted to $54 million from $50 million. Therefore, banks, savings associations, and credit unions with assets of $54 million or less as of 12/31/2022, are exempt from collecting data in 2023. The final rule is effective on 01/01/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/ FR-2022-12-30/pdf/2022-28441.pdf Federal Register, Vol. 87, No. 250, 12/30/2022, 80433-80435.

CFPB issued a final rule to amend the official commentary to Regulation Z to make annual adjustments to the assetsize thresholds, which exempt certain creditors from the requirement to establish an escrow account for a higher-priced mortgage loan (HPML). The changes reflect updates to the exemption from the escrow requirement in the Truth in Lending Act for creditors that, together with their affiliates, regularly extended covered transactions secured by first liens, had total assets of less than $2 billion (adjusted annually for inflation). The changes also reflect updates to the exemption CFPB added, by implementing section 108 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), for certain insured depository institutions and insured credit unions with assets of $10 billion or less (adjusted annually for inflation). The amendments are based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Based on the 8.6 percent increase in the average of the CPI-W for the 12-month period ending in November 2022, the exemption threshold for creditors and their affiliates that regularly extended covered transactions secured by first liens is adjusted to $2 537 billion from $2.336 billion and the exemption threshold for certain insured depository institutions and insured credit unions with assets of $10 billion or less is adjusted to $11.374 billion from $10.473 billion. The final rule is effective on 01/01/2023 The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-30/pdf/2022-28439.pdf. Federal Register, Vol. 87, No. 250, 12/30/2022, 80435-80439.

CFPB Announces Availability of Updated HELOC Booklet.

CFPB announced the availability of an updated consumer publication titled, What You Should Know about Home Equity Lines of Credit, also known as the HELOC booklet, required by the Truth in Lending Act, as implemented by Regulation Z. The newest version of the HELOC booklet is updated to align with CFPB’s educational efforts, to be more concise, and to improve readability and usability. The updated consumer publication is available for download on CFPB’s website and can be found in the Catalog of U.S. Government Publications. Both websites may be found in the notice. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27324.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77078.

Regulatory Spotlight

CFPB issued a notice of its intent to make a preemption determination under the Truth in Lending Act (TILA). CFPB stated that after receiving a written request to make a determination that TILA preempts a New York State commercial financing law with respect to certain provisions, CFPB has published a notification of its intent to make a preemption determination about the New York law and has made a preliminary conclusion that the law is not preempted by TILA. CFPB has also provided notice that it is considering whether to make a preemption determination regarding state laws in California, Utah, and Virginia, that are potentially similar to the New York law. Comments are due 01/20/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-15/pdf/2022-27059.pdf. Federal Register, Vol. 87, No. 240, 12/15/2022, 76551-76553.

CFPB Seeks Comment on Information Collections.

CFPB seeks comment regarding an information collection titled, Generic Information Collection Plan to Conduct Cognitive and Pilot Testing of Research Methods, Instruments, and Forms. Under the Dodd-Frank Act, CFPB is charged with researching, analyzing, and reporting on topics relating to CFPB’s mission, including developments in markets for consumer financial products and services, consumer awareness, and consumer behavior. In order to improve its understanding of how consumers engage with financial markets, CFPB seeks to obtain approval for an information collection plan to conduct research to improve the quality of data collection by examining the effectiveness of datacollection procedures and processes, including potential psychological and cognitive issues. Comments are due 01/17/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27320.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77078-77079.

CFPB seeks comment regarding an information collection titled, Terms of Credit Card Plans Survey. CFPB intakes different forms of credit card data from credit card issuers, as required by the Truth in Lending Act, and implementing regulation, Regulation Z. The data collection enables CFPB to provide Congress and the public with a centralized and searchable repository for consumer and college credit card agreements and information regarding the arrangements between financial institutions and institutions of higher education. Comments are due 01/17/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27321.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77079-77080.

CFPB seeks comment regarding an information collection titled, Generic Information Collection Plan for the Development and Testing of Disclosures and Related Materials. CFPB will use the generic information collection for the development and testing of consumer financial disclosures and related materials. CFPB will conduct planned research activities toward the goal of creating effective disclosures and related materials that will help consumers understand the features of consumer financial products and services. Comments are due 01/17/2023. The notice may be viewed at: https://www. govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27274.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77080.

CFPB seeks comment regarding an information collection titled, Truth in Savings, Regulation DD. Consumers rely on the disclosures required by the Truth in Savings Act (TISA) and Regulation DD to facilitate informed decision-making regarding deposit accounts offered at depository institutions. Without the information, consumers would be severely hindered in their ability to assess the true costs and terms of the deposit accounts offered. Federal agencies and private litigants use the records to ascertain whether accurate and complete disclosures of depository accounts have been provided to consumers. The information also provides the primary evidence of law violations in TISA enforcement actions brought by CFPB. Without the Regulation DD recordkeeping requirement, CPFB’s ability to enforce TISA would be significantly impaired. Comments are due 01/26/2022. The notice may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2022-12-27/pdf/2022-28044.pdf. Federal Register, Vol. 87, No. 247, 12/27/2022, 79287-79288.

FRB Announces 2022 Aggregate Global Indicator Amounts.

The Board of Governors of the Federal Reserve System (FRB) issued a notice to provide the 2022 aggregate global indicator amounts, as required under FRB’s rule regarding risk-based capital surcharges for global systemically important bank holding companies (GSIB surcharge rule). See the chart within the notice for the specific amounts. The 2022 aggregate global indicator amounts are effective 12/16/2022. The notice may be viewed at: https://www.govinfo. gov/content/pkg/FR-2022-12-16/pdf/2022-27207.pdf. Federal Register, Vol. 87, No. 241, 12/16/2022, 77120-77121.

CFPB Issues Notice of Intent to Make Preemption Determination Under TILA.

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FRB Announces Fee Schedule for Bank Services and Electronic Access.

FRB announced the approval of the private-sector adjustment factor (PSAF) for 2023 of $23.7 million and the 2023 fee schedules for Federal Reserve priced services and electronic access. The approvals were taken in accordance with the Monetary Control Act, which requires that, over the long run, fees for Federal Reserve priced services be established based on all direct and indirect costs, including PSAF. See the notice for FRB’s rationale for the changes and the 2023 fee schedules. The new fee schedules are effective 01/03/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-12-27/pdf/2022-28096.pdf Federal Register, Vol. 87, No. 247, 12/27/2022, 79310-79330.

FRB Revises Policy on Payment System Risk.

FRB announced the revision of part II of the Federal Reserve Policy on Payment System Risk (PSR Policy) to add a posting rule to facilitate the implementation of enhancements to the Automated Claim Adjustment Process (ACAP). Currently, ACAP adjustments are not explicitly mentioned in the posting rules of the PSR Policy because ACAP adjustments are settled using the National Settlement Service (NSS), which has its own posting rule. FRB added a new posting rule to part II of the PSR Policy to reflect the fact that ACAP adjustments will be made on a gross basis through Fedwire Securities throughout the business day. FRB also modified footnote 37 of the PSR Policy to add a hyperlink to a frequently updated document containing a list of securities issuers, including GSEs, rather than listing the securities issuers directly in the footnote. The change is not substantive in nature and reflects current practices that the Reserve Banks use to administer the PSR Policy. The notice is applicable 01/30/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-27/pdf/2022-28095.pdf Federal Register, Vol. 87, No. 247, 12/27/2022, 79331-79332.

FDIC Adopts Revised Guidelines for Appeals of Material Supervisory Determinations.

The Federal Deposit Insurance Corporation (FDIC) released revised Guidelines for Appeals of Supervisory Determinations (Guidelines). The revisions expand and clarify the role of FDIC’s Ombudsman, add the Ombudsman to the Supervision Appeals Review Committee as a non-voting member, and require that materials considered by the Supervision Appeals Review Committee be shared with both parties to the appeal on a timely basis, subject to applicable legal limitations on disclosure. In addition, the revised Guidelines allow insured depository institutions to request a stay of a material supervisory determination while an appeal is pending. The revised Guidelines are applicable 12/13/2022. The revised Guidelines may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/202227351.pdf. Federal Register, Vol. 87, No. 241, 12/16/2022, 77112-77119.

FDIC Seeks Comment on Proposed Rule to Modernize Rules Governing Use of Official FDIC Signage and Advertising.

FDIC seeks comment regarding a proposed rule meant to modernize the rules governing use of the official FDIC sign and insured depository institutions’ (IDIs’) advertising statements to reflect how depositors do business with IDIs today, including through digital and mobile channels. The proposed rule also would clarify FDIC’s regulations regarding misrepresentations of deposit insurance coverage by addressing specific scenarios where consumers may be misled as to whether they are doing business with an IDI and whether their funds are protected by deposit insurance. Comments are due 02/21/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-21/pdf/202227349.pdf Federal Register, Vol. 87, No. 244, 12/21/2022, 78017-78037.

FDIC Seeks Comment Regarding Information Collections for Bank Service Companies and Securities of Banks.

FDIC seeks comment regarding two information collections. The first information collection in the notice is titled, Notification of Performance of Bank Services. Insured state nonmember banks are required to notify FDIC under section 7 of the Bank Service Company Act of the relationship with a bank service company. The information collection is used in connection with this requirement. The second information collection is titled, Securities of State Nonmember Banks and State Savings Associations. Section 12(i) of the Exchange Act grants authority to the federal banking agencies to administer and enforce sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of the Exchange Act and sections 302,

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303, 304, 306, 401(b), 404, 406, and 407 of the Sarbanes-Oxley Act. Pursuant to section 12(i), FDIC has the authority, including rulemaking authority, to administer and enforce the enumerated provisions as may be necessary with respect to state nonmember banks and state savings associations over which it has been designated the appropriate federal banking agency. Section 12(i) generally requires FDIC to issue regulations substantially similar to regulations issued by the Securities and Exchange Commission (SEC) to carry out these responsibilities. Thus, part 335 of the FDIC regulations incorporates by cross-reference the SEC rules and regulations regarding the disclosure and filing requirements of registered securities of state nonmember banks and state savings associations. The information collection is used in connection with the requirements under part 335. Comments are due 03/07/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-06/pdf/2023-00055.pdf Federal Register, Vol. 88, No. 4, 01/06/2023, 1069-1072.

OCC Seeks Comment on Information Collections.

The Office of the Comptroller of the Currency (OCC) seeks comment regarding an information collection titled, Guidance on Sound Incentive Compensation Policies (Guidance). The principles discussed in the Guidance will vary with the size and complexity of a banking organization, and monitoring methods for small banks are not directly addressed by the four policies and procedures outlined in the Guidance. Comments are due 01/19/2023. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2022-12-20/pdf/2022-27591.pdf Federal Register, Vol. 87, No. 243, 12/20/2022, 77952-77953.

OCC seeks comment regarding an information collection titled, Extensions of Credit to Insiders and Transactions with Affiliates. National banks and federal savings associations must comply with rules of the Board of Governors of the Federal Reserve System (FRB) regarding extensions of credit to insiders (Regulation O) and transactions with affiliates (Regulation W), which implement section 22 and sections 23A and 23B, respectively, of the Federal Reserve Act. The information collection is used in connection with requirements under Regulations O and W as outlined in the notice. Comments are due 01/19/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-20/ pdf/2022-27596.pdf Federal Register, Vol. 87, No. 243, 12/20/2022, 77953-77954.

OCC seeks comment regarding an information collection titled, Appraisals for Higher-Priced Mortgage Loans (HPMLs). The information collection relates to section 1471 of the Dodd-Frank Act, which added a new section 129H to the Truth in Lending Act to establish special appraisal requirements for “higher-risk mortgages.” The information collection is used in connection with the record retention requirements for creditors making HPMLs. Comments are due 02/06/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-06/pdf/2023-00065.pdf. Federal Register, Vol. 88, No. 4, 01/06/2023, 1107-1108.

OCC seeks comment regarding an information collection titled, Financial Management Policies, Interest Rate Risk, which is applicable only to federal savings associations. The information collection covers the recordkeeping burden for federal savings associations to maintain data in accordance with OCC’s regulation on interest rate risk procedures. The purpose of the regulation is to ensure that federal savings associations appropriately manage their exposure to interest rate risk. To comply with this reporting requirement, institutions need to maintain sufficient records to document how their interest rate risk exposure is monitored and managed internally. Comments are due 02/06/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-06/pdf/2023-00050.pdf Federal Register, Vol. 88, No. 4, 01/06/2023, 1108-1109.

HUD Proposes to Strengthen Section 184 Indian Home Loan Guarantee Program.

The Department of Housing and Urban Development (HUD) issued a proposed rule to revise the regulations governing the Section 184 Indian Home Loan Guarantee Program (Section 184 Program) to fiscally strengthen the program. The proposed rule strives to modernize and enhance the Section 184 Program by adding participation and eligibility requirements for lenders and other financial institutions. The proposed rule would also clarify the rules governing Tribal participation in the program, establish underwriting requirements, specify rules on the closing and endorsement process, establish stronger and clearer servicing requirements, establish program rules governing claims submitted by servicers and paid by HUD, and add standards governing monitoring, reporting, sanctions, and appeals. The proposed rule would add new definitions and make statutory conforming amendments, including the categorical exclusion of the Section 184

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program in HUD’s environmental review regulations. Comments are due 03/17/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-21/pdf/2022-26097.pdf Federal Register, Vol. 87, No. 244, 12/21/2022, 78324-78379.

HUD Seeks Comment on FHA TOTAL Mortgage Scorecard Information Collection.

HUD seeks comment regarding an information collection titled, Federal Housing Administration (FHA) TOTAL Mortgage Scorecard. FHA-approved mortgagees must certify compliance with HUD regulations, Handbooks, Guidebooks, and Mortgagee Letters. Within this scope, mortgagees must certify compliance with FHA TOTAL Mortgage Scorecard requirements at 24 CFR 203.255(b)(5). Comments are due 02/21/2023. The notice may be viewed at: https://www. govinfo.gov/content/pkg/FR-2022-12-22/pdf/2022-27768.pdf Federal Register, Vol. 87, No. 245, 12/22/2022, 78702.

FEMA Issues Final Flood Hazard Determinations.

The Federal Emergency Management Agency (FEMA) issued a notice which identifies communities in the state of Wisconsin, 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 05/09/2023, 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-2022-12-12/pdf/2022-26876.pdf. Federal Register, Vol. 87, No. 237, 12/12/2022, 76061-76062.

FEMA issued a notice which identifies communities in the state of Wisconsin, 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 05/23/2023, 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-2022-12-21/pdf/2022-27747.pdf Federal Register, Vol. 87, No. 244, 12/21/2022, 78116-78118.

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 Ohio, 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-2023-0106/pdf/2023-00076.pdf Federal Register, Vol. 88, No. 4, 01/06/2023, 1084-1087.

FEMA Issues Notices of Changes in Flood Hazard Determinations.

FEMA issued a notice which lists communities in the states of Illinois, Indiana, Michigan, 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

Regulatory Spotlight

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-202212-12/pdf/2022-26878.pdf Federal Register, Vol. 87, No. 237, 12/12/2022, 76057-76061.

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 Wisconsin, 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 03/13/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2022-12-12/pdf/2022-26879.pdf. Federal Register, Vol. 87, No. 237, 12/12/2022, 76065-76067.

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 states of Minnesota and Wisconsin, 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 04/06/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-01-06/pdf/2023-00079.pdf Federal Register, Vol. 88, No. 4, 01/06/2023, 1081-1083.

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 Iowa, 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 04/06/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-06/ pdf/2023-00083.pdf Federal Register, Vol. 88, No. 4, 01/06/2023, 1083-1084.

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 Indiana 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 04/10/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-10/ pdf/2023-00193.pdf Federal Register, Vol. 88, No. 6, 01/10/2023, 1396-1397.

FinCEN Issues Proposed Rule for Beneficial Ownership Information Access and Safeguards, and Use of Entity Identifiers.

The Financial Crimes Enforcement Network (FinCEN) issued a proposed rule regarding access by authorized recipients to beneficial ownership information (BOI) that will be reported to FinCEN pursuant to Section 6403 of the Corporate Transparency Act (CTA), enacted into law as part of the Anti-Money Laundering Act of 2020, which is itself part of the National Defense Authorization Act for Fiscal Year 2021. The proposed rule explains the circumstances in which specified recipients would have access to BOI and outlines data protection protocols and oversight mechanisms applicable to each recipient category. The proposed rule also specifies when and how reporting companies can use

Regulatory Spotlight

FinCEN identifiers to report the BOI of entities. Comments are due 02/14/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27031.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77404-77457.

Treasury Seeks Comment on Tax-Exempt Income Tax Returns.

The Department of Treasury (Treasury) seeks comment regarding an information collection titled, U.S. Tax-Exempt Income Tax Returns. The forms and schedules within the collection are used to determine that tax-exempt organizations fulfill the operating conditions within the limitations of their tax exemption. The data is also used for general statistical purposes. There have been changes in IRS guidance documents which relate to forms within the collection. There has also been an addition of forms to the information collection since the past approval of the collection by the Office of Management and Budget. Comments are due 01/23/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-12-22/pdf/2022-27886.pdf Federal Register, Vol. 87, No. 245, 12/22/2022, 78766-78767.

IRS Issues Final Rule on Exception for Interests Held by Foreign Pension Funds.

The Internal Revenue Service (IRS) issued a final rule regarding gain or loss of a qualified foreign pension fund attributable to certain interests in United States real property. The final rule also includes rules for certifying that a qualified foreign pension fund is not subject to withholding on certain dispositions of, and distributions with respect to, certain interests in United States real property. The final rule is effective 12/29/2022. See the final rule for dates of applicability. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-29/pdf/2022-27978. pdf. Federal Register, Vol. 87, No. 249, 12/29/2022, 80042-80067.

IRS Issues Proposed Rule on Single-Entity Treatment of Consolidated Groups for Specific Purposes.

IRS issued a proposed rule regarding regulations that treat members of a consolidated group as a single United States shareholder in certain cases for purposes of section 951(a)(2)(B) of the Internal Revenue Code (Code). The proposed rule would amend 26 CFR part 1 under sections 1502 and 7805(a) of the Code. Pursuant to section 1501, an affiliated group of corporations may elect to file a U.S. federal income tax return on a consolidated basis (such return, a consolidated return). Groups electing to file consolidated returns include all members’ income items on a single return, in lieu of filing separate returns for each member. Section 1502 authorizes IRS to prescribe regulations for an affiliated group of corporations that join in filing (or that are required to join in filing) a consolidated return (such a group, a consolidated group, as defined in section 1.1502-1(h)) to clearly reflect the U.S. tax liability of the consolidated group and to prevent avoidance of such tax liability. Section 1502 also permits IRS to prescribe rules that would apply if the corporations composing the consolidated group filed separate returns. Comments are due 01/18/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-14/pdf/2022-27055.pdf Federal Register, Vol. 87, No. 239, 12/14/2022, 76430-76434.

IRS Proposes Use of an Electronic Medium to Make Participant Elections and Spousal Consents.

IRS issued a proposed rule regarding the use of an electronic medium for participant elections and spousal consents. The proposed rule provides an alternative to in-person witnessing of spousal consents required to be witnessed by a notary public or a plan representative, and clarifies that certain special rules for the use of an electronic medium for participant elections also apply to spousal consents. Comments are due 03/30/2023. The proposed rule may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2022-12-30/pdf/2022-28327.pdf Federal Register, Vol. 87, No. 250, 12/30/2022, 80501-80509.

IRS Seeks Comment on Deduction and Capitalization of Expenditures Guidance.

IRS seeks comment regarding an information collection titled, Guidance Regarding Deduction and Capitalization of Expenditures. The information required to be retained by taxpayers will constitute enough documentation for purposes of substantiating a deduction. The information collected will be used by IRS on audit to determine the taxpayer’s

Regulatory Spotlight

entitlement to a deduction. The respondents include taxpayers who engage in certain transactions involving the acquisition of a trade or business or an ownership interest in a legal entity. Comments are due 02/13/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-15/pdf/2022-27244.pdf. Federal Register, Vol. 87, No. 240, 12/15/2022, 76693-76694.

FHFA Issues 2023-2024 Multifamily Enterprise Housing Goals.

The Federal Housing Finance Agency (FHFA) issued a final rule on the multifamily housing goals for Fannie Mae and Freddie Mac (the Enterprises) for 2023 and 2024. The Federal Housing Enterprises Financial Safety and Soundness Act requires FHFA to establish annual housing goals for mortgages purchased by the Enterprises. Under FHFA’s existing housing goals regulation, the multifamily housing goals for the Enterprises include benchmark levels through the end of 2022 based on the total number of affordable units in multifamily properties financed by mortgage loans purchased by the Enterprise each year. The final rule amends the regulation to establish benchmark levels for the multifamily housing goals for 2023 and 2024 based on a new methodology, the percentage of affordable units in multifamily properties financed by mortgages purchased by the Enterprise each year. The final rule is effective 02/21/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-23/pdf/2022-27467.pdf Federal Register, Vol. 87, No. 246, 12/23/2022, 78837-78846.

FHFA Adopts Prior Approval Process for Enterprise Products.

FHFA adopted a final rule that establishes a process for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises) to provide advance notice to the FHFA Director before offering a new activity to the market and to obtain prior approval from the Director before offering a new product to the market. The final rule is effective 02/27/2023. The final rule may be viewed at: https://www. govinfo.gov/content/pkg/FR-2022-12-27/pdf/2022-27942.pdf Federal Register, Vol. 87, No. 247, 12/27/2022, 7921779232.

FHFA Announces Annual Adjustment of Cap for Definition of Community Financial Institutions.

FHFA issued a notice to announce an adjustment to the cap on average total assets that is used in determining whether a Federal Home Loan Bank member qualifies as a community financial institution. The adjusted cap is $1,417,000,000, based on the annual percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U), as published by the Department of Labor. The adjustment is effective 01/01/2023. The notice may be viewed at: https://www.govinfo. gov/content/pkg/FR-2022-12-29/pdf/2022-28331.pdf Federal Register, Vol. 87, No. 249, 12/29/2022, 80184-80185.

SBA Proposes Revisions to Small Business Development Centers Program.

The Small Business Administration (SBA) proposed revisions to the Small Business Development Centers Program (SBDC Program) regulations to align with current policy and guidance from SBA and to incorporate updates to uniform administrative requirements, cost principles, and audit requirements for federal awards. The proposed rule also includes policy and procedural changes identified by SBA as necessary to preserve the integrity and legislative intent of the SBDC Program. Comments are due 02/13/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2022-12-13/pdf/2022-25012.pdf. Federal Register, Vol. 87, No. 238, 12/13/2022, 76127-76148.

SBA Proposes Amendments to Appeals Process.

SBA issued a proposed rule to amend the rules of practice of its Office of Hearings and Appeals (OHA) and the Historically Underutilized Business Zone (HUBZone) Program. Specifically, SBA proposed to implement procedures authorizing appeals to OHA from protest determinations regarding the status of a concern as a certified HUBZone small business concern. The amendments are issued in accordance with provisions of the National Defense Authorization Act for Fiscal Year 2022 (NDAA). Section 864 of NDAA authorizes SBA’s OHA to decide all appeals from HUBZone status protest determinations, which are currently decided by the Associate Administrator of Government Contracting and Business Development. Comments are due 01/17/2023. The proposed rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-12-15/pdf/2022-26873.pdf Federal Register, Vol. 87, No. 240, 12/15/2022, 76585-76589.

Regulatory Spotlight

FCIC Corrects Walnut Crop Insurance Provisions.

The Federal Crop Insurance Corporation (FCIC) issued a correction to the recently revised Walnut Crop Insurance Provisions. On 10/25/2022, FCIC revised the Walnut Crop Insurance Provisions. The final rule contained an incorrect instruction in the Settlement of Claims section. This document makes the correction. The correction is effective 12/16/2022. The correction may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27228. pdf. Federal Register, Vol. 87, No. 241, 12/16/2022, 76919.

RBC Issues NOSA for FY 2023 Rural Energy for America Program.

The Rural Business-Cooperative Service (RBC) issued a notice of solicitation of applications (NOSA) to announce the acceptance of grant and guaranteed loan applications under the Rural Energy for America Program (REAP). REAP helps agricultural producers and rural small businesses reduce energy costs and consumption and helps meet the nation’s critical energy needs. See the NOSA for deadlines, dates, and times that applications must be received to be considered. The NOSA may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27359.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77059-77064.

RHS Issues Proposed Rule Regarding Changes to Administration of Property Reserve Accounts.

The Rural Housing Service (RHS) issued a proposed rule to amend its regulation to implement changes related to the administration of property reserve accounts under the Multi-Family Housing (MFH) section 515, Rural Rental Housing, and section 514 Farm Labor Housing programs. The intent of the proposed rule is to increase flexibility in project refinancing for additional capital improvements needed at MFH section 515, Rural Rental Housing, and section 514 Farm Labor Housing properties. Comments are due 03/10/2023. The proposed rule may be viewed at: https://www.govinfo. gov/content/pkg/FR-2023-01-09/pdf/2023-00140.pdf. Federal Register, Vol. 88, No. 5, 01/09/2023, 1149-1151.

CFTC Seeks Comment on Proposal to Amend Reporting and Information Regulations for Derivatives Clearing Organizations.

The Commodity Futures Trading Commission (CFTC) issued a proposed rule to amend certain reporting and information regulations applicable to derivatives clearing organizations (DCOs). The proposed amendments would, among other things, update information requirements associated with commingling customer funds and positions in futures and swaps in the same account, address certain systems-related reporting obligations regarding exceptional events, revise certain daily and event-specific reporting requirements, and include in an appendix the fields that a DCO is required to provide on a daily basis. In addition, CFTC has proposed to amend certain delegation provisions. Comments are due 02/13/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-15/pdf/202226849.pdf Federal Register, Vol. 87, No. 240, 12/15/2022, 76698-76735.

SEC Makes Technical Amendments to SEC Rules.

To confirm with current Federal Register requirements of structuring statutory authority citations within the Code of Federal Regulations, the Securities and Exchange Commission (SEC) adopted technical amendments to its regulations regarding organization; conduct and ethics; and information and requests. The technical amendments move the citations of statutory authority for the regulations from the subpart level to the part level and amend related citations to remove duplicative statutory citations at the subpart level. The final rule is effective 12/21/2022. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-21/pdf/2022-27636.pdf. Federal Register, Vol. 87, No. 244, 12/21/2022, 77982-77983.

SEC Issues Final Rule to Enhance Information Mutual Funds, Exchange-Traded Funds, and Other Funds Need Report About Proxy Votes.

SEC issued a final rule to adopt amendments to Form N-PX under the Investment Company Act to enhance the information mutual funds, exchange-traded funds (ETFs), and certain other funds currently report about their proxy

Regulatory Spotlight

votes and to make that information easier to analyze. SEC also adopted rule and form amendments under the Securities Exchange Act that would require an institutional investment manager subject to the Exchange Act to report on Form N-PX how it voted proxies relating to executive compensation matters, as required by the Exchange Act. The reporting requirements for institutional investment managers complete implementation of those requirements added by the DoddFrank Act. The final rule is effective 07/01/2024. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/ FR-2022-12-22/pdf/2022-24292.pdf Federal Register, Vol. 87, No. 245, 12/22/2022, 78770-78818.

SEC Issues Final Insider Trading Arrangements and Related Disclosures Rule.

SEC issued a final rule to adopt amendments to the rule under the Securities Exchange Act that provides affirmative defenses to trading on the basis of material nonpublic information in insider trading cases. The amendments add new conditions to the rule that are designed to address concerns about abuse of the rule to trade securities opportunistically on the basis of material nonpublic information in ways that harm investors and undermine the integrity of the securities markets. SEC also adopted new disclosure requirements regarding insider trading policies and procedures of issuers, adoption and termination (including modification) of plans that are intended to meet the final rule’s conditions for establishing an affirmative defense, and certain other similar trading arrangements by directors and officers. In addition, SEC adopted amendments to disclosure requirements for director and executive compensation regarding equity compensation awards made close in time to the issuer’s disclosure of material nonpublic information. Finally, SEC adopted amendments to Forms 4 and 5 to require filers to identify transactions made pursuant to a plan intended to meet the final rule’s conditions for establishing an affirmative defense, and to require disclosure of bona fide gifts of securities on Form 4. The final rule is effective 02/27/2023. See Section III of the final rule for further information on transitioning to the final rule. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-29/ pdf/2022-27675.pdf. Federal Register, Vol. 87, No. 249, 12/29/2022, 80362-80432.

SEC Proposes Amendments to Rules for Open-End Management Investment Companies.

SEC issued a proposed rule to amend the current rules for open-end management investment companies (open-end funds) regarding liquidity risk management programs and swing pricing. The proposed amendments are designed to improve liquidity risk management programs to better prepare funds for stressed conditions and improve transparency in liquidity classifications. The amendments are also designed to mitigate dilution of shareholders’ interests in a fund by requiring any open-end fund, other than a money market fund or exchange-traded fund, to use swing pricing to adjust a fund’s net asset value (NAV) per share to pass on costs stemming from shareholder purchase or redemption activity to the shareholders engaged in that activity. In addition, to help operationalize the proposed swing pricing requirement, and to improve order processing more generally, SEC proposed a “hard close” requirement for these funds. SEC also proposed amendments to reporting and disclosure requirements on Forms N-PORT, N-1A, and N-CEN that apply to certain registered investment companies, including registered open-end funds (other than money market funds), registered closed-end funds, and unit investment trusts. The proposed amendments would require more frequent reporting of monthly portfolio holdings and related information to SEC and the public, amend certain reported identifiers, and make other amendments to require additional information about funds’ liquidity risk management and use of swing pricing. Comments are due 02/14/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR2022-12-16/pdf/2022-24376.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77172-77296.

SEC Issues Proposed Order Competition Rule.

SEC issued a proposed rule to amend the regulation governing the national market system (NMS) under the Securities Exchange Act to add a new rule designed to promote competition as a means to protect the interests of individual investors and to further the objectives of an NMS. The proposed rule would prohibit a restricted competition trading center from internally executing certain orders of individual investors at a price unless the orders are first exposed to competition at that price in a qualified auction operated by an open competition trading center. The proposed rule would also include limited exceptions to the general prohibition. In addition, SEC proposed to amend the regulation governing the NMS to add new defined terms as included in the proposed rule. Comments are due 03/31/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-03/pdf/2022-27617.pdf Federal Register, Vol. 88, No. 1, 01/03/2022, 128-245.

Regulatory Spotlight

FTC Seeks Comment on Guides for Use of Environmental Marketing Claims.

The Federal Trade Commission (FTC) seeks comment on its Guides for the Use of Environmental Marketing Claims (Guides). First issued in 1992 and most recently revised in 2012, FTC’s Guides address the applicability of section 5 of the FTC Act to environmental advertising and labeling claims. The Guides outline general principles applicable to all environmental marketing claims, and provide specific guidance regarding many common environmental benefit claims. As administrative interpretations of the law, the Guides themselves are not enforceable. In any enforcement action, FTC must prove the challenged act or practice is unfair or deceptive in violation of section 5 Comments are due 02/21/2023 The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-20/pdf/2022-27558.pdf Federal Register, Vol. 87, No. 243, 12/20/2022, 77766-77770.

FCC Issues Final and Proposed Rules to Help Consumers Shop Among Broadband Services.

The Federal Communications Commission (FCC) issued a final rule as required by the Infrastructure Investment and Jobs Act to help consumers comparison shop among broadband services. The final rule requires broadband internet service providers (ISPs) to display, at the point of sale, a broadband consumer label containing critical information about the provider’s service offerings, including information about pricing, introductory rates, data allowances, performance metrics, and whether the provider participates in the Affordable Connectivity Program. The final rule is effective 01/17/2023. Compliance with the amendments to 47 CFR 8.1(a)(1) through (6) of FCC’s rules are delayed indefinitely. FCC will publish a document in the Federal Register announcing compliance dates. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-26854.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 76959-76980.

FCC seeks comment on additional proposals to implement the Infrastructure Investment and Jobs Act. FCC seeks comment on refining broadband consumer labels to include more comprehensive information on pricing, bundled plans, label accessibility, performance characteristics, service reliability, cybersecurity, network management and privacy issues, the availability of labels in multiple languages, and whether the labels should be interactive or otherwise formatted differently so the information contained in them is clearer and conveyed more effectively. Comments are due 01/17/2023, reply comments are due 02/14/2023. The proposed rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-12-16/pdf/2022-26853.pdf Federal Register, Vol. 87, No. 241, 12/16/2022, 77048-77053.

VA Seeks Comment on Guaranteed Home Loan Cash-Out Refinance Loan Comparison Disclosure.

The Department of Veterans Affairs (VA) seeks comment regarding an information collection titled, VA-Guaranteed Home Loan Cash-out Refinance Loan Comparison Disclosure. There are three categories of refinance loans: Interest Rate Reduction Refinancing Loans (IRRRL), TYPE I Cash-Out Refinance, and TYPE II Cash-Out Refinance. All refinancing loan applications taken on or after the effective date that do not meet the requirements of the loan program may be subject to indemnification or the removal of the guaranty. Failure to provide initial disclosures to the Veteran within three business days from the initial application date and at closing may result in indemnification of the loan up to five years. Comments are due within 30 days of publication of the notice in the Federal Register website. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-12-29/pdf/2022-28401.pdf Federal Register, Vol. 87, No. 249, 12/29/2022, 80263.

EEOC Seeks Comment on Draft Strategic Enforcement Plan.

The Equal Employment Opportunity Commission (EEOC) seeks comment on a Draft Strategic Enforcement Plan for 2023-2027 as part of its strategic planning process. The purpose of the draft plan is to focus and coordinate EEOC’s work over a multiple fiscal year period to have a sustained impact in advancing equal employment opportunity. Comments are due 02/09/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-01-10/ pdf/2023-00283.pdf Federal Register, Vol. 88, No. 6, 01/10/2023, 1379-1385.

Regulatory Spotlight

NCUA Issues

Proposed Rule

Regarding Loan Participations, Eligible Obligations, and Notice of Liquidating Credit Unions.

The National Credit Union Administration (NCUA) issued a proposed rule to amend rules regarding the purchase of loan participations and the purchase, sale, and pledge of eligible obligations and other loans (including notes of liquidating credit unions). The proposed rule is intended to clarify NCUA’s current regulations and provide additional flexibility for federally insured credit unions to make use of advanced technologies and opportunities offered by the financial technology (fintech) sector. The proposal would also make conforming amendments to NCUA’s rule regarding loans to members and lines of credit to members by adding new provisions about indirect lending arrangements and indirect leasing arrangements. Finally, the proposed rule would make other conforming changes and technical amendments in other sections of NCUA’s regulations. NCUA does not view the conforming and technical changes as substantive. Comments are due 02/28/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-202212-30/pdf/2022-27607.pdf Federal Register, Vol. 87, No. 250, 12/30/2022, 80479-80501.

Compliance Notes

OCC issued a revised version of the Fair Lending booklet of the Comptroller’s Handbook. The Fair Lending booklet provides information and examination procedures to assist OCC examiners in assessing fair lending risk and evaluating compliance with the Fair Housing Act, ECOA, and Regulation B. The revised booklet reflects changes to laws and regulations since it was last published to explain OCC’s current approach to fair lending examinations. The revised booklet may be viewed at: www.occ.gov/news-issuances/news-releases/2023/nr-occ-2023-5.html

Beginning 01/01/2023, the standard IRS mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 65.5 cents per mile driven for business use; 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces; and 14 cents per mile driven in service of charitable organizations. The rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles. The announcement may be viewed at: www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2023-business-use-increases-3cents-per-mile

FDIC’s January Consumer News focuses on credit card checks and cash advances, frequently referred to as “convenience checks.” The consumer-facing resource is meant to help consumers be aware of the interest rate and fees that often accompany convenience checks, provides tips for how to avoid fees and penalties when using convenience checks, and includes recommendations for how best to prevent convenience checks from falling into the wrong hands. The resource may be viewed at: www.fdic.gov/resources/consumers/consumer-news/2023-01.html

Compliance Notes

CFPB released its annual report which details improvements and deficiencies in the nationwide consumer reporting companies’ responses to consumer complaints transmitted by CFPB. The report includes considerations for the nationwide consumer reporting companies (i.e., Transunion, Equifax, and Experian) to improve compliance with consumer financial protection laws and, more broadly, to serve consumers better. The annual report may be viewed at: www.consumerfinance.gov/about-us/newsroom/cfpb-issues-report-on-transunion-experian-and-equifax/

OCC published its 2022 Annual Report which provides Congress with an overview of the condition of the federal banking system, discusses OCC’s strategic priorities and initiatives, and shares its financial management and condition. The Annual Report may be viewed at: www.occ.gov/news-issuances/news-releases/2023/nr-occ-2023-2.html

FDIC and OCC will host a webinar for banks and community-based organizations to promote free tax assistance for low- and moderate-income (LMI) households and bank accounts for unbanked Americans. IRS will provide an overview of the Volunteer Income Tax Assistance (VITA) Program and VITA offices and tax resource organizations will share tax resources which benefit consumers and small businesses. FDIC will share their #GetBanked resources to help unbanked households obtain bank accounts in order to easily receive their tax refund. The webinar will be held 01/31/2023 from 1:00 - 2:00 PM CT. Registration information may be viewed at: www.fdic.gov/resources/consumers/ events/2023-01-31-tax-time-resources.html

FRB announced the designation of the 2023 Chairs and Deputy Chairs of the twelve Federal Reserve Banks. Each Reserve Bank has a nine-member board of directors. FRB appoints three directors, and each year designates one of its appointees as Chair and a second as Deputy Chair. The release may be viewed at: www.federalreserve.gov/ newsevents/pressreleases/other20230110a.htm

CFPB released a report which reflects an increase in identity theft of servicemembers. The report reflects that between 2014 and 2022, military consumer complaints to CFPB about debts they said resulted from identity theft increased nearly fivefold, from just over 200 annually in 2014, to more than 1,000 in 2022. CFPB’s report may be viewed at: www.consumerfinance.gov/data-research/research-reports/servicemember-reports-about-identity-theft-are-increasing/

OCC reported performance of first-lien mortgages in the federal banking system improved during the third quarter of 2022. The OCC Mortgage Metrics Report, Third Quarter 2022 showed that 97.2 percent of mortgages included in the report were current and performing at the end of the quarter, compared to 95.6 percent a year earlier. The percentage of seriously delinquent mortgages, mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due, was 1.3 percent in the third quarter of 2022, compared to 1.5 percent in the prior quarter and 3.1 percent a year ago. The report may be viewed at: www.occ.gov/ news-issuances/news-releases/2022/nr-occ-2022-151.html

FHFA released the 2023 Scorecard for Fannie Mae and Freddie Mac (together, the Enterprises) and their joint venture, Common Securitization Solutions (CSS). Each year, FHFA releases an annual Scorecard to communicate and provide public awareness of its priorities and expectations for the Enterprises and CSS. The 2023 Scorecard focuses on specific Enterprise goals that address affordability, fair lending, and equity, in addition to modernizing single-family appraisal processes and continuing to prioritize climate risks. The scorecard may be viewed at: www.fhfa.gov/Media/ PublicAffairs/Pages/FHFA-Releases-2023-Scorecard-for-Fannie-Freddie-and-CSS.aspx

IRS released information on certain clean vehicle provisions of the Inflation Reduction Act. The information provides greater clarity to consumers and businesses that, beginning 01/01/2023, will be able to access tax benefits from the law’s clean vehicle provisions. The information released consists of: (a) FAQs for consumers on the clean vehicle tax credits that will help consumers better understand how to access the various tax incentives for the purchase of new and used electronic vehicles; (b) a notice on the “incremental cost” of vehicles eligible for the commercial clean vehicle tax credit; (c) a notice of the intent to propose regulations on the tax credit for new clean vehicles; and (d) a white paper regarding the anticipated direction of an upcoming proposed guidance on the critical minerals and battery component requirements and the process for determining whether vehicles qualify under such requirements. The resources may be viewed at: https://home.treasury.gov/news/press-releases/jy1179

FDIC presented a new episode in their podcast series, Banking in Rural America, which describes the unique banking needs for those who live and work in less populated areas across our country. The podcast may be accessed at: https://anchor.fm/fdic/episodes/Banking-in-Rural-America-e1t5ebo

FEBRUARY 2023

• Branch Manager Boot Camp: Session 1

2 4-part series; virtual half-days; $800/attendee

• Bank Executives Conference

8–10 Wisconsin Dells

• Compliance Forum: Session 3

14 Wisconsin Dells; annual membership (pricing varies)

MARCH 2023

• Call Report Review & Update Workshop

1–2 Virtual half-days; $245/attendee

• Branch Manager Boot Camp: Session 2

2 4-part series; virtual half-days; $800/attendee

• Advanced IRA Workshop

7 Madison or virtual; $245/attendee

• Health Savings Accounts Workshop

8 Madison or virtual; $245/attendee

•Loan Compliance School

13–17 Madison or virtual; $1,295/attendee

•Real Estate Compliance School

15–17 Madison or virtual; $795/attendee

•Introduction to Commercial Lending School

20–22 Madison; $895/attendee

• WBA/ABA Washington Summit

20–23 Washington, D.C.

• Security Officer Workshops

22 Wisconsin Dells or virtual; $245/attendee

• Branch Manager Boot Camp: Session 3

23 4-part series; virtual half-days; $800/attendee

APRIL 2023

• Principles of Banking Course

5–6 Fond du Lac; $550/attendee

12–13 Mineral Point; $550/attendee

•Residential Mortgage Lending School

11–14 Madison; $1,045/attendee

• Agricultural Bankers Conference

13–14 Wisconsin Dells; $300/ag section member or $350/non-section member attendee

APRIL 2023 (continued)

• FinTech Showcase 17 Wisconsin Dells

• Power of Community Week 17–22 www.wisbank.com/BanksPowerWI

• Compliance Management School 18–20 Madison; $795/attendee

• Women in Banking Conference 25 Wisconsin Dells or virtual; team pricing available

• Community Bankers for Compliance (CBC) – Session II 26 Wisconsin Dells or virtual; membership (pricing options vary)

• Branch Manager Boot Camp: Session 4 27 4-part series; virtual half-days; $800/attendee

MAY 2023

• American Mortgage Conference 1–3 South Carolina

•Personal Banker School 2–3 Wausau; $495/attendee

• HR Conference 4 Stevens Point; $245/attendee

•School of Bank Management 8–12 Madison; $1,395/attendee

• Capitol Day 11 Madison

• BSA/AML Conference 11–12 Wisconsin Dells; $450/attendee

• Principles of Banking Course 17–18 Wausau; $550/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

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