January 2024 Compliance Journal

Compliance Journal January 2024

Special Focus FDIC Revises Part 328 Regarding Advertising of FDIC Membership and Use of Official Sign The Federal Deposit Insurance Corporation (FDIC) issued a final rule in late December which amends its regulations governing use of the official FDIC sign and insured depository institutions’ (IDIs’) advertising statements (Part 328) to reflect how depositors conduct business with IDIs today, including through digital and mobile channels. Part 328 includes requirements for the use of the official FDIC sign and IDI’s advertising statements, as well as misrepresentations of insured status and misuses of the FDIC name or logo. The amendments made by the final rule are effective April 1, 2024; with an extended compliance date of January 1, 2025.

FDIC’s Part 328, entitled Official Signs, Advertisements and Membership, False Advertising, Misrepresentation of Insurance Status, and Misuse of FDIC’s Logo, consists of two parts. Subpart A provides definitions and requirements for the required use of the FDIC official sign and the advertisement of membership. Subpart B of Part 328 provides definitions and prohibitions against false advertising, misrepresentation of insured status, and misuse of FDIC’s name or logo. The final rule revised both subparts.

The following is a section-by-section summary of the revisions to Subpart A of Part 328 and an overview summary of the revisions to Subpart B regarding false advertisements, misrepresentation of insurance status, and misuse of FDIC logo.

Subpart A Definitions and Requirements Subpart A of Part 328 describes the official sign and advertising statement and prescribes their use by IDIs, as well as other signs to prevent customer confusion in the event non-deposit products are offered by an IDI. Part 328.1 provides definitions for terms used within Subpart A Part 328, including the following: Branch has the same meaning as the term “domestic branch” as set forth under section 3(o) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(o).

Corporation means the Federal Deposit Insurance Corporation.

Deposit has the same meaning as set forth under section 3(l) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(l).

Digital deposit-taking channel means websites, banking applications, and any other electronic communications method through which an IDI accepts deposits.

Hybrid product means a product or service that has both deposit product features and non-deposit product features. A sweep account is an example of a hybrid product.

Insured depository institution has the same meaning as set forth under section 3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2).

Non-deposit product means any product that is not a “deposit”, including, but not limited to: insurance products, annuities,

Special Focus mutual funds, securities, and crypto-assets. For purposes of this definition, credit products and safe deposit boxes are not non-deposit products.

Part 328.2 provides FDIC’s official sign and symbol.

FDIC will continue to use the existing design of its official sign. Except as otherwise provided in this section, FDIC’s official sign must be 7” by 3” in size, with black lettering and gold background, and has the following design:

January 2024 Volume 29, 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

FDIC will also continue the use of its existing “symbol” which is that portion of the official sign consisting of “FDIC” and the two lines of smaller type above and below “FDIC.” An IDI may procure the official sign from FDIC for official use at no charge. Information on obtaining the official sign is posted on FDIC’s website at: https://www.fdic.gov.

Alternatively, an IDI may, at their expense, procure from commercial suppliers, signs that vary from the official sign in size, color, or material. FDIC has also continued its existing procedure that it may require an IDI, upon at least thirty (30) days written notice, to change the wording or color of the official sign in a manner deemed necessary for the protection of depositors or others.

Signs in Bank Premises Part 328.3 provides requirements for signage within the premises of IDIs and the offering of non-deposit products within the premises of IDIs. FDIC has revised its current rule for the display of its official sign to address changes in some branch structures, including café-style locations where deposits are accepted in an open area rather than at a teller window or station. As a general rule, each IDI must continuously, clearly, and conspicuously display the official sign at each place of business where consumers have access to or transact with deposits.

For deposits received at teller windows or stations, FDIC has retained the current rule to require the display of the official sign at each teller window or station where insured deposits are usually and normally received, in a size of 7” by 3” or larger with black lettering on a gold background as described in section 328.2 above.

FDIC has created a new provision meant to allow flexibility with respect to the display of the official sign when the IDI usually and normally receives deposits at teller windows and stations and only offers insured deposit products on the premises. If the IDI does not offer non-deposit products on the premises, the official sign may be displayed at one or more locations visible from the teller windows or stations in a manner that ensures a copy of the official sign is large enough so as to be legible from anywhere in that area. Whether the display is “large enough to be legible from anywhere in that area” means that the average customer can easily see and read the sign from a reasonable distance from that area. This may depend on factors specific to the layout of the IDI’s physical premises.

For example, if an IDI’s place of business has two teller windows right next to each other Page 2 | January 2024

Layout Christian Heo

Copyright ©2024 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 and it posts one official sign between the teller windows that is large enough to be legible to depositors at both teller windows, that approach would meet the standard.

If insured deposits are usually and normally received in areas of the premises other than teller windows or stations (e.g., café-style locations), the IDI must display the official sign in one or more locations in a manner that ensures a copy of the official sign is large enough to be legible from anywhere in the deposit-taking areas.

An IDI may display the official sign in locations at the institution other than those required by this section, except for areas where non-deposit products are offered as further outlined below. FDIC will also continue to allow an IDI to display signs that vary from the official sign in size, color, or material at any location where display of the official sign is required or permitted. However, any such varied sign that is displayed in locations where display of the official sign is required must not be smaller in size than the official sign, must have the same color for the text and graphics, and include the same content.

Under the final rule, if non-deposit products are offered on the IDI premises, the non-deposit products must be physically segregated from areas where insured deposits are usually and normally accepted. The IDI must identify areas where activities related to the sale of non-deposit products occur and clearly delineate and distinguish those areas from the areas where insured deposit-taking activities occur. Examples include, that IDIs could conduct non-deposit related activity in separate areas or in areas that are not in close proximity to where deposits are taken by using a desk, cubicle, partitions, railings, planters, a separate room, or other indicator that the area is distinct and separate from the deposittaking area.

In addition, at each location within the premises where non-deposit products are offered, an IDI must continuously, clearly, and conspicuously display signage indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. The signage may not be displayed in close proximity to the official sign. FDIC has not created a standardized design or model form for the non-deposit sign; IDIs will need to create their own signage.

In limited situations where physical considerations present challenges to offering non-deposit products in a distinct area, an IDI must take prudent and reasonable steps to minimize customer confusion.

FDIC will permit IDIs to use electronic media to display the official sign and non-deposit sign as required by the rule, so long as the display meets the continuous, clear, and conspicuous display standard. FDIC stated in its preamble to the rule that a rotating display will not satisfy the “continuous” requirement applicable to the display of the official sign and nondeposit sign.

Signs for ATMs and Other Remote Electronic Facilities Part 328.4 governs signage for IDIs’ automated teller machines (ATMs) and other remote electronic facilities that receive deposits. An IDI’s remote electronic facility that receives deposits and is labeled an interactive teller machine or (ITM) instead of an ATM is subject to Part 328. However, if the ITM does not receive deposits, it is not subject to the rule. This section is separate from online and mobile banking channels, which are referred to as “digital deposit-taking channels” described further in the next section.

As a general rule, an IDI’s ATM or like device that receives deposits for an IDI and does not offer access to non-deposit products may comply with the official sign requirement by either: (1) displaying the physical official sign as described above in section 328.2 on the ATM by attaching or posting it to the ATM; or (2) displaying the FDIC official digital sign which is discussed in the digital deposit-taking channel section below. However, IDI’s ATMs or like devices that accept deposits and are put into service after January 1, 2025, must display the official digital sign.

If an IDI is satisfying the requirements of displaying FDIC’s official sign on its ATM or like device by physically attaching or posting it to the ATM, IDIs need be mindful that if the physical sign were to become degraded or defaced, the physical sign would not meet the “clearly, continuously, and conspicuously” standard. As a result, an IDI should monitor the condition of any physically attached posted official sign to ensure it does not become too bad of condition and replace it as necessary.

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Special Focus An IDI’s ATM or like device that receives deposits for an IDI and offers access to non-deposit products must clearly, continuously, and conspicuously display the FDIC official digital sign on its home page or screen and on each transaction page or screen relating to deposits. An IDI that offers access to non-deposit products, must clearly, continuously, and conspicuously display electronic disclosures indicating that such non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. These disclosures must be displayed on each transaction page or screen relating to non-deposit products by January 1, 2025. Such signage may not be displayed in close proximity to the FDIC official digital sign.

Signs for Digital Deposit-Taking Channels Part 328.5 governs signage for digital deposit-taking channels, including IDIs’ websites and web-based or mobile applications that offer the ability to make deposits electronically and provide access to deposits at IDIs. An IDI must clearly, continuously, and conspicuously display the FDIC official digital sign on its digital deposit-taking channels on the following pages or screens: 1.

2.

3.

Initial or homepage of the website or application; Landing or login pages; and Pages where the customer may transact with deposits.

Under the final rule, the FDIC official digital sign shall be clearly legible across all IDI deposit-taking channels. The official digital sign must also be clearly and conspicuously placed. An official digital sign continuously displayed near the top of the relevant page or screen and in close proximity to the IDI’s name would be considered clear and conspicuous by FDIC. The official digital sign required under this section must have the following design:

The “FDIC” in the official digital sign shall be displayed with a wordmark size of 37.36 x 15.74px, in navy blue (hexadecimal color code #003256), and the “FDIC-Insured – Backed by the full faith and credit of the U.S. Government” shall be displayed in regular 400 italic (12.8px) and with black (hexadecimal color code #000000) lettering.

The entire official digital sign must be displayed in Source Sans Pro Web. If the FDIC official digital sign in these colors would be illegible in a digital-taking channel, due to the color of the background, the entire official digital sign must be displayed in white (hexadecimal color code #FFFFFF).

The “digital symbol” of FDIC is that portion of the FDIC official digital sign consisting of “FDIC” and the one line of smaller type to the right of “FDIC. If a digital deposit-taking channel offers both access to deposits at an IDI and non-deposit products, the IDI must clearly and conspicuously display signage indicating that the non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. This signage must be displayed continuously on each page relating to non-deposit products. The non-deposit signage may not be displayed in close proximity to the FDIC official digital sign display.

If a digital deposit-taking channel offers access to non-deposit products from a non-bank third party’s online platform, and a logged-in bank customer attempts to access such non-deposit products, the IDI must provide a one-time per web session notification on the IDI’s deposit-taking channel before the customer leaves the IDI’s digital deposit-taking channel. The notification must be dismissed by an action of the bank customer before initially accessing the third party’s online platform and it must clearly, conspicuously indicate that the third party’s non-deposit products: are not insured by the FDIC; are not deposits; and may lose value. An IDI is not precluded from including additional disclosures in the notification that may help prevent consumer confusion, including, for example, that the bank customer is leaving the IDI’s insured website.

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Special Focus Similar to signs within an IDI’s premises, FDIC may require an IDI, upon at least thirty (30) days written notice, to change the wording, color, or placement of the FDIC official digital sign and other signs for digital deposit-taking channels when it is deemed necessary for the protection of depositors or others or to ensure consistency with this section.

Official Advertising Statement Part 328.6 governs the requirement of how FDIC’s official advertising statement is to be used. Currently, IDI must include the official advertising statement in all advertisements that promote deposit products. The term advertisement means a commercial message in any medium that is designed to attract public attention or patronage to a product or business.

The definition includes advertising published through social media channels.

The current official advertising statement under Part 328 is “Member of the Federal Deposit Insurance Corporation.”

IDIs are also currently allowed to use the short title “Member of FDIC,” “Member FDIC,” or a reproduction of the symbol of FDIC. Under the final rule, IDIs may now also use the short title, “FDIC-Insured.”

The existing requirements regarding the size and print of the official advertising statement, use of the official statement in advertisements, list of advertisements which do not require the official advertising statement, restrictions on the use of the statement when advertising non-deposit products, and use of the official advertising statement in non-English language remain in place and are not impacted by the final rule.

Prohibition Against Receiving Deposits at Same Teller Station as Non-Insured Institution Part 328.7 sets forth the general prohibition against an IDI receiving deposits at same teller station or window as any non-insured institution receives deposits or similar liabilities. The section currently has an exception in that the prohibition did not apply to deposits received at an ATM or other remote electronic facility that receives deposits for an IDI. The section was revised to include in the exception deposits facilitated through a digital deposit-taking channel.

Policies and Procedures Part 328.8 sets forth a new requirement that IDIs must establish and maintain written policies and procedures to achieve compliance with Part 328. The policies and procedures must be commensurate with the nature, size, complexity, scope, and potential risk of the deposit-taking activities of the IDI. The policies and procedures must also, as appropriate, include provisions related to monitoring and evaluating activities of persons that prove deposit-related services to the IDI or offer the IDI’s deposit-related products or services to other parties.

Subpart B: False Advertising, Misrepresentation of Insured Status, and Misue of the FDIC Name or Logo FDIC issued Subpart B to Part 328 in May 2022 which established the process by which FDIC identifies and investigates conduct that may violate Section 18 of the Federal Deposit Insurance Act which prohibits any person from misusing the name or logo of the FDIC and from engaging in false advertising or making knowing misrepresentations about deposit insurance. Amendments were made to Subpart B to expressly address situations where consumers may be misled. The section now includes a non-exhaustive list of conduct that violates part 328.

The final rule also revises the definition of “non-deposit product” under the Subpart to state that crypto-assets are not a “deposit.” The revised definition also states safe deposit box services are not non-deposit products. The revisions are meant to clarify that IDIs are not required to display the non-deposit sign in areas where IDIs provide safe deposit boxes and offer no other non-deposit products.

Summary FDIC has revised Part 328 regarding the use of the FDIC official sign and IDI’s advertising statements to reflect digital and mobile channels. The final rule generally: (a) modernizes and amends the rules governing the display of the official sign in branches; (b) requires the display of the FDIC official digital sign on bank websites, mobile applications, and certain IDI ATMs and other like devices; (c) requires the use of disclosures differentiating deposits and non-deposit January 2024 | Page 5

Special Focus products across all banking channels, including digital channels; (d) clarifies FDIC’s rules regarding misrepresentations of deposit insurance coverage by addressing specific scenarios where information provided to consumers may be misleading; and (e) amends the definition of “non-deposit product” to include crypto-assets and specifically address safe deposit box services.

The final rule also requires IDIs to adopt a Part 328 policy and create procedures regarding the use of the FDIC official sign and advertising statement, including monitoring, and evaluating any third-party servicer, as applicable. The policy and procedures need be commensurate with the nature, size, complexity, scope, and potential risk of the deposit-taking activities of the IDI. IDIs also need to review ATMs, ITMs, and other remote service devises to ensure any required statements are properly placed, including whether a non-deposit product statement is necessary. IDIs will also need to review any deposit-taking channels to ensure each have the necessary FDIC signage and non-deposit product statement, as applicable.

The amendments made by the final rule are effective April 1, 2024; with an extended compliance date of January 1, 2025. The final rule may be viewed at: https://www.fdic.gov/news/board-matters/2023/2023-12-20-notice-dis-b-fr.pdf

2024 Adjusted State and Federal Regulatory Thresholds and Limits Happy New Year! As we start afresh into a new year, several thresholds 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, 2024, including a link to pull each publication for reference.

Regulation Z, TILA • The exemption threshold for Regulation Z (Truth in Lending Act) will increase to $69,500, up from $66,400. https:// www.govinfo.gov/content/pkg/FR-2023-11-29/pdf/2023-25048.pdf • The exemption threshold under Regulation Z for HPML appraisals will increase to $32,400, up from $31,000. https:// www.govinfo.gov/content/pkg/FR-2023-11-29/pdf/2023-25047.pdf • 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 asset- size threshold is adjusted to $2.640 billion, up from $2.537 billion; and o The exemption threshold for certain insured depository institutions with assets of $10 billion or less is adjusted to $11.835 billion, up from $11.374 billion. https://www.govinfo.gov/content/pkg/FR-2023-12-21/pdf/2023- 28076.pdf • 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 $26,092. o The adjusted points-and-fees dollar trigger for high-cost mortgages will be $1,305. 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 $130,461; • 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $78,277 but less than $130,461; • 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $78,277; • 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $130,461; • 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $78,277; or • 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $78,277.

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Special Focus 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 $130,461; • $3,914 for a loan amount greater than or equal to $78,277 but less than $130,461; • 5 percent of the total loan amount for a loan greater than or equal to $26,092 but less than $78,277; • $1,305 for a loan amount greater than or equal to $16,308 but less than $26,092; and • 8 percent of the total loan amount for a loan amount less than $16,308. 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. https://www.govinfo.gov/content/pkg/FR-2023-09-21/ pdf/2023-20476.pdf Regulation C, HMDA • The asset-size threshold to be exempt from collecting HMDA data in 2023 is adjusted to $56 million, up from $54 million. https://www.govinfo.gov/content/pkg/FR-2023-12-21/pdf/2023-28079.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 $1.564 billion; and o Intermediate small bank means a small bank with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years. https://www.govinfo.gov/content/pkg/FR-2023-12-20/pdf/2023-27934.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.” https://www.occ.gov/ news-issuances/bulletins/2023/bulletin-2023-40.html Required Escrow Rate under Wisconsin Law • 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 0.18%. https://dfi.wi.gov/ Pages/FinancialInstitutions/BankingSavingsInstitutions/EscrowNotice.aspx 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 2024 calendar year is $15.50. https://www.govinfo.gov/ content/pkg/FR-2023-11-15/pdf/2023-25172.pdf • The exemption threshold for Regulation M (Consumer Leasing Act) will increase to $69,500, up from $66,400. https:// www.govinfo.gov/content/pkg/FR-2023-11-29/pdf/2023-25049.pdf • The FDIC Designated Reserve Ratio remains 2 percent for 2024. https://www.govinfo.gov/content/pkg/FR-2023-1122/pdf/2023-25814.pdf • The OCC is maintaining the general assessment, independent trust, and independent credit card fee schedules from 2023. There will be no inflation adjustment to assessment rates. OCC is increasing the hourly fee for special examinations and investigations to $170 from $161. The increase is to ensure adequacy in recovering the cost of conducting special examinations and investigations. https://www.occ.treas.gov/topics/supervision-and-examination/examinations/ assessments-and-fees/notice-of-fees-semiannual-assessment.html

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Special Focus • 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 $23,000, up from $22,500. The limit on annual contributions to an IRA increased to $7,000, up from $6,500. 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 $70 billion for each enterprise, for a combined total of $140 billion. The caps reflect current market forecasts. FHFA will continue to require that at least 50 percent of Fannie’s and Freddie’s multifamily business be mission-driven affordable housing. https://www.fhfa.gov/Media/ PublicAffairs/PublicAffairsDocuments/2024-Multifamily-Caps-Fact-Sheet.pdf • The conforming loan limit values for mortgages to be acquired by Fannie Mae and Freddie Mac in 2024 for one-unit properties will be $766,550 an increase from $726,200. https://www.fhfa.gov//Media/PublicAffairs/Pages/FHFAAnnounces-Conforming-Loan-Limit-Values-for-2024.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 $498,257 to $3,317,400. https://www.hud.gov/press/ press_releases_media_advisories/hud_no_23_265 • Beginning January 1, 2024, 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 diesel-powered vehicles. o 67 cents per mile driven for business use, up 1.5 cents from 2023; o 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023; and o 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023. https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2024-mileage-rate-increases- to-67-cents-a-mile-up-1-point-5-cents-from-2023

Regulatory Spotlight Agencies Issue 2024 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 to amend their Community Reinvestment Act (CRA) regulations to adjust the asset-size thresholds used to define “small bank” and “intermediate small bank.” As required by the CRA regulations, the adjustment to the threshold amount is based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Under the final rule, “small bank” means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.564 billion. “Intermediate small bank” means a small bank with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years. The final rule is effective 01/01/2024. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-20/pdf/2023-27934.pdf. Federal Register, Vol. 88, No. 243, 12/20/2023, 87895-87897.

The Office of the Comptroller of the Currency (OCC) announced revisions to the asset-size threshold amounts used to define “small bank or savings association” and “intermediate small bank or savings association” under the Community Reinvestment Act (CRA) regulations. The adjusted threshold amounts are based on the annual percentage change in a measure of the Consumer Price Index. For CRA purposes, beginning 01/01/2024, a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.564 billion is a “small bank or savings association” and a “small bank or savings association” with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years is an “intermediate small bank or savings association.” The thresholds, which apply to any national bank, federal savings association, or state savings association, are effective 01/01/2024. The bulletin may be viewed at: https://www.occ.gov/ news-issuances/bulletins/2023/bulletin-2023-40.html.

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Regulatory Spotlight Special Focus Agencies Amend Uniform Rules of Practice and Procedure.

The Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and National Credit Union Administration (NCUA) (collectively, the agencies) issued a final rule to adopt changes to the Uniform Rules of Practice and Procedure (Uniform Rules) to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. The agencies also modified their agency-specific rules of administrative practice and procedure (Local Rules). OCC also integrated its Uniform Rules and Local Rules so that one set of rules applies to both national banks and federal savings associations and amended its rules on organization and functions to address service of process. The final rule is effective 04/01/2024. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/ FR-2023-12-28/pdf/2023-25646.pdf. Federal Register, Vol. 88, No. 248, 12/28/2023, 89820-89973.

Agencies Issue Report on Differences in Accounting and Capital Standards.

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) prepared a report pursuant to section 37(c) of the Federal Deposit Insurance Act which requires the agencies to jointly submit an annual report to the Committee on Financial Services of the U.S. House of Representatives and to the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate. The report describes differences among the accounting and capital standards used by the agencies for insured depository institutions. Section 37(c) requires that the report be published in the Federal Register. The agencies reported no material differences were identified among the agencies’ accounting and capital standards applicable to the institutions they regulate and supervise. The joint report may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-12-22/pdf/2023-28173.pdf. Federal Register, Vol. 88, No. 245, 12/22/2023, 88616-88618.

Agencies Adjust CMPs for Inflation.

The Office of the Comptroller of the Currency (OCC) announced changes to its maximum civil money penalties (CMPs) as adjusted for inflation. The 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 are applicable to penalties assessed on or after 01/08/2024, for conduct occurring on or after 11/02/2015. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-01-08/pdf/2024-00097.pdf. Federal Register, Vol. 89, No. 5, 01/08/2024, 872-874.

The Farm Credit System Insurance Corporation (FCSIC) issued a final rule to implement inflation adjustments to civil money penalties (CMPs) that FCSIC may impose under the Farm Credit Act, as amended. The adjustments are required by 2015 amendments to the Federal Civil Penalties Inflation Adjustment Act. The final rule is effective 01/10/2024. The adjusted amounts of CMPs in the final rule are applicable to penalties assessed on or after 01/15/2024, for conduct occurring on or after 11/02/2015. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-01-10/ pdf/2024-00339.pdf. Federal Register, Vol. 89, No. 7, 01/10/2024, 1445.

The Federal Trade Commission (FTC) issued a final rule to implement inflation adjustments to civil money penalties (CMPs) that the Farm Credit System Insurance Corporation (FCSIC) may impose under the Farm Credit Act, as amended.

The adjustments are required by 2015 amendments to the Federal Civil Penalties Inflation Adjustment Act. The final rule is effective 01/10/2024. The adjusted amounts of CMPs are applicable to penalties assessed on or after 01/15/2024, for conduct occurring on or after 11/02/2015. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR2024-01-10/pdf/2024-00301.pdf. Federal Register, Vol. 89, No. 7, 01/10/2024, 1445-1447.

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 adjustments comply with the requirement in the Federal Civil Penalties Inflation Adjustment Act, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act, to make annual adjustments to the penalties. The final rule is effective 01/10/2024. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-01-10/pdf/2024-00353.pdf. Federal Register, Vol. 89, No. 7, 01/10/2024, 1458-1460.

January 2024 | Page 9

Regulatory Spotlight The National Credit Union Administration (NCUA) issued a final rule to amend its regulations to adjust the maximum amount of each civil monetary penalty (CMP) within its jurisdiction to account for inflation. The final rule, including the amount of the adjustments, is required under the Federal Civil Penalties Inflation Adjustment Act, as amended by the Debt Collection Improvement Act and the Federal Civil Penalties Inflation Adjustment Act Improvements Act. The final rule is effective 01/10/2024. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-01-10/ pdf/2024-00316.pdf. Federal Register, Vol. 89, No. 7, 01/10/2024, 1441-1444.

Agencies Seek Comment on Revisions to Call Report Forms FFIEC 002 and 002S. 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) seek comment regarding revisions to information collections titled, Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), and the Report of Assets and Liabilities of a Non-U.S. Branch that is Managed or Controlled by a U.S. Branch or Agency of a Foreign Bank (FFIEC 002S). The revisions to the Call Report forms and instructions, and the FFIEC 002, relate to the reporting on loans to non-depository financial institutions and other loans, guaranteed structured financial products, and proposed long-term debt requirements. In addition, the agencies seek comment on a proposal to adopt ongoing standards for electronic signatures to comply with the Call Report signature and attestation requirement. The revisions are proposed to take effect with the 06/30/2024, report date, except for those related to the proposed long-term debt requirements which would take effect for the first report date at or following the effective date of any final rule.

Comments are due 02/26/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-27/ pdf/2023-28473.pdf. Federal Register, Vol. 88, No. 247, 12/27/2023, 89489-89495.

CFPB Announces 2024 HMDA Asset-Size Exemption Threshold.

The Bureau of Consumer Financial Protection (CFPB) issued a final rule to amend the official commentary that interprets the requirements of Regulation C, which implements the 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 4.1 percent increase in the average of the CPI-W for the 12-month period ending in November 2023, the exemption threshold is adjusted to $56 million from $54 million. Therefore, banks, savings associations, and credit unions with assets of $56 million or less as of 12/31/2023, are exempt from collecting data in 2024. The final rule is effective 01/01/2024. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-21/pdf/2023-28079.pdf. Federal Register, Vol. 88, No. 244, 12/21/2023, 88221-88223.

CFPB Announces 2024 Asset-Size Exemption for HPML Escrow Accounts.

CFPB issued a final rule to amend the official commentary to Regulation Z, which implements the Truth in Lending Act (TILA), to make annual adjustments to the asset-size thresholds exempting 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 TILA for creditors that, together with their affiliates that 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 4.1 percent increase in the average of the CPI-W for the 12-month period ending in November 2023, the exemption threshold for creditors and their affiliates that regularly extended covered transactions secured by first liens is adjusted to $2.640 billion from $2.537 billion and the exemption threshold for certain insured depository institutions and insured credit unions with assets of $10 billion or less is adjusted to $11.835 billion from $11.374 billion. The final rule is effective 01/01/2024. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-21/pdf/202328076.pdf. Federal Register, Vol. 88, No. 244, 12/21/2023, 88223-88227.

Page 10 | January 2024

Regulatory Spotlight FRB Announces 2023 Aggregate Global Indicator Amounts.

The Board of Governors of the Federal Reserve System (FRB) announced the 2023 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 in the notice for amounts per category and systemic indicator. The 2023 aggregate global indicator amounts are effective 12/18/2023. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-12-18/pdf/2023-27671.pdf. Federal Register, Vol. 88, No. 241, 12/18/2023, 87426-87427.

FRB Reports Final Approval of Information Collections.

FRB announced final approval of an information collection titled, Reporting and Recordkeeping Requirements Associated with Regulation Y, Capital Plans. In addition to other reporting and recordkeeping requirements, Section 225.8 of Regulation Y, Bank Holding Companies and Change in Bank Control, requires respondents to submit a capital plan to FRB on an annual basis and to request prior approval from FRB under certain circumstances before making a capital distribution. The information collection is used in connection with these reporting and recordkeeping requirements. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-26/pdf/2023-28346.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88919-88920.

FRB announced final approval of an information collection titled, Reporting, Recordkeeping, and Disclosure Requirements Associated with Regulation VV. Section 13 of the Bank Holding Company Act and the implementing regulation, Regulation VV, Proprietary Trading and Certain Interests in and Relationships with Covered Funds, restrict the ability of banking entities to engage in proprietary trading or to have certain interests in, or relationships with, a hedge fund or private equity fund. Respondents, which include state member banks, bank holding companies, savings and loan holding companies, foreign banking organizations, U.S. branches or agencies of foreign banks, and other holding companies that control an insured depository institution, must submit certain information to facilitate the monitoring and enforcement of these restrictions. The information collection is used in connection with these reporting requirements. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-26/pdf/2023-28347.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88920.

FRB announced final approval of an information collection titled, Reporting Requirements Associated with Section 208.22 of Regulation H, Notifications Related to Community Development and Public Welfare Investments by State Member Banks. Section 208.22 of Regulation H, Membership of State Banking Institutions in the Federal Reserve System, requires state member banks, in connection with their community development or public welfare investment activity, to submit a request for approval to the appropriate Federal Reserve Bank unless the investment does not require prior FRB approval, in which case the state member bank must submit a written notice to the Reserve Bank. The information collection is used in connection with submitting a request for approval. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-12-26/pdf/2023-28345.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88921-88922.

FRB announced final approval of an information collection titled, Application for Exemption from Prohibited Service at Savings and Loan Holding Companies. The Federal Deposit Insurance Act and the implementing regulation, Regulation LL, Savings and Loan Holding Companies, prohibit individuals who have been convicted of certain criminal offenses or who have agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such criminal offenses from participating in the affairs of a savings and loan holding company (SLHC) or any of its subsidiaries without the written consent of FRB. Such an individual, or the SLHC with which the individual seeks to participate, may apply for an exemption from the prohibition. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-26/ pdf/2023-28349.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88923.

FRB Seeks Comment on Appraisal Standard Information Collection.

FRB seeks comment regarding an information collection titled, Recordkeeping and Disclosure Requirements and Provisions Associated with Real Estate Appraisal Standards. Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) requires that, for federally-related transactions, regulated institutions obtain real estate appraisals performed by certified or licensed appraisers in conformance with uniform appraisal standards.

FRB’s regulations implementing Title XI of FIRREA, contained in Regulation Y, Bank Holding Companies and Change January 2024 | Page 11

Regulatory Spotlight in Bank Control, include certain recordkeeping requirements that apply to respondents. FRB and other supervisory agencies also have issued Interagency Appraisal and Evaluation Guidelines (the Guidelines) that convey supervisory expectations relating to real estate appraisals and evaluations used to support real estate- related financial transactions.

The Guidelines recommend that institutions adopt certain policies and procedures to ensure compliance with Title XI of FIRREA and Regulation Y. Comments are due 02/26/2024. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-12-26/pdf/2023-28348.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88920-88921.

OCC Seeks Comment on Information Collections.

The Office of the Comptroller of the Currency (OCC) seeks comment regarding an information collection titled, OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches. OCC’s guidelines, codified in 12 CFR part 30, appendix D, establish minimum standards for the design and implementation of a risk governance framework for insured national banks, insured federal savings associations, and insured federal branches of a foreign bank. The guidelines also further the goal of the Dodd-Frank Act to strengthen the financial system by focusing management and boards of directors on improving and strengthening risk management practices and governance, thereby minimizing the probability and impact of future financial crises. Comments are due 02/12/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-12-13/pdf/2023-27294.pdf. Federal Register, Vol. 88, No. 238, 12/13/2023, 86445-86447.

OCC seeks comment regarding an information collection titled, Fair Housing Home Loan Data System Regulation. Part 27 requires certain national banks to record certain information, and all national banks to retain certain information as further outlined in the notice. Part 27 also requires that all national banks, including those not subject to the recording requirements, maintain certain application and loan information in loan files. Part 27 further provides that OCC may require national banks to maintain and submit additional information if there is reason to believe that the bank engaged in discrimination. The information collection is used in connection with the recordkeeping requirements of Part 27.

Comments are due 02/13/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-15/ pdf/2023-27517.pdf. Federal Register, Vol. 88, No. 240, 12/15/2023, 87052-87053.

OCC seeks comment regarding an information collection titled, Information Collection for Qualitative Research on Consumer Trust in Banking and Bank Supervision. The information collection will be used in connection with OCC’s plans to conduct a series of focus group interview discussions to obtain an in-depth understanding of consumers’ relationship with and attitudes toward banks, and other non-bank firms providing financial services or products. Comments are due 03/08/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-01-08/pdf/2024-00100.pdf.

Federal Register, Vol. 89, No. 5, 01/08/2024, 984-986.

HUD Seeks Comment on Information Collection Related to FHA-Insured Commercial Mortgage Transactions.

The Department of Housing and Urban Development (HUD) seeks comment regarding an information collection titled, Electronic Closing and Continued First Lien Priority Certificates for Federal Housing Administration (FHA) Insured Commercial Mortgage Transactions. The collection will be used to facilitate uniform electronic closings of FHA-insured commercial mortgage closings, allow for the use of digital signatures and digital records where they are consistent with program obligations, and determine the parties’ compliance with applicable legal requirements and therefore ensure protection of the FHA insurance fund. The collection will also be used by the FHA lender to certify to HUD certain conditions required as part of a request to reduce the interest rate of an existing FHA-insured commercial mortgage.

Comments are due 02/09/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-11/ pdf/2023-27046.pdf. Federal Register, Vol. 88, No. 236, 12/11/2023, 85904-85905.

FEMA Issues Final Flood Hazard Determinations.

The Federal Emergency Management Agency (FEMA) issued a notice which identifies communities in the states of Indiana, Iowa, Ohio, and 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 Page 12 | January 2024

Regulatory Spotlight 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 05/08/2024, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-26/pdf/2023-28367. pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88933-88935.

FEMA issued a notice which identifies communities in the states of Indiana, Michigan, Minnesota, and Ohio, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final.

The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The date of 04/25/2024, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-26/pdf/2023-28368.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88935-88937.

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 states of Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, and Wisconsin, 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-2024-01-05/pdf/2024-00063.pdf. Federal Register, Vol. 89, No. 4, 01/05/2024, 796-803.

FEMA Issues Notices of Changes in Flood Hazard Determinations.

FEMA issued a notice which lists communities in the states of Illinois, Michigan, and Wisconsin, where the addition or modification of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or the regulatory floodway (hereinafter referred to as flood hazard determinations), as shown on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports, prepared by FEMA for each community, is appropriate because of new scientific or technical data. The FIRM, and where applicable, portions of the FIS report, have been revised to reflect the flood hazard determinations through issuance of a Letter of Map Revision (LOMR), in accordance with federal regulations. The flood hazard determinations will be finalized on the dates listed in the table in the notice and revise the FIRM panels and FIS report in effect prior to the determination for the listed communities. From the date of the second publication of notification of the changes in a newspaper of local circulation, any person has 90 days in which to request through the community that the Deputy Associate Administrator for Insurance and Mitigation reconsider the changes. The flood hazard determination information may be changed during the 90-day period. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-15/pdf/2023-27631. pdf. Federal Register, Vol. 88, No. 240, 12/15/2023, 86915-86918.

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 Illinois, 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 03/12/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-13/ pdf/2023-27345.pdf. Federal Register, Vol. 88, No. 238, 12/13/2023, 86358-86359.

January 2024 | Page 13

Regulatory Spotlight FEMA Seeks Comment on Hazard Mitigation Assistance Program Information Collection.

FEMA seeks comment regarding an information collection titled, Generic Clearance for Hazard Mitigation Assistance Programs. FEMA provides financial, non-financial, program management and technical assistance to state, local, territorial, and Tribal governments, and certain private non-profit entities with the response to and recovery from Presidentially-declared major disasters and emergencies, and the implementation of hazard mitigation measures and related activities that reduce or eliminate long-term risk to people and property from hazards and their effects.

The information collected is required for FEMA’s Hazard Mitigation Assistance Programs, the Revolving Loan Fund Capitalization Program, and the Public Assistance Program, for ongoing program implementation and optimization.

Comments are due 02/09/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-11/ pdf/2023-27121.pdf. Federal Register, Vol. 88, No. 236, 12/11/2023, 85898-85899.

FinCEN Allows Access to and Creates Safeguards for Beneficial Ownership Information.

The Financial Crimes Enforcement Network (FinCEN) issued a final rule to promulgate regulations 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, which is itself part of the National Defense Authorization Act. The final rule implements the strict protocols required by the CTA to protect sensitive personally identifiable information reported to FinCEN and establish the circumstances in which specified recipients have access to BOI, along with data protection protocols and oversight mechanisms applicable to each recipient category. The final rule is effective 02/20/2024. The final rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-12-22/pdf/2023-27973.pdf. Federal Register, Vol. 88, No. 245, 12/22/2023, 88732-88813.

FinCEN Seeks Members of Bank Secrecy Act Advisory Group.

FinCEN seeks nominations of financial institutions, trade groups, and non-federal regulators or law enforcement agencies for membership in the Bank Secrecy Act Advisory Group. New members will be selected for three-year membership terms. Nominations must be received by 01/16/2024. The notice may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2023-12-15/pdf/2023-27620.pdf. Federal Register, Vol. 88, No. 240, 12/15/2023, 87053-87054.

Treasury Requests Information on Financial Inclusion.

The Department of the Treasury (Treasury) seeks information to inform its development of a national strategy for financial inclusion. The request for information offers the opportunity for interested individuals and organizations to identify opportunities to advance financial inclusion through policy, government programs, financial products and services, technology, and other tools. Comments are due 02/20/2024. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-12-22/pdf/2023-28263.pdf. Federal Register, Vol. 88, No. 245, 12/22/2023, 88702-88705.

IRS Seeks Comment on Proposed Guidance on Bad Debt Deductions.

The Internal Revenue Service (IRS) seeks comment regarding guidance of whether a debt instrument is worthless for federal income tax purposes. IRS stated the proposed rule is necessary to update the standard for determining when a debt instrument held by a regulated financial company or a member of a regulated financial group will be conclusively presumed to be worthless. Comments are due 02/26/2024. The proposed rule may be viewed at: https://www.govinfo. gov/content/pkg/FR-2023-12-28/pdf/2023-28589.pdf. Federal Register, Vol. 88, No. 248, 12/28/2023, 89636-89644.

SBA Issues Peg Rate.

The Small Business Administration (SBA) publishes an interest rate called the optional “peg” rate on a quarterly basis.

The rate is a weighted average cost of money to the government for maturities similar to the average SBA direct loan.

The rate may be used as a base rate for guaranteed fluctuating interest rate SBA loans. The rate will be 4.88 percent for the January-March quarter of FY 2024. Pursuant to 13 CFR 120.921(b), the maximum legal interest rate for any third party lender’s commercial loan which funds any portion of the cost of a 504 project shall be 6% over the Prime rate or, Page 14 | January 2024

Regulatory Spotlight if that exceeds the maximum interest rate permitted by the constitution or laws of a given state, the maximum interest rate will be the rate permitted by the constitution or laws of the given state. The notice may be viewed at: https://www. govinfo.gov/content/pkg/FR-2024-01-02/pdf/2023-28804.pdf. Federal Register, Vol. 89, No. 1, 01/02/2204, 120.

SBA Revises Size Standards Methodology.

SBA announced the revision of a white paper which explains how SBA establishes, reviews, and modifies small business size standards. The revised white paper provides a detailed description of SBA’s size standards methodology, including changes from its 2019 Revised Size Standards Methodology, which guided SBA’s recently completed second five-year review of size standards as required by the Small Business Jobs Act. SBA seeks comments regarding the revisions which SBA intends to apply to the forthcoming third five-year review of size standards. Comments are due 02/09/2024. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-11/pdf/2023-27053.pdf. Federal Register, Vol. 88, No. 236, 12/11/2023, 85852-85856.

FCA Finalizes Cyber Risk Management Regulations.

The Farm Credit Administration (FCA) issued a final rule to rescind and revise its regulations to reflect developments in cyber risk and continuously evolving business practices. FCA renamed the regulations, Cyber Risk Management. The final rule requires each Farm Credit System institution to implement a comprehensive, written cyber risk management program consistent with the size, risk profile, and complexity of the institution’s operations. The final rule is effective 01/01/2025.

The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-11/pdf/2023-27102.pdf. Federal Register, Vol. 88, No. 236, 12/11/2023, 85825-85833.

FCA Amends Loan Policies and Operations for YBS Programs.

FCA issued a final rule which amends regulations governing young, beginning, and small farmers and ranchers (YBS).

The final rule clarifies the responsibilities of funding banks in the review and approval of direct lender association YBS programs, strengthens funding bank internal controls, and bolsters YBS business planning. The final rule is effective the later of 02/01/2024, or at least 30 days after publication in the Federal Register during which either or both Houses of Congress have been in session. FCA will publish a notice of the effective date in the Federal Register. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-27/pdf/2023-27929.pdf. Federal Register, Vol. 88, No. 247, 12/27/2023, 89280-89286.

CFTC Proposes to Protect Clearing Member Funds Held by DCOs. The Commodity Futures Trading Commission (CFTC) proposed regulations to ensure clearing member funds and assets receive the proper treatment in the event the derivatives clearing organization (DCO) enters bankruptcy by requiring, among other things, that clearing member funds be segregated from the DCO’s own funds and held in a depository that acknowledges in writing that the funds belong to clearing members, not the DCO. In addition, CFTC proposed to permit DCOs to hold customer and clearing member funds at foreign central banks subject to certain requirements. Finally, CFTC proposed to require DCOs to conduct a daily calculation and reconciliation of the amount of funds owed to customers and clearing members and the amount actually held for customers and clearing members. Comments are due 02/16/2024.

The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-01-03/pdf/2023-28767.pdf.

Federal Register, Vol. 89, No. 2, 01/03/2024, 286-307.

SEC Issues Final Security-Based Swap Execution and Registration Rule.

The Securities and Exchange Commission (SEC) adopted a final rule and forms under the Securities Exchange Act to create a regime for the registration and regulation of security-based swap execution facilities (SBSEFs) and address other issues relating to security-based swap (SBS) execution generally. The final rule implements an element of the Dodd-Frank Act that is intended to mitigate conflicts of interest at SBSEFs and national securities exchanges that trade SBS (SBS exchanges). The final rule also addresses the cross-border application of the Exchange Act’s trading venue registration requirements and the trade execution requirement for SBS. In addition, SEC amended an existing rule to January 2024 | Page 15

Regulatory Spotlight exempt, from the Exchange Act definition of “exchange,” certain registered clearing agencies, as well as registered SBSEFs that provide a market place only for SBS. The final rule, while affirming that an SBSEF would be a broker under the Exchange Act, exempts a registered SBSEF from certain broker requirements. Further, the final rule allows persons who are aggrieved by certain actions by an SBSEF to apply for review by SEC. Finally, SEC delegated new authority to the Director of the Division of Trading and Markets and to the General Counsel to take actions necessary to carry out the final rule. The final rule is effective 02/13/2024. See the final rule for mandatory compliance dates. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-15/pdf/2023-24587.pdf. Federal Register, Vol. 88, No. 240, 12/15/2023, 87156-87328.

FTC Extends Comment Period for Unfair or Deceptive Fee Proposal.

The Federal Trade Commission (FTC) announced an extension of the deadline for filing comments on the proposed rule concerning its trade regulation rule titled, Rule on Unfair or Deceptive Fees. For the proposed rule published in the Federal Register on 11/09/2023, the comment deadline is extended to 02/07/2024. The proposed rule may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2024-01-02/pdf/2023-28669.pdf. Federal Register, Vol. 89, No. 1, 01/02/2024, 38-39.

CDFI Fund Issues Notices of Funding Availability.

The Community Development Financial Institutions Fund (CDFI Fund) issued a notice of funds availability (NOFA) seeking applications for Financial Assistance (FA) or Technical Assistance (TA) awards under the Community Development Financial Institutions Program (CDFI Program) fiscal year (FY) 2024 Funding Round. Through the CDFI Program, CDFI Fund provides (i) FA awards to Certified Community Development Financial Institutions (CDFIs) to build their financial capacity to lend to eligible markets and/or their target markets, and (ii) TA awards to build certified and emerging CDFIs’ organizational capacity to serve eligible markets and/or their target markets. See the NOFA for application details and deadlines. A technical correction was made to the deadlines within Table 12 in the NOFA. The NOFA may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-11/pdf/2023-27138.pdf. Federal Register, Vol. 88, No. 236, 12/11/2023, 85972-85995. The correction may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-15/ pdf/2023-27597.pdf. Federal Register, Vol. 88, No. 240, 12/15/2023, 87051-87052.

CDFI Fund issued a notice of funds availability (NOFA) seeking applications for Financial Assistance (FA) or Technical Assistance (TA) awards under the Native American CDFI Assistance (NACA Program) fiscal year (FY) 2024 Funding Round. Through the NACA Program, the CDFI Fund provides (i) FA awards to certified CDFIs serving Native American, Alaska Native, or Native Hawaiian populations or Native American areas defined as federally-designated reservations, Hawaiian homelands, Alaska Native Villages and U.S. Census Bureau-designated Tribal Statistical Areas (collectively, Native Communities) to build their financial capacity to lend to eligible markets and/or their target markets, and (ii) TA awards to build certified, and emerging CDFIs’ organizational capacity to serve eligible markets and/or their target markets, and sponsoring entities’ ability to create certified CDFIs that serve Native Communities. See the NOFA for application details and deadlines. A technical correction was made to the deadlines within Table 12 in the NOFA. The NOFA may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-11/pdf/2023-27139.pdf. Federal Register, Vol. 88, No. 236, 12/11/2023, 85995-86015. The correction may be viewed at: https://www.govinfo.gov/content/pkg/FR2023-12-15/pdf/2023-27598.pdf. Federal Register, Vol. 88, No. 240, 12/15/2023, 87050-87051.

VA Seeks Comment on Minimum Property Requirements for VA-Guaranteed and Direct Loans.

The Department of Veterans Affairs (VA) issued an advance notice of proposed rulemaking (ANPR) regarding the minimum property requirements (MPRs) for VA-guaranteed and direct loans. VA will consider information in implementing the Improving Access to the VA Home Loan Benefit Act which requires VA to consider making changes to MPRs in prescribing updated regulatory requirements regarding appraisals. VA seeks comments to better understand areas for improvement in MPRs, including whether VA should consider adopting an approach that aligns with other industry-wide property standards already in existence. Comments are due 02/09/2024. The ANPR may be viewed at: https://www.govinfo.gov/content/pkg/FR-2023-12-11/pdf/2023-27068.pdf. Federal Register, Vol. 88, No. 236, 12/11/2023, 85863-85865.

Page 16 | January 2024

Regulatory Spotlight NCUA Announces Amendments to Methodology for Computing Annual Operating Fees.

The National Credit Union Administration (NCUA) announced it is amending the methodology for computing the annual operating fees it charges to federal credit unions (FCUs). First, for purposes of calculating the annual operating fee, NCUA will increase the current asset exemption threshold from $1 million to $2 million. Second, NCUA will adjust the asset exemption threshold annually in future years by the computed rate of aggregate asset growth at FCUs. Third, as part of future reviews of the operating fee schedule methodology, NCUA plans to analyze options to adjust the distribution of operating fee costs. The amended methodology is effective 01/25/2024. The notice may be viewed at: https://www. govinfo.gov/content/pkg/FR-2023-12-26/pdf/2023-28303.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 8897588978.

NCUA Seeks Comment on Overhead Transfer Rate Methodology.

NCUA seeks comment regarding the methodology used to determine the Overhead Transfer Rate (OTR). NCUA applies the OTR to its operating budget to determine the portion of the budget that will be funded from the National Credit Union Share Insurance Fund. In response to industry recommendations, NCUA has provided more detail, clarity, and transparency regarding the OTR methodology. Comments are due 02/20/2024. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2023-12-20/pdf/2023-28000.pdf. Federal Register, Vol. 88, No. 243, 12/20/2023, 88131-88135.

NCUA Seeks Comment Regarding Stress Test Information Collection.

NCUA seeks comment regarding an information collection titled, Supervisory Stress Test Annual Data Collection. NCUA has determined, to protect the National Credit Union Share Insurance Fund and the credit union system, that the largest federally-insured credit unions (FICUs) should have systems and processes in place to monitor and maintain their capital adequacy. Subpart C of part 702 of NCUA’s regulations codifies capital planning and stress testing requirements for FICUs with $10 billion or more in assets (covered credit unions). Covered credit unions are further delineated by asset tiers as outlined in the notice. To facilitate NCUA’s ability to conduct supervisory stress test on covered credit unions, section 702.306(d) requires that covered credit unions must provide NCUA with any relevant qualitative or quantitative information requested by NCUA pertinent to capital plans or stress test. The information collection is used in connection with the required data reporting. Comments are due 01/25/2024. The notice may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2023-12-26/pdf/2023-28302.pdf. Federal Register, Vol. 88, No. 246, 12/26/2023, 88978-88980.

NCUA Seeks Comment on TILA, Liquidity Funding Plans, and Higher-Risk Mortgage Appraisal Information Collections.

NCUA seeks comment regarding three information collections. The first information collection titled, Truth in Lending (TILA), Regulation Z. The collection pertains to the various information collection requirements of the regulation for both open- and closed-end credit. The second information collection is titled, Liquidity and Contingency Funding Plans.

The collection is used by federally-insured credit unions required to maintain a contingency funding plan and establish a federal liquidity contingency source. The third information collection in the notice is titled, Higher-Risk Mortgage Appraisals. Section 1471 of the Dodd-Frank Act established TILA section 129H, which contains appraisal requirements applicable to higher-risk mortgages and prohibits a creditor from extending credit in the form of a higher-risk mortgage loan to any consumer without meeting the requirements. Comments are due 03/11/2024. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-01-09/pdf/2024-00182.pdf. Federal Register, Vol. 89, No. 6, 01/09/2024, 1130-1131.

January 2024 | Page 17

Compliance Notes Agencies issued an Interagency Statement for Banks on the Issuance of the Beneficial Ownership Information (BOI) Access Rule to reassure banks that FinCEN’s recently issued access rule to BOI does not create a new regulatory requirement for banks to access BOI from FinCEN’s BO IT System or a supervisory expectation that banks do so. Existing BSA/AML rules remain in place for banks and are not impacted by the most recent FinCEN rule. Future rulemaking is necessary before changes are made to existing BSA/AML rules for banks. The statement may be viewed at: https:// www.fincen.gov/sites/default/files/shared/Interagency_Statement_for_Banks_On_the_Issuance_of_the_Access_ Rule_12.15.2023.v2.pdf The federal banking agencies issued a video which provides an overview of the new CRA rule. The video may be viewed at: https://www.youtube.com/watch?v=wRUo-aehv5I FDIC issued an advisory, Managing Commercial Real Estate Concentrations in a Challenging Environment, to reemphasize the importance of strong capital, appropriate credit loss allowance levels, and robust credit riskmanagement practices for institutions with CRE concentrations. It also conveys several key risk management practices for banks to consider in managing CRE loan concentrations in the current challenging economic environment. Additionally, the advisory reemphasizes the importance of effectively managing liquidity and funding risks, which can compound lending risks, particularly for CRE-concentrated institutions. The advisory replaces the 2008 advisory with the same name. The advisory may be viewed at: https://www.fdic.gov/news/financial-institution-letters/2023/fil23064.html FFIEC released data on small business, small farm, and community development lending during 2022. FFIEC also prepared aggregate disclosure statements of small business and small farm lending for all of the metropolitan statistical areas and non-metropolitan counties in the United States and its territories. The data may be viewed at: https://www. ffiec.gov/press/pr121523.html OCC issued Bulletin 2024-1 to provide FAQs about the State Small Business Credit Initiative 2.0 (SSBCI) based on the facts and circumstances presented in the questions. The FAQs address reporting on loans to businesses owned by socially and economically disadvantaged individuals, regulatory treatment for loans using certain SSBCI-supported credit enhancements, considerations for loans in Indian Country, and CRA considerations. The FAQs may be viewed at: https:// www.occ.gov/news-issuances/bulletins/2024/bulletin-2024-1.html OCC also issued Bulletin 2024-3 to highlight actions that banks should take to prepare for a change in the standard securities settlement cycle for most U.S. securities transactions. The compliance date for the change is 05/28/2024. SEC adopted final rules that shorten the standard settlement cycle for most broker-dealer transactions from the second business day after the trade date (T+2) to the first business day after the trade date (T+1). Banks should prepare to meet the applicable time frames for the T+1 settlement cycle for trades related to banks’ securities activities.

These include activities related to banks’ investment and trading portfolios and securities settlement and servicing provided to banks’ custody and fiduciary accounts. Banks that offer retail non-deposit investment products through a broker-dealer should assess the broker-dealer’s preparedness for the new settlement time frames. The bulletin may be viewed at: https://www.occ.gov/news-issuances/bulletins/2024/bulletin-2024-3.html FHFA released its third quarter 2023 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (collectively, the Enterprises) completed 43,356 foreclosure prevention actions during the quarter. The report also shows that 33 percent of loan modifications completed in the third quarter reduced borrowers’ monthly payments by more than 20 percent. The number of refinances decreased from 93,952 in the second quarter of 2023 to 83,522 in the third quarter of 2023. The Enterprises’ serious delinquency rate declined slightly from 0.55 percent to 0.54 percent at the end of the third quarter. This compares with 3.34 percent for FHA loans, 1.99 percent for VA loans, and 1.52 percent for all loans (industry average). The report may be viewed at: https://www.fhfa.gov/Media/PublicAffairs/ Pages/FHFA-Releases-3rd-Quarter-2023-Foreclosure-Prevention-and-Refinance-Report.aspx CFPB issued guidance to consumer reporting companies to address inaccurate background check reports, as well as sloppy credit file sharing practices. The two advisory opinions seek to ensure that the consumer reporting system produces accurate and reliable information and does not keep people from accessing their personal data. First, an advisory opinion on background check reports highlights that the reports must be complete, accurate, and free of information that is duplicative, outdated, expunged, sealed, or otherwise legally restricted from public access. Second, an advisory opinion on file disclosure highlights that people are entitled to receive all information contained in their consumer Page 18 | January 2024

Compliance Notes file at the time they request it, along with the source or sources of the information contained within, including both the original and any intermediary or vendor source. The both advisories may be viewed at: https://www.consumerfinance. gov/about-us/newsroom/cfpb-addresses-inaccurate-background-check-reports-and-sloppy-credit-file-sharing-practices/ FinCEN has updated its FAQs on Beneficial Ownership Information Reporting and has also issued a FAQ regarding PPP. The FAQs may be found at the following links, respectively: https://www.fincen.gov/boi-faqs and https:// www.fincen.gov/sites/default/files/2024-01/Paycheck_Protection_Program_FAQs_Jan2024_508.pdf

Are you a WBA memeber with a legal question?

Contact the

WBA Legal Call Program wbalegal@wisbank.com | 608-441-1200 | wisbank.com/resources/compliance This WBA member-exclusive program provides information in response to compliance questions.

Visit the

WBA Compliance Resources Page www.wisbank.com/resources/compliance With all the changing regulations bankers face today, the Wisconsin Bankers Association offers a variety of resources to help you perform your job at the highest level: • • • • •

Recent WBA Compliance Journals WBA Compliance Corner videos Frequently Asked Questions to the WBA Legal Call Program Guides and Toolkits Information About Compliance Services and Training

January 2024 | Page 19

February 1

April

Branch Manager Boot Camp: Session I Four-part series, virtual half days – $800/attendee

7-9

Bank Executives Conference

WBA Loan Documentation Webinar Series

2, 9, 16 & 30

Four-part webinar series – $995/attendee

Wisconsin Economic Forecast Luncheon

10

Wisconsin Dells 21

Compliance Forum: Session III

Madison

Agricultural Bankers Conference

11-12

Wisconsin Dells – annual membership/pricing varies 22

Capitol Day

Power of Community Week

15-20

Madison 22

Wisconsin Dells - $300/ag section member; $350/nonsection member banker attendee

Online Workshop: Fundamentals of Commercial Lending 101

www.wisbank.com/BanksPowerWI

FinTech Showcase

15

Wisconsin Dells – team pricing available

Virtual full day – $250/attendee

Introduction to Commercial Lending School

16-18

Madison – $895/attendee

March 1

Wisconsin Dells or virtual – team pricing available

School of Bank Management

22-26

CRA Workshop Wisconsin Dells or virtual – $245/attendee

5

Women in Banking Conference

17

Advanced IRA Workshop

Madison – $1,395/attendee

Community Bankers for Compliance (CBC) – Session II

23

Madison or virtual – $245/attendee 6

Health Savings Account Workshop Madison or virtual – $245/attendee

6-7

FIPCO Software & Compliance Forum: Deposits Virtual half days – $250/attendee

7

Branch Manager Boot Camp: Session II Four-part series, virtual half days – $800/attendee

11-15

Loan Compliance School

Virtual half-day – annual membership/pricing varies

Branch Manager Boot Camp: Session IV

25

Four-part series, virtual half days – $800/attendee 4/285/1

WBA/ICBA Capital Summit

4/305/23

Understanding Bank Performance Virtual Series

Washington, D.C. Eight-part webinar series – $1,000/attendee

Madison or virtual – $1,295/attendee 13-15

Real Estate Compliance School Madison or virtual – $795/attendee

14-15

Call Report Workshop Virtual half days – $245/attendee

18-20

WBA/ABA Washington Summit

KEY: Color-Coded Event Descriptions •

based on hot topics, industry news and best practices, scheduled time for peer networking.

Washington, D.C. 20

Security Officer Workshop Wisconsin Dells or virtual – $245/attendee

25-28

Residential Mortgage Lending School Madison – $1,045/attendee

27

Online Workshop: Fundamentals of Comm.

Lending 201: Analyzing Repayment Sources

•

Branch Manager Boot Camp: Session III Four-part series, virtual half days – $800/attendee

Schools/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.

•

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

Virtual full day – $250/attendee 28

Conferences/Summits – One or more days,

•

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

•

Other Events

www.wisbank.com | 608-441-1252 | wbaeducation@wisbank.com Page 20 | January 2024