By NOELLE PHILLIPS | nphillips@denverpost.com | The Denver Post
PUBLISHED: April 24, 2024 at 6:00 a.m. | UPDATED: April 24, 2024 at 6:03 a.m.

New rules imposed by Denver and Colorado that require large buildings to reduce pollution will be too expensive and are at odds with federal regulations, groups representing owners and developers of office towers, hotels and apartment complexes allege in a lawsuit filed this week.

The Colorado Apartment Association, the Apartment Association of Metro Denver, the Colorado Hotel and Lodging Association and NAIOP — an association representing commercial real estate developers — said the green-energy rules preempt a federal regulation that governs the quality and performance of new heating and cooling systems and other appliances in large apartment complexes, hotels and commercial office and retail buildings.

The groups, in their lawsuit filed Monday in U.S. District Court in Denver, are asking a federal judge to throw out the city and state environmental regulations, which in the coming years will force a transition away from natural gas to improve air quality.

The lawsuit names as defendants the Colorado Department of Public Health and Environment and its executive director, the Colorado Energy Office and its executive director and the Denver Office of Climate Action, Sustainability and Resiliency and its executive director, as well as the Denver City Council and Denver Mayor Mike Johnston.

Representatives of the city and state agencies named as defendants declined to comment, citing policies that prohibit them from speaking about litigation.

On a practical level, the associations that filed suit this week also argue the rules would force building owners to make expensive but unnecessary upgrades that ultimately would increase rents for tenants and cause utility bills to rise.

Building owners could meet early goals by adding insulation, LED lighting and new windows, which are relatively inexpensive upgrades.

But as city and state emissions-reduction requirements increase in the coming years, building owners would be forced to get rid of their natural gas heating systems in favor of furnaces and hot water heaters that run on electricity, said Andrew Hamrick, general counsel and senior vice president for both apartment associations.

Replacing those systems and retrofitting apartment buildings for them would be an enormous expense, he said.

His associations represent 817 buildings that would be impacted by one or both rules.

“The formulas are out of whack and, in the end, it boils down to a ban on the use of natural gas appliances,” he said.

Greenhouse gas emissions from buildings are not the largest source of air pollution, and there are better ways to achieve reductions, Hamrick said.

“They’re attacking a small emission problem with a very expensive fix,” he said. “That’s what the friction is all about.”

Colorado and Denver have set ambitious goals to reduce greenhouse gas pollution and are trying to regulate the various sources of that pollution, including automobiles and oil and gas drilling. Greenhouse gases such as carbon dioxide, methane and nitrogen oxide combine in the atmosphere to trap heat, contributing to global warming and climate change. They also harm human health.

Colorado’s northern Front Range is listed as a severe violator of federal air quality standards, which means drivers in the nine-county region will pay for more expensive gas during the summer and more companies will have to apply for federal air permits.

Reducing the pollution coming from large buildings is one of multiple strategies to attack the pollution problem in play by the state.

In 2021, the Denver City Council approved a plan called Energize Denver to reduce greenhouse emissions 100% by 2040 from all large buildings in the city. The plan included different requirements for buildings larger than 25,000 square feet, and those between 5,000 square feet and 24,999 square feet. The lawsuit objects to the requirements for the largest buildings, which impact about 3,000 structures in Denver.

In August, the Colorado Air Quality Control Commission, which establishes rules and regulations for emissions, created a building performance standard rule after the Colorado General Assembly passed a bill requiring it in 2021. The state regulations require buildings that are 50,000 square feet to reduce greenhouse gas emissions by 6% by 2026 and by 20% by 2030. The rules affect about 8,000 buildings in Colorado.

To meet the new state regulations and the rules for the largest buildings in Denver, property owners will need to conduct assessments of their current emissions to establish a baseline. Then they will have to reassess every so often to figure out what progress has been made.

In the lawsuit, multiple property management companies and hotel managers wrote statements saying those assessments would be expensive, costing up to $200,000 per building depending on the complexity and size of the building.

For example, Anthony Dunn, general manager of the Downtown Denver Sheraton, wrote his energy audit could cost between $100,000 to $200,000 per building. And Jack Damioli, president and chief executive officer of the Broadmoor in Colorado Springs, wrote it would cost $10,000 to prepare annual benchmarking reports and up to $200,000 to conduct the most detailed energy audit.

Neither hotel is in compliance with the new rules and would need to spend significant capital to modify their buildings in the coming years, according to their declarations that are included in the lawsuit.

source: The Denver Post, April 24, 2024

Congressional investigations into the causes of last year’s banking crisis remain incomplete, specifically regarding the appropriateness of the regulators’ post-failure actions and rulemakings, the associations said. The recent push for multiple regulatory changes—including those related to the Basel III endgame, long-term debt requirements and the FDIC governance proposal—allegedly stem from the failure of Silicon Valley Bank. However, these measures would not have prevented the bank failures, nor would they foster a broad-based, diverse U.S. banking system, they said. “We believe this regulatory tsunami is not a rational response appropriate to current circumstances and warrants scrutiny,” they added.

The associations noted that Sens. Jon Tester (D-Mont.) and Thom Tillis (R-N.C.) have called for an independent review, as has Federal Reserve Governor Michelle Bowman.

“Regulators should not impose yet another layer of regulation on numerous banks that had nothing to do with the failures and whose condition and management are clearly distinguishable from the banks that failed,” the associations said. “Any regulatory reforms should be evidence-based to safeguard the integrity and stability of our financial system. Regulators as well as banks should be held to high standards of accountability.”

Read the letter

source: ABA Daily Newsbytes, April 23, 2024

“While some changes to the supervisory process and priorities may be appropriate to promote a safe and sound financial system and enhance financial stability, having an appropriate focus on the most salient risks is important for effective risk management and effective supervision,” Bowman said. “We should be cautious that these changes do not distract banks or supervisors from focusing on core and emerging risks or impair the long-term viability of the banking system—especially for midsized and smaller banks.”

Bowman also urged banks to have emergency contingency funding plans in place, which may include borrowing from the Federal Home Loan Banks or the Fed’s discount window. However, with regulators preparing to unveil new liquidity regulations, she urged caution in how they approached the issue.

“While it may be appropriate for supervisors to encourage banks to establish and maintain contingency funding sources, test the contingency funding plans and evaluate whether those plans are adequate in the context of examination, supervisors are not bankers,” Bowman said. “And we must be cautious not to cross the line from supervisor to member of the management team and avoid interfering with the decision-making of bank management.” 

Read Bowman's Remarks

source: ABA Daily Newsbytes, April 19, 2024

The analysis revealed that most elder scam-related BSA filings referenced “account takeover” by a perpetrator unknown to the victim, that adult children were the most frequent elder theft-related perpetrators, and that illicit actors mostly relied on unsophisticated means to steal funds that minimize direct contact with financial institution employees, such as guessing passwords, according to FinCEN. FinCEN created new elder financial exploitation key terms for BSA reports in a 2022 advisory issued by the agency.

‌“FinCEN’s analysis highlights the critical role of financial institutions in helping to identify, prevent and report suspected elder financial exploitation,” FinCEN Director Andrea Gacki said. “We are grateful for their vigilance and for the BSA information they have filed—and continue to file—in response to FinCEN’s 2022 advisory.” 

Read the analysis

Learn about ABA’s Safe Banking for Seniors program

source: ABA Daily Newsbytes, April 19, 2024

The Veterans Affairs Servicing Purchase, or VASP, program will be a “last-resort” tool in the VA’s suite of home retention options for eligible veterans, active-duty service members and surviving spouses with VA-guaranteed home loans, the agency said. Through the program, the VA will purchase defaulted VA loans from mortgage servicers, modify the loans and then place them in the VA-owned portfolio as direct loans. This will empower the VA to work directly with eligible veterans to adjust their loans—and their monthly payments—so they can keep their homes. With VASP, borrowers will have a fixed 2.5% interest rate.

Veterans will not apply directly for VASP. Instead, beginning May 31, mortgage servicers will identify qualified borrowers and submit requests on behalf of veterans based on a review of all home retention options available and qualifying criteria. Veterans facing financial hardship should work with their mortgage servicers to explore available options, the VA said.

Read more

source: ABA Daily Newsbytes, April 11, 2024

The final rule requires public entities to make their websites and mobile apps comply with Web Content Accessibility Guidelines (WCAG) 2.1, Level AA, unless the public entity can demonstrate that compliance with the standard would result in a fundamental alteration of the product or service or would result in an undue financial and administrative burden to the entity. The final rule also contains changes to the exceptions section compared to the proposed rule. For example, the exception for linked third-party content has been eliminated, while an exception for preexisting social media posts has been introduced.

Another major change was the addition of a new section on noncompliance that has a minimal effect on access. This section allows public entities to employ inaccessible technologies provided they can demonstrate that their alternative methods of providing access to the intended goods or services are "substantially equivalent" to the use of fully accessible technologies.

Read the rule

source: ABA Daily Newsbytes, April 10. 2024

In a statement, Scott said the CFPB rule will decrease the availability of credit card products for those who need it most, raise rates for many borrowers and increase the likelihood of late payments across the board. “Lawful and contractually agreed upon payment incentives promote financial discipline and responsibility, and this rule shows that the CFPB is more focused on scoring political talking points than policies that protect consumers,” he said.

ABA is among the supporters of the resolution. The association joined five other business groups in March in a lawsuit seeking to overturn the rule, arguing the CFPB exceeded its statutory authority and offered deficient analysis and reasoning for the rule to achieve a pre-ordained outcome.

Read more

source: ABA Daily Newsbytes, April 10, 2024

Banks are required by regulation to file CTRs on most fiat currency transactions of more than $10,000. However, after 80 years, $10,000 is no longer an unusually large transaction—adjusted for inflation, the amount would be nearly $170,000 today, ABA said. The association pointed to a March survey of member banks that found that more than a quarter of respondents spent between 25% and 50% of all their Bank Secrecy Act compliance costs on CTR filings.

“Those are resources that cannot be devoted to suspicious activity,” ABA said. “But because having accurate data on CTR burden is essential to policy discussions regarding ways to promote the efficiency and effectiveness of BSA and anti-money laundering compliance, we urge FinCEN to conduct a comprehensive survey of banks in order to revise its estimate and to inform long overdue policy discussions about the need to modernize the CTR rules.” 

Read the letter

source: ABA Daily Newsbytes, April 8, 2024

The OCC in February proposed to end the time limit for automatic approvals of mergers of banks that it supervises as well as reevaluate its approval process, while the FDIC last month proposed a major overhaul of its approval process. Speaking at a Kansas City Fed event on the future of banking, Bowman was critical of the FDIC proposal in particular, saying that some of the proposed changes—such a move away from deposit-based analysis in merger consideration—could result in more delays in the process.

“We should focus on ensuring that we can improve the speed and timeliness of regulatory decision making, applying review standards that are reasonable and consistent with the statutory framework,” Bowman said. “Too often it seems that regulators discount the fact that these organizations do not simply hit the pause button during the merger review process. We must remember that these organizations are businesses that continue to operate and must do so in a way that supports their ongoing business operations and future growth.”

Bowman also said that the M&A process can be inappropriately influenced when regulators make demands on firms that are not squarely grounded in statutory approval requirements or based on safety and soundness considerations. “During the application deliberation process, regulators can impose limitations or restrictions to address specific supervisory or policy concerns in the form of ‘conditions’ or ‘commitments’ on the approval,” Bowman said. “While this can be an important tool, it should not be used to replace rulemaking or existing regulations and statutes that guide regulatory action; we should not engage in ‘regulation by application.’ Conditions or commitments that impose obligations that are inconsistent with our existing regulatory framework raise issues of significant concern.”

Read Bowman’s remarks

source: ABA Daily Newsbytes, April 3, 2024

"Although the Bureau professes intent to protect ‘courtesy’ overdraft, the Proposal would do the opposite. It would effectively bring an end to overdraft services for millions of consumers who – following receipt of a consumer-tested disclosure – choose to use to the product to cover emergency expenses and other liquidity shortfalls, all to advance the Administration’s political campaign against ‘junk fees.’ We call on the Bureau to withdraw the Proposal."

The letter details the significant changes in overdraft services already underway within the industry, including the wide array of choices available to consumers and the lengths to which banks provide tools and resources to help their customers avoid overdraft fees.

“The Proposal and the accompanying press releases assert that the CFPB ‘is taking action to close regulatory loopholes that will bring long overdue transparency and competition for overdraft lending.’ But the market for overdraft services already is transparent and competitive. In recent years, depository institutions have evaluated the existing pro-consumer regulations governing overdraft and the markets they serve, listened to consumers’ preferences, and responded by introducing changes to their overdraft programs. The process has yielded a variety of overdraft protection programs that fairly and transparently respond to consumer needs, promote free choice, and encourage competition, as even Director Chopra has repeatedly acknowledged. These innovations include sending low-balance alerts, linking the customer’s checking account to another account, imposing de minimis thresholds and caps on total fees that the bank may charge per day, and providing overdraft grace periods’ during which a customer can make a deposit and avoid a fee. Additionally, some banks no longer charge overdraft or NSF fees, and many banks offer overdraft-free accounts that meet the Bank On initiative’s National Account Standards. The Bureau’s own research confirms that, as a result of banks’ innovations, consumers are paying less in overdraft and NSF fees now than they did four years ago.”

The letter notes that the CFPB’s proposal disregards the law in its zeal to cap overdraft fees, “reinterpreting” overdraft as “credit” despite Congress’ determination that it is not, among other areas where the Bureau’s proposal exceeds its authority and raises other serious questions as to its constitutionality. The associations wrote that it will also put existing pro-consumer innovations at risk, and that many consumers use overdraft protection strategically and highly value it:

“Consumers will be harmed by the Bureau’s price cap. An analysis of transaction data from 11 banks found that the median size of items paid into overdraft is $370. Another analysis of data from 14 financial institutions found that the average size of items paid into overdraft was $198. These analyses demonstrate that many consumers use overdraft strategically to ensure that important expenses – such as rent, utilities, and medical bills – are paid when the consumer experiences a shortfall in funds. Not surprisingly, surveys consistently show that consumers appreciate and value their bank’s overdraft program and are glad that their bank covered their overdraft payment, rather than returned or declined the payment. A survey conducted in March 2024 by Morning Consult found that more than two-thirds of consumers (67%) find their bank’s overdraft protection valuable – as compared with only 16% who do not find it valuable – and 8 in 10 consumers (79%) who have paid an overdraft fee in the past year were glad their bank covered their overdraft payment, rather than returning or declining payment. While no one likes to pay fees, 64% of consumers think it is reasonable for banks to charge a fee for an overdraft, as opposed to only 23% who think it’s unreasonable. Prior surveys by Morning Consult found similar results and demonstrate the enduring reality that consumers value overdraft. Indeed, only a miniscule number of complaints submitted to the Bureau – 0.003% of the total – list ‘overdraft’ as the issue or sub-issue of the complaint.”

In addition, the letter highlights how the proposed rule will still impact smaller financial institutions the Bureau claims it wants to exempt:

"The Proposal purports to apply only to banks and credit unions with more than $10 billion in assets, but if it is finalized, all depository institutions (and their customers) will be impacted, as institutions will face market pressure to conform their practices to the Bureau’s rule. In addition, the Bureau’s line-drawing is inconsistent with TILA; nothing in the statute supports defining overdraft as ‘credit’ and the fee a ‘finance charge’ only when offered by an institution with assets greater than $10 billion. And to our knowledge, this is the first time a regulator has suggested that a consumer is not entitled to the same protections based on the asset size of the institution where the consumer chooses to bank.”

Read the full comment letter

ABA, the U.S. Chamber of Commerce and five national and state associations sued banking agencies in February for exceeding their statutory authority with their recent amendments to final rules implementing the CRA. In a lawsuit filed in the Northern District of Texas, the groups asked the court to vacate the rules. They also sought a preliminary injunction preventing the agencies from enforcing the rules while the court decides the merits of the case.

District Court Judge Matthew Kacsmaryk granted the plaintiffs their request to pause implementation of the rules while the case moves forward. Among other things, Kacsmaryk said the plaintiffs had shown that banks would incur substantial and unrecoverable costs if the rules were to be enforced only to be struck down at a later date.

The other plaintiffs in the lawsuit are the Texas Bankers Association, Independent Community Bankers of America, Independent Bankers Association of Texas, Amarillo Chamber of Commerce and Longview Chamber of Commerce. In a joint statement, the plaintiffs said they welcomed the decision.

“While we strongly support the goals of CRA, the Final Rules exceeded the banking agencies’ regulatory authority and created disincentives for banks to lend in low- and moderate-income communities that need access to credit the most,” the groups said. “We look forward to litigating this matter to a final judgment.” 

Read the full statement

Read the Judge's Order

Read more about the lawsuit

source: ABA Newsbytes, April 1, 2024

The 51-page report was published in response to a 2023 executive order by President Biden directing federal agencies to develop strategies for the safe deployment of AI technologies across the U.S. economy. The Treasury Department interviewed key players in the financial services sector, information technology and others to learn what institutions already doing in terms of AI, where there is room for improvement, and draft best practices for managing AI threats. Among other things, the report cautioned that financial institutions should ensure they have prudent risk management over AI activities, including robust oversight of third-party providers.

The report stressed the need for industry collaboration to counter AI-related risks. As an example, it noted that ABA is working to design and pilot a new information-sharing exchange focused on combating fraud and other illicit finance activities. “The U.S. government, with its collection of historical fraud reports, may be able to assist with this effort to contribute to a data lake of fraud data that would be available to train AI, with appropriate and necessary safeguards,” the report said.

Read the report

source: ABA Newsbytes, March 28, 2024

‌The CFPB last year issued orders to the nine largest auto lenders seeking data such as fees, loan terms and consumer complaints. The bureau also proposed to collect more limited data from lenders that originated between 500 and 20,000 loans in the previous calendar year. In their letter, the associations said the CFPB did not include the survey instrument to be used in the expanded data collection. The bureau also claimed that it has freestanding authority to monitor “for risks to consumers in the offering or provision of consumer financial products or services,” but Congress never granted it any such authority, the groups said.

The associations said the CFPB would be collecting an enormous amount of data about the personal finances of millions of Americans, which could be used to identify individuals, and it has not stated whether that information will be public. Furthermore, the bureau has estimated the annual burden for lenders in collecting information would come out to about 1,375 hours—an estimate the groups calculate is off by a magnitude of 3,000. “The CFPB provides no information to support this estimated burden,” the groups said.

Read the letter

source: ABA Newsbytes, March 27, 2023

The CFPB in January proposed to prohibit financial institutions from charging insufficient funds fees for one-time debit card, ATM transactions and some person-to-person payments that are declined instantly or near-instantly. The bureau acknowledged that such fees are rarely charged. However, the bureau nonetheless concluded that the fees take unreasonable advantage of consumers’ lack of awareness of the risks, costs or conditions of a consumer financial product or service.

In a comment letter, ABA noted that CFPB’s Truth in Savings Act rule already requires financial institutions to disclosure fees at account opening. It also noted that banks have devoted considerable resources to developing mobile and online banking, low balance alerts and numerous other tools to promote consumer access and control of their finances. Given the availability of such tools, financial institutions are not taking unreasonable advantage of consumers, as the bureau alleges, ABA said. In addition, the CFPB wrongly concluded that disclosure is not a remedy because some consumers won’t understand even the clearest disclosure, the association said.

“The bureau's proposed approach is contrary to decades of federal policy on consumer protection and the consumer financial laws the bureau implements, which rely primarily on disclosure to give consumers choice and promote competition,” ABA said.

Read the letter

source: ABA Newsbytes, March 26, 2024

“I am working very closely with Chair Powell and other members of our Federal Reserve board to try to reach a broad consensus,” Barr said, according to Bloomberg. Specifically, he said criteria related to operational, market and credit risks could be adjusted.

The proposed standards have met resistance from lawmakers from both parties as well as ABA and a host of interests both inside and outside the banking industry. A February analysis by the law firm Latham and Watkins found that 97% of public comments the Fed received on the proposal either opposed it or raised concerns. Opponents included manufacturers, the energy sector, agricultural interests, small businesses, medium and large corporations, real estate companies and mortgage stakeholders, market infrastructure providers, exchanges and insurers, and academics. ABA has called for the proposal to be withdrawn and re-proposed before being finalized. 

Read the Bloomberg article

Read the analysis

source: ABA Newsbytes, March 25, 2024

Currently, lenders are permitted to sell mortgage loans to Fannie and Freddie only if they show that the mortgage is a valid first lien that is free of any prior lien or encumbrance, Thompson said. They also must provide independent verification through either a legal opinion or a lender’s title insurance policy, with the cost of the latter usually passed onto homeowners. The pilot will test whether waiving that requirement is a responsible approach to reducing the closing costs incurred by existing homeowners, according to Thompson.

Lenders will retain the option to provide evidence of clear title through other options, such as title insurance or an attorney opinion letter, and homeowners are always able to purchase their own title insurance policy or AOL, Thompson said. 

Read more

source: ABA Newsbytes, March 11, 2024

The Rectifying UDAAP Act, sponsored by Rep. Andy Barr (R-Ky.), would clearly define the CFPB’s authority concerning UDAAP actions and would rein in the bureau’s overly aggressive stance on “abusive” acts or practices by requiring it to prove intentional misconduct, ABA said in a letter in support for the legislation. “This bill would also make clear that the bureau’s UDAAP authority does not extend to discriminatory practices, which are already governed by our nation’s anti-discrimination laws,” ABA said.

The Secure Payments Act, sponsored by Rep. Blaine Luetkemeyer (R-Mo.), would require the Fed to measure the effect on consumers of lowering the debit interchange cap, including access to affordable debit accounts, and a review of the primary beneficiary of the interchange cap. In its letter, ABA said the Fed’s proposal to slash debit interchange fees is part of a tsunami of new federal regulations that would have tangible, and potentially severe, consequences for banks, their customers and their communities. “As required by the Secure Payments Act, the Fed should stop and conduct a rigorous study of this proposal’s impacts and the cumulative impacts of the tsunami of newly finalized and pending regulations from the federal banking agencies,” the association said.

Read the letter of support for the Rectifying UDAAP Act

Read the letter of support for the Secure Payments Act

source: ABA Newsbytes, March 8, 2024

In a joint letter, 21 members of the New Democrat Coalition and Congressional Hispanic Caucus urged regulators to ensure that Navy Federal Credit Union is adhering to fair lending laws following a CNN report that concluded the institution rejected minority applicants for conventional home purchase mortgages at a much higher rate than white applicants. They also sent a letter to former Navy Federal CEO Mary McDuffie asking a series of questions about the credit union’s fair lending processes. (McDuffie stepped down at the end of February and was succeeded by Dietrich Kuhlmann.)

In a separate joint letter last week, Reps. Emanuel Cleaver, II (D-Mo.), ranking member of the House Financial Services Subcommittee on Housing and Insurance, Steven Horsford (D-Nev.), chairman of the Congressional Black Caucus, and Sydney Kamlager-Dove (D-Calif.) urged the CPFB and National Credit Union Administration to investigate Navy Federal’s lending practices.

The letters represent only the latest calls from lawmakers for a wider probe of Navy Federal. House Financial Services Committee Ranking Member Rep. Maxine Waters (D-Calif.) and six committee Democrats in February requested that committee Chairman Rep. Patrick McHenry (R-N.C.) hold a hearing on the credit union. In addition, the Congressional Black Caucus in January requested a meeting with McDuffie to discuss the alleged disparities.

Read the New Democrat Coalition and Congressional Hispanic Caucus letters

Read the joint letter from the three lawmakers.

source: ABA Newsbytes, March 5, 2024

In a joint letter, 21 members of the New Democrat Coalition and Congressional Hispanic Caucus urged regulators to ensure that Navy Federal Credit Union is adhering to fair lending laws following a CNN report that concluded the institution rejected minority applicants for conventional home purchase mortgages at a much higher rate than white applicants. They also sent a letter to former Navy Federal CEO Mary McDuffie asking a series of questions about the credit union’s fair lending processes. (McDuffie stepped down at the end of February and was succeeded by Dietrich Kuhlmann.)

In a separate joint letter last week, Reps. Emanuel Cleaver, II (D-Mo.), ranking member of the House Financial Services Subcommittee on Housing and Insurance, Steven Horsford (D-Nev.), chairman of the Congressional Black Caucus, and Sydney Kamlager-Dove (D-Calif.) urged the CPFB and National Credit Union Administration to investigate Navy Federal’s lending practices.

The letters represent only the latest calls from lawmakers for a wider probe of Navy Federal. House Financial Services Committee Ranking Member Rep. Maxine Waters (D-Calif.) and six committee Democrats in February requested that committee Chairman Rep. Patrick McHenry (R-N.C.) hold a hearing on the credit union. In addition, the Congressional Black Caucus in January requested a meeting with McDuffie to discuss the alleged disparities.

Read the New Democrat Coalition and Congressional Hispanic Caucus letters

Read the joint letter from the three lawmakers.

source: ABA Newsbytes, March 5, 2024

“The FDIC’s 2023 loan from the Fed was a highly unusual source of funding that came with eye-popping penalty pricing on banks compared to other available alternatives, based on the publicly available information,” writes ABA VP Jeff Huther. “As the steward of the DIF, the FDIC owes the banks that pay into the DIF an explanation for its funding choices, and the Fed owes the public an explanation for charging a penalty rate for a loan with an explicit government guarantee. Banks, not taxpayers, covered the bill for last spring’s bank failures. They have very legitimate reasons to want to understand how the government arrived at the final price tag.”

Huther explores how the FDIC could have borrowed from a wide range of other sources, including the DIF itself, the Treasury, the Federal Financing Bank, the Federal Home Loan Banks and commercial banks, all of which would likely have provided cheaper credit. Moreover, he questions why the Fed decided to charge the FDIC a rate of 100 basis points above the discount window rate for a loan that had an explicit government guarantee. “With healthy banks picking up a substantial portion of the tab for the failures of last spring, an estimated $40 billion in total, they deserve an itemized receipt, or at least an explanation, for what appears to be a $2.5 billion penalty fee from the government,” he writes.

Read the article

source: ABA Newsbytes, March 5, 2024

“Credit union growth, while theoretically positive for the communities credit unions serve, is only beneficial if it is accompanied by congressional oversight and careful regulatory supervision that accounts for the potential consequences of that growth on the credit union model.... As credit unions continue to grow, Congress has a responsibility to ensure that disclosure and transparency requirements keep pace and provide adequate documentation of responsible stewardship of taxpayer funds,” the associations said.

The associations added that they welcome competition and recognize that it benefits U.S. households. However, they also believe that American taxpayers deserve accountability and that financial institutions awarded special tax and regulatory treatment should live up to their stated missions, noting it has been two decades since Congress last held a hearing on the credit union tax exemption. “Hearings once every 20 years are not enough for the 140 million consumers who use credit unions, nor the taxpayers who subsidize their services,” they said.

Read the letter

Ask your members of Congress to convene an oversight hearing on credit unions

source: ABA Newsbytes, February 29, 2024

‌“ABA’s survey shows that the CFPB’s analysis grossly underestimated the costs associated with implementing and complying annually with the final rule,” Brown and Ryan write. “For example, while the bureau said it would only cost entities between $44,800 to $77,800 to build the systems and implement processes necessary for compliance with the rule, respondents to the ABA survey said one-time costs would range between $112,685 and $7,474,186.”

‌The same was true for annual, ongoing compliance costs. The ABA survey found those costs will range between $71,944 and $2,010,125, far more than the $8,349 to $278,618 estimated by the CFPB. And costs were proportionately higher for smaller banks, with one-time and ongoing costs exceeding 1% of total revenue for the smallest banks, which exceeds the significance threshold established by the Small Business Administration Office of Advocacy.

“The CFPB has misjudged the cost to comply with this rule, which will reduce the funds available for lending to the very small businesses Section 1071 intended to help,” Brown and Ryan write. “In addition, the significant compliance costs will disincentivize banks to lend to small businesses, which again seems at odds with Congress’ objective. By degrading the economic viability of banks that specialize in lending to small businesses, the rule will have a significant adverse impact on the communities where these banks and small businesses are located.”

Read the article

source: ABA Newsbytes, February 28, 2024

More than two in three SMBs surveyed said it was important for their primary financial institutions to provide multiple borrowing tools, with demand more pronounced among larger businesses, according to the report. Rewards credit cards were the most popular option for covering both planned and unplanned costs, with SMBs showing a slight preference for using the cards for planned costs, likely to maximize their ability to earn rewards. 

Read more

source: ABA Newsbytes, February 23, 2024

Same-day ACH payments increased 22.3% in volume and 41.2% in value, to 853.4 million payments worth $2.4 trillion, Nacha said. Business-to-business payments grew to 6.6 billion payments, a 10.8% increase, as businesses used fewer checks. Healthcare claim payments to medical and dental providers rose 7.7% to 488 million. Consumer internet-initiated payments rose 5.7% to 9.9 billion, primarily supporting bill payment and account transfer use cases. Direct deposit volume increased 3.3%, with 8.3 billion payments to consumers. '

Read more

source: ABA Newsbytes, February 21, 2024