Rules and Regulations

Participate in the Fed’s Regulation C Public Hearings

The Federal Reserve Board is holding four public hearings between July and September on potential revisions to Regulation C, which implements the Home Mortgage Disclosure Act.

The Board wants to:

1. evaluate whether the 2002 revisions to Regulation C, which requires lenders to report mortgage pricing data, help provide useful and accurate information about the mortgage market;
2. gather information that will help the Board assess the need for additional data and other improvements; and
3. identify emerging issues in the mortgage market that may warrant additional research.

The hearings will take place at the Atlanta Fed on July 15, the San Francisco Fed on Aug. 5, the Chicago Fed on Sept. 16 and the Federal Reserve Board in Washington, D.C. on Sept. 24. Mortgage lenders, consumers, community and consumer organizations, and other interested parties are invited to participate in the hearings. Eighth District bankers can participate either in person or by submitting written statements of any length before any of the events.

Agencies Issue Correspondent Concentration Risks Guidance

The federal financial regulatory agencies issued Interagency Guidance on Correspondent Concentration Risks on April 30. Financial institutions are expected to consider actions beyond the minimum requirements to identify, monitor and manage correspondent concentration risks, especially when there are rapid changes in market conditions or in a correspondent's financial condition.
It is important for financial institutions to:

• implement procedures for identifying correspondent concentrations;
• consider aggregate credit concentration exposures on the asset side of the balance sheet;
• consider aggregate funding concentration exposures on the liability side of the balance sheet;
• calculate credit and funding concentration exposures;
• monitor correspondent relationships: define the information, ratios or trends that must be reviewed on each correspondent on an ongoing basis, and consider factors such as deteriorating trends in capital or asset quality, level of other real estate loan, the existence of public enforcement actions, etc.; and
• manage the concentrations. If the concentration exceeds prudent risk management thresholds, take steps to review it.

Several examples illustrating possible actions by an institution are included in the final guidance. If you have any questions, contact your regulator.

Final Debit Cards and Overdraft Protection Rules Effective in July

If your customers are unsure how the new rules are supposed to work for debit cards, ATM withdrawals and the like, you can direct them to the Fed’s Overdraft Protection web site.

Meanwhile, the Federal Reserve Board proposed clarifications to its Nov. 17, 2009, final Regulation E rule regarding assessing overdraft fees on one time debit card and ATM transactions. The proposal clarifies that the prohibition in Regulation E on assessing overdraft fees without the consumer's affirmative consent applies to all institutions, including those with a policy and practice of declining ATM and one-time debit card transactions when an account has insufficient funds.

Final Stage of Credit Card Changes Coming in August

The last of a series of changes to credit card practices take effect in August.

The third stage of credit card changes required by the 2009 Credit Card Accountability Responsibility and Disclosure Act will address practices related to excessive penalty fees and require credit card issuers to inform consumers of the reasons for increases in rates. In addition, issuers that have increased rates since Jan. 1, 2009, must evaluate whether the reasons for the increase have changed and, if appropriate, reduce the rate.