Lending Archive

The Federal Reserve Board has proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

According to the FRB’s press release, the rules, proposed for public comment under the Federal Trade Commission Act (FTC Act), also would forbid banks from imposing interest charges using the "two-cycle" billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

In a press release, the Federal Trade Commission has announced that it has issued its annual report to the Federal Reserve Board on FTC enforcement activities in 2007 related to the Truth in Lending Act, Consumer Leasing Act, Equal Credit Opportunity Act, and Electronic Fund Transfer Act.

The Federal Reserve Board has announced the adoption of amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form.

The United States Court of Appeals for the Seventh Circuit, has issued a ruling in the case of Hamm verses Ameriquest Mortgage Company.  In this case, the court ruled that a financial institution must specifically state, in its Truth in Lending disclosures, the payment period for a borrower's loan.

The Federal Reserve Board has issued a proposal to amend Regulation Z, which implements the Truth in Lending Act (TILA), and the staff commentary to the regulation, following a comprehensive review of TILA's rules for open-end (revolving) credit that is not home-secured.

The IRS has issued Revenue Procedure 2007-36. Section 4 provides the HSA dollar limits for 2008 HSA contributions and high deductible health plans (HDHP). For 2008:

HSA contribution limit for self-only coverage will be $2,900
HSA contribution limit for family coverage will be $5,800
HDHP self-only deductible must be at least $1,100
HDHP family deductible must be at least $2,200
HDHP maximum out-of-pocket expenses for self-only coverage will be $5,600
HDHP maximum out-of-pocket expenses for family coverage will be $11,200

Click here to see the Revenue Procedure.

In a press release, the Federal Trade Commission has announced that it has issued its annual report to the Federal Reserve Board on FTC enforcement activities in 2007 related to the Truth in Lending Act, Consumer Leasing Act, Equal Credit Opportunity Act, and Electronic Fund Transfer Act.

The Federal Reserve Board has announced the adoption of amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form.

The Board is publishing amendments to Regulation B (Equal Credit Opportunity Act) to update the address where questions should be directed concerning creditors for which the Federal Reserve System administers compliance with the regulation.

Effective Date: October 29, 2007. Compliance is optional until October 1, 2008.

In a press release, Comptroller of the Currency John C. Dugan has called for an amendment to the Community Reinvestment Act regulation to provide CRA consideration for community development investments in middle-income communities that are distressed as a result of mortgage foreclosures and related economic factors affecting the area.

The federal bank regulatory agencies announced the annual adjustment to the asset-size thresholds used to define "small bank," "small savings association," "intermediate small bank," and "intermediate small savings association" under the Community Reinvestment Act (CRA) regulations. The annual adjustments for banks are required by the 2005 CRA regulatory amendments and for savings associations by the Office of Thrift Supervision's 2007 CRA regulatory amendments.

The federal bank and thrift regulatory agencies have requested public comment on a series of new and revised interagency questions and answers pertaining to the Community Reinvestment Act (CRA). The Interagency Questions and Answers Regarding Community Reinvestment were first published in 1996 under the auspices of the Federal Financial Institutions Examination Council (FFIEC).

In a press release, the Federal Trade Commission has announced that it has issued its annual report to the Federal Reserve Board on FTC enforcement activities in 2007 related to the Truth in Lending Act, Consumer Leasing Act, Equal Credit Opportunity Act, and Electronic Fund Transfer Act.

The Federal Reserve Board has announced the adoption of amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form.

In a speech to the Independent Bankers Association of Texas, Comptroller of the Currency John C. Dugan said community banks engaged in the commercial real estate lending  need to assess the strength of borrowers and identify problem credits at an early stage. Those community banks with significant concentrations of commercial real estate need to be especially prepared according to Dugan.

The Federal Reserve Board has issued a final rule that amends Regulation O to eliminate certain reporting requirements. These amendments implement section 601 of the Financial Services Regulatory Relief Act of 2006.

The Board of Governors of the Federal Reserve Board issued a notice of final rulemaking in the June 1, 2007, Federal Register (Volume 72, Number 105, pages 30470-30472) . The final rulemaking amends Regulation O to eliminate certain reporting requirements. This final rule adopted the interim rule without changes and is effective July 2, 2007.

The Federal Reserve Board has proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

According to the FRB’s press release, the rules, proposed for public comment under the Federal Trade Commission Act (FTC Act), also would forbid banks from imposing interest charges using the "two-cycle" billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

The Department of Defense has published a proposal to amend its military lending regulations. These regulations are being proposed to implement the consumer protections covered by Public Law 109-364, the John Warner National Defense Authorization Act for Fiscal Year 2007, section 670, "Limitations on Terms of Consumer Credit Extended to Service Members and Dependents'' (October 17, 2006). The proposed regulation is intended to regulate the terms of consumer credit extended by creditors to active duty service members and their dependents. This proposal does impact all financial institutions but is intended to address payday loans and predatory lending practices. Comments on this proposal must be received no later than June 11, 2007.

The Federal Reserve Board and the Federal Trade Commission have announced proposed regulations that generally would require a creditor to provide a consumer with a risk-based pricing notice when, based in whole or in part on the consumer's credit report, the creditor offers or provides credit to the consumer on terms less favorable than the terms it offers or provides to other consumers.

The proposal will soon be published in the Federal Register and the comment period will end 90 days thereafter.

The Federal Reserve Board has proposed rules to prohibit unfair practices regarding credit cards and overdraft services that would, among other provisions, protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.

According to the FRB’s press release, the rules, proposed for public comment under the Federal Trade Commission Act (FTC Act), also would forbid banks from imposing interest charges using the "two-cycle" billing method, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.

The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).

The U.S. Treasury Department has  released its Blueprint for an improved financial regulatory structure.  This structure is designed to  strengthen consumer protections, improve tools for market stability and enhance financial innovation. Treasury's Blueprint for a Modernized Financial Regulatory Structure also presents a series of short-, intermediate- and long-term recommendations for reform of the U.S. regulatory structure.

Three payday lenders have agreed to settle Federal Trade Commission charges that their Internet advertising stated the cost of loans without disclosing annual percentage rate information that federal law requires.

The Federal Deposit Insurance Corporation (FDIC) is accepting bankers' applications to participate in its Affordable and Responsible Consumer Credit pilot program, which will begin in January 2008. Between 20 and 40 participants will be selected from interested institutions based on information describing their small-dollar loan programs. Applications will be accepted through November 20, 2007.

The OCC, Board, FDIC, and OTS have adopted as final the interim rules issued on April 10, 2007, that implemented section 605 of the Financial Services Regulatory Relief Act of 2006 (FSRRA) and related legislation. These Examination Amendments permit insured depository institutions that have up to $500 million in total assets, and that meet certain other criteria, to qualify for an 18-month (rather than 12-month) on-site examination cycle.

The Amendments are effective on September 25, 2007, the Interim Rules published on April 10, 2007 are adopted as final without change.

The OCC has released two publications that provide the latest OCC interpretations and decisions authorizing activities for national banks and their operating subsidiaries: Significant Legal, Licensing, and Community Development Precedents for National Banks: 2006 (annual) and Activities Permissible for a National Bank, Cumulative: 2006.

In a press release, Comptroller of the Currency John C. Dugan said that consumers should be given the opportunity to “opt out” of certain credit card rate increases and be given the alternative of paying off the card balance at the old rate. Referencing a speech to the Financial Services Roundtable, Mr. Dugan noted that the Federal Reserve is now considering a change to its Truth-in-Lending rules that would generally prohibit rate increases unless the cardholder receives 45 days prior notice. The notice would allow the consumer to avoid the rate increase by paying off the card balance or moving it to another card.

The Federal Financial Institutions Examination Council (FFIEC) has issued updated guidance for examiners, financial institutions, and technology service providers to identify business continuity risks and evaluate controls and risk management practices for effective business continuity planning. The guidance is an update to the “Business Continuity Planning Booklet,” which was issued in March 2003.

In an effort to further expedite the application and decision-making process, the OCC reviewed its current requirements for notarization or bank seals that are required in connection with the filing of applications with the OCC. Following a review of statutes and regulations applicable to all corporate applications, documents, and notices, the OCC issued Bulletin OCC 2008-2 which removes all notary and seal requirements not supported by federal banking code or regulation.

The Federal Financial Institutions Examination Council (FFIEC) has issued guidance for financial institutions in identifying the continuity planning that should be in place to minimize the potential adverse effects of a pandemic. This guidance expands upon the contents of the Interagency Advisory on Influenza Pandemic Preparedness issued in March 2006.

Bipartisan members of the Senate Banking, Housing and Urban Affairs Committee have introduced legislation intended to restore the separation of banking and commerce and prevent additional commercial firms from acquiring or establishing industrial loan companies (ILCs). The legislation is a companion bill to H.R. 698, which cleared the House Financial Services Committee early in early May.

The Industrial Bank Holding Company Act of 2007 would grandfather existing ILCs, but they would not be allowed to be acquired by commercial firms. ILC holding companies, unless they are already supervised by the Federal Reserve, Office of Thrift Supervision, or Securities and Exchange Commission, would be subject to consolidated supervision by the Federal Deposit Insurance Commission.

Sen. Sherrod Brown, D-Ohio, a co-sponsor of the bill, noted that ILC assets have "skyrocketed over the last twenty years, and many more firms are poised to drive their trucks through the ILC loophole should the current moratorium on applications expire." According to the bills' sponsors, ILC aggregate assets have grown from $4 billion to more than $150 billion over the past two decades.

The American Bankers Association (ABA) said it hopes to see final action on ILC legislation soon. Floyd Stoner, ABA executive director for congressional relations, noted that there is a large, diverse group of policymakers, businesses and consumer groups that "object to having banks embedded in the world's largest commercial companies. The only way to address these concerns definitively is through legislation."

Sarah Borchersen-Keto, ComplianceHeadquarters Washington Correspondent and Reporter for CCHGroup, Inc.

Bankruptcy filings by Americans aged 55 and older are rising at a faster rate than that of the general population, indicating that bankruptcy courts can expect an influx of new bankruptcy petitions as the baby boomer generation continues to age, according to new research from the Administrative Office of the U.S. Courts. The study points to healthcare costs and mortgage debt as key components behind the trend.

According to the study, the median age for bankruptcy petitioners increased from 37.7 years in 1994 to 41.4 in 2002. The fastest growth in Chapter 7 petitions occurred in filers over 55, where the increase between 1994 and 2002 stood at 87.1 percent. The fastest growth in Chapter 13 petitions also occurred in the over-55 group, where the gain from 1994 to 2002 totaled 75.0 percent.

Separately, at a May 1 hearing of the House Subcommittee on Commercial and Administrative Law, Henry J. Sommer, president of the National Association of Consumer Bankruptcy Attorneys, said amendments to the bankruptcy code have not protected consumers. Instead, the biggest impact of the new law has been the enormous increase in the costs and burdens of filing an individual bankruptcy case, Sommer said.

Filing fees are up 50 percent, he noted, while there are new fees for credit counseling and education. Attorneys have also had to increase fees at least 50 percent due to the increase in documentation, he added. "Bankruptcy has gone from being a relatively low-priced proceeding that could be handled quickly and efficiently to being an expensive minefield of new requirements, tricks and traps that can catch the innocent and unsuspecting debtor," Sommer told the hearing.

Steve Bartlett, president and CEO of the Financial Services Roundtable, told members, however, that "the new law seems to be working for the consumer and the economy. It is working better than anticipated…what we need now is careful bi-partisan oversight."

Sarah Borchersen-Keto, ComplianceHeadquarters Washington Correspondent and Reporter for CCHGroup, Inc.

In a press release, the Federal Reserve Board announced it is requesting public comment on proposed amendments to five consumer financial services and fair lending regulations (Regulations B, E, M, Z, and DD) to clarify the requirements for providing consumer disclosures in electronic form. The proposal would simplify the Board's rules by (1) withdrawing certain portions of the 2001 interim final rules that restate or cross-reference provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) and accordingly are unnecessary; (2) withdrawing provisions of the interim rules that may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and (3) retaining certain provisions of the interim final rules that provide guidance on the use of electronic disclosures.

The proposal would also implement certain provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which mandates certain disclosures for online credit card solicitations.

The comment period ends sixty days after publication of the attached notices in the Federal Register.