In this issue. The Federal Deposit Insurance Corporation (FDIC) Board of Directors approved a final revised rule to strengthen resolution planning for large banks; the Board of Governors of the Federal Reserve System (Federal Reserve), Consumer Financial Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA), FDIC, National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC) issued a final rule on automated valuation models to ensure accuracy and accountability in the use of AI and algorithms in home appraisals; the FDIC updated the Consumer Compliance Examination Manual; the OCC announced the issuance of the Federal Financial Institutions Examination Council's (FFIEC) revised Home Mortgage Disclosure Act (HMDA) guide; and the OCC requested comments on proposed revisions to its recovery planning guidelines. These and other developments are discussed in more detail below.
Regulatory Developments
FDIC Approves Final Revised Rule to Strengthen Resolution Planning for Large Banks
On June 20, the FDIC approved a final rule that modifies current requirements for insured depository institutions (IDIs) resolution planning to support the FDIC's resolution readiness should such IDI encounter material distress or fail. Set to come into effect in October 1, the rule will require IDIs with $100 billion in assets to submit comprehensive resolutions plans, and IDIs with total assets of at least $50 billion but less than $100 billion to submit informational filings, which will not require resolution strategy or related valuation information. Most IDIs will be required to submit their resolution plans or informational filings every three years. Additionally, the rule requires that IDIs demonstrate the ability to market the covered IDI and its assets, including the capability to provide key reports in a timely manner and to promptly provide information necessary for interested parties to submit well-informed bids.
Six Federal Agencies Issue Final Rule to Ensure Accuracy and Accountability in Use of AI and Algorithms in Home Appraisals
On June 20 and June 24, the OCC and CFPB, respectively, approved a final rule issued in concert with the Federal Reserve, FDIC, FHFA, and NCUA to implement quality control standards required by Section 1473(q) of the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) for automated valuation models used by mortgage originators and secondary market issuers in determining the worth of a mortgage secured by a consumer's principal dwelling. The rule requires the implementation of quality control standards designed to: (1) ensure confidence in the valuation estimates; (2) protect against the manipulation of data; (3) avoid conflicts of interest; (4) require random sample testing and reviews; and (5) comply with applicable nondiscrimination laws. The rule is set to take affect 12 months after publication in the Federal Register.
"...there is no "fancy technology"
exemption in our nation's consumer financial protection and
fair lending laws."
— Rohit Chopra, Director, CFPB & Zixta Martinez,
Deputy Director, CFPB
FDIC Updates Consumer Compliance Examination Manual
On June 18, the FDIC updated its Consumer Compliance Examination Manual (CEM), a document used by the FDIC to conduct its supervisory activities and evaluate financial institutions' compliance with federal consumer protection laws and regulations. The FDIC updated section II-14.1 (Violations Codes) to include the violation code, FCRA 605A(h)(2)(B), and the annual thresholds in section IV-1.1 (Truth in Lending Act) and section XI-1.1 (Community Reinvestment Act). Financial institutions can use the CEM to obtain more information about the FDIC's supervisory policies and examination process.
OCC Announces Issuance of FFIEC's Revised HMDA Guide
On June 17, the OCC issued Bulletin 2024-15, announcing the FFIEC's revised "A Guide to HMDA Reporting: Getting it Right!" – a guide to help banks comply with their HMDA data reporting obligations, including the scope of institutions and transactions covered by Regulation C and what information covered institutions are required to collect, record, and report. The revised guide was updated to reflect the increase in the asset-size threshold – from $54 million to $56 million, as of December 31, 2023 – for banks that are exempt in 2024 from certain data collection requirements. This edition of the guide was effective January 1, 2024 for HMDA submissions due March 1, 2025.
OCC Requests Comments on Proposed Revisions to Its Recovery Planning Guidelines
On June 24, the OCC issued a notice of proposed rulemaking to impose new requirements on and expand the scope of "covered banks" under the Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches of Foreign Banks (Guidelines). The Guidelines currently require covered banks to establish risk governance frameworks and recovery guidelines in the event of severe financial distress. The proposed rule expands the definition of covered banks to any bank with total consolidated assets of $100 billion or more, compared to the current baseline of $250 billion or more; mandates covered banks to annually simulate stress scenarios in order to test their recovery plans; and requires covered banks to appropriately consider non-financial risks in their recovery plans, such as operational and strategic risks. Comments are due within 30 days from the date of the proposed rule's publication in the Federal Register.
CFPB Extends Compliance Dates for Small Business Lending Rule
On June 25, the CFPB issued an interim final rule to extend compliance deadlines for its small business data collection rule by 290 days. Lenders with the highest volume of small business loans must begin collecting data by July 18, 2025, moderate volume lenders by January 16, 2026, and the smallest volume lenders by October 18, 2026. The CFPB will still require lenders to report their small business lending data by June 1 after the calendar year for which they collected the data. Lenders are permitted to continue using their small business originations from 2022 and 2023 to determine their initial compliance date, or use their originations from 2023 and 2024. The rule also allows lenders to collect demographic data up to one year before their compliance dates in order to test their procedures and systems. The CFPB updated its grace period to reflect the revised compliance dates and does not intend to assess penalties for reporting errors for the first 12 months of collection. The rule goes into effect 30 days after publication in the Federal Register.
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