#2021-23, July 23, 2021

MBA, State Banking Trade Groups Oppose New IRS Reporting Requirements

The Association joined the American Bankers Association and 50 state banking trade groups in sending a letter to Congress opposing proposals to impose new tax reporting requirements on banks.  The proposals would require institutions to report information on account flows on every account above a de minimis threshold of $600, including earnings from investment and business activity.  The provisions were recommended as a way to shrink the so-called “tax gap” and help fund the major infrastructure bill now under consideration in Congress.

The letter notes that “this proposal would create a dragnet, collecting the financial information of most Americans and requiring significant resources to build, police, and maintain,” and that “policymakers must consider how account-holder data would be protected and whether a program of this scale and scope infringes on the American people’s reasonable expectation of privacy.”  It also states that banks are already subject to strong reporting requirements and that creating a new structure would be costly and burdensome. 

To read the letter, click here.

OCC to Rescind CRA Rule; Regulators Pledge Joint Rulemaking Process

Acting Comptroller of the Currency Michael Hsu announced this week that the OCC is proposing a rule to rescind the changes to the Community Reinvestment Act (CRA) regulations that were finalized in May 2020.  He also indicated that the agency plans to work with the other federal banking regulators on a new joint CRA proposal in the coming months.  

The OCC, Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) also issued a joint statement noting that they have “broad authority and responsibility for implementing the CRA,” and that “joint agency action will best achieve a consistent, modernized framework across all banks.”  The Association has advocated for a consistent CRA framework over the last several years, particularly when the OCC issued a standalone proposal. 

To read the OCC statement, click here. To read the joint statement, click here.

FHFA Eliminating MBA-Opposed “Adverse Market Refinance Fee”

Late last week, the Federal Housing Finance Agency (FHFA) announced that it is eliminating an MBA-opposed “adverse market refinance fee” of 50 basis points for no-cash-out and cash-out refinance mortgages.  The change is effective for all loan deliveries on August 1. 

The fee, which was initially imposed to help cover losses at Fannie Mae and Freddie Mac due to the coronavirus pandemic, was widely opposed by industry and housing advocacy groups.  FHFA’s statement notes that “the success of FHFA and the Enterprises’ COVID-19 policies reduced the impact of the pandemic and were effective enough to warrant an early conclusion of the Adverse Market Refinance Fee.”  The agency also stated that “FHFA’s expectation is that those lenders who were charging borrowers the fee will pass cost savings back to borrowers.” 

To read more, click here.