#2022-11, April 8, 2022

MBA Joins State Bankers Associations in Opposing New CU Powers

Earlier this week, the Association joined state banking trade associations from all fifty states in sending a letter to Congress opposing legislation to expand credit union powers.  The bill, “the Expanding Access for Underserved Communities Act” (H.R. 7003) was filed last month by House Financial Services Committee Chair Maxine Waters (D-CA).

The letter notes that, “Community credit unions can already serve underserved areas if they identify a local need and choose to do so [without legislation].”  In particular, the bill does not include any requirements similar to the Community Reinvestment Act (CRA) for credit unions that take advantage of these new powers.  As you know, Massachusetts is one of a small number of states that imposed CRA requirements on state-chartered credit unions.

The legislation also creates a new loophole in the credit union business lending cap, “a necessary statutory element to ensure this tax-exempt industry continues to fulfill its specified mission of ‘meeting the credit and savings needs of consumers … through an emphasis on consumer rather than business loans,’” the letter states.  In addition, it cites analysis showing that credit unions increasingly target wealthy communities, serve wealthy consumers, and contribute to widening economic inequality, particularly as they continue to buy banks and expand into commercial lending.

To read the letter, click here.  To send a letter to your members of Congress opposing H.R. 7003 through the American Bankers Association’s Secure American Opportunity website, click here.

Secretary Yellen Says Digital Asset, Crypto Firms Need “Appropriate Oversight”

At an industry event this week, Treasury Secretary Janet Yellen said that regulatory oversight of cryptocurrencies and digital assets must keep pace with innovation to ensure financial stability and consumer protection.  The speech, which was at American University’s Kogod School of Business Center for Innovation, also noted several steps the Biden Administration has taken regarding digital assets in recent months.

According to Secretary Yellen, “Our regulatory frameworks should be designed to support responsible innovation while managing risks—especially those that could disrupt the financial system and economy.”  Among other points, Yellen emphasized the need for a regulatory framework that is “tech neutral” meaning that it would be based on risks and assets rather than specific technologies.  In addition, she noted that, “Consumers, investors, and businesses should be protected from fraud and misleading statements regardless of whether assets are stored on a balance sheet or distributed ledger.”

To read Secretary Yellen’s remarks, click here.

FDIC Asks Banks to Provide Notice of Crypto-Related Activities

In related news, the Federal Deposit Insurance Corporation (FDIC) this week issued a letter to insured depositories asking that any institution considering engaging in crypto-related activities provide notification to the appropriate FDIC regional director.  The letter also states that banks should provide “all necessary information that would allow the FDIC to engage with the institution regarding related risks.”

Specifically, the agency notes that the risks related to safety and soundness, financial stability and consumer protection should be highlighted.  Banks already engaged in crypto-related activities should notify the FDIC “promptly” according to the letter.  While the letter states that the information required may vary on a case-by-case basis, “the initial notification to the FDIC Regional Director should describe the activity in detail and provide the institution’s proposed timeline for engaging in the activity.”

The agency’s definition of “crypto-related activities” includes acting as crypto-asset custodians; maintaining stablecoin reserves; issuing crypto and other digital assets; acting as market makers or exchange or redemption agents; participating in blockchain- and distributed ledger-based settlement or payment systems, including performing node functions; as well as related activities such as finder activities and lending.

To read the letter, click here.

FHFA Requires Suspension of Foreclosure Activities for Borrowers Requesting HAF Assistance

The Federal Housing Finance Agency (FHFA) recently announced that mortgage servicers must suspend foreclosure activities for up to 60 days if they are notified that a borrower has applied for mortgage assistance under the Treasury Department’s Homeowner Assistance Fund (HAF).  The HAF was established to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship after January 21, 2020.

In Massachusetts, the HAF program is being administered by the Massachusetts Housing Partnership and MassHousing in collaboration with several other state agencies, including the Division of Banks.  For more information on the Massachusetts program, click here.

To read the FHFA announcement, click here.