#2023-26, November 3, 2023

Meet & Greet With Congresswoman Katherine Clark (D, MA-5), U.S. House Minority Whip

On Tuesday, Congresswoman Katherine Clark (D, MA-5) met with Association leadership and member banks headquartered and/or with branches established in her district to discuss a variety of issues facing the banking industry and its customers in Massachusetts and across the country. Congresswoman Clark serves as the U.S. House Minority Whip and is the second-highest ranking Democrat in the U.S. Congress.

We are grateful to Congresswoman Clark and her team, and to the Association members who took time to join us for this important advocacy event. The Association is proud to coordinate these events to connect our members with our elected leaders and build upon our strong relationships with them.

Special thanks to East Cambridge Savings Bank for hosting us, and congratulations to Gilda Nogueira who retired as President and CEO of East Cambridge Savings Bank on Tuesday after a 46 year career with the bank. 

Association Members pictured with Congresswoman Katherine Clark (D, MA-5)

Consumer Financial Protection Bureau Unveils CRA State Laws Summary

The CFPB released a report yesterday that analyzed and summarized several states’ community reinvestment acts, which included Massachusetts. The CFPB report “focuses on state CRA laws that provide an affirmative obligation for financial institutions to meet the lending, services, and/or investment needs of their communities” and summarizes “key factors of each of these laws, organizes them into ten issue groups, and identifies five findings that inform how states could consider establishing reinvestment obligations.”

Click here to read the report.  

U.S. Treasury Issues Final Rule for Treasury Check Returns

This week the U.S. Treasury issued a final rule holding financial institutions liable if canceled Treasury checks are paid without taking “reasonable efforts” to ensure checks are authentic.

Among the changes included in the final rule is the definition of “reasonable efforts” as outlined below:

“The final rule amends the definition of “reasonable efforts” found at 31 CFR 240.2 to include a requirement that financial institutions wait for check return information within the time periods set out by Regulation CC to help verify that a Treasury check is valid and authentic. It is also making conforming changes to 31 CFR part 240 to require that financial institutions ensure a Treasury check has not been canceled before making the funds associated with that check available for withdrawal.

In those instances where a financial institution has taken reasonable efforts but check return information for a POC on a properly presented check is not transmitted to the financial institution prior the funds availability timeframe specified in Regulation CC, the financial institution would not be liable for releasing the funds associated with the Treasury check. While Fiscal Service expects this circumstance to be uncommon, it understands that compliance with Regulation CC requires the release of the funds within certain timeframes, and thus under the final rule a financial institution will not be liable for a POC due to complying with Regulation CC.”

The final rule takes effect on Friday, December 1, 2023.

For more information on the U.S. Treasury final rule click the links below:

• Federal Register :: Indorsement and Payment of Checks Drawn on the United States Treasury
• A Guide to Regulation CC Compliance (federalreserve.gov)
• Regulators tighten liability standards for Treasury check returns | ABA Banking Journal. 

Community Reinvestment Act Regulations Unveiled

Last week the Federal Reserve Board, FDIC, and OCC unveiled a 1,500-page final rule revising how they will assess compliance with the Community Reinvestment Act (CRA). The Federal Reserve Board voted 6-1 and the FDIC voted 3-2 in support of the final rule.

According to the three agencies, the updated CRA regulations will:

• Encourage banks to expand access to credit, investment, and banking services in LMI communities
• Adapt to changes in the banking industry, including mobile and online banking
• Provide greater clarity and consistency in the application of the CRA regulations
• Tailor CRA evaluations and data collection to bank size and type

The Association and our members are still digesting the 1,500-page rule and we will be helping our members with this through training and educational programs. We will keep you posted on all developments going forward.

Click the links below for more information on the CRA Final Rule:

• Federal Register notice: Community Reinvestment Act (federalreserve.gov)
• Community Reinvestment Act Final Rule Fact Sheet - October 2023 (federalreserve.gov)
• Interagency Overview of the Community Reinvestment Act Final Rule (federalreserve.gov)
• Banking regulators release CRA final rule | ABA Banking Journal. 

Federal Reserve Board Advances Debit Card Fee Cap Proposal

In a 6-1 vote last week the Federal Reserve Board advance a proposal, which would apply to issuers with at least $10 billion in consolidated assets, would lower the debit card fee cap and “establish a regular process for updating the maximum amount every other year going forward.” According to the Fed, the proposal would adjust the interchange fee cap “to reflect changes in issuer costs” since the rule first took effect in 2011.

Separate from the recent Board vote, though related, the Association, the American Bankers Association and state banking associations are strongly opposed to any and all efforts to reduce interchange fees as it will be detrimental to the tens and thousands of Massachusetts small businesses and consumers who rely on the credit card benefits offered to them. We remain in contact with our Congressional delegation to discuss these concerns and continue to work with our partners to see that the Credit Card Competition Act is not passed into law. To read our past letter to the MA delegation, click here. 

For more information on the debit card fee cap proposal, click the links below:

• Federal Reserve Board - Federal Reserve Board requests comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction
• Debit Card Interchange Fees and Routing - Regulation II
• Federal Reserve Proposed Regulation II Changes | American Bankers Association (aba.com). 

Federal Reserve Maintains Current Level Federal Funds Rate

This week, the Federal Open Market Committee announced it would maintain the federal funds rate at the current target range at 5.25% to 5.5%.

To read more about the decision click here.