Financial industry groups join forces to accelerate settlement cycle to T+1

A group of financial industry organizations is joining forces to accelerate the U.S. securities settlement cycle from T+2 to T+1. © Shutterstock The collaborating organizations — Investment Company Institute (ICI), The Securities Industry and Financial Markets Association (SIFMA), and The Depository Trust & Clearing Corporation (DTCC) — are outlining key steps to shorten the cycle […]

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A group of financial industry organizations is joining forces to accelerate the U.S. securities settlement cycle from T+2 to T+1.

© Shutterstock

The collaborating organizations — Investment Company Institute (ICI), The Securities Industry and Financial Markets Association (SIFMA), and The Depository Trust & Clearing Corporation (DTCC) — are outlining key steps to shorten the cycle for secondary market transactions. The groups seek to complete their analysis on the next steps to achieving T+1 by the end of the third quarter. After that, they will develop a time frame for moving to T+1.

“ICI and its members will play an active role in designing the roadmap for shortening the settlement time,” ICI President and CEO Eric Pan said. “Regulated funds occupy a prominent place at the intersection of trading and settlement as they are the primary source for the daily trading transactions that brokers process. ICI, SIFMA, and DTCC led the move to T+2 settlement in 2017, and we look forward to reviving that successful partnership.”

The groups also plan to assess what it may take to further accelerate the settlement cycle beyond T+1.

“Accelerating the settlement cycle, as we and our partners ICI and DTCC know from experience, is a complex and significant undertaking,” SIFMA President and CEO Kenneth Bentsen Jr. said. “A shorter settlement time frame can benefit investors and market participants by reducing credit, market, and liquidity risks and promoting financial stability. Our plan is to fully address the business and operational impacts of the change first, to ensure a smooth transition and avoid any unnecessary market risk.”

ICI, SIFMA, and DTCC led the effort to shorten the US securities settlement cycle to T+2 back in 2017. It was a multi-year effort that required significant coordination across the industry. Similarly, moving to T+1 will be a significant undertaking that will require similar coordination.

“Recent volumes and volatility demonstrate that the time to move to a shorter settlement cycle is now,” DTCC President and CEO Michael Bodson said. “While we are committed to fast-tracking this work and can support T+1 with existing DTCC technology today, we realize that this is a complex undertaking that will require close collaboration across the industry.”

The organizations identified several goals to advance this effort, including mitigating risks to investors and industry participants; analyzing and improving current business and operational processes; minimizing the disruption of important industry services; ensuring new risks are not introduced; and
conducting a comprehensive cost-benefit analysis.

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CSBS backs Senate resolution to strike down OCC’s true lender rule

The Conference of State Bank Supervisors (CSBS) has endorsed a Senate resolution to strike down the Office of the Comptroller of the Currency’s (OCC) true lender rule.© Shutterstock CSBS officials sent a letter to Sen. Sherrod Brown (D-OH), chair of the Senate Banking Committee, and Sen. Pat Toomey (R-PA), ranking member on the committee, expressing […]

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The Conference of State Bank Supervisors (CSBS) has endorsed a Senate resolution to strike down the Office of the Comptroller of the Currency’s (OCC) true lender rule.

© Shutterstock

CSBS officials sent a letter to Sen. Sherrod Brown (D-OH), chair of the Senate Banking Committee, and Sen. Pat Toomey (R-PA), ranking member on the committee, expressing the organization’s support for the joint resolution, S.J. Res. 15.

“The true lender rule undercuts state consumer protection laws by extending national bank preemption to third-party nonbanks. The rule enables otherwise illegal interest rates on loans in which a nonbank holds the predominant economic interest by asserting that its national bank partner is the true lender merely because the bank’s name was on the loan,” CSBS President and CEO John Ryan said.

The True Lender rule was put in place by the Trump Administration. It specifies that a bank is the true lender if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan. Also, if one bank is named the lender in the loan agreement for a loan and another bank funds that loan, the bank named as the lender in the loan agreement makes the loan.

“The OCC’s true lender test is so formalistic that it permits nonbanks to effectively lend at otherwise usurious interest rates and completely disregards the long-standing role of states to determine the interest charged to their citizens by nonbank lenders,” Ryan added.

CSBS is the national organization of bank regulators from all 50 states, American Samoa, District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands

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CBS assesses consumer bank satisfaction amid COVID-19 pandemic

The Consumer Bankers Association (CBA) said findings from the J.D. Powers 2021 U.S. Retail Banking Satisfaction Study affirm the industry’s focus on aiding consumers amid the COVID-19 pandemic.© Shutterstock CBA President and CEO Richard Hunt issued a statement regarding the survey results, which maintained banks have made a concerted effort to strengthen communication, offer digital […]

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The Consumer Bankers Association (CBA) said findings from the J.D. Powers 2021 U.S. Retail Banking Satisfaction Study affirm the industry’s focus on aiding consumers amid the COVID-19 pandemic.

© Shutterstock

CBA President and CEO Richard Hunt issued a statement regarding the survey results, which maintained banks have made a concerted effort to strengthen communication, offer digital products and services and support their communities, which has resulted in a customer satisfaction surge.

“The survey results underscore our industry’s unwavering commitment to navigating the new normal, especially in the wake of one of the most uncertain times in our nation’s history,” Hunt noted. “When COVID-19 hit communities last March, the banking industry joined together to support struggling small businesses and consumers during their time of need. Banks offered increased flexibility to support customers and enhanced online banking services, with bankers working around the clock to close the digital divide.”

The study found that customer satisfaction improved amid flight to digital; banks stepped up efforts to help financially insecure customers, the majority of customers believe their bank supported them during the pandemic, and big banks continue to close the gap.

“If you’re looking for a case study in how to improve engagement and deliver a superior customer experience in the face of massive disruption, look no further than the U.S. retail banking industry’s response to the COVID-19 pandemic,” J.D. Power Senior Director, Banking Intelligence Paul McAdam said. “The fact that satisfaction has improved most among customers who say they feel worse off financially speaks volumes to the proactive efforts many banks launched to support their customers in a period of heightened financial stress. Moreover, banks’ ability to deliver consistently through digital channels has helped reassure branch-centric holdouts and ease the large-scale transition to digital-only banking.”

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FHFA offers Enterprise mortgage refinancing options

The Federal Housing Finance Agency (FHFA) is offering low-income borrowers with Fannie Mae and Freddie Mac (the Enterprises), single-family mortgages a new refinance option.© Shutterstock The FHFA indicated eligible borrowers would benefit from a reduced interest rate and lower monthly payment, estimating borrowers taking advantage of the new initiative could save an average between $100 […]

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The Federal Housing Finance Agency (FHFA) is offering low-income borrowers with Fannie Mae and Freddie Mac (the Enterprises), single-family mortgages a new refinance option.

© Shutterstock

The FHFA indicated eligible borrowers would benefit from a reduced interest rate and lower monthly payment, estimating borrowers taking advantage of the new initiative could save an average between $100 and $250 per month.

“Last year saw a spike in refinances, but more than 2 million low-income families did not take advantage of the record low mortgage rates by refinancing,” FHFA Director Mark Calabria said. “This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment.”

New refinance option features include, per the FHFA, the lender providing a savings of at least $50 in the borrower’s monthly mortgage payment, and at least a 50-basis point reduction in the borrower’s interest rate; a maximum $500 credit from the lender for an appraisal if the borrower is not eligible for an appraisal waiver; and a waiver of the 50 basis point up-front adverse market refinance fee for borrowers with loan balances at or below $300,000.

Refinancing qualifications include an Enterprise-backed one-unit single-family mortgage that is owner-occupied; an income at or below 80 percent of the area median income; the borrower has not missed a payment in the past six months while having no more than one missed payment in the past 12 months; and the borrower not having a mortgage with a loan-to-value ratio greater than 97 percent, a debt-to-income ratio above 65 percent or a FICO score lower than 620.

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Federal Reserve Board issues enforcement actions with former employee of Barclays Bank PLC and former employee of Texas Community Bank

Federal Reserve Board issues enforcement actions with former employee of Barclays Bank PLC and former employee of Texas Community Bank

Federal Reserve Board issues enforcement actions with former employee of Barclays Bank PLC and former employee of Texas Community Bank

Read more / Original news source: https://www.federalreserve.gov/newsevents/pressreleases/enforcement20210429a.htm

Sens. Crapo, Risch introduce back-to-work bonus bill

U.S. Sens. Mike Crapo (R-ID) and Jim Risch (R-ID) introduced legislation that would provide a bonus for workers who can safely return to work. © Shutterstock The Back to Work Bonus Act bill is designed to counteract enhanced federal unemployment benefits that may be discouraging workers from returning to jobs. Idaho implemented such a program […]

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U.S. Sens. Mike Crapo (R-ID) and Jim Risch (R-ID) introduced legislation that would provide a bonus for workers who can safely return to work.

© Shutterstock

The Back to Work Bonus Act bill is designed to counteract enhanced federal unemployment benefits that may be discouraging workers from returning to jobs. Idaho implemented such a program last July, and it reduced the number of Idahoans on unemployment.

Specifically, the bill would provide a one-time payment of either $1,200 (full-time) or $600 (part-time) to unemployed workers who obtain employment, comparable to a hiring bonus. The bonus requires verification from an individual’s employer.

The bill accelerates a scheduled increase in Reemployment Services and Eligibility Assessments (RESEA) funding to support laid-off workers. It also expands the pool of eligible workers to include those receiving benefits through CARES Act unemployment programs, including Pandemic Unemployment Assistance.

Further, it would reinstate the federal work search requirement for individuals receiving unemployment. Last March, Congress waived this requirement, and 32 states continue to have a waiver in place.

“The economy is showing strong signs of recovery, and a record number of Americans are being vaccinated each day,” Crapo said. “However, a growing economy requires a willing and able workforce, and many small businesses are having trouble competing with enhanced unemployment benefits. A back-to-work bonus provides an incentive to return to work safely and will help to accelerate our economic recovery.”

The American Rescue Plan Act provides an extension of $300/week in supplemental unemployment benefits through Sept. 6, 2021. As states begin to reopen, the lawmakers said the Back to Work Bonus Act would help connect unemployed workers with jobs.

A similar bill was introduced in the House by Rep. Kevin Brady (R-TX).

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Legislation introduced in House to reform civil asset forfeiture laws

U.S Reps. Tim Walberg (R-MI) and Jamie Raskin (D-MD) introduced legislation seeking to reform U.S. civil asset forfeiture laws.© Shutterstock The Fifth Amendment Integrity Restoration Act (H.R. 2857), or FAIR Act, would raise the level of proof necessary for the federal government to seize property. Further, it would reform the IRS structuring statute to protect […]

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U.S Reps. Tim Walberg (R-MI) and Jamie Raskin (D-MD) introduced legislation seeking to reform U.S. civil asset forfeiture laws.

© Shutterstock

The Fifth Amendment Integrity Restoration Act (H.R. 2857), or FAIR Act, would raise the level of proof necessary for the federal government to seize property. Further, it would reform the IRS structuring statute to protect innocent small business owners while increasing transparency and congressional oversight.

“Under the current system, it is too easy for the government to seize a citizen’s private property without ever charging them with a crime,” Walberg said. “We have been sounding the alarm about civil asset forfeiture abuse for years, and meaningful reforms are long overdue at the federal level. The FAIR Act brings much-needed change to the status quo. Our legislation provides critical protections for all Americans and their right to due process under the Constitution, and I thank my colleagues for their leadership on this bipartisan effort.”

Raskin, who also sponsored the bill, said it was a constitutional imperative to reform these laws.

“I thank our colleagues for joining this bipartisan effort to uphold due process rights and rein in the nation’s reckless asset forfeiture policies,” Raskin said.

The bill was co-sponsored by Reps. Bobby Rush (D-IL), Tom McClintock (R-CA), Tony Cárdenas (D-CA), and Kelly Armstrong (R-ND).

“The vast majority of Americans who have their assets seized in civil forfeiture cases are never charged with a crime. As civil forfeiture has ballooned over the past three decades, minorities and low-income communities have suffered most. Reforming our broken policing system is a top priority for me, and the current civil asset forfeiture system stands out as unjust, unfair, and unacceptable. I am proud to join my colleagues in this bipartisan effort to reform civil asset forfeiture and reverse the perverse financial incentives that aid and abet abuse of this system,” Rush said.

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Survey examines pandemic financial stress

Findings derived from The Harris Poll on behalf of the American Institute of CPAs (AICPA) maintain since the COVID-19 pandemic began, young adults are heavily impacted by financial stress.© Shutterstock Officials said the study determined young adults are three times more likely to acknowledge they are experiencing pandemic financial stress in comparison to older adults, […]

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Findings derived from The Harris Poll on behalf of the American Institute of CPAs (AICPA) maintain since the COVID-19 pandemic began, young adults are heavily impacted by financial stress.

© Shutterstock

Officials said the study determined young adults are three times more likely to acknowledge they are experiencing pandemic financial stress in comparison to older adults, noting three in four younger Americans ages 18 through 34 indicated they have been at least somewhat stressed about their financial situation since the pandemic began, compared with about one in four older Americans ages 65 and up.

“Financial stress at any age can have a negative impact on a person’s wellbeing,” Gregory J. Anton, chairman of the AICPA’s National CPA Financial Literacy Commission, said. “For many younger Americans, this is the first time they have experienced this level of economic uncertainty, whereas older generations have already lived through recessions and depressions. Keeping perspective and finding comfort with what you can, and can’t, control is a good starting point to help alleviate financial stress.”

The survey was conducted online within the United from Jan. 13-15, 2021, among 2,040 U.S. adults ages 18 and older, officials said,
adding consumers can take several steps as a means of reducing financial stress and anxiety.

The AICPA’s National CPA Financial Literacy Commission recommends consumers start with keeping perspective and knowing what can and cannot be controlled, taking inventory of finances, and finding opportunities and tools to help today and in the future.

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CFPB delays mortgage rule compliance date

The Consumer Financial Protection Bureau (CFPB) is delaying the General Qualified Mortgage (QM) final rule mandatory compliance date, citing preservation of consumer access and flexibility amid the COVID-19 pandemic.© Shutterstock The compliance date has shifted from July 1, 2021, to Oct. 1, 2022. The General QM final rule is in accordance with the agency’s work […]

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The Consumer Financial Protection Bureau (CFPB) is delaying the General Qualified Mortgage (QM) final rule mandatory compliance date, citing preservation of consumer access and flexibility amid the COVID-19 pandemic.

© Shutterstock

The compliance date has shifted from July 1, 2021, to Oct. 1, 2022. The General QM final rule is in accordance with the agency’s work to protect homeowners from debt traps and unaffordable, irresponsible mortgage lending.

“So many consumers have been hit hard by the pandemic and the economic downturn, and we want to ensure that responsible, affordable mortgages remain available,” CFPB Acting Director Dave Uejio said. “As the mortgage market navigates an uncertain and challenging time, extending the date by which lenders must comply with the CFPB’s new General QM definition will help provide options and flexibility for both lenders and borrowers.”

According to the CFPB, QM loans are to be made based on the lender’s reasonable determination of the homeowner’s ability to repay the loan and delaying the mandatory compliance date of the General QM final rule provides lenders with more time to offer the loans based on the homeowners’ debt-to-income (DTI) ratio and not singularly basing determinations on pricing thresholds.

Authorities indicated the CFPB’s delayed action would also enable lenders access to more time to use the Government-Sponsored Enterprise (GSE) Patch – a tool providing QM status to loans eligible for sale to Fannie Mae or Freddie Mac.

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Read more / Original news source: https://financialregnews.com/cfpb-delays-mortgage-rule-compliance-date/

Prepared Remarks of Acting Director Dave Uejio for the Asian Real Estate Association of America Housing and Diversity Conference

Acting Director Dave Uejio remarks at the Asian Real Estate Association of America Housing and Diversity Conference.

Acting Director Dave Uejio remarks at the Asian Real Estate Association of America Housing and Diversity Conference.

Read more / Original news source: https://www.consumerfinance.gov/about-us/newsroom/prepared-remarks-of-acting-director-dave-uejio-for-the-asian-real-estate-association-of-america-housing-and-diversity-conference/