Policy Pulse Newsletter
September 2022 Edition
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September 2022 - Legislative and Regulatory Update

This month, Fannie Mae and Freddie Mac reported on foreclosure preventions; the Secret Service recovered $286 million in COVID-19 relief fraud; and a group of Republican senators accused the Consumer Financial Protection Bureau of a “politicized agenda.”

Details about these and other developments are below.


Report: Fannie/Freddie Foreclosure Preventions Actions Dipped
in Q2

A recent report, the “2022 Foreclosure Prevention and Refinance Report” includes data on mortgages held or securitized by Fannie Mae and Freddie Mac (Fannie and Freddie). The report details Fannie and Freddie’s delinquencies and active forbearance plans, as well as forfeiture actions and refinances by state.

According to the report, Fannie and Freddie completed 96,945 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to almost 6.6 million since the start of their conservatorships in September 2008. There were 129,779 foreclosure prevention actions during the first quarter of 2022.

Seventy-two percent of loan modifications completed in the first quarter reduced borrowers' monthly payments by more than 20 percent.


Secret Service Recovers $286M in COVID-19 Relief Fraud

The Secret Service recently said that it recovered $286 million in fraudulently obtained pandemic loans by conspirators who used fake identities to apply for Economic Injury Disaster Loans. The agency worked with the online bank, Green Dot, to identify roughly 15,000 accounts created by the conspirators to conceal
and move their criminal proceeds, which will be returned to the Small
Business Administration.

CFPB Targets Credit Card Fees

Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra recently announced a proposed rule focusing on credit card late fees. The proposal reopens a rule that the Federal Reserve Board enacted in 2010 that provides banks with a safe harbor on the amount they can charge when a cardholder pays. It also provided for annual adjustments based on inflation.

In recent remarks that suggested he views current fees as excessive, Mr. Chopra indicated that the CFPB would scrutinize how banks set their fees. Under statute, credit card late fees must be “reasonable and proportional” to the costs incurred by the issuer as a result of a late payment.

Talent Acquisition Serious Business Risk, Execs Say

C-suite executives in the financial services sector are more likely to view talent acquisition and retention as a major business risk than their counterparts in other sectors, according to a recent survey of 722 U.S. executives by accounting firm PricewaterhouseCoopers. Forty-four percent of financial service executives surveyed cited staffing as a “serious” risk versus 38 percent across all sectors.

The financial services sector was also among the most likely to offer flexible work options, with 68 percent of respondents saying they’ve expanded remote work choice or plan to do so. Only 27 percent said they’ve implemented a plan for having employees on-site more often.

Banks Communicate Concerns about Climate Change Emphasis

In recent remarks, Acting Comptroller of the Currency (OCC) Michael Hsu said community banks and their state trade associations have raised concerns about the OCC’s supervisory and regulatory actions related to climate change in “every meeting” he has had with them.

“I want to acknowledge those concerns and commit to continued open dialogue and constructive engagement as we move forward,” Mr. Hsu said.

“In the coming weeks, I will be traveling to Lubbock and Midland, Texas, to meet with local OCC-supervised community banks and hear directly from them about the risks and issues impacting their communities. I intend to listen actively and to provide more clarity on (the OCC’s approach) to climate-related risk management.”

GOP Senators Accuse CFPB of Politicized Agenda

The CFPB under Director Chopra is pursuing “a radical and highly-politicized agenda unbounded by statutory limits,” according to all 12 Republican members of the Senate Banking Committee in a recent letter to the agency. The senators singled out CFPB’s “relentless smear campaign” against banks that offer overdraft services.

“Charging fees that customers chose to pay should not be disturbing or illegal, and yet, the CFPB appears to have developed a particular disdain for banks charging their customers for services, pejoratively calling overdraft protection ‘junk fees,’ ” the senators said.

The Republican senators also accused CFPB of changing its rules so it could publish previously confidential information about financial institutions to make it easier to threaten them with reputational harm.

U.S. Adds 315,000 Jobs in August

The U.S. economy added 315,000 nonfarm jobs in August, the Labor Department recently reported. Gains were strongest in professional and business services, health care and retail trade.

The unemployment rate was 3.7 percent, up from July’s 3.5 percent. The labor force participation rate was 62.4 percent, a slight increase from the previous month's
62.1 percent.

Producer Prices Rise 8.7 Percent Year Over Year

The Producer Price Index rose 8.7 percent in August from a year before, the Labor Department recently reported. The index, which measures price changes on products and services before they reach consumers, showed that prices rose 0.1 percent from the month prior.

Report: Inflation Takes Toll on Bank Customers

A growing number of bank customers say inflation is taking a toll on their finances, including those classified as financially healthy, according to the most recent monthly survey data from research firm J.D. Power. The company polled 4,000 retail bank customers in June and found that 70 percent said prices are increasing faster than their incomes..

Consumer Confidence Rises in August

The Consumer Confidence Index increased to 103.2 in August, up from 95.3 in July and the first increase following three months of declines, the Conference Board recently said.


“Strong loan growth has lenders returning to the Federal Home Loan Banks for advances, with lenders tapping the banks to fund their loans again.” 
— American Banker

“(The Independent Community Bankers Association) and the nation’s community bankers believe the Federal Home Loan Banks must remain a strong, stable and reliable source of funding for community banks.”
— Rebecca Romero Rainey, ICBA president and CEO

“It was just very nice to have this program available, I really appreciate it.”
— George Lemelle, recipient of an FHLB Dallas Special Needs Assistance
Program (SNAP)

“We have been invested in SNAP since its founding in 2009 and have seen how it has helped disabled and special-needs residents, including elderly residents on fixed-incomes, with home repairs critical to their health and safety. This program has funded roof replacements, wheelchair ramps and upgrades to plumbing, heating and air-conditioning to name a few examples.”
— Ken Judice, BancorpSouth Bank president, Lafayette, Louisiana market

“We are truly grateful to receive this (Partnership Grant Program) grant as it allows us to focus on providing programs to those who need it most."
— Rosalind Washington, executive vice president, New Orleans Neighborhood Development Foundation

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