CALL TO ACTION

Ask Your Senators to Support Reg II Stop-and-Study Bill

The Federal Reserve is proposing to further lower debit interchange via Regulation II.

The proposal is based on incomplete data and does not consider the impact that reducing interchange revenue could have on the affordability and availability of low or no-cost banking products.

While the public comment period has closed, Congress can prevent the Fed from finalizing this damaging proposal without adequate analysis.

Senator Ted Budd (R-NC) has introduced S. 4570, the Secure Payments Act, a bill which would require the Federal Reserve to pause its current Regulation II proposal and complete a quantitative impact study of the effects of the proposal before moving forward. This is a companion bill to Rep. Luetkemeyer’s bill in the House.

Write to Senators Stabenow and Peters today and urge them to co-sponsor the Secure Payments Act.

REGULATORS

Bankers Meet with Regulators in Chicago

Bankers from across Michigan met with regulators in Chicago, this week for roundtable discussions with the Federal Reserve Bank of Chicago leadership, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).

Common themes of the discussions included more focus from the regulators on balance sheet and concentration management, liquidity and contingency funding plans and an increase in supervisory findings since the bank failures in spring 2023. Discussion was also had with each agency on the forecast for 1071 reporting, overdraft rules, and credit card late fees.

The FDIC indicated that they will be releasing soon an official FAQ relating to the new digital FDIC insurance logo and guidelines for how banks can utilize and display it. During the Wednesday meeting with the Chicago Fed, Federal Reserve Board Governor Michelle Bowman joined bankers. Ultimately, bankers were able to share their perspectives and experiences on how regulations affect customers and Michigan banks.

The OCC shared the Third-Party Risk Management booklet. In June 2023, the Federal Reserve Board, FDIC, and OCC issued the Interagency Guidance on Third-Party Relationships: Risk Management (TPRM Guidance). This guide assists community banks in developing and implementing third-party risk management practices. It is not a substitute for the TPRM Guidance, a checklist, or a prescriptive set of practices. While primarily for community banks, other banks may find it useful. Additional resources are listed in the appendix. The agencies emphasize that this supervisory guidance does not have the force of law or impose new requirements on banks.

FHFA

MBA Comments on FHFA's Request for Input

The MBA offered comments today on the Federal Housing Finance Agency's (FHFA) Request for Input (RFI) regarding the Federal Home Loan Banks’ (FHLBs) Core Mission Activities and Mission Achievement. The FHFA's Comprehensive Review of the FHLBs, initiated in 2023, is a commendable step towards improving the system through stakeholder engagement. Read the letter. The MBA will join with our peers across the country on Monday with a joint comment letter shared by the American Bankers Association.

REGULATORS

CFPB Releases Mortgage Servicing Proposal, Overhauls Loss Mitigation Framework

The CFPB released a proposed rule to amend Regulation X’s mortgage servicing provisions, which would result in a major overhaul of the existing default servicing framework. Read more.

DEPARTMENT OF LABOR

House Committee Advances Resolution to Overturn Fiduciary Rule

The House Committee on Education and the Workforce advanced a resolution to overturn a Department of Labor final rule that expands fiduciary status to nearly all financial professionals. Read more.

GRASSROOTS

HUMAN RESOURCES

Court Issues Preliminary Injunction Against FTC’s Noncompete Ban

A federal court last week issued a preliminary injunction against the Federal Trade Commission’s rule to ban the use of noncompete clauses in employee contracts. The injunction stops the rule from taking effect to the plaintiffs who filed lawsuits against the rule—tax services firm Ryan LLC and several nonfinancial business trade associations. The court stated that it intends to rule on the merits of the challenge prior on or before Aug. 30. The rule’s effective date is Sept. 4.

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While the FTC does not have regulatory authority over banks, it does have authority over bank affiliates. The FTC also claims authority over bank holding companies.

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The FTC rule would make it illegal for an employer to enter into a noncompete agreement with a worker, maintain a noncompete with a worker or tell workers they are subject to a noncompete. Noncompete agreements with senior executives finalized before the rule’s effective date of Sept. 4 would remain in force under the rule. Existing noncompete agreements with other workers would not be enforceable after the effective date, under the rule.

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In issuing the injunction, the court held that the FTC lacks the authority to create substantive rules—like the noncompete ban—under its authority to regulate unfair methods of competition. The court also held that the rule is arbitrary and capricious because it is “unreasonably overbroad without a reasonable explanation” for its breadth.

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Read the court decision.

Read the final rule.

ECONOMY

New York Fed: Consumers’ Inflation Expectations Decline in Short and Long Terms

Perceptions about households’ current financial situations deteriorated slightly with more respondents reporting being worse off than a year ago and fewer respondents reporting being better off. Read more.

ECONOMY

FOMC Minutes Show Discussion of Inflation Dynamics

In deciding at its last meeting to hold interest rates steady, the Federal Open Market Committee considered continued economic growth and a strong labor market, as well as “modest further progress” toward the FOMC’s 2 percent inflation objective in recent months, according to the latest FOMC minutes released Wednesday. Read the minutes.