Regulators Issue Statement on Lending to Creditworthy Small Businesses 

The federal financial regulatory agencies and the Conference of State Bank Supervisors (the regulators) issued a statement today on prudent lending to creditworthy small business borrowers.  The regulators recognize that small businesses play an important role in the economy and know that some are experiencing difficulty in obtaining or renewing credit.

The statement emphasizes that financial institutions that engage in prudent small business lending after performing a comprehensive review of a borrower's financial condition will not be subject to supervisory criticism for small business loans made on that basis. Financial institutions should understand the long-term viability of the borrower's business and focus on the strength of a borrowers' business plan to manage risk rather than using portfolio management models that rely primarily on general inputs, such as a borrower's geographic location or industry.

The regulators are working with the industry and supervisory staff to ensure that supervisory policies and actions do not inadvertently curtail the availability of credit to sound small business borrowers.

What's New: Regulation CC Amendments

The Federal Reserve Board has approved amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve Banks' check-processing operations.

Appendix A provides a routing symbol guide that helps depository institutions determine the maximum permissible hold periods for most deposited checks.

On February 27, 2010, the Reserve Banks will transfer the check-processing operations of the head office of the Federal Reserve Bank of Atlanta to the head office of the Federal Reserve Bank of Cleveland. To ensure that the information in Appendix A accurately describes the structure of check-processing operations within the Federal Reserve System, the final rule deletes the reference in Appendix A to the Atlanta head office and reassigns the routing numbers listed thereunder to the Cleveland head office.

To coincide with the effective date of the underlying check processing changes, the amendments are effective February 27, 2010. At that time, there will only be a single check-processing region for purposes of Regulation CC and there will no longer be any checks that are nonlocal.

Funds availability is discussed in-depth in The Gold Book.

Federal Reserve Launches New Website for Bank Directors 

The Federal Reserve has launched a website to help new bank directors learn how they can work to ensure the safety and soundness of their institutions. The website, BankDirectorsDesktop.org, also provides a refresher course for experienced board members.

BankDirectorsDesktop.org is tailored to directors of community banks and features online training and other resources to help directors better understand the issues and challenges associated with serving on a bank's board.

The website includes links to the "Training for Bank Directors" interactive course and the latest edition of Basics for Bank Directors, a comprehensive guide to directors' roles and responsibilities.

Federal Reserve Introduces Online Regulatory Filing System

The Federal Reserve on Monday announced the availability of Electronic Applications, or "E-Apps," a new Internet-based system for financial institutions to submit regulatory filings. E-Apps allows firms and their representatives to file applications online, eliminating the time and expense of printing, copying, and mailing the documents. Registered users can access the system at any time to upload additional documents or create new filings. There are no fees for using E-Apps.

E-Apps has been designed to ensure the confidentiality of the data and the identity of individual filers. Institutions ready to start using E-Apps can find sign up forms at http://www.federalreserve.gov/bankinforeg/eappssignup.htm.

Fed Banks To Examine Check & Electronic Payments Usage

The Federal Reserve Banks have announced plans to conduct another series of studies to determine the current volume and composition of check and electronic payments in the United States. These studies will build on information gained from similar studies conducted by the Reserve Banks in 2001, 2004 and 2007.

The 2010 Federal Reserve Payments Study consists of three research efforts commissioned to estimate the annual number, dollar value and composition of retail noncash payments in the United States. Together, the studies will provide aggregate estimates and current trends in the use of noncash payment instruments by U.S. consumers and businesses.

What's New: 2010 Rules for Roth IRAs

Beginning January 1, 2010, the income and filing requirements for rollovers (including conversions) to a Roth IRA were eliminated. Additionally, for rollovers to a Roth IRA in 2010 only, a special 2-year option for reporting taxable portions of a rollover is available to taxpayers.

Previously, taxpayers were permitted to roll over (convert) a traditional IRA, SEP-IRA, SIMPLE IRA, and an eligible rollover distribution from an employer's retirement plan (other than from a designated Roth account) to a Roth IRA only if the following requirements were met:

  • AGI for Roth IRA purposes was $100,000 or less; and

  • tax filing status was not married, filing separate.

Under the new rules for 2010, regardless of income or filing status, individuals may roll over (convert) the following to a Roth IRA:

  • a traditional IRA, SEP-IRA or SIMPLE IRA;

  • an eligible rollover distribution from a 401(k), 403(b) (or similar plan, as permitted);

  • an eligible rollover distribution to a beneficiary from a retirement plan.

For rollovers and conversions to a Roth IRA in 2010 only, taxpayers have the option of reporting all of the taxable portion of the rollover in 2010, or reporting half in 2011 and half in 2012.

Additional information about Roth IRA Conversions and Rollovers, Qualified Rollovers and the Taxation of Roth IRA conversions may be found in The Gold Book.

What's New: FinCEN Provides Educational Pamphlet on CTRs

The Financial Crimes Enforcement Network (FinCEN) is providing an educational pamphlet, "Notice to Customers: A CTR Reference Guide," for financial institutions and their customers containing information on the currency transaction reporting (CTR) requirement. The pamphlet is provided as a resource for financial institutions to help address questions frequently asked by their customers.

For example, the pamphlet explains that large currency transactions are not illegal, and that financial institutions are required to obtain information from their customers when these transactions do occur. The pamphlet does not alter in any way a financial institution's BSA reporting requirements and explains that if a customer attempts to break up, i.e. "structure," transactions in order to evade the CTR reporting requirement there are potential civil and criminal consequences. In the pamphlet, FinCEN explains what constitutes structuring and provides examples of structured transactions.

The pamphlet may be found at:

A Spanish version of the pamphlet may be found at:

Information on Currency Transactions Reports is found in the Compliance chapter of The Gold Book.

What's New: Model Privacy Notices Available

Joint federal regulatory agencies have released a final model privacy notice form that will make it easier for consumers to understand how financial institutions collect and share information about consumers. Under the Gramm-Leach-Bliley Act (GLB Act), institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices. The model form can be used by financial institutions to comply with these requirements.

See Model Privacy Notice for details and links to model notices.

What's New: Annual Adjustments for Reserve Calculations & Deposit Reporting

The Federal Reserve Board recently announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2010. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective 2010.

See sub-chapter Reserve Requirements for updated information.

What's New: Final Rules on Overdraft Services

The Federal Reserve Board announced final rules prohibiting institutions from charging fees for overdrafts on ATM and one-time debit card transactions.

The final rules will enable consumers to limit the costs of overdraft services by providing consumers a choice regarding their institution's payment of overdrafts for ATM and one-time debit card transactions. Financial institutions will be required to provide a clear disclosure of the fees and terms associated with the institutions' overdraft service.

Consumers may opt in or affirmatively consent, to the institution's overdraft service for ATM and one-time debit card transactions, before overdraft fees may be assessed on the account. The rule also provides consumers an ongoing right to revoke consent.

For further information, including the mandatory compliance date, click here.

What's New: Agencies Announce Availability of 2008 HMDA Data

The Federal Financial Institutions Examination Council (FFIEC) has announced the availability of data on mortgage lending transactions at 8,388 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies.

The HMDA data cover 2008 lending activity—applications for loans, loan originations, loan denials, and purchases of loans. The data also include disclosure statements for each financial institution, aggregate data for each metropolitan statistical area (MSA), nationwide summary statistics regarding lending patterns, and Loan Application Registers (LAR) for each financial institution (LARs modified for borrower privacy).

The FFIEC prepares and distributes this information on behalf of its member agencies (Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision) and the Department of Housing and Urban Development.

Financial institution disclosure statements, individual institutions' LAR data, and MSA and nationwide aggregate reports are available at http://www.ffiec.gov/hmda. Refer to the HMDA data products at http://www.ffiec.gov/hmda/hmdaproducts.htm for the item descriptions and formats.

For further information see HMDA FAQs.

What's New: 2009 Required Minimum Distribution Waiver

The Worker, Retiree, and Employer Recovery Act of 2008  waives required minimum distributions  for 2009 from certain retirement plans.

In September 2009, the Internal Revenue Service provided guidance regarding this legislation. For example, the waiver of the RMD rules affects distributions for 2009 only. Also, for individuals who have taken their 2009 RMD, there are provisions that may allow the distributed amounts to be rolled over. For additional information and more details on this temporary waiver, see 2009 Required Minimum Distribution Waiver.

The guidance also provides amendment information and sample amendments for plan sponsors (see Pension Plan Required Amendments, RMD Waiver for 2009).

What's New: 2010 Reporting Changes for 1099-R & 5498

The IRS has updated Form 1099-R and Form 5498 for tax year 2009. While no substantive changes were made to Form 1099-R, Form 5498 has been enlarged and reformatted to provide additional boxes for the collection of Required Minimum Distribution information.

These changes may be found at Form 1099-R Reporting Instructions and Form 5498 Reporting Instructions.

What's New: Power of Attorney Changes

The New York State legislature made sweeping changes to the Power of Attorney law, which went into effect September 1, 2009. The changes to the law require documents which are much more complex than the short form power of attorney under the old law. One major change, for example, is the use of a Statutory Major Gifts Rider for granting gifts of $500 or more. The new short form also affords principals increased protection by allowing the designation of co-agents as well as a person to monitor the agent. These changes and additional information on the new law can be found at New York Rules.

What's New: 2010 Cost-of-Living-Adjustments

The 2010 Cost-of-Living Adjustments (COLAs) for determining annual limits for most retirement plans remain the same as in 2009, except for the following:

  • The adjusted gross income (AGI) limits for determining the deductible amount of traditional IRA contributions for single and married taxpayers who are active participants in an employer-sponsored retirement plan (see "Deductions" );

  • The AGI limits for determining the deductible amount of traditional IRA contributions for married taxpayers filing jointly who aren’t active participants in an employer-sponsored retirement plan but whose spouses are (see "Deductions") ;

  • The AGI limits for determining the maximum Roth IRA contributions permitted for taxpayers whose filing status is married filing jointly (see "Phaseouts) and;

  • The adjusted gross income limits for taxpayers who qualify for the 50% nonrefundable tax credit on qualified retirement savings contributions (see "Credit for Pension Contributions").

Click here for a table summarizing the applicable limitations.

What's New: FDIC Insurance Coverage Increase Extended

Superseding the October 3, 2008 changes to FDIC insurance coverage, the FDIC has extended the temporary increase on deposits held at FDIC-insured institutions through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts (including IRAs) which will remain at $250,000 per depositor.

FDIC extended its temporary Transaction Account Guarantee Program through June 30, 2010. This program provides depositors with unlimited coverage for noninterest-bearing transaction accounts at participating FDIC-insured institutions. The unlimited coverage applies to all personal and business checking deposit accounts that do not earn interest (including Demand Deposit (DDA) accounts), low-interest NOW accounts (NOW accounts that cannot earn more than 0.5% interest), Official Items, and IOLTA accounts.

Click here for information about the temporary extensions on these increases.
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