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    US Agencies Make Various Announcements for Banking Sector

    May 22, 2023

    The U.S. Small Business Administration (SBA) issued a notification regarding the application process for new small business lending companies (SBLC) licenses. The Federal Housing Finance Agency (FHFA) is consulting, until July 03, 2023, on amendments to the prudential management and operations standards rule. Additionally, the Consumer Financial Protection Bureau (CFPB) is seeking comments, until July 26, 2023, on a proposed rule to implement section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) and to amend Regulation Z to address the application of Truth in Lending Act (TILA) to “Property Assessed Clean Energy (PACE) transactions.” Finally, the Office of the Comptroller of the Currency (OCC) announced the establishment of the Office of Financial Technology.

    Key highlights of the aforementioned updates follow:

    • SBA notified that the Office of Capital Access (OCA) is opening the application period for new small business lending companies' licenses from June 01, 2023 to July 31, 2023. It also shared the process by which interested entities may apply. SBA informed that it is not accepting applications for Community Advantage SBLCs (CA SBLCs) in this period, however, SBA will continue to accept applications for new lenders in SBA's Community Advantage (CA) Pilot Program through the end of the CA Pilot Program, until September 30, 2023. Entities that are interested in applying to become a CA Pilot lender should follow the application instructions in the Community Advantage Participant Guide, version 7, effective May 31, 2022. In accordance with SBA Information Notice 5000–846918, Community Advantage Small Business Lending Company Conversion, effective May 01, 2023, SBA will continue to work with all CA Pilot lenders to transition them to CA SBLCs.
    • FHFA proposed to amend part 1236 to reflect the scope of its statutory authority to establish prudential management and operations standards (Standards) as regulations as well as guidelines. The rule would expressly reflect the statutory authority of FHFA to establish Standards as either regulations or guidelines and to locate Standards established as regulations outside of the appendix to the rule. If amended as proposed, the rule would make clear that guidelines or regulations that FHFA identifies as Standards are to be considered Standards for purposes of section 4513b and part 1236. FHFA is also proposing that the rule and some of the existing Standards in the appendix to part 1236 be made applicable to the Office of Finance of the Federal Home Loan Bank System (OF). Moreover, FHFA could in the future establish Standards by regulation or guideline that would apply only to OF.
    • The section 307 of the EGRRCPA directs CFPB to prescribe ability-to-repay rules for Property Assessed Clean Energy (PACE) financing and to apply the civil liability provisions of the Truth in Lending Act (TILA) for violations. PACE financing is financing to cover the costs of home improvements that results in a tax assessment on the real property of the consumer. CFPB proposes that the final rule, if adopted, would take effect at least one year after publication in the Federal Register, but no earlier than the October 01 which follows by at least six months the date of promulgation. The final rule would apply to covered transactions for which creditors receive an application on or after this effective date. CFPB tentatively determines that a one-year period between Federal Register publication of a final rule and the final rule's effective date would give creditors enough time to bring their systems into compliance with the revised regulations.
    • OCC announced the establishment of its Office of Financial Technology and the selection of Prashant Bhardwaj to lead the office as Deputy Comptroller and Chief Financial Technology Officer, effective April 10, 2023. The Office of Financial Technology enhances the agency’s knowledge and expertise of financial technology platforms and applications in support of the OCC’s mission as well as ensures the agency’s leadership and agility in providing high-quality supervision of bank-fintech partnerships.


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    Keywords: Americas, US, Banking, Lending, Small Business Lending, SBLC, EGRRCPA, TILA, PACE, Regulation Z, Fintech, Regtech, OCC, CFPB, FHFA, SBA

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