Guest Commentary By Gale Simons-Poole, BHG Financial
Navigating the Potential Impact of Recent Regulatory Guidance
As we enter 2023, the banking industry is faced with unprecedented risk management challenges amid rapid technological and competitive changes. Federal and state authorities have recently issued guidance to address paradigm- altering shiſts such as climate change, artificial intelligence, cryptocurrency, digital and mobile banking, credit models, data security and more. Financial institutions should understand how these changes could affect their operating model and strategy.
Te following highlights recent regulatory guidance. Learn how they might affect community banks in the near term and discover the steps banks can take to successfully prepare themselves for a shiſting compliance backdrop.
CLIMATE RISK • Impacts large financial institutions first; the Federal Reserve Board will conduct a pilot to analyze climate-related financial risk involving the six largest U.S. banks in early 2023.
MODERNIZE THE COMMUNITY REINVESTMENT ACT • Mainly affecting retail lenders, changes to the CRA would, among many other things, increase access to credit, investment and basic banking services in areas where it is needed most, generally in low- and moderate-income communities.
SMALL BUSINESS LENDING DATA COLLECTION • Will impact most U.S. financial institutions when implemented in 2023; requires lenders to annually report small business credit application data, including credit purpose, loan amount, business info and location, gross annual revenue, NAICS code and more.
EXPANSION OF UDAAP STANDARDS • Broadens the scope of consumer activities subject to UDAAP beyond lending to include advertising, pricing, servicing, reporting, payments and collections. However, a lawsuit by several banking trade associations seeks to prevent the expansion of CFPB’s UDAAP role beyond its Dodd- Frank Act statutory authority.
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