[Brent V]

As defined in the CRA Sunshine Regulations “Covered Agreement” is any contract, arrangement, or
understanding that meets all of the following criteria:

1. The agreement is in writing.
2. The parties to the agreement include:
a. One or more insured depository institutions or affiliates of an insured
depository institution; and
b. One or more NGEPs.
3. The agreement provides for the insured depository institution or any affiliate to:
a. Provide to one or more individuals or entities (whether or not parties to
the agreement) cash payments, grants, or other consideration (except loans)
that have an aggregate value of more than $10,000 in any calendar year; or
b. Make to one or more individuals or entities (whether or not parties to the
agreement) loans that have an aggregate principal amount of more than
$50,000 in any calendar year.
4. The agreement is made pursuant to, or in connection with, the fulfillment of the CRA.
5. The agreement is with a NGEP that has had a CRA communication prior to entering into the agreement.

A “Covered Agreement” does not include:

1. Any individual loan that is secured by real estate; or
2. Any specific contract or commitment for a loan or extension of credit to an individual, business, farm, or other entity, or group of such individuals or entities if:
a. The funds are loaned at rates that are not substantially below market rates;
and
b. The loan application or other loan documentation does not indicate that the
borrower intends or is authorized to use the borrowed funds to make a loan
or extension of credit to one or more third parties.

[Brent V]

There is not a regulation that controls the interest rate you will pay on a deposit account. Some banks negotiate rates for certain (usually high dollar) customers. Also, there isn’t a regulation that would mirror fair lending, but I would argue that you need to apply the same principles and negotiate rates on an equitable basis, regardless of a prohibited basis, due to reputational risk.

There are prohibitions on preferential rates being paid to a director, officer, attorney, or employee. (https://www.law.cornell.edu/uscode/text/12/376).

[Brent V]

Assuming you have complied with the E-SIGN requirements, the same rule would apply for delivering the LE electronically – it would be required to be delivered (i.e. sent in compliance with E-SIGN) no later than 3 business days after application. As with regular mail, if you send the LE via email it is considered received 3 business days after delivery unless you have evidence the consumer received the disclosures earlier.
See 1026.19(e)(1)(iii)-A and (iv).

Also, comment 19(e)(I)(iv)-2 states:
The three-business-day period provided in § 1026.19(e)(1)(iv) applies to methods of electronic delivery, such as email. For example, if a creditor sends the disclosures required under § 1026.19(e) via email on Monday, pursuant to § 1026.19(e)(1)(iv) the consumer is considered to have received the disclosures on Thursday, three business days later. The creditor may, alternatively, rely on evidence that the consumer received the emailed disclosures earlier. For example, if the creditor emails the disclosures at 1 p.m. on Tuesday, the consumer emails the creditor with an acknowledgement of receipt of the disclosures at 5 p.m. on the same day, the creditor could demonstrate that the disclosures were received on the same day. Creditors using electronic delivery methods, such as email, must also comply with § 1026.37(o)(3)(iii), which provides that the disclosures in § 1026.37 may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. For example, if a creditor delivers the disclosures required under § 1026.19(e)(1)(i) to a consumer via email, but the creditor did not obtain the consumer’s consent to receive disclosures via email prior to delivering the disclosures, then the creditor does not comply with § 1026.37(o)(3)(iii), and the creditor does not comply with § 1026.19(e)(1)(i), assuming the disclosures were not provided in a different manner in accordance with the timing requirements of § 1026.19(e)(1)(iii).

[Brent V]

The requirements related to advertising/promoting non-deposit investment related products are quite strict. At a minimum any advertisement or disclosure must include the three statements:
* are not insured by the FDIC;
* are not deposits or other obligations of the institution and are not guaranteed by the institution; and,
* are subject to investment risks, including possible loss of the principal invested.

In addition, the advertisement or promotional materials must not suggest or convey any inaccurate or misleading impression about the nature of the product or its lack of FDIC insurance.

My biggest concern about a teller handing out a brochure, even with proper disclosures as mentioned above is the fact that the teller likely has an “FDIC Insured” sign at his/her teller window and there are specific requirements that prohibit that in the Interagency Statement on Retail Sales of Nondeposit Investment Products, specifically:
“To minimize customer confusion with deposit products, sales or recommendations of non-deposit investment products on the premises of a depository institution should be conducted in a physical location distinct from the area where retail deposits are taken. Signs or other means should be used to distinguish the investment sales area from the retail deposit-taking area of the institution. However, in the limited situation where physical considerations prevent sales of non-deposit products from being conducted in a distinct area, the institution has a heightened responsibility to ensure appropriate measures are in place to minimize customer confusion.”

While the brochure has proper disclosure, it may be considered by some examiners as a recommendation of a nondeposit investment product in an area where retail deposits are accepted. I think the same argument would hold true if the televisions in the branch are behind or near the teller window or deposit taking area of the branch where FDIC insured signs were housed.

While these guidelines could be interpreted differently, the safest course of action is to ensure these two areas of the financial institution remain separate.

[Author]

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