SBA - 2nd Request to Postpone New LO Compensation Rules


In a previous article, entitled "FRB's Loan Officer Compensation 'Guidance,'" dated January 31, 2011, I wrote about the so-called "small entity compliance guide" issued on January 26, 2011 by the Federal Reserve Board. The "Guide" is inadequate, incomplete, and regurgitates most features of the statutory requirements carefully reasoned in the SBA's letter. Much of the FRB "Guide" is no more than a regurgitation of the "already known" aspects of the Regulation Z amendments affecting loan officer compensation.

That rule is scheduled to go into effect on April 2, 2011.

It is now clear to me that the "Guide" is meant to be a response to the January 13, 2011 letter from the SBA's Office of Advocacy, which expressed concern, among other things, that the "the Federal Reserve has not analyzed properly the full economic impact of the proposal on small entities as required by the Regulatory Flexibility Act (RFA)." That is, the "Guide" is a transparent attempt to satisfy a regulatory requirement, though the dubious result adds little to an overall resolution.

Today, the Advocacy issued yet another letter to the FRB, again asking for a postponement and this time specifically enumerating the expectations of what constitutes satisfaction of compliance with Section 212(a)(4) of SBREFA.

This article provides the following synopsis:

Requirements for a Compliance Guide

Has the FRB met its Obligations?

Facilitating Revisions to the Guide

Consumer Advocacy

Postponement Request

The article provides also provides links to a compendium of relevant documents.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jonathan Foxx, Lenders Compliance Group | Attorney Advertising

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