Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations
Section Content

Upcoming Events

Filter

Subscribe to our InfoBytes Blog weekly newsletter for news affecting the financial services industry.

  • Treasury Announces FSOC Executive Session on July 28

    Federal Issues

    On July 21, the Treasury Department announced that on Friday, July 28, Secretary Steven T. Mnuchin will preside over an executive session of the Financial Stability Oversight Council (FSOC). According to a Treasury press release, the preliminary agenda includes:

    • a discussion about Volcker Rule recommendations presented in the Treasury’s June 2017 report, “A Financial System That Creates Economic Opportunities: Banks and Credit Unions”;
    • an update on annual reevaluation requirements for designating nonbank financial companies; and
    • a discussion regarding pending litigation brought against FSOC.

    Consistent with FSOC’s transparency policy, the meeting may be made available via live webcast and can be viewed after it occurs. Meeting minutes for the most recent FSOC meetings are generally approved at the next meeting and posted online soon afterwards.

    Meeting minutes for past meetings are available here.

    Readouts for past meetings are available here.

    Federal Issues Agency Rule-Making & Guidance FSOC Treasury Department Volcker Rule Nonbank Supervision

    Share page with AddThis
  • FTC to Host Small Business Roundtables Focusing on Cybersecurity

    Privacy, Cyber Risk & Data Security

    On July 20, the FTC announced it will host a series of public roundtables to discuss pressing challenges facing small businesses when protecting the security of their computers and networks. The feedback will be used to assist the FTC and its partners in creating additional cybersecurity education resources. The Engage, Connect, and Protect Initiative: Small Business and Data Security Roundtables are part of Acting FTC Chairman Maureen K. Ohlhausen’s initiative to help small businesses protect against cyberattacks. Earlier this year, Ohlhausen launched a website designed to provide guidance for small businesses on scams and cyberattacks, many of which lack the resources larger companies have to spend on cybersecurity. (See previous InfoBytes post here.)

    The first roundtable will be on July 25 in Portland, Oregon, in partnership with the National Cyber Security Alliance (NCSA), the SBA, and other organizations. On September 6, a second roundtable discussion will convene in Cleveland in collaboration with the SBA and the Council of Smaller Enterprises. The third roundtable in the series, sponsored by the NCSA, will occur later in September in Des Moines, Iowa.

    Privacy/Cyber Risk & Data Security Agency Rule-Making & Guidance FTC Small Business

    Share page with AddThis
  • Buckley Sandler Insights: CFPB Updates Rulemaking Agenda

    Consumer Finance

    On July 20, the CFPB released its Spring 2017 rulemaking agenda. The agenda was last updated in Fall 2016. The summer release date, and the fact that certain deadlines listed in the updated agenda have already passed, indicates that the agenda’s release may have been delayed after the CFPB drafted it. The following aspects of the updated agenda are particularly noteworthy:

    • Regulation Reviews: The Bureau plans to begin “the first in a series of reviews of existing regulations that we inherited from other agencies through the transfer of authorities under the Dodd-Frank Act,” noting that “other federal financial services regulators have engaged in these types of reviews over time, and believe that such an initiative would be a natural complement to our work to facilitate implementation of new regulations.” The Bureau has formed “an internal task force to coordinate and deepen the agency’s focus on concerns about regulatory burdens and projects to identify and reduce unwarranted regulatory burdens….” The agenda lists “pre-rule activities” as continuing through September 2017. Separately, the Bureau notes its ongoing assessments of the effectiveness of the Mortgage Servicing Rules, the Ability-to-Repay/Qualified Mortgage Rule, and the Remittance Transfer Rule pursuant to the Dodd-Frank Act’s five-year lookback provision.
    • Small Dollar Lending: The Bureau reports that it received more than one million comments on its June 2016 proposed rule to impose ability-to-repay requirements for payday, vehicle title, and similar installment loans. The Bureau states that it “continue[s] to believe that the concerns articulated in the [proposed rule] are substantial” but does not provide an expected release date for a final rule.
    • “Larger Participants” in Installment Lending: The agenda lists September 2017 as the expected release date for “a proposed rule that would define non-bank ‘larger participants’ in the market for personal loans, including consumer installment loans and vehicle title loans.” Designation as a larger participant brings a non-bank entity within the CFPB’s supervisory jurisdiction. The agenda indicates that a companion rule requiring payday, vehicle title lenders, and other non-bank entities to register with the Bureau is also underway, as noted below.
    • Debt Collection: In July 2016, the Bureau released an outline of proposals under consideration for debt collection and convened a panel under the Small Business Regulatory Enforcement Fairness Act in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. The Bureau notes that, “[b]uilding on feedback received through [that] panel, we have decided to issue a proposed rule later in 2017 concerning debt collectors’ communications practices and consumer disclosures.” The agenda states that a proposed rule is expected in September 2017. The Bureau also states that, in a departure from the July 2016 outline of proposals, the Bureau “intend[s] to follow up separately at a later time about concerns regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.”
    • Overdrafts: The Bureau states that the current opt-in regime “produces substantially different opt-in rates across different depository institutions” and that its “supervisory and enforcement work indicates that some institutions are aggressively steering consumers to opt in.” The Bureau reports that it is “engaged in consumer testing of revised opt-in forms and considering whether other regulatory changes may be warranted to enhance consumer decision making.” The agenda lists “pre-rule activities” as continuing through June 2017.
    • Small Business Lending: The agenda lists “pre-rule activities” on the implementation of the small business data reporting provisions of the Dodd-Frank Act as continuing through June 2017. Specifically, the agenda states that, at this juncture, the CFPB “is focusing on outreach and research to develop its understanding of the players, products, and practices in the small business lending market and of the potential ways to implement section 1071.”
    • HMDA & ECOA Amendments: The agenda lists October 2017 as the expected release date for the April 2017 proposed ECOA amendments to clarify requirements for collecting information on ethnicity, race, and sex, but does not list an expected release date for finalization of the April 2017 proposed technical corrections to the 2015 HMDA rule, or the July 2017 proposed amendments to the 2015 HMDA rule’s requirements for reporting home equity lines of credit. 
    • TRID/Know Before You Owe Amendments: The agenda lists March 2018 as the expected release date for finalization of the July 2017 proposed rule addressing the “black hole” issue, which is discussed in our special alert.
    • Mortgage Servicing Amendments: The Bureau states that it expects to issue a proposal in September 2017 “to make one or more substantive changes to the rule in response to . . . concerns” raised by the industry. 
    • Arbitration: Interestingly, the agenda states that the Bureau’s final rule on mandatory arbitration clauses, which was released this month to significant controversy, was not expected until August.
    • Non-Bank Registration: The Bureau states that it is “considering whether rules to require registration of [installment lenders] or other non-depository lenders would facilitate supervision, as has been suggested to us by both consumer advocates and industry groups.”
    • Prepaid Cards: The agenda does not provide an expected release date for finalization of the June 2017 proposed amendments addressing error resolution and limitations on liability, application of the rule’s credit-related provisions to digital wallets, and other issues. 
    • Credit Card Agreement Submission: The Bureau is “considering rules to modernize our database of credit card agreements to reduce burden on issuers that submit credit card agreements to us and make the database more useful for consumers and the general public.” The agenda lists “pre-rule activities” as continuing through October 2017.

    Consumer Finance Agency Rule-Making & Guidance CFPB Regulator Enforcement Lending Installment Loans Debt Collection Overdraft Small Business Lending HMDA ECOA TRID Mortgages Arbitration Prepaid Cards Credit Cards

    Share page with AddThis
  • Senate and House Committees File Separate Resolutions Disapproving of CFPB Arbitration Rule

    Federal Issues

    On July 20, the Senate Committee on Banking, Housing and Urban Affairs and the House Financial Services Committee each announced Congressional Review Act Joint Resolutions of Disapproval against the CFPB’s Arbitration Agreements final rule issued July 10. In a press release issued by the Senate Committee, 24 Republican senators—including Chairman Mike Crapo (R-Idaho)—expressed concern that the anti-arbitration measure will discourage cost-effective dispute resolution and push consumers into class action lawsuits causing more harm than good. House Republicans outlined similar concerns in a press release issued the same day. H.J. Res. 111, co-sponsored by all 34 Republican members of the House Financial Services Committee, will seek to nullify the rule, which they believe “punish[es] consumers with decreased access to financial products, increased costs for such products, or both.”

    The Congressional Review Act allows Congress to overturn agency rules by a simple majority if moved within 60 days from the rule’s publication.

    Federal Issues Agency Rule-Making & Guidance Arbitration CFPB Senate Banking Committee CRA House Financial Services Committee Congress Class Action

    Share page with AddThis
  • OCC Acting Comptroller Reiterates Request for CFPB Arbitration Rule Data

    Agency Rule-Making & Guidance

    On July 17, OCC Acting Comptroller Keith Noreika delivered a letter to the CFPB reiterating his request to review the supporting data used to develop the Bureau’s final arbitration rule prohibiting the use of mandatory pre-dispute arbitration clauses in certain contracts for consumer financial products and services. While the CFPB issued assurances that the final rule would not impact the safety or soundness of the financial banking system, Noreika argued that because the Bureau is not a “safety and soundness prudential regulator,” the OCC, as the prudential regulator for the federal banking system, should be allowed to review the underlying data to address potential concerns under Section 1023 in Title X of the Dodd-Frank Act. In response, CFPB Director Richard Cordray stated his team is in the process of gathering the requested data but questioned the “plausible basis” for Noreika’s claim that the final arbitration rule could pose a safety and soundness issue.

    Agency Rule-Making & Guidance Arbitration CFPB OCC Prudential Regulators Dodd-Frank

    Share page with AddThis
  • OCC Acting Comptroller Supports Fintech National Bank Charter

    FinTech

    On July 19, Acting Comptroller of the Currency, Keith A. Noreika, spoke before the Exchequer Club about the proposed concept of granting special purpose charters for financial technology (fintech) companies. In prepared remarks, Acting Comptroller Noreika said the OCC has the authority to grant national bank charters to nondepository fintech companies in “appropriate circumstances.” However, he reiterated that having the authority does not imply a determination has been made as to whether the OCC will accept or grant applications from nondepository fintech companies that rely solely on regulation 12 CFR 5.20(e)(1), which outlines eligibility requirements for receiving special purpose national bank charters. To date, no such applications have been received.

    The OCC continues to demonstrate its support for innovative developments and partnerships between banking and technology companies. As previously discussed in a Special Alert, the OCC issued a draft supplement in March to provide guidance for evaluating charter applications from fintech companies. “Providing a path for these companies to become national banks is pro-growth and in some ways can reduce regulatory burden for those companies,” Noreika remarked. However, the fintech special purpose national bank charter has recently met legal challenges from the New York Department of Financial Services (NYDFS) and the Conference of State Bank Supervisors (see Special Alerts here and here). Norieka stated that the OCC is developing its response to the NYDFS lawsuit “and plans to defend [its] authority vigorously.” He cautioned against defining banking too narrowly, and argued that fintech companies should be allowed to apply for national bank charters if they meet the criteria and are involved in the “business of banking.”

    Fintech OCC Licensing Agency Rule-Making & Guidance

    Share page with AddThis
  • Federal Banking Agencies Issue Proposed Rulemaking to Amend Appraisal Requirement Threshold for Commercial Real Estate Transactions

    Agency Rule-Making & Guidance

    On July 19, the Federal Reserve Board, the FDIC, and the OCC issued a joint notice of proposed rulemaking to raise the threshold for commercial real estate transactions requiring an appraisal from $250,000 to $400,000 in an effort to reduce costs and streamline transactions. The proposal was issued, in part, in response to concerns raised by financial industry representatives during the Economic Growth and Regulatory Paperwork Reduction Act review process that adjustments have not been made to the current thresholds despite increases in property values and a scarcity of appraisers in rural areas. FDIC Chairman Martin J. Gruenberg issued a statement announcing that the proposal will significantly reduce the number of transactions requiring an appraisal. Evaluations, rather than appraisals, would now be required for commercial real estate transactions at or below the proposed threshold.

    Comments on the proposed rule will be accepted for 60 days from date of publication in the Federal Register.

    Agency Rule-Making & Guidance Federal Reserve FDIC OCC Commercial Lending Appraisal

    Share page with AddThis
  • FDIC Adopts Revised Supervisory Appeals Guidelines

    Agency Rule-Making & Guidance

    On July 18, the FDIC adopted revised guidelines for appeals of certain material supervisory determinations to expand the circumstances under which banks may appeal a material supervisory determination. The revisions incorporate changes suggested by commentators during a request for comments in 2016. The revised guidelines also provide consistency with the appeals processes of other federal banking agencies and will, among other things, (i) permit the appeal of the level of compliance with an existing formal enforcement action; (ii) provide that formal enforcement-related actions or decisions do not affect a pending appeal; (iii) allow for additional opportunities for appeal rights available under the guidelines with respect to material supervisory determinations in certain circumstances; and (iv) draw up other limited technical and conforming amendments.

    The guidelines are effective immediately.

    Agency Rule-Making & Guidance FDIC Bank Supervision

    Share page with AddThis
  • FTC Staff Supports FCC’s Proposal to Reverse Broadband Enforcement Authority

    Privacy, Cyber Risk & Data Security

    On July 17, FTC staff submitted its comments to the FCC in response to the FCC’s Notice of Proposed Rulemaking on Restoring Internet Freedom (NPRM), in favor of returning broadband enforcement authority to FTC. (See previous InfoBytes coverage here.) The NPRM would reverse a 2015 FCC decision, which changed the classification of broadband internet access service from an “information service to a common carrier service,” and resulted in a loss to the FTC’s authority. Currently, the FTC cannot regulate common carrier activities. FTC staff argued that with the exception of broadband providers, FTC jurisdiction covers virtually all other internet entities. Having one agency with enforcement authority over all internet entities would allow for “consistent standards and consistent application of those standards.” The result, the staff encouraged, would be the creation of a “level playing field for all companies operating in the Internet ecosystem.”

    Acting FTC Chairman Maureen K. Ohlhausen endorsed the staff comments and offered support for the NPRM to reverse the 2015 Title II classification of broadband internet access service as a way to “restore the FTC’s ability to protect broadband consumers under its general consumer protection and competition authority.” However, FTC Commissioner Terrell McSweeny dissented, stating that “[u]nless Congress repeals the common carrier exemption in the FTC Act, the FTC could continue to face challenges to its authority over common carriers.” Consequently, “[r]epealing these rules would be harmful for consumers and the marketplace . . . . Rather than roll[ing] back protections, we should augment them with renewed FCC vigor and a change to anachronistic barriers to FTC enforcement.”

    Privacy/Cyber Risk & Data Security FTC FCC Federal Issues Agency Rule-Making & Guidance Enforcement

    Share page with AddThis
  • FTC Chairman Announces Reforms for Bureau of Consumer Protection, Aims to Improve Transparency

    Agency Rule-Making & Guidance

    On July 17, FTC Acting Chairman Maureen K. Ohlhausen announced process reforms designed to reduce burden and improve transparency in investigations conducted by its Bureau of Consumer Protection (BCP). The initiative, which is part of the FTC’s reform efforts announced in April of this year, is designed to “protect consumers and promote competition without unduly burdening legitimate business activity.” To streamline information requests for CIDs in consumer protection cases, the BCP intends to:

    • Provide plain language descriptions of the CID process and develop business education materials to help small businesses understand how to comply;
    • Add detailed descriptions of the scope and purpose of investigations to assist companies in better understanding the information the FTC seeks;
    • Limit relevant time periods to minimize undue burden on companies when possible;
    • Significantly reduce the length and complexity of CID instructions for providing electronically stored data; and
    • Increase response times (for example, 21 days to 30 days for targets, and 14 days to 21 days for third parties) to improve the quality and timeliness of compliance by recipients.

    BCP will continue its current practice of communicating with investigation targets at least every six months once the CID has been complied with to provide investigation status updates.

    Agency Rule-Making & Guidance FTC Enforcement Investigations

    Share page with AddThis

Pages