Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

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

  • Senate Banking Committee Approves Financial Regulatory Relief Bill

    Federal Issues

    On December 5, the Senate Banking Committee approved bill S.2155, Economic Growth, Regulatory Relief, and Consumer Protection Act, which would alter certain financial regulations under the Dodd-Frank Act of 2010. While not as sweeping as previous legislative relief proposals (see previous InfoBytes coverage on House Financial CHOICE Act of 2017), the bill was introduced and passed the Committee with bipartisan support. The bill’s highlights include, among other things:

    • Consumer Access to Credit. The bill deems mortgage loans held in portfolios by insured institutions with less than $10 billion in assets to be “qualified mortgages” under TILA, and removes the three-day waiting period for TILA-RESPA Integrated Disclosures if the second credit offer is a lower rate. The bill also instructs the CFPB to provide “clearer, authoritative guidance” on certain issues such as the applicability of TRID to mortgage assumptions and construction-to-permanent loans. Additionally, the bill eases appraisal requirements on certain mortgage loans and exempts small depository institutions with low mortgage originations from certain HMDA disclosure requirements.
    • Regulatory Relief for Certain Institutions. The bill exempts community banks from Section 13 of the Bank Holding Company Act if they have, “[i] less than $10 billion in total consolidated assets, and [ii] total trading assets and trading liabilities that are not more than five percent of total consolidated assets” – effectively allowing for exempt banks to engage in the trading of, or holding ownership interests in, hedge funds or private equity funds. Additionally, the bill raises the threshold of the Federal Reserve’s Small Bank Holding Company Policy Statement and the qualification for certain banks to have an 18-month examination cycle from $1 billion to $3 billion.
    • Protections for Consumers. Included in an adopted “manager’s amendment,” the bill requires credit bureaus to provide consumers unlimited free security freezes and unfreezes. The bill also limits certain medical debt information that can be included on veterans’ credit reports.
    • Changes for Bank Holding Companies. The bill raises the threshold for applying enhanced prudential standards from $50 billion to $250 billion.

    The bill now moves to the Senate, which is not expected to take up the package before the end of this year.

    Federal Issues Senate Banking Committee Dodd-Frank Federal Legislation TILA RESPA TRID Federal Reserve OCC FDIC Mortgages HMDA Credit Reporting Agency

    Share page with AddThis
  • House Financial Services Committee Passes Bill That Would Pre-empt State Usury Laws

    Federal Issues

    On November 15, the House Financial Services Committee (Committee) announced the passage of H.R. 3299, “Protecting Consumers Access to Credit Act of 2017,” which would amend the “Revised Statues and the Federal Deposit Insurance Act” to explain that bank loans that were valid as to their maximum rate of interest in accordance with federal law at the time the loan was made shall remain valid with respect to that rate, regardless of whether the bank subsequently sells or assigns the loan to a third party. This would have the effect of preempting contrary state usury laws and effectively overturn the 2015 decision in Madden v. Midland Funding, LLC.

    The bill passed Committee 42-17.

    InfoBytes previously covered the bill’s introduction and also, a similar measure introduced in the Senate.

    Federal Issues House Financial Services Committee Usury Lending Federal Legislation

    Share page with AddThis
  • House Passes Flood Insurance Bill Reforming and Reauthorizing National Flood Insurance Program

    Federal Issues

    On November 14, the House voted 237-189 to pass legislation reforming and reauthorizing the National Flood Insurance Program (NFIP) for five years before it expires next month. As previously covered in InfoBytes, President Trump signed a three-month extension to the NFIP at the beginning of September in order to provide Congress additional time to establish a long-term financial solution for the program. The 21st Century Flood Reform Act (H.R. 2874) is designed to better facilitate compliance and clarify guidance for lenders and borrowers, and will, among other things, (i) change annual limits on premium increases for insurance obtained through the NFIP; (ii) require FEMA to consider the differences in flood risk between coastal and inland flood hazards when establishing premium rates; (iii) require FEMA to clearly communicate to policyholders the full flood risk to, and flood claims history of their property, and the effect of filing any additional claims; (iv) allow private insurers to continue selling policies on behalf of the NFIP, while also being allowed to sell their own private flood coverage; (v) revise federal flood mapping requirements, establish premium rates based on applicable flood insurance rate maps, and revise and clarify aspects of the appeals process; (vi) amend the Biggert-Waters Flood Insurance Reform Act of 2012 to clarify the time periods within which communities may consult with FEMA regarding mapping changes and submit data for consideration by the agency; (vii) revise the Flood Mitigation Assistance program to provide assistance for additional multiple loss properties; and (viii) amend the Flood Disaster Protection Act of 1973 to increase penalties against lenders and GSEs for violations of the mandatory purchase requirement from $2,000 to a maximum of $5,000 per violation.

    H.R. 2874 now heads to the Senate.

    Federal Issues U.S. House Flood Insurance National Flood Insurance Program Federal Legislation Disaster Relief Trump

    Share page with AddThis
  • President Trump Signs Law to Prevent Elder Abuse and Exploitation

    Federal Issues

    On October 18, President Trump signed the Elder Abuse Prevention and Prosecution Act, which establishes new requirements aimed at improving the DOJ’s response to elder abuse crimes. Among other things, S 178 expands data collection and information sharing provisions to prevent financial crimes committed against seniors. The law also broadens the federal criminal code to include “email marketing” fraud, such as marketing measures designed to induce the commitment to a loan. Other notable provisions include enhanced penalties for fraud and increased training for federal investigators and prosecutors. Further, the law requires the FTC’s Bureau of Consumer Protection and the DOJ to appoint elder justice coordinators to oversee enforcement, consumer education efforts, and policy activities related to elder justice issues.

    Federal Issues Federal Legislation Consumer Finance FTC DOJ Elder Financial Exploitation Trump

    Share page with AddThis
  • President Trump Signs Government Funding Package, Temporarily Extends National Flood Insurance Program

    Federal Issues

    On September 8, President Trump signed a government-funding package (H.R. 601) that temporarily extends the National Flood Insurance Program (NFIP), which was set to expire September 30, through December 8. The extension provides Congress additional time to establish a long-term financial solution. (See previous InfoBytes coverage on the NFIP here.) The Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017, also temporarily lifts the nation’s debt ceiling, funding the federal government through December 8, and delivers the first installment of emergency aid for victims of Hurricane Harvey.

    Federal Issues Federal Legislation National Flood Insurance Program Trump Disaster Relief Flood Insurance

    Share page with AddThis
  • Legislation Introduced to Make Bitcoin Purchases up to $600 Tax-Exempt

    FinTech

    On September 7, Representatives Jared Polis (D-Colo.) and David Schweikert (R-Ariz.)—co-chairs of the Congressional Blockchain Caucus—introduced the Cryptocurrency Tax Fairness Act of 2017 to allow for tax and IRS reporting requirements exemptions on cryptocurrency transactions of up to $600. The bill is in response to an IRS notice issued in 2014 that held that virtual currency, such as bitcoin and other forms of cryptocurrency, must be treated as property for U.S. federal tax purposes. According to a press release issued by Rep. Polis’ office, this “outdated guidance classifies even the smallest of cryptocurrency transactions the same as buying or selling stock, which dis-incentivizes consumers from using virtual currencies to pay for goods and services.” The bill proposes amending the Internal Revenue Code to exclude up to $600 of “gain from the sale or exchange of virtual currency for other than cash or cash equivalents” from gross income and ordering the Treasury Department to create “regulations providing for information returns on virtual currency transactions for which gain or loss is recognized.”

    Fintech Federal Issues Federal Legislation Bitcoin Cryptocurrency

    Share page with AddThis
  • Senators Introduce Legislation to Override Second Circuit’s Decision in Madden v. Midland

    Federal Issues

    On July 27, a bipartisan group of senators introduced draft legislation (S. 1642), which would require bank loans, sold or transferred to another party, to maintain the same interest rate. As previously covered in InfoBytes, similar legislation (H.R. 3299) was introduced in the House earlier in July to reestablish a “legal precedent under federal banking laws that preempts a loan’s interest as valid when made.” Both measures come as a reaction to the 2015 Second Circuit decision in Madden v. Midland Funding, LLC, in which an appellate panel held that a nonbank entity taking assignment of debts originated by a national bank is not entitled to protection under the National Bank Act from state-law usury claims. The draft legislation seeks to amend the Revised Statutes, the Home Owners’ Loan Act, the Federal Credit Union Act, and the Federal Deposit Insurance Act.

    Federal Issues Federal Legislation Usury Lending Second Circuit Litigation National Bank Act

    Share page with AddThis
  • Legislation Introduced to Codify “Valid When Made” Doctrine

    Federal Issues

    On July 19, Representative Patrick McHenry (R-N.C.), the Vice Chairman of the House Financial Services Committee, and Representative Gregory Meeks (D-N.Y.) introduced legislation designed to make it unlawful to change the rate of interest on certain loans after they have been sold or transferred to another party. As set forth in a July 19 press release issued by Rep. McHenry’s office, the Protecting Consumers’ Access to Credit Act of 2017 (H.R. 3299) would reaffirm the “legal precedent under federal banking laws that preempts a loan’s interest as valid when made.”

    Notably,  a Second Circuit panel in 2015 in Madden v. Midland Funding, LLC overturned a district court’s holding that the National Bank Act (NBA) preempted state law usury claims against purchasers of debt from national banks. (See Special Alert on Second Circuit decision here.)The appellate court held that state usury laws are not preempted after a national bank has transferred the loan to another party. The Supreme Court denied a petition for certiorari last year. According to Rep. McHenry, “[t]his reading of the National Bank Act was unprecedented and has created uncertainty for fintech companies, financial institutions, and the credit markets.” H.R. 3299, however, will attempt to “restore[] consistency” to lending laws following the holding and “increase[] stability in our capital markets which have been upended by the Second Circuit’s unprecedented interpretation of our banking laws.”

    Federal Issues Federal Legislation Fintech Lending Second Circuit Appellate Usury National Bank Act

    Share page with AddThis
  • Legislation Reintroduced to Base SIFI Determination on Risk Rather Than Asset Size

    Federal Issues

    On July 19, Representative Blaine Luetkemeyer (R-Mo.) reintroduced legislation designed to overhaul the process used to manage systemic risk by basing the regulation of financial institutions on risk rather than asset size alone. As set forth in a press release issued by Rep. Luetkemeyer’s office, the Systemic Risk Designation Improvement Act of 2017 would replace the $50 billion threshold for designating a bank holding company as a Systemically Important Financial Institution (SIFI) with a series of standards for evaluating risk. The legislation would require the Federal Reserve to evaluate an “institution’s size, interconnectedness, substitutability, global cross-jurisdictional activity, and complexity” before designating it as a SIFI. The legislation was previously introduced in the House, but discussion was delayed to provide Rep. Luetkemeyer with time to propose a method for funding the proposed changes, which are estimated to cost more than $115 million. (See previous InfoBytes summary here.)

    “This legislation supports economic growth throughout the country because it will free commercial banks to make loans while allowing financial regulators the ability to apply enhanced standards on banks based on actual risk posed to the financial system–rather than on arbitrary asset size alone," Luetkemeyer pronounced.

    Federal Issues Federal Legislation Risk Management Regulator Enforcement SIFIs Bank Holding Companies

    Share page with AddThis
  • House Appropriations Committee Approves Fiscal Year 2018 Funding Bills Affecting Housing and Urban Development, and Cybersecurity

    Federal Issues

    On July 17, the House Appropriations Committee (Committee) approved the fiscal year 2018 transportation, housing and urban development funding bill by a vote of 31-20. Of the total $56.5 billion in funding provided by the bill, $38.3 billion is allocated to the Department of Housing and Urban Development (HUD) for community planning and development, which is $487 million below fiscal year 2017 but $6.9 billion above President Trump’s request. According to Committee Chairman Rodney Frelinghuysen, the bill “includes responsible funding to ensure communities across the nation have access to necessary community development funds, and [will] provide housing to those who need it the most – including the poor, elderly, and disabled.”

    • A summary of the bill is available here.
    • A copy of the legislative text of the bill is available here.
    • A copy of the bill report is available here.

    On July 18, the Committee approved the fiscal year 2018 homeland security bill by a vote of 30-22. The bill allocates $703 million to cybersecurity programs, which is $18 million less than President Trump’s request but $33 million above fiscal 2017 levels.

    • A summary of the bill is available here.
    • A copy of the legislative text of the bill is available here.
    • A copy of the bill report is available here.

    Federal Issues Federal Legislation Financial CHOICE Act HUD Budget House Appropriations Committee Privacy/Cyber Risk & Data Security

    Share page with AddThis

Pages