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  • 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

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  • Trump to Select Mulvaney as Interim CFPB Director

    Federal Issues

    According to media sources, President Trump is expected to select Mick Mulvaney, the current Director of the White House Office of Management and Budget (OMB), to serve as the interim Director of the CFPB upon Richard Cordray’s resignation at the end of this month. Mulvaney would keep his current position and serve as both the Director of OMB and Acting Director of the CFPB throughout the interim term.

    Federal Issues CFPB OMB Trump

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  • SEC Releases FY 2017 Annual Report on Enforcement Priorities and Results

    Federal Issues

    On November 15, the SEC Division of Enforcement released a report highlighting the division’s priorities for the coming year and summarizing the enforcement actions from FY 2017. Division Co-Directors Stephanie Avakian and Steven Peikin identify and discuss the five core principles that guide their decision making: (i) “Focus on the Main Street Investor”; (ii) “Focus on Individual Accountability”; (iii) “Keep Pace With Technological Change”; (iv) “Impose Sanctions That Most Effectively Further Enforcement Goals”; and (v) “Constantly Assess the Allocation of [the Division’s] Resources.”

    The report highlights the two new initiatives announced in 2017 as key priorities: the Cyber Unit and Retail Strategy Task Force (previously covered by InfoBytes). The report also gives an overview of the 754 FY 2017 enforcement actions, including a summary of the various remedies the Division sought.

    Federal Issues SEC Privacy/Cyber Risk & Data Security Enforcement Financial Crimes

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  • 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

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  • Acting Comptroller Argues for Removing Separation Between Banking and Commerce

    Federal Issues

    On November 8, Acting Comptroller of the Currency Keith A. Noreika addressed The Clearing House Annual Conference in New York, New York and called for an end to the separation between banking and commerce. Noreika noted that the topic may be considered “taboo” to banking regulators but nonetheless offered “an alternative to the popular narrative.” In his speech, Noreika acknowledged that the premise of the separation is to avoid the risks associated with entangling federally insured deposits with unreliable commercial enterprises. However, he argued, “the recent financial crisis actually demonstrated that there is nothing inherently safer about separating banking and commerce or traditional banking and investment banking,” and further noted that allowing for commingling could generate efficiencies and improve banking economic performance.

    Federal Issues OCC Banking

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  • FDIC Chairman Speaks About Financial Inclusion

    Federal Issues

    On November 7, the Chairman of the FDIC, Martin J Gruenberg, addressed the Local Initiatives Support Corporation (LISC) in New York, New York regarding financial inclusion and expanding economic opportunity for the underbanked. In his speech, Gruenberg discussed the agency’s most recent report, FDIC National Survey of Unbanked and Underbanked Households, which found that nearly 27 percent of American households are unbanked or underbanked.  Gruenberg also highlighted the initiatives the agency has undertaken to address the results of this report, including (i) creating access to “Safe Accounts,” which are electronic transaction accounts with low costs; (ii) conducting research on mobile financial services and how technology can lead to more sustainable banking relationships; and (iii) continuing financial education initiatives with a particular focus on youth savings.

    Federal Issues FDIC Consumer Finance Mobile Banking Consumer Education

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  • Fannie and Freddie Introduce Extended Modifications for Disaster Relief

    Federal Issues

    On November 2, at the direction of the Federal Housing and Finance Authority (FHFA), Fannie Mae introduced in Lender Letter LL-2017-09 (Letter) a temporary forbearance mortgage loan modification (Extend Mod) for servicers with mortgage loans affected by the recent disasters. The Letter covers the requirements for an Extend Mod, including outlining loan eligibility criteria. Among other requirements, the loan must (i) be located in a FEMA-Declared Disaster Area; (ii) be less than 31 days delinquent when the disaster occurred and complete the forbearance plan while between 31 days delinquent and 360 days delinquent; (iii) not be delinquent after being previously modified with an Extend Mod from the same disaster; (iv) not be insured or guaranteed by a federal government agency; and (v) not be subject to a recourse or indemnification arrangement, another workout option, or a current repayment plan that is performing. The Letter also provides information on disbursing hazard loss draft proceeds, reimbursement for property inspections, and payment records for borrower-initiated termination of mortgage insurance.

    Under the same FHFA direction and in coordination with Fannie Mae, Freddie Mac issued Guide Bulletin 2017-25 announcing the servicing requirements for the Freddie Mac Extend Modification for Disaster Relief. Both Fannie and Freddie note the deadline for implementing the Extend Mod is February 1, 2018.

    Find more InfoBytes disaster relief coverage here.

    Federal Issues Disaster Relief Mortgages Mortgage Modification Mortgage Servicing FHFA Fannie Mae Freddie Mac

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  • House Energy and Commerce Subcommittee Examines Consumer Data Security

    Federal Issues

    On November 1, the House Subcommittee on Digital Commerce and Consumer Protection (Subcommittee) held a hearing entitled “Securing Consumers’ Credit Data in the Age of Digital Commerce” to examine: (i) the legal and regulatory framework for consumer reporting agencies, including the Gramm-Leach-Bliley Act and Fair Credit Reporting Act; (ii) current cybersecurity standards, best practices, threats, and vulnerabilities; and (iii) how data breaches relate to incidences of identity theft and fraud. In introductory remarks, Subcommittee Chairman, Bob Latta (R-Ohio), acknowledged the need to understand ways to protect against data breaches and secure consumer data. This sentiment was echoed by Full Committee Chairman, Greg Walden (R-Or.), who noted in his opening statement that recent data breaches “demonstrate the challenges of protecting consumer information in the digital age.” The full list of witnesses, testimony, and committee background memo is available here.

    Federal Issues Privacy/Cyber Risk & Data Security House Energy and Commerce Committee Data Breach

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  • Third Treasury Report Calls on HUD to Reconsider Application of Disparate Impact Rule to the Insurance Industry

    Federal Issues

    On October 26, the U.S. Treasury Department published a report outlining a number of recommendations for ways to manage systemic risk primarily within the asset management and insurance industry.  A section of the report, however, also discusses HUD’s potential application of the disparate impact rule to the insurance industry—specifically related to homeowner’s insurance. The report, “A Financial System That Creates Economic Opportunities—Asset Management and Insurance,” is the third in a series of four the Treasury plans to issue in response to President Trump’s Executive Order 13772 (EO), which mandated a review of financial regulations for inconsistencies with promoted “Core Principles.” (See Buckley Sandler Special Alert on the EO here and InfoBytes coverage on the first two reports here.)

    HUD is authorized to adjudicate housing discrimination claims and issue rules relating to the Fair Housing Act. According to the report, Treasury recommends that HUD reconsider the use of the disparate impact theory to the insurance industry. The report notes a number of problems and challenges that would arise from applying disparate impact to the insurance industry. In particular, the report identifies potential challenges because (i) “state insurance regulations ordinarily prohibit the consideration of protected characteristics in the evaluation and pooling of risk” and at least one state expressly prohibits the collection of this data; (ii) the rule could impose unnecessary burdens on insurers and lead to actions that are not actuarially sound in an effort to avoid underwriting practices that may result in disparate outcomes; and (iii) it may be inconsistent with the McCarran-Ferguson Act and other existing state laws.

    The report also recommends, among other things, that Congress clarify the “business of insurance” exception that generally excludes these services from the CFPB’s jurisdiction. The report recommends clarification to this exception to eliminate uncertainty about the CFPB’s jurisdiction and the potential overlap between the Bureau and state insurance regulators. A fact sheet accompanying the report further highlights Treasury’s recommendations to evaluate systemic risk, streamline regulations, rationalize international engagement, and promote economic growth.

    Federal Issues Department of Treasury FHA Asset Management HUD Disparate Impact CFPB Systemic Risk Insurance

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  • OCC Presents First National Bank Charter Since the Financial Crisis

    Agency Rule-Making & Guidance

    On October 27, Acting Comptroller of Currency, Keith A. Noreika, issued the first full-service national bank charter since the financial crisis to a banking institution in Florida. The institution is also the first de novo national bank and de novo approved for federal deposit insurance in Florida since the financial crisis. While presenting the charter, Noreika commented on the rarity of de novo banks and encouraged better efficiency in the process for their establishment in order to, “create more economic opportunity for consumers, businesses, and communities across the nation.”

    As previously covered by InfoBytes, the House Financial Services Committee held a hearing in March related to the “de novo drought” and to examine the impact the Dodd-Frank Act has had on the creation of new financial institutions.

    Agency Rule-Making & Guidance Lending OCC Bank Regulatory Federal Issues

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