Federal Bank Regulatory Agencies Intend to Rescind 2023 CRA Final Rule

Welcome to Goodwin's Financial Services News Roundup. Our newsletter highlights important legal, regulatory, and business developments related to financial services and banking.

In this issue

Federal Bank Regulatory Agencies Intend to Rescind 2023 CRA Final Rule
FDIC Rescinds Notification Requirement to Engage in Permitted Crypto-Related Activities
CFPB Offers Regulatory Relief for Small Loan Providers
CFPB Seeks to Vacate Settlement with Townstone Financial
CFPB Announces Availability of 2024 HMDA Data

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0Federal Bank Regulatory Agencies Intend to Rescind 2023 CRA Final Rule

On March 28, the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency (the Agencies) announced their intent to rescind the Community Reinvestment Act (CRA) final rule issued in October 2023 and to reinstate the framework that existed prior to the October 2023 final rule.

0FDIC Rescinds Notification Requirement to Engage in Permitted Crypto-Related Activities

On March 28, the FDIC rescinded its April 7, 2022 Financial Institution Letter (FIL-16-2022), which required FDIC-supervised institutions to notify the FDIC before engaging in crypto-related activities, such as acting as a custodian for digital assets, maintaining stablecoin reserves, issuing digital assets, acting as a market maker or exchange or redemption agent, participating in blockchain and distributed ledger-based settlement or payment systems, finder activities, and digital asset lending-related activities. Now, FDIC-supervised institutions may engage in activities involving crypto-assets and digital assets without notifying or seeking approval from the FDIC, as long as the institutions adequately manage associated risks, as required by other federal banking laws and regulations, such as market and liquidity risk, operational and cybersecurity risks, consumer protection requirements, and anti-money laundering requirements. The FDIC also advised that it intends to work with the other federal banking agencies to replace and update previously issued interagency guidance documents related to crypto-assets.

0CFPB Offers Regulatory Relief for Small Loan Providers

On March 28, the Consumer Financial Protection Bureau (CFPB) announced that it will not prioritize enforcement or supervision actions related to penalties or fines associated with the Payment Withdrawal and Payment Disclosure provisions of the Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule (the Payday Lending Rule) once they become operative on March 30, 2025. Instead, the CFPB plans to focus its enforcement and supervision resources on "pressing threats" to consumers, with particular focus on servicemen and veterans. The CFPB also advised that it may narrow the scope of the Payday Lending Rule through future rulemaking.

0CFPB Seeks to Vacate Settlement with Townstone Financial

On March 26, in its first substantive press release in almost two months, the CFPB announced that its Acting Director, Russ Vought, is seeking to vacate the CFPB's settlement with Townstone Financial (Townstone) and to refund the six-figure penalty that Townstone paid. Offering a potential roadmap for challenging future CFPB enforcement actions, the announcement alleges that (i) the CFPB's investigation was not prompted by any actual or perceived harm, (ii) disparity automatically equaled discrimination, (iii) Townsend was targeted because of the contents of its radio show, (iv) there was no evidence of any potential customers reporting Townstone to the CFPB, and (v) the process was the punishment.

0CFPB Announces Availability of 2024 HMDA Data

On March 31, the CFPB announced the availability of loan-level Home Mortgage Disclosure Act (HMDA) data for 2024 filed by approximately 4,898 financial institutions. The data is available on the HMDA Modified Loan Application Register on the Federal Financial Institutions Examination Council's HMDA Platform.

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