On October 17, the CFPB updated its rulemaking agenda for the remainder of 2018. In the near term, the CFPB intends to:
- Continue its work to implement S. 2155, the new regulatory reform law, with plans to issue rulemakings that will provide an exemption from Dodd-Frank’s mortgage escrow requirements for certain creditors with assets of $10 billion or less and develop standards for assessing consumers’ ability to repay Property Assess Clean Energy loans;
- Issue a proposed rule on small dollar lending in January of 2019;
- Propose to update rules relating to the Fair Debt Collection Practices Act in March of 2019; and
- Issue a proposal “to address some or all” of the issues related to various Home Mortgage Disclosure Act (HMDA) projects under consideration, such as revisiting the discretionary data added in the 2015 HMDA rule.
The CFPB also moved its rulemaking on small business lending data collection to its “long-term actions” issues list and announced plans for rulemaking to define abusive acts and practices and to address consumer access to financial records.
On October 2, the U.S. Senate’s Banking Committee held a hearing to review regulators’ implementation of the Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155) since its passage in June. As framed by Banking Committee Chairman Mike Crapo (R-ID), the law “right-sizes regulations for financial institutions, making it easier for consumers to get mortgages and obtain credit while also increasing important consumer protections for veterans, senior citizens, victims of fraud, and those who fall on hard financial times.” View the LenderLaw Watch blog post.
On October 18, the Federal Financial Institutions Examination Council (FFIEC) launched its redesigned Bank Secrecy Act/Anti-Money Laundering (BSA/AML) website. The BSA/AML website provides bank examination procedure information to the banking industry and the general public. The website redesign improves site navigation and search capabilities. Most significantly, the redesigned website now allows users to download sections of the FFIEC BSA/AML Examination Manual.
On October 18, the SEC announced the launch of its Strategic Hub for Innovation and Financial Technology (FinHub), a portal that will support the SEC’s engagement with innovators, developers, entrepreneurs, and the general public on Fintech developments, including blockchain and distributed ledger technology; automated investment advice; digital marketplace financing; and artificial intelligence/machine learning. FinHub will be led by Valerie A. Szczepanik, Senior Advisor for Digital Assets and Innovation and Associate Director in the SEC’s Division of Corporation Finance, and staffed by SEC representatives with Fintech expertise and involvement. FinHub replaces the previously established FinTech@sec.gov contact address, and persons wishing to contact FinHub staff should now use this FinHub form on FinHub’s webpage.
The SEC published a report of an investigation (Report) into whether certain public companies that suffered financial losses as a result of cyber-related fraud violated the federal securities laws by failing to have a system of internal accounting controls that provides reasonable assurances that the company’s assets will be protected from cyber-related fraud. Although the SEC decided not to pursue enforcement action against any of these companies, the SEC published the Report to remind public companies and other market participants that cyber-related threats involving spoofed or manipulated electronic communications are increasing and represent considerable risk, and should be considered when devising and maintaining a system of internal accounting controls that comply with federal securities laws. The Report emphasizes that cyber-related risks and disclosure continue to be a significant SEC priority. For more information, read the client alert issued by Goodwin’s Public Companies and Privacy & Cybersecurity practices.
The second installment in this series of insights on bank charter considerations describes the consequences of operating through a depository institution charter, including capital requirements, supervision and examination by bank regulatory authorities and potential limitations imposed on controlling shareholders and investors. For more information, read the Fintech Flash issued by Goodwin’s Fintech practice.
Enforcement & Litigation
On October 4, the CFPB announced that it had entered into a consent order with an online retailer and its subsidiaries that sell products through revolving-credit accounts and installment-credit accounts, and then sell charged-off accounts to third-party debt collectors. The consent order resolves the CFPB’s allegations that the retailer and its subsidiaries violated the Consumer Financial Protection Act by substantially delaying the transfer of payments it received from consumers on charged-off accounts to the third-party debt buyers who had purchased and were attempting to collect the debts. View the Enforcement Watch blog post.
NYBA’s Financial Services Forum is the hallmark event for NYBA members, offering first-rate banker education in a world-class setting. The forum promises important industry updates and outlooks, a focused workshop for directors and trustees, targeted breakfast workshops, and valuable networking opportunities. The 2018 Financial Services Forum will be no different. The beautiful Ritz-Carlton in Key Biscayne, Miami will be the setting for one of the nation’s most vibrant banking communities, including bank CEO’s, directors, trustees and senior officers from financial institutions across New York State and beyond, as well as many industry service providers, for need-to-know information, education and networking. Goodwin is a sponsor of this event. Partner William Stern will be speaking on the “S.2155: Regulatory Changes and Strategic Considerations for New York Banks” panel on Tuesday, October 30. For more information, please visit the event website.
Lynne Barr, of counsel in Goodwin’s Financial Industry, Banking and Consumer Financial Services & Fintech practices, will speak on a webinar presented by Western Bankers Association covering Regulatory Developments in Financial Payments on October 30.seminar for non-bank financial services providers in the payments and lending space will address recent legal developments in this rapidly evolving area, including: pros and cons of operating through a bank charter; the OCC’s Fintech Charter and status of related litigation; Fintech bank partnerships; SEC enforcement in the cryptocurrency and blockchain industries, and anti-money laundering (AML) risks for Fintech businesses. To register for this event, please click here.
Join NRS at our Fall 2018 Compliance Conference where industry experts will address how investment adviser and broker-dealer firms can successfully navigate the disruptive currents of regulatory change and adapt procedures to compliance programs. David Solander, counsel in Goodwin's Financial Industry, Investment Management, Private Investment Funds, and Digital Currency & Blockchain Technology practices, will speak on the “Compliance Considerations related to BlockChain and Cryptocurrencies” and “Current Issues for Private Fund Advisers” panels. For more information, please visit the event website.