For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.com 33 By contrast, California was involved in only ten enforcement actions, but recovered $347.5 million, indicating that it pursues a small number of cases with larger payouts. The subject matter of state enforcement actions has generally aligned with national trends. The top two targets of such enforcement trends have related to debt collection/settlement and mortgages. Following behind are pay day lending, auto lending, personal loans and student lending. However, Massachusetts has been an outlier, focusing primarily on mortgage origination and servicing actions. This drive could be the result of Massachusetts’ historically large banking sector. LOOKING AHEAD TO 2018 The direction the CFPB will take in 2018 remains uncertain following the departure of former Director Cordray and the Trump Administration’s subsequent appointment of Acting Director Mulvaney. One thing appears clear though: at least until midterm elections are held, CFPB rules and regulations will likely be met with resistance from both the Administration and Congress. The future of such regulations—some years in the making—may depend on the identity of the next director of the CFPB, and the results of the 2018 midterm elections. In light of this, we expect the upward trend in state enforcement actions that has grown over the past several years to continue. After Director Mulvaney was named the acting head of the CFPB, 17 state attorneys general wrote to President Trump and stated their intent to fill the void should federal agencies fail to zealously enforce consumer protection laws. Also in December, Democratic leaders in Congress introduced a bill—the Accountability for Wall Street Executives Act of 2017—which, if passed, would further arm state actors by permitting state attorneys general to issue subpoenas and investigate and examine national banks. Thus, financial institutions should be mindful of the historical targets of state enforcement actions and gaps in federal enforcement that states may fill. FINANCIAL TECHNOLOGY (FINTECH) As we reported in last year’s year-in review, the OCC announced in December 2016 that it was considering granting special purpose national bank (SPNB) charters to FinTech companies as a way to uniformly regulate this emerging segment of the financial services industry. The OCC’s 2016 white paper explored and sought input on the proposed SPNB charter process, as well as the supervisory and regulatory expectations of FinTech companies that may be granted special- purpose national bank status. Although the rule has yet to be finalized, the proposed SPNB charter application process has already been subject to challenge, as the New York Department of Financial Services (NYDFS) and the Conference of State Bank Supervisors (CSBS) each sued the OCC regarding the prospective regulatory development. The NYDFS and CSBS argued that the OCC does not have the authority to regulate FinTech entities, and that this regulation will weaken existing consumer protections. The NYDFS case was dismissed without prejudice on December 13, 2017 based on the court’s finding that the agency lacked standing. The court ruled that because the OCC has not issued a final decision on whether to regulate FinTech companies by awarding them SPNB charters, there was no Article III injury. As of today, a ruling on the motion to dismiss in the CSBS case is pending. LOOKING AHEAD TO 2018 The OCC’s new Comptroller, Joseph Otting, assumed office on November 27, 2017. The Comptroller has not yet taken a public position on the charter issue. However, Mr. Otting, a former banker, commented at a December 20, 2017 press conference that FinTech firms are generally serving a segment of the market that larger banks were forced out of due to burdensome regulation. He further noted that FinTech firms serve a role in a fast-evolving financial marketplace, but that more research must be done on the issue before any final decisions are made. Thus, although the expansion of regulation in this area in the future is likely, the OCC’s role in that regulation remains uncertain as the regulatory approach the OCC may support under its new leadership remains unclear.