On October 26, the Consumer Financial Protection Bureau (CFPB) announced that it intends to propose rules in January 2019 that will reconsider the CFPB’s current rule concerning payday, vehicle title, and certain high-cost installment loans (the “small-dollar lending rule”). The January 2019 proposed rules will also address the compliance date for the small-dollar lending rule. Although the CFPB has not made a final decision regarding the scope the proposed rules, it is currently planning to reconsider only provisions of the small-dollar lending rule that concern the consumer’s ability to repay the loan.
On October 25, the Federal Deposit Insurance Corporation (FDIC) issued a proposed rule to rescind Part 350 from the Code of Federal Regulations, removing an annual disclosure requirement that was duplicated by data publicly available on the FDIC’s website. Part 350 requires FDIC-insured state non-member banks and foreign branches, but not state thrifts, to prepare, and make available on request, annual disclosure statements consisting of: (1) required financial data comparable to specified schedules in the Call Report filed for the previous two year-ends; (2) information that the FDIC may require of particular banks, which could include disclosure of enforcement actions; and (3) other information at a bank’s option. The FDIC noted that other federal regulators have removed similar requirements and stated “With advancements in information technology since part 350 was adopted, including widespread public access to the internet (including through public libraries for individuals without their own direct personal access to the internet), information about the financial condition of individual insured depository institutions is now reliably and directly offered to the public through the FDIC’s and the Federal Financial Institutions Examination Council’s (FFIEC) websites.” Comments are due by November 24, 2018.
The third installment in this series of insights on bank charter considerations describes the process for seeking regulatory approval to form or acquire a depository institution. For more information, read the FinTech Flash issued by Goodwin’s FinTech practice.
Enforcement & Litigation
On October 15, in remarks to the Mortgage Bankers Association, Acting Director Mick Mulvaney declared that the CFPB will move away from “regulation by enforcement” by clarifying standards of conduct, to provide the regulated community with a measure of certainty when engaging in business operations. Mulvaney stated that, under his leadership, the CFPB is looking to change tack, that the goal is to “move the needle to the middle” in balancing consumer protection goals with providing certainty to the regulated community, and that the CFPB will “continue to function as [it] did before—we are just taking a different way of looking at it.” Thus, while the CFPB will continue to pursue enforcement actions against entities that break the law, “[i]f you’re doing something we don’t like, but it’s within the law, then we’re going to leave you alone.” View the LenderLaw Watch blog post.
On October 19, the Department of Justice announced that it settled allegations that a Florida-based mortgage lender violated the False Claims Act by falsely certifying that it complied with Federal Housing Administration mortgage insurance requirements for certain loans originated between 2006 and 2011 for $13.2 million. View the Enforcement Watch blog post.
Please join Goodwin’s FinTech and Banking Practice Groups at our San Francisco office for a symposium addressing recent regulatory developments affecting the FinTech industry. This seminar for nonbank 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.
Partner and co-chair of Goodwin’s Banking & Consumer Financial Services practice, Mike Flynn, will be speaking on the “Latest Developments in Mortgage Litigation and Compliance” at the 2018 Annual Consumer Financial Services Conference held by the Conference on Consumer Finance Law on Tuesday, November 6 in Fort Worth, TX. For more information, please click here.
Karen Neuman, partner in Goodwin’s Financial Industry group and member of its Privacy & Cybersecurity practice, and David Kantrowitz, Associate in Goodwin’s Financial Industry and Privacy & Cybersecurity groups, will lead a webinar hosted by the Western Bankers Association on November 14 covering topics in privacy.