Weekly RoundUp February 06, 2019

Financial Services Weekly News

Editor's Note

In This Issue. The Board of Governors of the Federal Reserve System (Federal Reserve) released 2019 stress test scenarios and exempted less complex banks with between $100 billion and $250 billion in assets from this year’s stress tests; the Consumer Financial Protection Bureau (CFPB) posted a set of frequently asked questions relating to its TILA-RESPA Integrated Disclosure Rule; the Office of the Comptroller of the Currency (OCC) revised the “Subsidiary and Equity Investments” booklet of the Comptroller’s Licensing Manual; and the Securities and Exchange Commission’s (SEC) Division of Investment Management updated certain forms available on its website. These and other developments are discussed in more detail below.

Editor's Note

Regulatory Developments

Federal Reserve Releases 2019 Stress Test Scenarios and Exempts Less Complex Banks with Between $100 Billion and $250 Billion in Assets From This Year's Stress Tests

On February 5, the Federal Reserve released the scenarios banks and supervisors will use for the 2019 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test exercises. The Federal Reserve also announced that it will be providing relief to less complex firms from stress testing requirements and CCAR by effectively moving the firms to an extended stress test cycle for this year. The relief applies to firms generally with total consolidated assets between $100 billion and $250 billion. As a result, these less complex firms will not be subject to a supervisory stress test during the 2019 cycle and their capital distributions for this year will be largely based on the results from the 2018 supervisory stress test. At a later date, the Federal Reserve will propose for notice and comment a final capital distribution method for firms on an extended stress test cycle in future years.

CFPB Posts TRID Rule FAQs

The CFPB has posted a set of frequently asked questions related to the TILA-RESPA Integrated Disclosure Rule. Topics include model forms as well as corrected closing disclosures and the three-business-day waiting period before consummation of a transaction.

OCC Revises “Subsidiary and Equity Investments” Booklet

On January 31, the OCC released a revised “Subsidiaries and Equity Investments” booklet of the Comptroller’s Licensing Manual, which supersedes the October 2017 version of the booklet. The revised booklet reflects additional guidance describing activities of federal savings associations that may be performed in operating subsidiaries and service corporations, or through pass-through investments. The revisions include new appendixes describing appropriate precedent for such activities, as well as updated footnotes and other references.

FDIC Webinar on Standardized Export of Imaged Loan Documents Initiative

The Federal Deposit Insurance Corporation (FDIC) will host a webinar for financial institutions on February 19, 2019, from 2 p.m. to 3 p.m. Eastern Time. The webinar will provide an update on the standardized export of the imaged loan documents initiative, which was first introduced on April 24, 2018. The initiative was begun by the FDIC, in consultation with the Federal Financial Institutions Examination Council, to help streamline the process for conducting loan review examinations offsite. The webinar will highlight results from its testing of the initiative, lessons learned, and next steps. For more information and registration details, see the FDIC’s January 31, 2019, notice.

SEC’s Division of Investment Management Updates Forms Available on its Website

On February 1, the SEC’s Division of Investment Management released an Information Update announcing that certain forms available on its website have been updated to reflect amendments recently adopted by the SEC, including amendments pertaining to the SEC’s Investment Company Reporting Modernization Initiative and the Investment Company Liquidity Risk Management Programs and related liquidity disclosure initiatives. The updated forms are: Form N-1A, N-2, N-3, N-4, N-5, N-6, N-8B-2, N-14 and N-CSR. The updated forms include bracketed text for certain amended form items and additional information about those amendments’ effective dates and compliance dates.

Enforcement & Litigation

Eye On ERISA: Q&A With Goodwin's James Fleckner (Law360)

Jamie Fleckner, chair of Goodwin’s ERISA litigation practice, sat down with Law360 for a Q&A session to discuss issues affecting litigation under the Employee Retirement Income Security Act (ERISA), his practice, and more. Fleckner, who co-led the Goodwin team that recently secured dismissal of an ERISA class action challenging the use of proprietary funds in 401(k) plans, discusses how this case gives fiduciaries and employers latitude to design their plans, and that there is no cookie-cutter approach to how benefits should be provided. He is also looking toward a future in which courts have decided whether fiduciaries should apply a paternalistic approach to managing 401(k) plans. He says courts’ competing views on this issue create a tension that underlies many ERISA lawsuits and leads to confusion for plan managers. View the Law360 article.

CFPB Announces $3.2 Million Settlement With Online Payday Lender

On January 25, the CFPB announced that it had entered into a consent order with an online lender that extends unsecured payday and installment loans, as well as lines of credit, resolving allegations that the lender had engaged in unfair acts or practices in violation of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531, 5536. View the Enforcement Watch blog post.

CFPB Announces $1 Settlement With Military Pension-Advance Broker

On January 23, the CFPB announced that it had entered into a consent order with a loan broker, resolving allegations the broker’s offering of high-interest credit to veterans on behalf of several unnamed companies had thereby violated the CFPA, 12 U.S.C. §§ 5531, 5536. View the Enforcement Watch blog post.

California Department of Business Oversight Enters Into $900,000 Consent Order With Payday Lender

On January 22, the California Department of Business Oversight (DBO) announced that it had entered into a consent order with a payday lender to resolve allegations that the company violated the California Financing Law, Fin. Code Section 22000 et seq. View the Enforcement Watch blog post.

Goodwin News

Post-Midterm Election Financial Regulatory Update – February 13

Join Goodwin and EY for a timely post-midterm election financial regulatory update. With a newly divided Congress and increasingly aggressive state regulators, the years ahead may see broader regulatory enforcement emanating from Washington, D.C., and across the country.

Our speakers will provide unique insight into this changing regulatory environment, including business and legal perspectives from former federal and state financial regulators, industry professionals, and “DC insiders.” We will engage in a dynamic discussion focusing on current trends in federal and state regulations, including consumer financial services, securities regulatory and litigation risks, and the critical opportunities for financial and other institutions to proactively address the compliance risks of doing business in this new environment. Please find the registration link here.

American Bankers Association Conference for Community Bankers – February 10-12

The ABA Conference for Community Bankers is the premier event developed for — and by — community bank CEOs. Goodwin is a sponsor and will appear on two peer exchanges. Partner and Chairman Emeritus Regina Pisa will facilitate the Board Member session on February 11 and Partner Samantha Kirby will facilitate the Board Management and Strategic Planning session on February 12. Please find the registration link here.

This week’s Roundup contributors: Alex Callen, Jessica Craig and Stephen Shaw.