- prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate marijuana-related business;
- provides that the proceeds from a transaction involving activities of a cannabis-related legitimate business or service provider shall not be considered proceeds from an unlawful activity solely because the transaction involves proceeds from a cannabis-related legitimate business or service provider;
- provides that a depository institution, an entity performing a financial service for or in association with a depository institution, an insurer that provides a financial service to a cannabis-related legitimate business or service provider, a federal home loan bank, or a federal reserve bank, and the officers, directors, and employees of such entities, may not be held liable pursuant to any federal law or regulation solely for providing, in states or territories in which cannabis is legal in some form, such a financial service or for further investing any income derived from such a financial service; and
- provides that the collateral of a depository institution, federal home loan bank, or federal reserve bank for a loan or another financial service provided to an owner, employee, or operator of a cannabis-related legitimate business or service provider, or to an owner or operator of real estate or equipment that is leased or sold to a cannabis-related legitimate business or service provider, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any federal law for providing such loan or other financial service.
The bill also requires the Federal Financial Institutions Examination Council (FFIEC) to develop uniform guidance and examination procedures for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers within 180 days of the bill’s enactment.
While the Senate Banking Committee recently indicated that it would consider the bill, the bill’s prospects for passage in the full Senate are unclear at this time.
The SEC has adopted a new rule that will allow all issuers to engage in test-the-waters communications regarding a contemplated registered securities offering with qualified institutional buyers (QIBs) and institutional accredited investors (IAIs) before or after the filing of a registration statement. A similar exemption has been available since 2012 for emerging growth companies (EGCs) only. New Rule 163B will be effective 60 days after publication in the Federal Register and is expected to provide all issuers with greater flexibility in determining whether to proceed with a registered public offering and how to structure the offering terms. To learn more, read the client alert issued by Goodwin’s Public Companies practice.
On September 24, the DOL released the final version of a new rule (Final Rule) that raises the minimum annual salary level for most employees covered by the “white collar exemptions” from the Fair Labor Standards Act’s overtime pay requirement. The increase is from $23,660 to $35,568. Employers have approximately three months to comply with the Final Rule. For more information, read the client alert issued by Goodwin’s Employment practice.
On September 27, the Board of Governors of the Federal Reserve System, the FDIC, and the OCC (collectively, the Agencies) announced that the Agencies had adopted a final rule that increases the threshold for residential real estate transactions requiring an appraisal from $250,000 to $400,000 (the Rule). The Rule defines a residential real estate transaction as a real estate-related financial transaction that is secured by a single one-to-four family residential property. For such exempted transactions, regulated institutions will be required to obtain an evaluation of the collateral that is consistent with safe and sound banking practices. The Agencies noted that evaluations, required since the 1990s, are generally less burdensome than appraisals. The Rule will be effective one day following its publication in the Federal Register.
On September 30, the FDIC proposed rescinding four policy statements that it had identified as “out-of-date and no longer relevant.” The effected policy statements, which are to be rescinded pursuant to the FDIC’s comprehensive review of its Statements of Policy and the Economic Growth and Regulatory Paperwork Reduction Act, are:
- Statement of Policy on Applicability of the Glass-Steagall Act to Securities Activities of Subsidiaries of Insured Nonmember Banks;
- Statement of Policy on Treatment of Collateralized Letters of Credit After Appointment of the FDIC as Conservator or Receiver;
- Statement of Policy on Treatment of Collateralized Put Obligations After Appointment of the FDIC as Conservator or Receiver; and
- Statement of Policy on Contracting With Firms That Have Unresolved Audit Issues With FDIC.
Comments on the proposal to rescind these statements are due by October 30, 2019.
On September 30, the OCC updated the "Bank Supervision Process," "Community Bank Supervision," "Federal Branches and Agencies Supervision," and "Large Bank Supervision" booklets of the Comptroller’s Handbook. The updated booklets reflect:
- The interim final rule for the expanded supervisory cycle;
- An updated OCC report of examination policy based on the revised FFIEC report of examination policy;
- Information about the OCC’s authority to access banks’ books and records;
- Revision of the OCC’s enforcement action policies;
- The revised "Capital and Dividends" booklet of the Comptroller’s Handbook;
- Updates to the OCC’s credit underwriting assessment; and
Changes to references to include new issuances and to reflect rescissions of OCC issuances since June 28, 2018.
Enforcement & Litigation
As we previously reported, Selia Law LLC (Selia) filed a petition for writ of certiorari with the U.S. Supreme Court on June 28, 2019, appealing the Ninth Circuit’s ruling upholding the constitutionality of the CFPB’s single directorship. On September 17, the CFPB filed its responding brief, in which it agrees with Selia’s position, and urges the Supreme Court to grant certiorari. Read the LenderLaw Watch blog post.
NEACH’s Innovating Payments 2019 will bring together community financial institution executives and fintech players to discuss fintech disruption to traditional banking. Goodwin partner Kim Holzel will speak at the conference as a member of the Executive Insight Panel. For more information, please click here.