Regulatory Developments
CFPB Launches New Initiative Focused on Rural Communities
On March 10, the CFPB published a blog post announcing a new initiative focusing on financial issues facing rural America, including:
- Rural banking deserts, in which consumers face a declining number of banks, higher fees and interest rates from non-bank alternatives, loss of local, on-the-ground knowledge of how rural communities operate due to bank consolidation, and racial disparities in access to credit and banking services;
- Discriminatory and predatory agricultural credit, including a long history of credit providers discriminating against Black farmers, resulting in Black-owned land loss and a decline of Black farmers, and farmers being steered by dominant agriculture firms to take out large loans; and
- Manufactured housing, where consumers face dramatically increased rents and tacked-on fees from private equity firms that buy the lot and force eviction while taking possession of the manufactured home as abandoned property without paying the owner.
The CFPB encourages relevant parties to share their experiences about the challenges facing rural areas and to submit a complaint, as appropriate.
“We are concerned about these threats to rural household financial resiliency and committed to using our tools and authorities to ensure that rural communities, and the people who live in them, have opportunities to build wealth and thrive.”
— CFPB Official Shawn Sebastian
CFPB Updates UDAAP Examination Procedures to Cover Unfair Discrimination
On March 16, the CFPB announced that it is expanding its anti-discrimination efforts to combat discriminatory practices in all consumer finance markets, including credit, servicing, collections, consumer reporting, payments, remittances and deposits, clarifying that discrimination, whether intentional or not, can be “unfair” and trigger liability under the Consumer Financial Protection Act, even in cases where the conduct may also be covered by the Equal Credit Opportunity Act. Accordingly, the CFPB published updated examination procedures for unfair, deceptive and abusive acts and practices to examine financial institutions’ decision-making processes for assessing discriminatory risk and outcomes, including in advertising, pricing and other areas.
SEC Proposes Expanded and Accelerated Cyber Disclosure by Public Companies
On March 9, as a significant step in its ongoing initiatives on the disclosure, management and oversight of cybersecurity risks and incidents, the SEC proposed new rules that would significantly increase cyber-related disclosures by public operating companies.
Read the client alert to learn more about the proposed rules.
SEC Trading and Markets Staff Issue Statement on Market and Counterparty Risks
On March 14, the SEC’s Staff of the Division of Trading and Markets (Staff) issued a statement urging broker-dealers and other market participants to remain vigilant to market and counterparty risks that may surface during periods of heightened volatility and global uncertainties. The Staff recommends that broker-dealers:
1. Collect margin from counterparties to the fullest extent possible in accordance with any applicable regulatory and contractual requirements.
2. Consider concentrated positions of prime brokerage counterparties pose particular concerns. Staff urges broker-dealers to seek sufficient information to determine counterparties’ aggregate positions in any markets that may experience liquidity concerns and work with the counterparties to mitigate risk.
3. Stress test positions with the proper severity in light of current events and potential market movements, and act to manage the risk of the positions, particularly those that are concentrated, appropriately.
4. Monitor risk management limits, calibrated to the financial resources of the broker-dealer, closely intraday and escalate any breaches promptly to senior management.
The statement acknowledges that it is not a rule, regulation or statement of the SEC and has no legal force or effect.
White House Issues Crypto Executive Order: Appears to Acknowledge Crypto and Blockchain Are Critical and Here to Stay; Studies and Reports to Follow
On March 9, President Biden issued the Executive Order Ensuring Responsible Development of Digital Assets setting forth six principal policy objectives in furtherance of U.S. initiatives in the crypto and digital asset space: (1) consumer and investor protection; (2) protection of U.S. and global financial stability and mitigations of systemic risk; (3) reduction of illicit finance and national security risks; (4) reinforcement of U.S. leadership in the global financial system and technological and economic competitiveness; (5) promotion of access to safe and affordable financial services; and (6) support for responsible development and use of digital assets.
Read the client alert to learn more.
FDIC Rescinds 45-Day Extension for Annual Reporting
On March 15, the FDIC rescinded FIL-30-2020, Statement on Part 363 Annual Reports in Response to Coronavirus, which provided for a 45-day extension of time for filing Part 363 Annual Reports and other reports and notices.
The rescission is effective for fiscal years beginning after December 31, 2021, so the deadline for filing annual reports reverts to either 90 or 120 days, depending on the status as a public filer, after the end of the insured depository institutions’ (IDI) fiscal year. To the extent that an IDI cannot timely file all or any portion of its annual report, a written Notice of Late Filing must be submitted to the FDIC and the appropriate federal banking and state bank supervisor by the 90 or 120 day filing deadline, including IDIs unable to submit in a timely manner due to the effects of the COVID-19 pandemic.
OCC Addresses Authority for Exemptions to Suspicious Activity Reports
On March 16, the OCC issued a final rule amending the OCC’s SAR regulations.
The final rule addresses the OCC’s authority to issue exemptions based on a request from a national bank or federal savings association, including federal branches and agencies of foreign banks. Among other things, the rule states that for any SAR regulation exemption request, the OCC considers specific criteria, including consistency with the purpose of the Bank Secrecy and safe and sound banking. The final rule will take effect on May 1, 2022.
If an exemption request from SAR regulations would also require exemption from FinCEN-established SAR regulations, that request for an exemption needs to be made to both the OCC and FinCEN.
Check Out Goodwin’s Latest Industry Insights
FinReg + Policy Watch Blog
Stay on top of developments affecting the financial services community.
LenderLaw Watch Blog
Stay on top of news and legal issues in the consumer finance industry.
Consumer Finance Enforcement Watch Blog
Stay on top of enforcement actions, trends and issues.
Digital Currency + Blockchain Perspectives Blog
Stay on top of digital currency industry news, regulatory developments and issues.
Editors
Samantha M. Kirby
William McCurdy
Contributors
Josh Burlingham