All Things FinReg

Editor

Charles M. Horn

CFPB Issues Guidance Regarding Applications for Early Termination of Consent Orders

By Eamonn K. Moran , Robin Nunn , David I. Monteiro , and Nicholas M. Gess

// October 06, 2020

The Consumer Financial Protection Bureau (CFPB or Bureau) issued a policy statement on October 5 establishing a process to allow for early termination of consent orders. The policy statement is applicable on October 8, 2020.

The Dodd-Frank Act provides that the Bureau may enter into administrative consent orders where the Bureau has identified violations of federal consumer financial law. Consent orders, which generally have a five-year term, describe the Bureau’s findings and conclusions concerning the identified violations by an entity and generally impose injunctive relief, monetary relief, penalties, and reporting, recordkeeping, and cooperation requirements.

Tags: BCFP, Bureau of Consumer Financial Protection, CFPB, Consumer Financial Protection Bureau, Consumer Financial Services, Dodd-Frank Act, Enforcement, Regulation, Supervision and Examination

‘Let’s Be Civil’: White House Due Process Memo May Improve Enforcement in Financial Regulatory Matters

By Michael A. Cumming , Nicholas M. Gess , Matthew S. Miner , Robin Nunn , Michael M. Philipp , and Eamonn K. Moran

// October 01, 2020

An August 31 memorandum issued by the Office of Information and Regulatory Affairs (OIRA), an arm of the Office of Management and Budget (OMB) within the Executive Branch, could dramatically change the way agencies handle civil and administrative enforcement proceedings. The memorandum directs covered agencies to provide greater due process to individuals and companies under investigation and reemphasizes the principle that the burden of proof of a violation rests solely with the government. The memorandum was issued to implement the directives contained in Section 6 of Executive Order 13924, Executive Order on Regulatory Relief to Support Economic Recovery (issued May 19, 2020). In relevant part, the executive order directed agency heads to revise agency procedures and practices in light of “the principles of fairness in administrative enforcement and adjudication.”

Tags: CFPB, Consumer Financial Services, FinTech, FTC, Innovation, OIRA, OMB, Regulation, SEC, States, Supervision and Examination, White House

FinCEN Expands AML, Customer Identification Programs, and Beneficial Ownership Requirements to Banks Lacking a Federal Functional Regulator

By Charles M. Horn , Ignacio A. Sandoval , and Martin Hirschprung

// September 24, 2020

The Financial Crimes Enforcement Network (FinCEN) issued a final rule that requires minimum standards for anti-money laundering (AML) programs for banks lacking a federal functional regulator (the Federal Reserve Board, OCC, FDIC, OTS, NCAU, and SEC), i.e., banks and similar financial institutions that are subject only to state regulation and supervision, and certain international banking entities (collectively, “covered banking entities”).

The final rule also extends customer identification program (CIP) and beneficial ownership requirements (also known as the Customer Due Diligence or CDD Rule) to covered banking entities. Such banking entities may include private banks, international banking entities, non-federally-insured credit unions, state banks, savings associations, and trust companies.

Tags: Anti-Money Laundering, Banking, BSA, FDIC, Federal Reserve, FinCEN, OCC, Regulation, Regulatory, Supervision and Examination

OCC Issues Clarification on Stablecoin Custody Services

By Charles M. Horn , Donald S. Waack , Eamonn K. Moran , and Sarah V. Riddell

// September 23, 2020

On the heels of an interpretive letter allowing national banks and federal savings associations (FSAs) to provide cryptocurrency custody services to customers (see our LawFlash), the US Office of the Comptroller of the Currency (OCC) issued another interpretive letter on September 21 clarifying that national banks and FSAs are authorized to hold stablecoin reserves. The interpretive letter only addresses stablecoin that is:

stored in a hosted wallet, defined by the OCC to mean “an account-based software program for storing cryptographic keys controlled by an identifiable third party” that receives, stores, and transmits cryptocurrency transactions on behalf of accountholders, which generally do not have access to such keys themselves;
backed on a 1:1 basis by a single fiat currency; and
verified by the bank at least daily to confirm that reserve account balances are always equal to or greater than the number of the issuer’s outstanding stablecoins.

CFPB Outlines Small Business Lending Data Collection Rule Proposals

By Eamonn K. Moran , David I. Monteiro , Robin Nunn , and Nicholas M. Gess

// September 16, 2020

Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (ECOA) to require financial institutions to compile, maintain, and submit to the Consumer Financial Protection Bureau (CFPB or Bureau) certain data on applications for credit for women-owned, minority-owned, and small businesses. The Bureau took the next step to implement this mandate on September 15, 2020 by releasing its Outline of Proposals under Consideration and Alternatives Considered (Outline) regarding small business lending data collection and reporting. Coinciding with the issuance of the Outline, the Bureau also released a high-level summary.

Tags: BCFP, Bureau of Consumer Financial Protection, CFPB, Consumer Financial Protection Bureau, Consumer Financial Services, Dodd-Frank Act, ECOA, HMDA, Lending, Privacy, Regulation, Small Business

California Means Business (Regulation) with New ‘Mini-CFPB’ Law

By Michelle Park Chiu , Robin Nunn , Nicholas M. Gess , David I. Monteiro , Eamonn K. Moran , Michael A. Cumming , and Martin Hirschprung

// September 14, 2020

California’s governor is expected to sign into law soon a bill creating a state consumer financial protection agency, the Department of Financial Protection and Innovation (DFPI), which some have called California’s “mini-CFPB.” We reported previously on the importance of this law in January and March.

Tags: Attorneys General, California, Consumer Financial Protection Bureau, Consumer Financial Services, Enforcement, FinTech, Innovation, Litigation, Regulation, States, Supervision and Examination, UDAAP, UDAP

COVID-19 Update: CDC Announces a Nationwide Ban on Residential Evictions

By Eamonn K. Moran and Martin Hirschprung

// September 03, 2020

The Centers for Disease Control and Prevention (CDC) on September 1 issued an order under Section 361 of the Public Health Service Act to temporarily—at least through the end of 2020—halt residential rental evictions for Americans struggling to pay rent due to the coronavirus (COVID-19) pandemic. The CDC states that the ban is necessary to mitigate the spread of COVID-19, a historic threat to public health, by preventing homelessness and facilitating stay-at-home/social distancing directives.

Tags: Banking, Consumer Financial Services, COVID-19, FHFA, HUD, Regulation, Regulatory, Treasury

Second Update: FHFA Announces Latest Extension of Moratorium on Foreclosures and Evictions

By Eamonn K. Moran and Martin Hirschprung

// August 31, 2020

The Federal Housing Finance Agency (FHFA) announced on August 27 that Fannie Mae and Freddie Mac (the GSEs) will extend their moratorium on foreclosures and evictions until at least December 31, 2020. The foreclosure moratorium applies to GSE-backed, single-family mortgages only. The evictions moratorium applies to properties that have been acquired by a GSE through foreclosure or deed-in-lieu of foreclosure transactions (real estate owned, or REO, properties). Currently, FHFA projects additional expenses of $1.1 to $1.7 billion will be borne by the GSEs due to the existing foreclosure moratorium and its extensions related to the coronavirus (COVID-19) pandemic.

Tags: Banking, Consumer Financial Services, FHFA, Mortgage Servicing, Regulation

Update: US Secretary of Education Implements Presidential Memorandum for Student Loan Payment Relief

By Eamonn K. Moran and Martin Hirschprung

// August 25, 2020

As we discussed in a prior LawFlash, US President Donald Trump signed four executive actions that purportedly extend various aid measures for individuals impacted by the coronavirus (COVID-19) pandemic on August 8. One of these actions related to student loan payment relief.

Tags: DOE, Lending, Regulation, Student Loans

FDIC Eases Bank Restrictions on Job Applicants with Prior Criminal Convictions

By Charles M. Horn , Donald S. Waack , and Martin Hirschprung

// August 10, 2020

The Federal Deposit Insurance Corporation (FDIC) announced on July 24 the approval of a final rule that will ease restrictions on banks’ hiring process for individuals with certain criminal offenses on their records. The final rule codifies and revises the current and longstanding FDIC Statement of Policy on this topic and will be effective 30 days after its publication in the Federal Register.

Section 19 of the Federal Deposit Insurance Act prohibits, without the FDIC’s prior consent, any person from being affiliated with, or participating in the affairs of, an insured depository institution who has been convicted of a crime of dishonesty or breach of trust or money laundering, or who has entered a pretrial diversion or similar program in connection with the prosecution of such an offense. The FDIC’s final rule makes some useful and burden-reducing changes to current FDIC policies and practices:

Tags: Banking, Consumer Financial Services, FDIC, Regulation

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