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.
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.
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.
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.
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.
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:
The Federal Financial Institutions Examination Council (FFIEC) on behalf of its members issued a statement on August 3 setting forth prudent risk management and consumer protection principles for financial institutions as initial coronavirus (COVID-19) related loan accommodation periods end and they consider additional accommodations.
The FFIEC is an interagency body composed of five banking regulators (FRB, FDIC, NCUA, OCC, and CFPB) that is empowered to prescribe uniform principles, standards, and report forms to promote uniformity in the supervision of financial institutions. The principles in the statement follow on the heels of previous statements the FFIEC issued encouraging financial institutions to work prudently with borrowers affected by COVID-19.
In a series of recent interviews (including with the American Bankers Association and a podcast with the ABA Banking Journal), Acting Comptroller of the Currency Brian Brooks discussed the Office of the Comptroller’s (OCC’s) plans to soon roll out another special purpose national bank (SPNB) charter specifically geared toward payments companies. This “payments charter” could be especially appealing for those companies looking for a national licensing platform for their payments business because it would provide federal preemption of state money transmitter licensing and related laws, which would eliminate the need to obtain a license to operate in each state.
The Federal Deposit Insurance Corporation (FDIC) issued a final rule on June 25 that reaffirms the enforceability of the interest rate terms of loans made by state-chartered banks and insured branches of foreign banks (collectively, state banks) following the sale, assignment, or transfer of the loan. The rule also provides that whether interest on a loan is permissible is determined at the time the loan is made, and is not affected by a change in state law, a change in the relevant commercial paper rate, or the sale, assignment, or other transfer of the loan. The final rule follows the FDIC’s proposed rule on this topic, and will take effect 30 days after publication in the Federal Register.
The Office of the Comptroller of the Currency (OCC) issued a similar final rule on May 25 that reaffirms the enforceability of the interest rate terms of national banks’ loans following their sale, assignment, or transfer. The OCC’s rule (on which we previously reported) takes effect 60 days after its June 2 publication in the Federal Register, or August 3.
The Financial Crimes Enforcement Network (FinCEN) published guidance (Guidance) on customer due diligence requirements under the Bank Secrecy Act (BSA) for hemp-related customers on June 29. The Guidance, which recognizes hemp as defined under the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), advises financial institutions on their BSA customer due diligence requirements for hemp customers. This Guidance supplements—but does not replace—the December 3, 2019 interagency statement on providing financial services to customers engaged in hemp-related businesses.
Notably, the Guidance allows financial institutions to confirm a hemp grower’s compliance with applicable legal requirements by obtaining an attestation from the grower that it is validly licensed, or by obtaining a copy of that license. Further due diligence above and beyond these core requirements may be needed, however, depending on the financial institution’s assessment of the level of risk posed by a particular hemp customer. Thus, financial institutions are expected to apply their risk-based customer due diligence policies and procedures to determine whether additional information about a particular hemp customer is required, and to obtain additional information as may be necessary, consistent with the risk profile of the customer.