In a rare judicial rebuke of the Consumer Financial Protection Bureau’s (CFPB’s) oft-criticized efforts to seek penalties despite no damages for allegedly “unfair, deceptive, or abusive acts or practices” (UDAAP) conduct, the US District Court for the District of North Dakota in CFPB v. Intercept Corporation has dismissed without prejudice a complaint (Complaint) filed by the CFPB against Intercept (a third-party payment processor for payday and title lenders and debt collectors) and two of its officers for failure to state a plausible claim under Fed. R. Civ. P. 12(b)(6).
LATEST REGULATORY DEVELOPMENTS IMPACTING
THE FINANCIAL SERVICES INDUSTRY
THE FINANCIAL SERVICES INDUSTRY
A recent US Court of Appeals decision out of the Seventh Circuit, Builders Bank v. Federal Deposit Insurance Corporation, is attracting attention because it appears to say that a bank that does not like its supervisory—or CAMELS, which stands for Capital, Assets, Management, Earnings, Liquidity, and Sensitivity to market risk—rating may sue the federal banking agency to challenge the rating.
Notwithstanding objections from both parties of the US Congress and state banking regulators, the Office of the Comptroller of the Currency (OCC) is moving forward with its proposal to accept applications from financial technology companies for a special purpose national bank charter (FinTech Charter) and has issued draft guidelines (FinTech Charter Guide) for its evaluation of FinTech Charter applications.
Sending what we believe is a signal that the Department of Justice (DOJ) will switch sides in the debate over whether the Consumer Financial Protection Bureau (CFPB) is constitutionally structured, the DOJ has filed a motion (Motion) seeking leave to file an amicus brief in PHH Corp., et al. v. CFPB.
In its decision, the Second Circuit remanded the case to the US District Court for the Southern District of New York for the resolution of remaining state law questions, including whether Delaware law (which has no usury limitations) governed the account agreement.
New York DFS Finalizes ‘First-in-the-Nation’ Cybersecurity Regulations for Financial Services Industry
On February 16, 2017, the New York Department of Financial Services (DFS) released its final self-described ““first-in-the-nation”first-in-the-nation” cybersecurity regulations (the Rules). The Rules become effective March 1, 2017, but will be phased in on a staggered basis beginning 180 days after the effective date.
As we previously reported, a three-judge panel of the US Court of Appeals for the DC Circuit held in October 2016 that the Consumer Financial Protection Bureau (CFPB) was unconstitutionally structured in that too much authority is concentrated in its unitary director.
US President Donald Trump issued an executive order (EO) on February 3 that directs the secretary of the US Department of the Treasury and the heads of the major federal financial regulatory agencies to review “existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other government policies” for their consistency with a series of newly created “Core Principles” for the oversight and regulation of the financial sector, and to report back with their findings within 120 days.
Pushing the limits of its already broad and undefined consumer protection authority, the Consumer Financial Protection Bureau (CFPB) issued a Consent Order stating that MasterCard and UniRush, a prepaid card issuer, have engaged in “unfair acts or practices” by failing to conduct adequate testing and preparation for the conversion of UniRush’s RushCard prepaid card onto the Mastercard Payment Transaction Services (MPTS) platform.
In a post-inauguration interview with The Wall Street Journal, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray forcefully asserted his and his agency’s independence from the incoming administration of President Donald Trump.