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The Office of the Comptroller of the Currency (OCC) issued a final rule on October 27 that determines when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party, such as a marketplace lender. This is a significant regulatory development that warrants the close attention of the national banking community and those who do business with national banks and federal savings associations.

The five federal banking agencies (Federal Reserve, CFPB, FDIC, NCUA, and OCC – collectively Agencies) issued a proposed rule on October 20 on the role of supervisory guidance. The proposal codifies and expands upon a 2018 statement from the same agencies about which we previously reported. In November 2018, the Agencies (aside from the NCUA) received a petition for a rulemaking, as permitted under the Administrative Procedure Act, requesting that the Agencies codify the 2018 statement.

The main thrust of the 2018 statement was that supervisory guidance does not have the force and effect of law, and that the Agencies do not take enforcement actions based on supervisory guidance. The current proposal not only reaffirms and clarifies the 2018 statement but, in certain respects, goes further.

The Consumer Financial Protection Bureau (CFPB or Bureau) on October 20 issued a final rule to extend the government-sponsored enterprises patch (GSE Patch), i.e., the “temporary qualified mortgage” exemption within the qualified mortgage/ability-to-repay rule.

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.

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.”

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.

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.

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 US Supreme Court on June 29 ruled in Seila Law v. Consumer Financial Protection Bureau that the Consumer Financial Protection Bureau’s (CFPB’s) structure unconstitutionally insulates the agency from presidential oversight and must be altered.

The Dodd-Frank Act sculpted the now-stricken structure, including protective provisions for the independent regulatory agency’s sole director that were known to be novel in that they allowed the president to oust the unitary director, who is appointed by the president with the advice and consent of the Senate for a five-year term, only “for cause” (more specifically for “inefficiency, neglect of duty or malfeasance”), while the vast majority of presidential appointees serve at the president’s pleasure alone and thus may be terminated for any reason or no reason at all. Prior to the CFPB’s creation, such “for cause” removal provisions typically were associated with independent regulatory agencies governed by multimember boards or commissions, rather than by a single director. Following the decision, the president may remove the agency’s director “at will.”