Editor's Note
The following newsletter provides a roundup summarizing enforcement actions, guidance, rulemakings, and other public statements taken by a federal and/or state financial services regulatory agency, specifically focusing on: (1) the source of the development (regulator, legislative body, etc.), (2) the subject matter (consumer lending, money transmission, capital markets, etc.), and (3) the general issue covered.

Regulatory Developments

  • Federal Reserve Board. Monetary Policy & Safety and Soundness. FRB Gov. Bowman spoke at an industry conference on monetary policy, bank regulation and supervision, and prospective rulemaking on BASEL III, GSIB banks, the Community Reinvestment Act, and potential revision to Regulation II.
  • Federal Deposit Insurance Corporation. Safety and Soundness & Nonbanks. FDIC Chair Gruenberg provided remarks on the potential financial stability risks of non-bank financial institutions including: non-bank designations, open-end mutual funds and money market funds, leveraged investment vehicles and bank interconnections, non-bank lending, and leveraged lending.
  • Federal Deposit Insurance Corporation. Cybersecurity. FDIC updated its Information Technology Risk Examination procedures to improve the Audit module's usability, specify compliance review steps relative to the Computer Security Incident Notification Rule (Part 304 Subpart C), provide more specificity regarding examiner review of service provider reports of examination, and update links to references.
  • Office of the Comptroller of the Currency. Regulatory Examinations & Supervision. OCC released version 2.0 of the "Lease Financing" booklet of the Comptroller's Handbook. Additionally, the agency issued its bank supervision operating plan for FY2024, which includes coverage of distributed ledger technology activities and climate-related financial risks.
  • Consumer Financial Protection Bureau. Artificial Intelligence (AI) & Equal Credit Opportunity Act (ECOA). CFPB published guidance about certain legal requirements that lenders must adhere to when using artificial intelligence and other complex models, and describes how lenders must use specific and accurate reasons when taking adverse actions against consumers.
  • Consumer Financial Protection Bureau. Debt Collection. CFPB announced a rulemaking process to remove medical bills from Americans' credit reports. Additionally, Dir. Chopra provided remarks on the action.
  • National Credit Union Administration. Fintech. NCUA approved a final rule that clarifies the agency's current regulations and provides flexibility for federally insured credit unions to take advantage of advanced technologies and opportunities offered by the financial technology sector. The rule is effective 30 days after publication in the Federal Register.
  • Financial Crimes Enforcement Network. Beneficial Ownership. FinCEN issued a notice of proposed rulemaking to extend the deadline from 30 to 90 days for certain reporting companies to file their initial beneficial ownership information (BOI) reports for companies created or registered in 2024 to file their initial reports. The deadline for comments is October 30, 2023.
  • Financial Crimes Enforcement Network. Beneficial Ownership. FinCEN published a Small Entity Compliance Guide to assist the small business community in complying with the beneficial ownership information reporting rule, effective January 1, 2024. Separately, the agency released a notice with request for comment on the application that the agency intends to require individuals to use to obtain an agency identifier. The deadline for comments is October 30, 2023.
  • Treasury Department. Fintech & Payments. Treasury Assistant Sec. for Financial Institutions spoke at a fintech policy forum on competition in payments, regulation, emerging issues in payment instruments, and financial inclusion strategy and outreach.
  • New York Department of Financial Services. Cryptocurrency. NY DFS issued the following guidance updates to the agency's oversight of virtual currencies: 1) Proposed Updates to Guidance Regarding Listing of Virtual Currencies and 2) General Framework for Greenlisted Coins.

Enforcement and Litigation

  • Financial Crimes Enforcement Network, Federal Deposit Insurance Corporation & New York Department of Financial Services. BSA/AML. FinCEN, the FDIC and NY DFS announced separate, concurrent settlements (FinCEN, NY DFS) with an international bank subsidiary to resolve alleged internal compliance deficiencies in violation of the Bank Secrecy Act, including $30 million in combined civil monetary penalties.
  • Consumer Financial Protection Bureau & Federal Trade Commission. Fair Credit Reporting Act (FCRA). CFPB and FTC filed an amicus brief in a case before the U.S. Court of Appeals for the Second Circuit urging reversal of a district court decision that the agencies say overlooked the FCRA's requirement to delete information disputed by a consumer that could not be verified by a furnisher of that information.
  • Department of Justice. Redlining. DOJ reached a $9 million settlement with a community bank to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in Rhode Island. Additionally, Assistant AG Clarke provided remarks on the agreement.
  • New York Attorney General. Merchant Cash Advance (MCA) & Debt Collection. NY AG announced that the state's Supreme Court ordered several MCA companies to cancel the debt owed by thousands of small businesses nationwide and repay all interest and overcharges collected, finding that the MCAs were a form of short-term, high-interest funding for small businesses were in fact illegal, high-interest loans with astronomical and illegal rates.

Research and Analysis

  • Treasury Department. Climate-Related Risk. Treasury published the Principles for Net-Zero Financing & Investment, which provides emerging best practices for private sector financial institutions that have made net-zero commitments and promote consistency and credibility in approaches to implementing them. Separately, the agency issued a report (see fact sheet) entitled "The Impact of Climate Change on American Household Finances."
  • Office of the Comptroller of the Currency & Consumer Financial Protection Bureau. Mortgage Lenders. OCC reported on the performance of first-lien mortgages in the federal banking system during 2023-Q2. Separately, the CFPB issued its annual report on residential mortgage lending activity and trends in 2022. Additionally, Dir. Chopra provided a statement on the report, noting that the agency will devote more attention to ensure borrowers can navigate foreclosure alternatives, including through previously announced consideration of amendments to the Regulation X mortgage loss mitigation rules.

Michael Buckalew is a regulatory analyst with Davis Wright Tremaine LLP.