Banking and Consumer Regulatory Digest

Regulatory Developments

• Federal Reserve Board. Extended comment period. On April 24, 2024, FRB and the Office of the Comptroller of the Currency said they would continue to accept comments on Capital One's proposed acquisition of Discover Financial Services until May 31. The comment period had been set to end April 26.
• Consumer Financial Protection Bureau. Junk fees. On April 24, 2024, CFPB outlined several actions taken in 2023 to cut down on so-called junk fees assessed by mortgage servicers. The agency found multiple UDAAP violations in servicers' fee-charging and loss mitigation practices. CFPB's focus on junk fees charged by mortgage servicers is part of a broader agency effort to identify and mitigate the charges across several consumer-facing industries.
• Federal Deposit Insurance Corp. Change in Bank Control Act. On April 25, 2024, FDIC considered two separate proposals to deal with the growing influence of asset managers and investment firms in their roles as bank shareholders. Both plans, one from FDIC Director Jonathan McKernan and another from CFPB Director Rohit Chopra, would have heightened FDIC scrutiny of institutional investors' investments in FDIC-supervised banks. The board decided not to vote on the plans after neither gained majority support.

Rulemaking Updates

• Consumer Financial Protection Bureau. Nonbank supervision. On April 16, CFPB announced an updated procedural rule designed to streamline how the agency identifies nonbank financial institutions for supervision. The amended rule aligns with changes in the CFPB's organizational structure for its supervision and enforcement work and is expected to speed up the agency's examination of nonbanks' compliance with federal consumer financial protection law.

Research and Analysis

• Conference of State Bank Supervisors. Annual report. On April 15, 2024, CSBS published its 2023 annual report, highlighting several regulatory victories from last year. Specifically, the group of state banking regulators noted that CFPB implemented several CSBS suggestions regarding the Dodd-Frank requirement that financial institutions report data on small businesses' credit applications.
• Congressional Research Service. Basel III endgame. On April 22, 2024, CRS published a report on how the Basel III endgame proposal would affect capital treatment of unrealized losses at U.S. banks. CRS found that unrealized losses have increased rapidly since the start of 2022, including at smaller banks not subject to the pending Basel III overhaul. Banking regulators are currently working on a major overhaul of the Basel III proposal, one that is expected to provide more flexibility for targeted institutions.

Other News of Note

• Federal Housing Finance Authority. Oversight of federal housing regulators. On April 18, 2024, FHFA Chairwoman Sandra L. Thompson testified before the Senate Banking Committee. She noted the persistent affordability challenges facing first-time homebuyers and highlighted the actions taken by agencies under her supervision to help mitigate barriers to homeownership. Freddie Mac and Fannie Mae have explored ways to reduce closing costs associated with both home purchases and refinancings, Thompson said.
• California Department of Financial Protection and Innovation. Enforcement action. On April 24, 2024, DFPI announced a consent order against the agency responsible for servicing federal and state student loans in Missouri. The Higher Education Loan Authority for the State of Missouri failed to provide DFPI with borrowers' contact information, delaying DFPI's efforts to inform borrowers that they may be eligible for student loan relief.

Orla McCaffrey is a regulatory analyst with Davis Wright Tremaine LLP.