1- Financial Services Management

27 03, 2024

MERGER15

2024-03-27T13:21:30-04:00March 27th, 2024|1- Financial Services Management|

Bank Merger Policy

Following its 2022 request for input, the FDIC has released a formal proposal that would redefine the agency’s bank-merger policy into one that will make it difficult for all but the smallest and simplest transactions within its jurisdiction to have the clear prospects for approval usually necessary in non-emergency transactions, subjecting other M&A applications to protracted review with a high likelihood of denial.  Strategic alliances involving nonbanks and/or nonbank affiliates and BHCs with nonbank activities may also come under critical FDIC scrutiny, complicating transactions otherwise under the FRB or OCC’s review.  Transactions over $100 billion would face the toughest scrutiny, but even small bank mergers could be denied if the FDIC is dissatisfied with the bank’s prior supervisory, enforcement, or community/consumer record.

MERGER15.pdf

14 03, 2024

CREDITCARD37

2024-03-14T15:57:19-04:00March 14th, 2024|1- Financial Services Management|

Credit-Card Late Fee Regulation

Following a very controversial proposal, the CFPB has finalized credit-card late-fee restrictions in a final rule that does not differ significantly from the proposal on its key point:  elimination of the manner in which inflation adjustments are now made by credit-card lenders when it comes to late fees.  The rule will sharply curtail issuer revenue related to these fees, likely affecting the market as a whole rather than the large issuers expressly covered by the new rule.  Although the Bureau did not go as far as proposed in several areas, its core late-fee standard could lead lenders to raise interest rates, curtail rewards, reduce high-risk exposures, or otherwise redesign products with adverse implications for borrowers who meet their monthly-payment requirements in a timely fashion.

CREDITCARD37.pdf

5 03, 2024

CONSUMER56

2024-03-05T14:27:57-05:00March 5th, 2024|1- Financial Services Management|

Consumer-Financial Product Marketing Practices

The CFPB has issued a circular essentially banning digital and perhaps all other consumer-finance comparison-shopping and lead-generation tools for credit cards and other products not covered by prior orders.  These activities could continue, but only as long as the comparison or lead is completely objective as the Bureau may come to judge it under complex and sometimes conflicting standards.  The circular follows similar CFPB actions outside the Administrative Procedure Act even though the agency clearly intends to enforce its new approach both directly and in concert with other state and federal agencies.

CONSUMER56.pdf

5 02, 2024

MERGER14

2024-02-05T14:54:48-05:00February 5th, 2024|1- Financial Services Management|

Bank-Merger Policy

Although all of the banking agencies have for years promised a new bank-merger policy, none has proposed one until this OCC rulemaking.  It is intended to add certainty and transparency to the manner in which the OCC reviews merger applications or others for charter combinations from national banks and federal savings associations resulting in a federally-chartered depository, but the OCC retains discretion to do as it chooses in this arena given the flexibility built into all the attributes now laid out that may augur OCC  disapproval and/or expedited processing.  The policy also appears to apply to non-depository acquisitions despite the proposal’s preamble suggesting the policy applies only to depositories.  The presumption of approval even for simpler, smaller deals would be eliminated, creating at the least additional uncertainty in this arena.  Further, broader uncertainty remains in the absence of policy guidance from the Federal Reserve regarding holding companies and the Department of Justice, which may overturn merger approvals the OCC decides to grant.

MERGER14.pdf

1 02, 2024

AI5

2024-02-01T10:20:08-05:00February 1st, 2024|1- Financial Services Management|

AI Regulation

Although FSOC’s latest annual report highlights AI risk, it does not request any express agency action, a hands-off approach that led to bipartisan legislation demanding a more forceful approach.  Possibly leading the way as it did on climate risk, the CFTC now seeks comment on both the way it uses AI and how it affects not only financial markets under its jurisdiction, but also financial-system stability.

AI5.pdf

29 01, 2024

CONSUMER55

2024-01-29T15:15:54-05:00January 29th, 2024|1- Financial Services Management|

NSF Fees

The CFPB has followed up a controversial proposal to set prices for larger-bank overdrafts exempt from certain consumer standards with a proposal to simply ban certain non-sufficient fund (NSF) fees when banks decide in real time to decline a consumer-payment request.  The Bureau readily acknowledges that banks in fact generally do not now charge NSF fees in these cases, but it fears they might and wishes to preemptively prohibit this as part of the Administration’s campaign against “junk fees.”  Although the rule is aimed principally at electronic declinations, it would apply to check and ACH transactions as declination capability grows via instant-payment system adoption.

CONSUMER55.pdf

23 01, 2024

OVERDRAFT12

2024-01-23T12:13:12-05:00January 23rd, 2024|1- Financial Services Management|

Overdraft Fees

Building on a bulletin and circular from late 2022 warning banks about certain overdraft practices, the CFPB has now proposed a rule that would sharply and expressly limit fees for extensions of credit related to overdrawn transaction accounts unless the account comes under an array of consumer-protection requirements.  Part of the Administration’s campaign against “junk fees,” the proposal sets a “break-even threshold based on a bank’s costs” and provides for an alternative break-even benchmark CFPB-set fee that would allow a lender to avoid costly additional regulatory requirements, expanding the Bureau’s recent focus on mandating industry pricing evident in its controversial proposal on credit-card late fees.  Lines of credit and ready access to credit-card credit associated with overdrafts would also come under new limits and come under additional consumer-protection standards.

OVERDRAFT12.pdf

5 01, 2024

INCLUSION3

2024-01-05T09:31:42-05:00January 5th, 2024|1- Financial Services Management|

U.S. Financial-Inclusion Policy

As required by law, the U.S. Treasury is working to set policy enhancing financial inclusion.  While it seeks recommendations for new policies in areas ranging from predatory lending to technological innovation and new federal programs, it is unclear how actionable its findings will prove and if federal policymakers then implement those possible under current law.  However, Treasury policy will clearly not provide an overall endorsement for new technology as advocates may hope; the conclusions on which policy will be based point to technology’s potential benefits, but also numerous risks to vulnerable households and communities.

INCLUSION3.pdf

4 01, 2024

NBFI3

2024-01-04T10:30:14-05:00January 4th, 2024|1- Financial Services Management|

NBFI Data Reporting

The banking agencies have proposed significant changes to call-reporting data illuminating how banking organizations are inter-connected with nonbank financial intermediaries and to implement pending requirements for long-term debt (LTD) issuance.1 New NBFI transparency is likely to result in additional supervisory scrutiny and market discipline.

NBFI3.pdf

3 01, 2024

DEPOSITINSURANCE123

2024-01-03T09:28:35-05:00January 3rd, 2024|1- Financial Services Management|

FDIC Coverage Protections

In the wake of increasing instances in which customers are confused and even misled about the extent to which fintech and cryptoasset holdings are insured deposits, the FDIC has finalized its proposal setting disclosure standards as well as modernizing IDI representations of their own FDIC-insured offerings in branches and through the fast-changing array of retail banking delivery channels.1 All IDIs will now have to ensure that branches, other physical locations admitting customers, ATMs, and digital/electronic-delivery channels comply with new signage and disclosure requirements differentiating insured deposits from other deposit and non-deposit products, including those offered in conjunction with third-parties. Nonbanks soliciting consumer funds will face new legal and reputational risk if deposit-insurance status is not clearly disclosed, with the new standards making it even more difficult for cryptoasset arrangements between banks and nonbank providers. The “rent-an-FDIC-sticker” business model is thus effectively barred for all but ventures willing to run significant enforcement risk.

DEPOSITINSURANCE123.pdf

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