#TILA

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

11 07, 2023

DAILY071123

2023-07-11T16:38:06-04:00July 11th, 2023|2- Daily Briefing|

FRB-NY Staff: Climate Tradition Risk Meaningful, Manageable

new blog post from Federal Reserve Bank of New York staff concludes that climate-transition risk in bank loan portfolios is meaningful, but also manageable.  The paper uses general-equilibrium models to focus on forward-looking climate risk in scenarios based on current policy as well as orderly and disorderly transitions, an approach it believes differ from much retrospective analysis of carbon emissions as a measure of transition risk.

CFPB, OCC Team Up To Sanction BofA Transaction, Card Account Practices

The CFPB and OCC today took action against Bank of America in ways that renew questions about potential overlaps between the CFPB’s jurisdiction and that of the banking agencies.  The costlier of the two actions from the CFPB ordered the bank to pay over $170 million in civil monetary penalties and restitution for a range of practices the Bureau regards as abusive and deceptive (see FSM Report CONSUMER39).

GOP Urges Supreme Court to Uphold Fifth Circuit CFPB Decision

Continuing the GOP’s longstanding campaign to redesign the CFPB, HFSC Chairman McHenry (R-NC), Senate Banking Ranking Member Scott (R-SC), and 130 Members of Congress filed an amicus brief today urging the Supreme Court to uphold the Fifth Circuit’s decision declaring the CFPB’s funding mechanism unconstitutional.

Daily071123.pdf

16 06, 2023

Daily061623

2023-06-16T16:49:58-04:00June 16th, 2023|2- Daily Briefing|

Waller Separates Monetary, Stability Policy

FRB Gov. Waller today defended recent rate hikes against criticism that they undermine financial stability, noting that monetary and stability policy are inter-related but must generally be addressed with different tools.

Brown-Scott Clawback Bill Adds Enforcement Teeth

In his first legislative mark-up since assuming the chairmanship in 2021, Banking Committee Chairman Brown (D-OH) will convene voting next Wednesday on compromise compensation-reform legislation on which he and Ranking Member Scott (R-SC) have agreed.

Hsu Warns of Tokenized-Settlement, AI Risk

Acting Comptroller Hsu’s speech today highlights both the benefits and risks of tokenization and AI, urging parallel development of new technologies and essential controls.

Democrats Try Again To Mandate TILA, CFPB Small-Business Authority

Banking Committee member Sen. Menendez (D-NJ) yesterday introduced legislation (S. 2021) along with Small Business Committee Ranking Member Velazquez (D-NY) (H.R. 4192) to extend TILA protections to small business lending, also giving the CFPB authority in this sector.

Fed Fears Little Systemic Risk

The financial-stability discussion in today’s report from the Federal Reserve ahead of next week’s hearings generally reiterates conclusions from the most recent Fed financial-stability report (see Client Report SYSTEMIC96): banks are generally sound and resilient and, despite MMF worries, most other vulnerabilities are of only moderate systemic concern.

Fed’s Long-Awaited Master-Account Database Goes Live

Conceding to a long-resisted and now statutory demand (see FSM Report PAYMENT25), the Federal Reserve today published the first database detailing who has or seeks access to Reserve Bank master accounts and services.…

28 03, 2023

DAILY032823

2023-03-29T12:03:14-04:00March 28th, 2023|2- Daily Briefing|

CFPB Expands Scope of State Law

Reaffirming its preliminary determination, the CFPB today concluded that business-loan disclosure laws in several states are not preempted by TILA.  This continues the Bureau’s reversal of prior preemption determinations from the OCC that gave national banks considerable protection from more stringent state standards.  The grounds on which the CFPB did so in this case are that TILA is expressly intended for consumers and those state laws now allowed to stand cover businesses and “entrepreneurs” who are not consumers.

Global Regulators to Review Resolution Process

In an unusual plenary statement following a previously-scheduled meeting today, FSB members stated that recent events warrant review of the global resolution framework.  The statement is brief and does not indicate how or when this might proceed, but – as noted in our previous report on CS-s failure’s fallout (see Client Report GSIB21), we expect a hard look at TLAC as well as renewed interest in ring-fencing.

Daily032823.pdf

8 03, 2023

DAILY030823

2023-03-08T17:06:14-05:00March 8th, 2023|2- Daily Briefing|

HFSC Plans Broad Attack, Limited Legislation to Rewrite Administration Crypto Standards

The HFSC staff memo makes it clear that the Digital Asset Subcommittee hearing on Thursday will be a strong general GOP attack on Biden Administration crypto policy and specific campaign against the SEC’s enforcement-focused strategy.

HFSC Plans to Blast CFPB, Press Limited Change

Thursday’s HFSC Monetary Policy Subcommittee hearing on the CFPB is sure to be a raucous, partisan affair judging by the staff memo describing it.  Republicans have strongly objected to the Bureau before its inception, with concerns sharply heightened by a series of recent actions under Director Chopra.

CFPB Slams Fees, Promises Mercy

Ahead of a meeting later today between senior White House officials, Director Chopra, and hundreds of state legislators concerning the President’s “junk fee” agenda, the CFPB  today released Supervisory Highlights focusing on recent instances of what it deems unlawful junk fees in deposit accounts, auto loan servicing, mortgage servicing, payday lending, and student loan servicing.

GAO Doubts Fintech’s Inclusion Advantage

The GAO today released a report finding that fintech may enhance inclusion, but that this inclusion comes at risk due to the patchwork of rules governing firms offering products – e.g., wage advances – that may put vulnerable households at risk.

HFSC Republicans Scrutinize SEC Rulemaking, Fed Climate Policy

As anticipated, today’s HFSC Subcommittee Hearing with the inspectors-general for the FRB, CFPB, Treasury, and SEC focused on GOP attacks on the SEC’s IG vacancy and the CFPB’s funding mechanism.

Brown, Others Demand ABA

7 12, 2022

DAILY120722

2022-12-07T17:42:12-05:00December 7th, 2022|2- Daily Briefing|

Gensler Stands by Enforcement-Focused Crypto Policy

In an interview today, SEC Chairman Gensler fiercely defended the Commission’s crypto enforcement history and attacked crypto exchanges, calling them “casinos” that fought to skirt investor-protection law rather than come into compliance.  Rebuking calls from Sen. Warren (D-MA) for increased SEC crypto attention, he argued that the Commission is committed to regulating crypto securities and has already filed an abundance of enforcement actions.

CFPB Demurs on Key Preemption Decisions

Signaling an aversion to Federal preemption long sought by consumer advocates, the CFPB has made a preliminary determination that a New York State law that requires commercial financing disclosures is not preempted by TILA.  It has also reached an initial decision that similar laws in California, Utah, and Virginia are also not preempted, reflecting the importance of this decision.

Dems Demand De-Risking Rewrite

A day after a senior Treasury official chastised banks for failing to de-risk on a risk-based methodology, Sen. Warren (D-MA), Rep. Omar (D-MN), and a group of Democratic Members of Congress wrote Secretary Yellen, FinCEN, and the banking agencies seeking an update on ways to ensure that AML compliance does not adversely affect Muslim and immigrant communities.  Noting that a recent increase in sanctions also has led banks to de-risk charities, the Members point to resulting humanitarian problems due to lost aid.

Daily120722.pdf

30 06, 2022

DAILY063022

2023-01-24T15:53:35-05:00June 30th, 2022|2- Daily Briefing|

OFAC Updates Counter-Terrorism Sanctions

OFAC today adopted a final rule that amends the Global Terrorism Sanctions Regulations to implement a 2019 executive order and make several minor technical changes.

Basel Crafts Stringent New Regime for Crypto Exposures

As promised, the Basel Committee today tried again to craft a global prudential regime for bank crypto exposures.  We will shortly provide clients with an in-depth analysis of the new consultation, which replaces a controversial first round (see FSM Report CRYPTO19) with one that continues add-on capital requirements for higher-risk digital assets (now redefined for stablecoins).

FSB Frets About Commodity, Resilience Risk

The FSB’s plenary today is far more pessimistic about both macroeconomic and financial conditions than it was just a month ago.  Although it then worried about commodity-market volatility, these concerns now are heightened by large margin calls, “undetected” leverage, and concentrated exposures.

CFPB Pledges Guidance on Wage Access Products

The CFPB today terminated the Sandbox Approval Order for Payactiv, an earned wage access company, removing an exemption for some of the company’s products from liability under the Truth in Lending Act.  Payactiv requested the termination in order to make changes to its fee model, as changes to its products would require modifications to the order.

Daily063022.pdf

15 12, 2021

Daily121521

2023-05-23T12:22:59-04:00December 15th, 2021|2- Daily Briefing|

HFSC GOP Try to Restrain FDIC Democrats
Squaring off in the partisan battle over FDIC merger policy, HFSC Republicans have launched their own investigation into what they call the Democrats’ “power grab.”  Republicans also “demanded” that Chairwoman Waters (D-CA) convene an oversight hearing even as they seek Democrats to join their inquiry.

Powell Commends MMF Proposal, Demurs on Crypto Risk
As expected, Fed Chair Powell’s press conference today focused almost entirely on inflation.  However, Mr. Powell used a question on financial stability to applaud the SEC’s MMF proposal (see alert earlier today).  Asked about crypto’s financial-stability risk, the Fed chair discounted near-term systemic risk, but consumer protection and market issues such as leverage outside the Fed’s jurisdiction warrant attention.

Senate Dems Demand BNPL Standards
Sen. Jack Reed (D-RI) was joined today by Banking Chairman Brown (D-OH), Sen. Warren (D-MA), and other Committee Democrats in calling on the CFPB to regulate buy-now, pay-later (BNPL) products.

SEC Advances Controversial Swing-Pricing MMF Rewrite
Acting on a major FSOC, Fed, and global worry, the SEC today approved a multi-prong proposal realigning MMF liquidity standards and clarifying how MMFs can handle negative rates.  The most controversial of the options would impose swing pricing on prime institutional and tax-exempt funds, an approach about which two Democratic commissioners expressed some concerns and the FSB seemed particularly skeptical in its recent MMF-options paper (see FSM Report MMF18).

Daily121521.pdf

19 11, 2021

Daily111921

2023-05-23T16:14:33-04:00November 19th, 2021|2- Daily Briefing|

Congressional Democratic Leaders Advance Tough Small-Business Lending Standards

Senior Democrats in both the House and Senate have introduced legislation (H.R. 6054 and S. 3235) to apply TILA to small business financing, granting the CFPB the same authority for small business loans as over consumer finance.

Daily111921.pdf

26 10, 2021

Daily102621

2023-06-05T13:54:59-04:00October 26th, 2021|2- Daily Briefing|

McWilliams Positions Herself as Crypto Liberal Among Agency Skeptics
In remarks posted this morning, FDIC Chair McWilliams provided an update on the inter-agency “crypto sprint.” Ms. McWilliams made it clear that her intent is not to prohibit bank crypto activities but instead to govern them, announcing that a series of policy statements will be issued in “coming months.”

U.S. Adds Voice to Health/Finance G20 Construct
The U.S. Treasury has now joined other G20 finance ministers in calling for a new forum coordinating health and finance policy. The proposal was sparked by an earlier report from former government officials such as Larry Summers based on the need to ensure that all national and global resources are prepositioned to prevent the next pandemic.

Global Regulators Tackle Margining, CCP Resilience
Advancing an FSB priority most recently emphasized in the Board’s forward-looking plan, the Basel Committee, IOSCO, and the Committee on Payment and Market Infrastructures today invited comment on additional margining standards addressing problems identified in the March 2020 COVID crisis.

House Advances Open-Source Regulatory Data
The House late yesterday passed 400-19 the Financial Transparency Act (H.R. 2989), legislation reintroduced by Reps. Maloney (D-NY) and McHenry (R-NC) requiring the federal financial regulatory agencies to adopt data collection-and-distribution standards on format, searchability, and transparency.

OCC Stands Firm on LIBOR Transition, Supervisory Priorities
In remarks generally focused on LIBOR transition, Acting Comptroller Hsu today emphasized that the U.S. agencies fully intend to end LIBOR and “zombie LIBOR” as of year-end and that even banks that think …

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