#UDAP – Federal Financial Analytics

23 01, 2024

OVERDRAFT12

Eliza Allen2024-01-23T12:13:12-05:00January 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…

10 05, 2023

Daily051023

Arezou Rafikian2023-05-10T17:20:41-04:00May 10th, 2023|2- Daily Briefing, Uncategorized|

McHenry Seeks To Use Appropriations Denial As Legislative Weapon

In his letter to Appropriations Committee leadership late yesterday afternoon, HFSC Chairman McHenry (R-NC) not only highlights GOP budgetary issues, but also requests that the panel deny funding for further SEC action on new rules governing open-end funds, equity-market execution, and climate-risk disclosures.

CFPB Declares Unilaterally Reopened Deposit Accounts To Be UDAAP

Continuing its and the Administration’s campaign against “junk fees,” the CFPB today issued a circular establishing that its UDAP authority may apply to banks that unilaterally reopen a deposit account to process debits or deposits after a consumer has closed it.

FHFA Concedes on DTIs, May Even Address LLPA Controversy

FHFA today retreated far more completely on its controversial March decision to retain an upfront fee related to a borrower’s debt-to-income level, now saying that it will postpone this requirement indefinitely pending views to be solicited via a forthcoming RFI.

Barr Lambasts Regulators as Democrats Press Targeted Change

At the HFSC Financial Institutions Subcommittee hearing today, Chairman Barr (R-KY) was scathing in his denunciation of reports from the Fed (see Client Report REFORM221) and FDIC (see Client Report REFORM222) on the failures and of what he called a “term paper” from the FDIC outlining deposit-insurance options (see Client Report DEPOSITINSURANCE119).

Daily051023.pdf

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26 04, 2023

Daily042623

Arezou Rafikian2023-04-27T10:27:37-04:00April 26th, 2023|2- Daily Briefing|

Senate Banking Housing Plans Focus on Affordability, Access

At today’s Senate Banking hearing on affordable housing, Chairman Brown (D-OH) framed the committee’s legislative agenda in his opening statement but did not indicate any timing or future action.

CFPB Targets Piggyback-Mortgage Collection

The CFPB today issued guidance on debt collection practices it asserts violate the Fair Debt Collection Practices Act by attempting to collect time-barred debt where the statute of limitations has expired.

Comment Deadline Set For Sweeping FHFA Equitable Housing NPR

The Federal Register today includes FHFA’s NPR codifying Sandra Thompson’s equitable- and fair housing agenda in a body of rule that future directors would find more difficult to reverse and FHFA could enforce with more punitive standards.

HFSC GOP Demands FHFA Reverse LLPA Changes

HFSC Chairman McHenry (R-NC) and Rep. Davidson (R-OH) sent a letter to FHFA Director Thompson today demanding that the agency reverse changes to the GSEs loan level pricing adjustments (LLPAs).

LIBOR Transition Still Too Slow, Agencies Say

The Fed, FDIC, NCUA, OCC, and CFPB along with state bank and state credit union regulators today issued a joint statement reminding supervised institutions that USD LIBOR panels will end on June 30.

FDIC, OCC Deploy UDAP Powers for Targeted Deposit Fees

So far without the Fed, the FDIC and OCC today released supervisory guidance asserting that authorize-positive, settle-negative (ASPN) charges are an unfair practice under UDAAP criteria and present consumer compliance risk.

HFSC GOP Leaders Press Banking Agencies on Digital “Chokepoint” Policy

HFSC Chairman McHenry (R-NC) was …

20 04, 2023

GSE-042023

Eliza Allen2023-04-20T15:30:53-04:00April 20th, 2023|4- GSE Activity Report|

From Plans To Purpose

FHFA yesterday proposed a sweeping rule that would codify Sandra Thompson’s equitable- and fair-housing standards in a rule that any future FHFA director would have to work a lot harder to reverse. Indeed, not only would new plans become a mandatory part of the GSEs’ mission, but violations of them by Fannie or Freddie or any other fair-lending, equity, or related standard by all of the housing agencies could be sanctioned as unfair or deceptive acts or practices (UDAP), a page from the CFPB’s rulebook that affords a far greater scope to call an action discrimination and then punish it at even greater legal and reputational cost. Even if spared new plans – and that’s a big if – Home Loan Banks would also be brought into a far more exacting equity construct far beyond current adherence to statutory AHP requirements.

GSE-042023.pdf…

7 04, 2023

Al041023

Eliza Allen2023-04-07T11:58:48-04:00April 7th, 2023|3- This Week|

The CFPB Lays an Egg

Okay, maybe that’s not the most objective way even before Easter to let you know that one of our in-depth analyses last week was of the CFPB’s new policy defining the “abusive” in unfair, deceptive and abusive acts or practices (UDAAP). But, as we noted in our assessment (see FSM Report UDAP8), the Bureau’s policy reaches far, deep, and sometimes perhaps indiscriminately into consumer-finance activities that may err only by falling short of the Bureau’s apparently-altruistic view of the only appropriate course of action for consumer-finance companies. We shall see what comes of this policy – even though it’s final, it’s also out for comment as well as sure to be linked into pending litigation protesting the Bureau’s practice of setting rules by administrative fiat. We also expect Republicans to launch the kind of Congressional Review Act repeal announced last week for the Bureau’s controversial small-business reporting rules. But, as we noted, CRA resolutions may well pass the Republican House and even divided Senate, but they will surely not be enacted into law in the wake of a Presidential veto.

Al041023.pdf…

6 04, 2023

UDAP8

Eliza Allen2023-04-06T16:36:20-04:00April 6th, 2023|1- Financial Services Management|

Abusive Consumer-Finance Practices

Following its usual practice of setting standards by edict, the Bureau of Consumer Financial Protection has laid out an extensive framework that brings a wide range of consumer-finance actions and inactions within the scope of enforcement sanctions governing acts or practices that are not only unfair or deceptive, but also abusive. As a result, consumer-finance providers and the third parties on which they often rely have considerably more legal and reputational risk even as consumers may be better insulated from actions that disadvantage or even harm their financial prospects. Much of the new policy requires providers to protect the most vulnerable of any possible consumer for all aspects of a product or service, structuring all aspects of product offerings, pricing, marketing, infrastructure, and long-term provision to a consumer’s advantage as the Bureau defines it.

UDAP8.pdf…

6 04, 2023

FedFin: Extra Equitable?

Arezou Rafikian2023-04-06T16:36:29-04:00April 6th, 2023|The Vault|

FHFA, Fannie, and Freddie yesterday updated the sometimes-controversial equitable-finance plans FHFA approved last year. Notably, Fannie’s new plan no longer focuses exclusively on Black households, a feature that garnered vitriolic Wall Street Journal criticism and negative Republican reactions. Freddie’s plan delays and may even back away from efforts to set MI and title insurance pricing.

The full report is available to subscription clients. To find out how you can sign up for the service, click here.…

5 04, 2023

DAILY040523

Eliza Allen2023-04-05T16:55:56-04:00April 5th, 2023|2- Daily Briefing|

FDIC Joins CFPB Targeting UDAP

The FDIC today published Consumer Compliance Supervisory Highlights showing that UDAP violations related to NSF representment constituted the second highest number of total citations and were by far the largest number of serious citations in 2022. The FDIC reiterates August guidance that third-party arrangements related to re-presented items may present numerous risks. We note that the FDIC’s UDAP focus is new under Chairman Gruenberg and comes at a time when the CFPB is expanding the reach of its own UDAAP enforcement powers with a focus in part on overdrafts and NSF practices.

IMF Staff Highlight New Systemic Risk: Geopolitical Stress

At a panel event today, IMF staff reported that their model-based study in the IMF’s global financial stability report found that geopolitical risks and global fragmentation gravely threaten financial stability by weakening interconnectivity between geopolitical blocs. Their model found that increased fragmentation results in reduced cross-border banking between blocs, higher lending costs, substantial diversification losses among G7 countries, and reduced bank profitability. Staff also drew a link between the war in Ukraine and the recent banking crisis, arguing that the war’s inflationary pressures led to an aggressive monetary policy reaction, revealing bank vulnerability to interest rate risk.

Daily040523.pdf…