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The Enforcement Blog

CFPB Outlines Principles for Consumer-Authorized Financial Data Sharing and Aggregation

Posted in CFPB, Privacy

On October 18, the CFPB released a set of guiding principles for participants in the financial data sharing and aggregation industry. The publication of the consumer protection principles follows a November 2016 Request for Information in which the CFPB asked stakeholders in the data sharing and aggregation market to comment on consumer benefits and risks associated with developments that rely on financial account information. The publication of the principles was accompanied by a press release and a 12-page summary of issues raised by stakeholders that informed the development of the principles.

The stakeholder report emphasizes that aggregation market participants generally called for “[consumer protection] practices that are based on a shared set of standards and expectations.” The principles reflect a response to this desire for uniformity.

Read our client alert.

Treasury Report, Part II: Regulation of the Capital Markets

Posted in Regulatory Developments

The U.S. Department of the Treasury (“Treasury Department” or “Treasury”) issued its second report (of four reports), titled “A Financial System that Creates Economic Opportunities, Capital Markets” (the “Report”). The Report was issued in response to Presidential Order 137772 setting forth the Core Principles that should guide regulation of the U.S. financial system. The Report addresses various elements of the capital markets, from the equity and debt markets, to the U.S. Treasury securities market, and to derivatives and securitization. The Report also addresses the role and regulation of financial market utilities and clearinghouses. Like many movie sequels, which are somehow less compelling than the original, this second installment is less cohesive than the first Treasury report, which focused on the regulation of depositary institutions. The Report notes that certain aspects of the capital markets regulatory framework are working well, but other elements would benefit from better “calibration.” To that end, the Report recommends various measures, most of which would not require legislation, that would promote capital formation. There are few novel recommendations included in the Report. In this alert, we discuss many of the recommendations in the principal areas of interest to our clients.

Read our client alert.

EVENT: Complimentary Teleconference – Financing Fintech: ILC Charters

Posted in Events

Thursday, October 19, 2017
5:00 p.m. – 5:45 p.m. EDT

Join us for one of our upcoming monthly telephone briefings led by members of our Fintech team.Topics will include: What is an ILC?; What laws apply to an ILC and what laws don’t apply?; and How does it differ from an OCC Fintech Charter?

This call will be an operator-assisted call of approximately 45 minutes in duration, and will be followed by a brief Q&A opportunity. We also invite you to submit questions before the start of the call. A replay will be available upon request.

In order to RSVP for the October call, and to submit questions, please click here.

CFPB Releases Final Payday Lending Rule

Posted in CFPB, Payday Lending, Regulatory Developments

On October 5, 2017, the CFPB released its final rule for short-term loans. The nearly 1,700 page rule appears to follow the proposed short-term lending rule with several notable changes. Most notably, the CFPB did not finalize rules relating to underwriting requirements for long-term loans that do not have balloon payments.

Read our client alert.

OCC Acting Comptroller Woos Fintech Companies with Remarks on Online Lending

Posted in Regulatory Developments

On September 25, 2017, Acting Comptroller of the Currency Keith Noreika discussed online lending and innovation in his keynote remarks prepared for delivery to the Online Lending Policy Summit in Washington, D.C. Consistent with his previous remarks, the Acting Comptroller expressed his support for a regulatory environment that fosters responsible innovation and touted the growth of online and marketplace lending as “the natural evolution of banking itself.”

Read our client alert.

Equifax Fallout: NYDFS Acts Again

Posted in Privacy, State Regulators

The massive Equifax breach continues to prompt responses from a wide-range of regulators. While this is not surprising in light of the scale and nature of the incident, a number of regulators are taking more aggressive and more public actions in just a short time following public announcement of the breach. While there is a long history of various regulators taking action following high-profile breaches, the speed of the regulatory response has been unique when compared with other high-profile breaches that have occurred in the past five years. For example, while multistate Attorney General (“AG”) investigations and settlements are becoming the norm, the Massachusetts AG has already filed suit against Equifax.

Read our client alert.

EVENT: PLI Webinar – Shadow-Boxing in 2017: An Update on Shadow Banking Reform

Posted in Events

Tuesday, September 26, 2017
12:00 p.m. – 1:00 p.m. EDT
5:00 p.m. – 6:00 p.m. BST

The Financial Stability Board has been spearheading a review of “shadow banking” entities and activities since the onset of the financial crisis. Pursuant to the FSB’s work, many regulatory reforms have been introduced at both national and international level in a wide-range of different areas. At the recent G-20 meeting in Germany, the FSB published an assessment of present shadow banking activities and the adequacy of reforms and policy tools that have been introduced since the financial crisis. Issues to be covered during the presentation include:

  • Current aspects of shadow banking giving most concern to the G20;
  • Money market fund regulation and recent MMF Regulation finalized by the European Union;
  • Repos and effect of recent reforms;
  • Investment funds exposed to shadow banking risks; and
  • Impact of crowdfunding and peer to peer lending growth.


PLI will provide CLE credit.

For more information, or to register, please click here.

Leading on Leads? CFPB Takes Action Against Online Lead Aggregators

Posted in CFPB, Enforcement Actions, Payday Lending, Privacy, UDAAP

On September 6, 2017, the CFPB announced that it has taken action against an online lead aggregator. The allegations revolved around the company’s selling personal information of consumers who were interested in small-dollar or installment loans to online lenders. It was alleged that the loans ultimately offered to consumers were, or were likely to be, void in a consumer’s state of residence, meaning that the lender had no legal right to collect the loans. According to the CFPB’s consent order, the loans were void in whole or in part because of licensing requirements or interest rate limitations in the consumer’s state.

Read our client alert.

CFPB Makes HMDA Data Sharing Proposal

Posted in CFPB, Mortgage

The CFPB announced on Wednesday, September 20th, 2017, proposed guidance to limit the Home Mortgage Disclosure Act (HMDA) data it shares publicly. The Bureau’s 2015 HMDA amendments (discussed in our alerts here and here) revamped HMDA’s coverage and processes, including requiring lenders to report vast swaths of new data about mortgage applicants and their loans. At the time, the Bureau said that it was still considering what portion of that data it would share with the public. It expressed sensitivity to the privacy and data security concerns implicated by gathering and maintaining such large amounts of personal data, which include applicant and borrower addresses, loan amounts, and credit scores, and sought public comment. In response, many consumer advocates and lenders expressed concern with sharing such sensitive information and urged the CFPB to limit the public sharing of that data.

Now, almost two years later, the CFPB has made its proposal. The Bureau would eliminate more than a dozen data and text fields—including the applicant or borrower’s property address, credit score(s), and race and ethnicity—from the HMDA data it publicly discloses. It is proposing a compromise on other data fields by making them less precise. For example, rather than publishing a borrower’s loan amount and property value, it would “disclose the midpoint for the $10,000 interval into which the reported value falls.” And rather than disclosing the borrower’s age, the Bureau would publish a range (under 25, 25 to 34, 35 to 44, etc…).

The comment period ends 60 days after the proposal is published in the Federal Register, and the update will take effect on January 1, 2018.

A First Time for Everything—CFPB Issues Its First No-Action Letter

Posted in CFPB, Disparate Impact, Fair Lending

The CFPB recently announced the issuance of its first no-action letter (“NAL”) to Upstart Network, Inc., an online lending platform that uses alternative data to model consumer credit decisioning and pricing. The letter signifies that the CFPB has no present intention to recommend an enforcement or supervisory action against Upstart for violation of the Equal Credit Opportunity Act. This NAL comes as the Bureau “continues to explore the use of alternative data to help make credit more accessible and affordable for consumers who are credit invisible or lack sufficient credit history.” In addition, the NAL is issued in the midst of heightened regulatory interest in and scrutiny of alternative credit data and modeling techniques. The Bureau issued two related requests for information, one in November 2016 on data aggregation services and the other in February 2017 on the use of alternative data, modeling techniques, and machine learning techniques in consumer lending. The NAL tends to suggest that companies may have some flexibility in the use of alternative underwriting modeling to offer consumer credit; however, as noted in this alert, the practical utility of such NALs may be limited.

Read our client alert.