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MoFo Reenforcement

The Enforcement Blog

Financial Services Report – Fall 2017

Posted in Arbitration, CFPB, Credit Cards, Credit Reports, Electronic Payments, Enforcement Actions, Fair Lending, Investigations, Mortgage, Preemption, Privacy, Regulatory Developments, State Regulators, UDAAP

Through hurricanes, wild fires, the publication of Hillary Clinton’s book, the birth of Amal and George Clooney’s twins, and the Dodgers’ historic losing streak, Director Richard Cordray and the CFPB’s Final Arbitration Rule are still standing. As my colleague Ollie Ireland explained, these days, it’s easier to predict the weather than it is to predict what will happen in Congress. So we wait.

To provide some distraction, focus on this: September is National Mortgage Professional Month. So say hello to your friendly neighborhood mortgage professional. For further distraction, we’ve packed this Report with all the blockbusters from the last quarter — read on for the latest in Privacy, Preemption, Arbitration, Mortgage, the CFPB, etc.

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EVENT: American Bar Association’s Eighth Annual National Institute on Consumer Financial Services Basics

Posted in Events

October 19-20, 2017
Waterview Conference Center
1919 N Lynn St.
Arlington, VA 22209

This educational institute is designed to expose practitioners to key areas of consumer financial services law. Key topics covered at the conference will include:

  • History and development of federal and state consumer financial services laws
  • Truth in lending and disclosure requirements
  • Fair lending
  • Financial privacy and credit reporting
  • Data security, fraud prevention, and identity theft protection
  • Consumer communications: FDCPA, TCPA, TSR, Can-Spam, and others
  • Asset account regulation
  • Mortgage origination and servicing
  • UDAAP
  • Litigation and enforcement actions

Senior Partner Rick Fischer will speak on the “Financial Privacy, Data Security and Cybersecurity” panel on Thursday, October 19.

Click here for more information and to register.

EVENT: Financial Markets Association’s Treasury and Capital Markets Legal and Legislative Issues Conference

Posted in Events

October 25-26, 2017
Hyatt Regency
400 New Jersey Ave., NW
Washington, D.C. 20001

This day and a half conference is a valuable forum for banking and securities attorneys, senior compliance officers and regulators providing for an exchange of information, ideas and experiences on current hot topic regulatory and legislative/agency initiatives. The focus is on high-level banking and securities law, enforcement proceedings, financial holding company issues, securities underwriting and distribution, capital markets regulation and public finance. Key industry leaders, regulatory professionals and legislative participants share information about changes in the regulation landscape and current hot topic areas of regulatory and legislative initiatives, including panels of general counsels from the banking, securities and commodities regulatory agencies.

Morrison & Foerster partner Barbara Mendelson is on the conference planning committee and will be moderating the “Banking General Counsel” panel.

Click here to register.

FMA will be providing CLE/CPE credit.

Replacing Familiar Benchmarks: Preparations to Phase Out the IBORs

Posted in Regulatory Developments

Long a mainstay of the financial world, the floating “IBOR” rates, based on the rates of actual or purported interbank offered loans, are now being swept slowly into the dustbin of history. The quantity, in both number and size, of existing financial products based on these floating rates is enormous, with the outstanding principal amount of such transactions globally estimated to be in the hundreds of trillions of dollars. IBORs are used extensively in numerous currencies as bases for floating rates in a wide range of transactions including derivatives, structured products, mortgages, floating rate securities and other consumer and commercial loans. A phase-out of the use of familiar benchmarks will therefore be a massive undertaking that will take many years to accomplish. In this article we review, primarily in relation to derivatives, the state of play regarding the IBORs, their possible replacements, prospects for a transition to new floating rates and some of the issues that parties to existing and new IBOR-based transactions should consider.

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CFPB and Card Issuers Resolve ECOA Action Involving Cards Offered in U.S. Territories and Cardholders with Spanish Language Preference

Posted in CFPB, Credit Cards, Disparate Impact, Enforcement Actions, Fair Lending

On August 23, 2017, the CFPB announced the resolution of an administrative action under the Equal Credit Opportunity Act and its implementing regulation, Regulation B, against American Express Centurion Bank and American Express Bank, FSB. In the proceeding, the CFPB alleged the Issuers violated ECOA by (i) offering credit and charge card products and services to consumers and small businesses in Puerto Rico and other U.S. territories on less favorable terms than it offered similar products and services to consumers and small businesses in U.S. states, and (ii) conducting collection activities with consumer cardholders with Spanish language preferences without making available to such cardholders collection offers and programs comparable to the offers and programs that it made available to cardholders without Spanish language preferences.

Read our client alert.

CFPB Case Against Payment Processors Dismissed: Court Sanctions Bureau for Non-Responsive Discovery

Posted in CFPB, Enforcement Actions

In another significant litigation setback for the CFPB, a U.S. District Court in Atlanta imposed discovery sanctions against the Bureau and dismissed all claims against payment processors alleged to have aided and abetted an unlawful debt collection scheme. Cases brought by the CFPB’s Division of Enforcement have seen the imposition of significant levels of damages as well as the imposition of severe penalties. More recently, however, some litigants have pushed back with success against the CFPB, demanding that the Bureau be held to its burden of proving the factual and legal bases of its claims.

Read our client alert.

EVENT: Teleconference: Canadian Bail-in and TLAC – Impact on Capital Markets Transactions

Posted in Events

Wednesday, September 13, 2017
11:00 a.m. – 12:00 p.m. EDT

Morrison & Foerster and Osler, Hoskin & Harcourt Teleconference

During this teleconference, the panelists will address the proposed Canadian federal rules relating to (a) Bank Recapitalization (Bail-in) Conversion Regulations and (b) Total Loss Absorbing Capacity (TLAC). These rules are expected to have a significant impact on how the major Canadian banks (D-SIBs) offer debt securities in Canada, the U.S. and elsewhere. In particular, the speakers will focus on navigating a variety of issues:

  • The expected regulatory framework and capital requirements;
  • Changes to debt offering programs, including indenture terms and covenants;
  • Changes to offering documents delivered to investors;
  • The impact on structured note offerings; and
  • The process for compensating debtholders.

Speakers:

  • Kashif Zaman, Partner, Osler, Hoskin & Harcourt LLP
  • Lloyd Harmetz, Partner, Morrison & Foerster LLP

CLE credit is pending for California and New York.

For more information, or to register for this complimentary teleconference, please click here.

CFPB Unveils Prototype Model Forms for Overdraft

Posted in CFPB

On August 4, 2017, the CFPB released four “prototype” model overdraft disclosure forms styled under its “Know Before You Owe” initiatives with a press release. The CFPB said the forms were designed to clarify the risks and costs of overdraft coverage for consumers. The press release and forms were accompanied by a report entitled Data Point: Frequent Overdrafters, highlighting the habits of the small group of consumers who initiated the most overdrafts per year.

Read our client alert.

OCC Seeks Public Comment on the Volcker Rule

Posted in Regulatory Developments

Section 13 of the Bank Holding Company Act (the “Volcker Rule”) and its implementing regulations (the “Implementing Regulations”) generally prohibit banking entities from engaging in proprietary trading and from investing in, sponsoring, or having certain relationships with covered funds. On August 2, 2017, the OCC submitted to the Federal Register a notice requesting public comment on how the Implementing Regulations should be revised to better accomplish the purposes of the Volcker Rule while decreasing the compliance burden on banking entities and fostering economic growth (the “Notice”). The Notice also requests input concerning “how the existing rule could be implemented more effectively without revising the regulation.”

Read our client alert.