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The Enforcement Blog

CFPB Issues Statement on Supervisory and Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic

Posted in CFPB, Regulatory Developments

The Consumer Financial Protection Bureau (CFPB) issued a Statement on Supervisory and Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic under the Truth in Lending Act, its implementing Regulation Z, and the Electronic Signatures in Global and National Commerce Act. The CFPB’s Statement provides temporary supervisory and enforcement flexibility for credit card issuers regarding the electronic delivery of account-opening disclosures and temporary rate or fee reduction disclosures during the COVID-19 pandemic.

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Madden Put to Rest? – OCC Finalizes Rule Reaffirming “Valid When Made” Doctrine

Posted in Regulatory Developments

The Office of the Comptroller of the Currency (OCC) finalized a rule on May 29, 2020, that reaffirms the “valid when made” doctrine applicable to loans originated by a national bank. According to Acting Comptroller of the Currency Brian Brooks, the final rule “clarif[ies] that a bank may transfer a loan without affecting the legally permissible interest term[]” and “supports the orderly function of markets and promotes the availability of credit by answering the legal uncertainty created by the ‘Madden’ decision.” The OCC believes that the legal uncertainty caused by the decision of the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC “may disrupt banks’ ability to serve consumers, businesses and the broader economy efficiently and effectively.”

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First Mover: The OCC Finalizes its CRA Rule

Posted in Regulatory Developments

On May 20, 2020, the OCC published a final rule intended to modernize the rules implementing the Community Reinvestment Act (“CRA”). While the CRA is administered jointly by the OCC, the FDIC, and the Federal Reserve, the OCC alone is moving forward with the regulatory overhaul. As a result, the final rule’s changes apply only to national banks and thrifts.

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CFPB Issues Guidance Concerning COVID-19-Related Regulatory Pain Points

Posted in CFPB, Credit Cards, Regulatory Developments

This client alert provides an overview of three recent CFPB guidance documents highlighting existing regulatory flexibility and responsibilities for financial institutions when interacting with consumers in the context of the COVID-19 pandemic:

  • A statement notifying credit card issuers and other open-end creditors that the CFPB will provide supervision and enforcement flexibility during the pandemic with respect to the timeframe for creditor completion of billing error investigations under Regulation Z;
  • FAQs on existing flexibility in Regulation E and Regulation DD for providers of checking, savings, or prepaid accounts; and
  • FAQs on existing flexibility for open-end credit in Regulation Z.

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Federal Reserve Updates Key Features of the Main Street Lending Program

Posted in Regulatory Developments

On April 30, 2020, the Board of Governors of the Federal Reserve System (“FRB”) announced an expansion of the Main Street Lending Program (“MSLP”) and clarified certain aspects of the program through publication of a list of FAQs. In general, the changes expand the number of businesses eligible to borrow, reduce the minimum loan size for eligibility, and establish a third facility under the program, the Main Street Priority Loan Facility (“MSPLF”), expanding the loan types eligible for financing. In addition, certain U.S. operations of foreign banking organizations (“FBOs”) are now permitted to participate as lenders in the program. This client alert provides an overview of the MSLP facilities and summarizes the key changes to the MSLP, as announced on April 30, 2020.

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CFPB Facilitates CARES Act Payments to Individuals

Posted in CFPB, Regulatory Developments

On April 13, 2020, the Consumer Financial Protection Bureau issued an interpretive rule to provide guidance to government agencies, including the U.S. Department of the Treasury, to make COVID-19-related relief payments to individuals, including the economic impact payments authorized in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

According to a press release, the CFPB is loosening its existing rules to make it easier to provide EIPs and other government pandemic-relief payments via prepaid account to individuals without access to direct deposit.

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Announcing Morrison & Foerster’s Financial Services Resource Center

Posted in Regulatory Developments
The outbreak of COVID-19 has wide-ranging implications for the global economy, including the financial services industry. As the crisis unfolds, federal and state government are taking unprecedented action to mitigate its impact on the economy and set the stage for a recovery. We have created a Financial Services Resource Center to aggregate resources from all levels of government and provide our insights as to how government actions will impact the financial services industry. Our goal is to provide an up-to-date and comprehensive resource center to help you navigate these turbulent times.
Visit our Financial Services Resource Center. Be sure to bookmark the page and visit regularly, as new insights will be added frequently. Contact FinancialServices@mofo.com for more information on any of the topics covered in our Resource Center.

For more information about Coronavirus (COVID-19) preparedness, please visit our Coronavirus (COVID-19) Resource Center.

FDIC Opens for Business for Industrial Banks

Posted in Regulatory Developments

On March 17, 2020, the Federal Deposit Insurance Corporation (FDIC) announced two significant developments relating to industrial banks (also sometimes called industrial loan companies). First, in a notice of proposed rulemaking (NPR), the FDIC laid out the regulatory regime it expects to apply to companies not subject to consolidated supervision by the Board of Governors of the Federal Reserve System (“Federal Reserve”) that seek to control industrial banks. Second, the FDIC approved applications for deposit insurance submitted by Square, Inc. and Nelnet, Inc., paving the way for these companies to establish the first de novo industrial banks in over a decade.
These two developments, taken together, signal a path forward for the use of deposit-taking industrial bank charters by companies that cannot (or do not wish to) subject themselves to the activity restrictions of the Bank Holding Company Act of 1956, as amended (the “BHC Act”).

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CARES Act Enacted: Financial Services Provisions

Posted in Regulatory Developments

On March 27, 2020, President Trump enacted a historic stimulus package, the CARES Act, which contains a number of provisions of interest to the financial services industry. This alert provides an overview of the financial services-related provisions of the new law.

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Patchwork of Coronavirus (COVID-19) Mortgage and Rent Forbearance Efforts Creates Challenges for Mortgage Lenders and Servicers

Posted in Mortgage, Regulatory Developments

As consumers and business face ever-worsening financial conditions in the wake of the COVID-19 pandemic, federal agencies and some states and localities have stepped in to provide foreclosure and eviction relief.  Not surprisingly, the approaches to providing this relief vary greatly, creating significant operational challenges for servicers operating in multiple jurisdictions. We discuss below these varying approaches and provide a chart of federal and state actions with links to the relevant orders and guidance.

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