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Category Archives: Regulatory Developments

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Is California’s Agent of a Payee Exemption Shrinking?

Posted in Regulatory Developments

Earlier this year, the California Department of Business Oversight (DBO) issued a draft rulemaking relating to the scope of the agent of a payee exemption (the “Exemption”) under the Money Transmission Act, Cal. Fin. Code § 2000 et seq. (MTA). As we observed at the time, the rulemaking affirms a broader interpretation of the scope of the Exemption… Read More

CFPB California Style: The California Consumer Financial Protection Law Brings More Providers of Consumer Financial Products and Services Into the Regulatory Tent

Posted in Regulatory Developments

On August 31, 2020, the California legislature passed the California Consumer Financial Protection Law (CCFPL). The law reflects Governor Newsom’s vision of a much more powerful banking agency with new registration authority, UDAAP authority mirroring the authority of the CFPB, and expanded enforcement authority. But important amendments adopted by the legislature will exempt many regulated… Read More

CFPB Issues RFI Seeking Information on the Impact of the CARD Act Regulations on Small Entities and on the Consumer Credit Card Market

Posted in Regulatory Developments

On August 28, 2020, the Consumer Financial Protection Bureau published a request for information to gather feedback on the economic impact on small entities of the rules that implement the Credit Card Accountability Responsibility and Disclosure Act of 2009, and a general review examining the consumer credit card market as a whole. Read our client… Read More

CFPB California Style: New Name Is Just the Start for a Much More Powerful Regulator

Posted in Regulatory Developments

California has become the latest state to create its own mini Consumer Financial Protection Bureau (CFPB). As part of the 2020-21 budget, Governor Gavin Newsom set in motion a reorganization and significant expansion of the authority of the California banking regulator, the Department of Business Oversight (DBO). This reorganization includes a new name (the “Department… Read More

Take Two: State AGs Target the FDIC’s Final Rule Reaffirming Valid-When-Made Doctrine

Posted in Regulatory Developments

Last week, the state attorneys general of seven states and the District of Columbia filed suit against the Federal Deposit Insurance Corporation (FDIC) challenging the FDIC’s final rule reaffirming the valid-when-made doctrine for loans originated by state-chartered federally insured banks.  The lawsuit was expected after three state attorneys general filed suit against the OCC challenging… Read More

Dropping Anchor in the (Safe) Harbor: Colorado “True Lender” Litigation Settles

Posted in Regulatory Developments

Ending years of litigation, the Colorado Attorney General and the Administrator of the Colorado Uniform Consumer Credit Code (“Administrator”) announced a settlement with marketplace lenders Avant of Colorado, LLC and Marlette Funding, LLC (together, the “Non-Bank Partners”), and their bank partners WebBank and Cross River Bank (together, the “Banks”). Under the terms of the settlement, the marketplace… Read More

Bitcoin Is “Money” for Purposes of D.C. Money Transmission Law, Says Federal Court

Posted in Regulatory Developments

A recent federal district court ruling in a criminal anti-money laundering case suggests that the transmission of virtual currency on behalf of another person requires a state money transmission license — even if the state’s money transmission law does not expressly address the regulation of virtual currency. This interpretation has the potential to significantly disrupt… Read More

CFPB Seeks Input on Improving Access to Credit

Posted in Regulatory Developments

On August 3, 2020, the Consumer Financial Protection Bureau (CFPB) published a Request for Information (RFI) that seeks comment on ways to clarify the Equal Credit Opportunity Act’s (ECOA) implementing regulation, Regulation B, to expand access to credit and improve protections against credit discrimination. According to the CFPB, comments provided in response to the RFI will help the… Read More

Not So Fast—State Attorneys General Seek to Enjoin OCC’s Final Rule Reaffirming “Valid When Made” Doctrine

Posted in Regulatory Developments

On July 29, 2020, the state attorneys general of California, Illinois, and New York filed suit against the Office of the Comptroller of the Currency (OCC) challenging the OCC’s Final Rule reaffirming the “valid when made” doctrine for loans originated by national banks.  The challenge extends the uncertainty created by the Second Circuit’s Madden decision… Read More

New York Passes Bill to Increase Transparency in Lending

Posted in Regulatory Developments

On July 23, 2020, in an effort to increase transparency in commercial financings so borrowers may make more informed decisions, the New York State legislature passed a bill, S5470B, which currently awaits the Governor’s signature. The bill requires certain commercial financing providers to disclose to recipients critical information about the amount, pricing, and terms of specific commercial… Read More

Will the True Lender Please Stand? – OCC Proposes “True Lender” Bright-Line Rule

Posted in Regulatory Developments

On July 20, 2020, the Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking that would establish when national banks or federal savings associations (collectively, banks) are the “true lender” making a loan in the context of a partnership between the bank and a third party.  Recognizing the uncertainty created by existing… Read More

Louisiana Becomes Second State to Require Virtual Currency Licensing

Posted in Regulatory Developments

Developments in virtual currency regulation have been top-of-mind with recently announced initiatives from the New York Department of Financial Services. Companies engaging in virtual currency activity should also, however, take note of Louisiana’s enactment of HB701. This law, which takes effect on August 1, 2020, is a broad standalone licensing regime for the regulation of… Read More

Machine Underwriting: The CFPB Issues Blog Post on Use of Artificial Intelligence in Credit Underwriting

Posted in CFPB, Regulatory Developments

On July 7, 2020, the Consumer Financial Protection Bureau (CFPB or Bureau) published a blog post on the use of artificial intelligence (AI), especially machine learning (ML), in credit underwriting. The blog post addresses industry concerns about how AI and ML models interact with the existing regulatory framework, specifically the adverse action notice requirements in the Equal Credit… Read More

FinCEN Guidance: How to Hemp

Posted in Regulatory Developments

The Financial Crimes Enforcement Network (FinCEN) released guidance on the Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations and considerations surrounding hemp-related customers. These customers include hemp growers, and processors and manufacturers that purchase hemp from such growers. The Guidance supplements a December 2019 interagency statement, summarized in our prior Client Alert, and outlines… Read More

Agencies Finalize Amendments to Volcker Rule Covered Fund Provisions

Posted in Regulatory Developments

On June 25, 2020, the five federal agencies with responsibility for implementing the Volcker Rule finalized amendments to the Volcker Rule’s provisions related to investing, sponsoring, and having certain relationships with “covered funds.”  The final rule is largely consistent with the agencies’ proposal of January 30, 2020 and is the final anticipated amendment in a… Read More

Following Suit – FDIC Finalizes Rule Reaffirming “Valid When Made” Doctrine for State Banks

Posted in Regulatory Developments

On June 25, 2020, following the OCC’s lead, the Federal Deposit Insurance Corporation’s (FDIC) board of directors voted 3-1 to finalize a rule that reaffirms the “valid when made” doctrine as applicable to loans originated by state-chartered banks and insured branches of foreign banks. The FDIC believes that reaffirmation of a state bank’s ability to… Read More

Consumer Financial Pilot Advisory Opinion Program Takes Flight

Posted in CFPB, Regulatory Developments

The Consumer Financial Protection Bureau recently announced the launch of a pilot advisory opinion (AO) program and also proposed a permanent AO program, which will replace the Pilot AO Program after the proposed permanent AO program is finalized. Both programs are intended to provide guidance to address uncertainty regarding the Bureau’s existing regulations, and are part of… Read More

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… Read More

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… Read More

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… Read More

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… Read More

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… Read More

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,… Read More

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… Read More