On January 23, 2025 the New York Department of Financial Services (NYDFS) announced proposed regulations to curb overdraft fees and insufficient funds fees charged by banks in New York. The proposed rules aim to protect consumers from what the NYDFS describes as “exploitative and deceptive banking fees.”Continue Reading New York Proposes Limits on Overdraft and NSF Fees
On November 13, the Federal Reserve Board issued two cease and desist orders against a state-chartered bank and a bank holding company for alleged compliance deficiencies.Continue Reading Federal Reserve Board Penalizes Two Banks for Compliance Deficiencies
On October 30, two leading fintech industry trade associations submitted comments (see comment letters here and here) in response to a joint Request for Information (RFI) issued by the Office of the Comptroller of the Currency (OCC), the Federal Reserve System (Fed), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the “Agencies”) (see here for our previous discussion on the RFI). The RFI seeks input on the nature of bank-fintech arrangements, effective risk management practices, and the implications of such arrangements, including whether enhancements to existing supervisory guidance may be helpful in addressing associated risks. The comment period concluded on October 30.Continue Reading Fintech Industry Trade Associations Respond to Federal Regulators’ Joint RFI on Bank-Fintech Partnerships
On August 5, a prominent investment brokerage firm disclosed in a quarterly filing that it has been responding to requests from the SEC since April related to the firm’s practice of sweeping uninvested customer account balances into interest-bearing deposit programs at affiliate banks in order to generate income. This disclosure comes on the heels of the firm being named in two separate class action lawsuits earlier this year, both alleging that the firm breached customer agreements and its fiduciary duties to account holders by failing to pay reasonable interest rates on cash balances swept to affiliate bank deposit programs.Continue Reading Scrutiny of Cash Sweep Programs Intensifies as Brokers Face Wave of Class Action Suits
On March 28, the FDIC released the spring edition of its consumer compliance supervisory highlights. The FDIC supervises approximately 3,000 state-chartered banks and thrifts that are not members of the Federal Reserve System. Most of these institutions are community banks that provide credit and services locally. Like the CFPB, the FDIC conducts supervisory activities, including examinations, to review institutions’ compliance management systems. Its examination focuses on identifying the greatest potential risk of harm to consumers, based on the business model and products offered by a particular institution. The FDIC’s report highlights consumer compliance issues identified by the agency’s examination of close to 900 institutions in 2023. While the entire report is worth a read, here are some key areas of focus:Continue Reading Takeaways From the FDIC’s Spring 2024 Consumer Compliance Supervisory Highlights
On March 28, the Federal Reserve (Fed) issued a cease-and-desist order to a Wyoming-based bank holding company, citing deficiencies identified in a September 2023 inspection related to its “fintech business strategy, board oversight, capital, earnings, liquidity, risk management, and compliance” in connection with the banking-as-a-service activities of its bank subsidiary. Continue Reading Fed Brings Enforcement Action Against Wyoming Bank Holding Company Over “Fintech Business Strategy”
In the FDIC’s latest monthly update on enforcement decisions and orders, the agency published recent consent orders it entered against both a New York-based and an Ohio-based bank, the latest in the agency’s series of enforcement actions against bank-fintech partnerships. The orders did not impose any fines or civil penalties but require corrective actions by the banks and their boards.Continue Reading FDIC Issues Orders Against Two More Banks Over Fintech Partnerships
California has recently proposed legislation that, if enacted, would impose a new licensing requirement for any person providing “commercial brokerage” services to a borrower in connection with a commercial loan of $5,000 or more. The legislation, Senate Bill 869, would expand the current commercial loan broker licensing requirements under the California Financing Law, which, as of now, does not require a license to broker non-real estate secured commercial loans.Continue Reading California Bill Proposes to License All Commercial Loan Brokers
On November 21, a Washington-based bank confirmed through a public filing that it entered into a consent order with the FDIC alleging that the bank engaged in unsafe or unsound banking practices, primarily related to products offered through a fintech partner. In particular, the FDIC determined that in connection with the bank’s relationship with the fintech, the bank engaged in, among other things, deceptive and unfair acts and practices in or affecting commerce by making implied claims that credit products with non-optional debt cancellation features were unemployment insurance, approving consumers who did not qualify for the debt cancellation feature, and misrepresenting the fees and benefits for those products.Continue Reading FDIC Issues Order Against Bank Over Fintech Partnership
On January 27, the Federal Reserve Board (FRB) announced that it unanimously voted to deny a crypto firm’s application to become a member of the Federal Reserve System. This denial ends the crypto firm’s 27-month effort to obtain a “master account,” which allows companies to move money through the Federal Reserve System without having to use a federally insured bank.Continue Reading Fed Board Denies Crypto Firm’s Bid to Join Federal Reserve System
On December 16, 2021, the Office of the Comptroller of the Currency (“OCC”) and the Financial Crimes Enforcement Network (“FinCEN”) issued civil monetary penalties against a Texas community bank for violations of the Bank Secrecy Act (“BSA”). The consent orders read like a veritable “how not to” for reviewing anti-money laundering alerts.
Continue Reading OCC and FinCEN Issue $9 Million in Penalties for BSA-AML Violations