Recently, CFPB Director Rohit Chopra spoke at a joint meeting of the CFPB’s Community Bank Advisory Council and Credit Union Advisory Council in which he expressed concerns that core service providers that many small banks and credit unions rely on “have too much power in the system.”  Despite providing core banking functions such as deposit taking, payment facilitation, and loan origination, the Director notes that local banks and credit unions report dissatisfaction with providers in their innovation speeds, product roll-outs and third-party compatibility, and tech sophistication.
Continue Reading CFPB Director Critical of Small Bank Core Service Providers

On April 7, the FDIC issued a Financial Institution Letter (FIL-16-2022) calling on all FDIC-supervised intuitions that intend to engage in, or that are currently engaged in, any activities involving or related to crypto assets to notify the FDIC.
Continue Reading FDIC Warns Insured Institutions Engaging in Crypto Activities About Risks

On April 8, the acting comptroller of the currency, Michael J. Hsu, discussed many aspects of stablecoins (we previously discussed the President’s Working Group report on stablecoins and Hsu’s comments here). In his speech at the Georgetown University Law Center, Hsu remarked that stablecoins are a “hot topic” among policymakers and posed three considerations that speak to the architecture of stablecoins.
Continue Reading Acting Comptroller Discusses Architecture of Stablecoins

On February 23, eight federal agencies including the CFPB, FDIC, OCC, Federal Reserve Board, NCUA, HUD, DOJ, and FHFA issued an interagency statement to remind creditors of the ability under the ECOA and Regulation B to establish special purpose credit programs (SPCPs) to meet the credit needs of specified classes of persons. According to an accompanying blog, the CFPB stated that “lenders are permitted to design and implement SPCPs to extend credit to a class of persons who would otherwise be denied credit or would receive it on less favorable terms, under certain conditions.”

Continue Reading Federal Agencies Issue Interagency Statement on Special Purpose Credit Programs Under ECOA, Regulation B

The Consumer Financial Protection Bureau (“CFPB”) has continued to ratchet up its regulatory scrutiny over the consumer financial services market.  On January 26, 2022, the CFPB published an initiative seeking public input on so-called “junk fees” in consumer financial services.  According to the CFPB, “junk fees” occur where: (i) fees are charged for things consumers believed were covered by the baseline price of a product or service; (ii) fees are unexpected; (iii) the expense of the fee is greatly disproportionate to the cost of the service; or (iv) it is unclear why a fee was charged.  The CFPB contends that “junk fees” are detrimental to the market for financial services because they “obscure the true price” of a service by, for example, offering attractive introductory pricing, but then make up the difference by levying various back-end fees on consumers.
Continue Reading Consumer Fees Find Themselves in the Crosshairs: The CFPB Seeks Public Input on Alleged “Junk Fees” in the Consumer Financial Services Industry

The Consumer Financial Protection Bureau (“CFPB”) has enhanced its regulatory scrutiny of the fees financial institutions assess on consumer depositors.  To better understand the gamut of such fees and financial institutions’ practices with respect to the same, the CFPB has required financial institutions to submit detailed quarterly statements identifying and breaking out the various types of fees assessed on consumer accounts.  In particular, the CFPB has required them to provide aggregate amounts charged as (i) overdraft and non-sufficient funds (“NSF”) fees; (ii) periodic account maintenance fees; and (iii) ATM fees (in particular, the fees charged in connection with consumer transactions at out-of-network ATMs).  The CFPB has now analyzed the consumer fee data going back to 2015 and published two reports: (i) Data Point: Overdraft/NSF Fee Reliance Since 2015—Evidence from Bank Call Reports; and (ii) Data Point: Checking Account Overdraft at Financial Institutions Served by Core Processors.  In general, the reports reveal that overdraft and NSF fees constitute one of the primary sources of financial institution revenues generated from consumer banking operations.  Indeed, overdraft fees alone generated more than $15 billion in revenues for banks and credit unions in 2019.

Continue Reading The CFPB Study Shines Spotlight on Banking Fees as a Presage to Greater Regulatory Scrutiny of Consumer Banking Fees

On July 13, the Federal Reserve, FDIC, and OCC proposed risk management guidance to help banking organizations manage risks related to third-party relationships, including relationships with vendors, FinTech companies, affiliates, and the banking organizations’ holding companies.  The proposal is based on existing but disparate third-party risk management guidance from the three prudential regulators, and is intended to promote consistency across the banking agencies.  If finalized, it will replace the guidance that each agency has released independently.

Continue Reading Federal Agencies Request Comments on Risk Management Guidance for Third-Party Relationships