On September 8, the OCC issued two bulletins addressing banks’ obligations under the Right to Financial Privacy Act and clarifying how the agency will evaluate “politicized or unlawful debanking” in licensing and Community Reinvestment Act (CRA) reviews. The guidance was issued consistent with the recently issued Executive Order 14331 (previously discussed here).Continue Reading OCC Issues Bulletins on Customer Financial Record Protections and Politicized Debanking
On August 7, President Trump signed an Executive Order directing federal banking regulators to prevent financial institutions and financial service providers from denying or restricting financial services and products based on the recipients political or religious beliefs. The Order also requires regulators to remove the concept of “reputational risk” that the administration believes could lead to debanking from supervisory guidance, manuals, and related examination materials.Continue Reading Trump Signs Executive Order on Debanking
On May 7, the OCC issued Interpretive Letter 1184, reaffirming that national banks and federal savings associations may provide cryptocurrency custody and execution services, including through sub-custodians. The OCC confirmed that these activities are permissible under existing banking authority so long as banks comply with applicable law and engage in safe and sound practices.Continue Reading OCC Confirms Banks’ Authority to Offer Crypto Custody and Execution Services
On March 24, acting FDIC Chairman Travis Hill informed Congress that the agency is preparing to eliminate the use of “reputation risk” as a basis for supervisory criticism. In a letter to Rep. Dan Meuser (R-Pa.), Hill explained that the FDIC has completed a review of its regulations, guidance, and examination procedures to identify and remove references to reputational concerns in its supervisory framework.Continue Reading FDIC Aims to Eliminate Reputational Risk from Supervision
On November 7, 2024, the CFPB ordered one of the largest credit unions in the nation to pay over $95 million for its practices related to the imposition of overdraft fees. The enforcement action addresses practices from 2017 to 2022 where the credit union charged overdraft fees on transactions that appeared to have sufficient funds, affecting consumers including those in the military community, in violation of the CFPA’s prohibition on unfair, deceptive, and abusive acts or practices.Continue Reading CFPB Imposes $95 Million Fine on Large Credit Union for Overdraft Fee Practices
On November 5, the Federal Trade Commission (“FTC”) filed a complaint against a company in connection with its mobile banking app, alleging violations of Section 5(a) of the FTC Act and Section 4 of the Restore Online Shoppers’ Confidence Act (“ROSCA”) for misleading customers through hidden fees and other deceptive practices. According to the FTC, the app targeted financially vulnerable individuals with surprise “tip” fees, amounting to 15% of cash advances, which was falsely marketed as a charitable donation. While customers were led to believe their tips funded meals for children, only a fraction of the funds was actually donated, while the rest was retained by the company as revenue. Between 2022 and mid-2024, this practice reportedly generated over $149 million for the company.Continue Reading FTC Takes Aim at Mobile Banking App for Deceptive Advertising Practices
On October 31, the CFPB entered into a consent order with a Florida-chartered credit union for harming consumers in connection with the botched launch of a new online banking system, in violation of the Consumer Financial Protection Act (CFPA). Continue Reading CFPB Penalizes Major Credit Union for Mishandled Online Banking Program Rollout
On October 3, the OCC issued Bulletin 2024-29, providing guidance for managing credit risk in connection with refinancing commercial loans. Continue Reading OCC Issues Guidance on Refinance Risk in Commercial Lending
On September 24, the Governor of California signed AB 2017 (the “Act”) into law. The Act prohibits state-chartered banks and credit unions from charging consumers non-sufficient fund fees (“NSF fees”) when they initiate transactions that are instantaneously declined due to insufficient funds.Continue Reading California Enacts Law Prohibiting State Banks and Credit Unions from Charging NSF Fees
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 July 25, federal regulators issued a joint statement to further put banking organizations on notice of the inherent risks of collaborating with fintechs in offering deposit products and services. This guidance aims to ensure the stability and integrity of the banking-as-a-service (“BaaS”) business model.Continue Reading Federal Regulators Issue Joint Statement and Request for Information Emphasizing Caution with BaaS Model