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Elizabeth Anne Khalil is a Member in Dykema's Government Policy Practice Group and Regulated Industries Department. She focuses her practice on all aspects of financial institution regulation, with a particular emphasis on compliance matters.

The Consumer Financial Protection Bureau (CFPB)’s Office of Regulations has long offered the public the opportunity to ask the agency questions about specific regulatory provisions and receive informal feedback from CFPB attorneys, although the path for doing so was not always clear. Now, the CFPB is offering a new web interface to use for submitting such questions. Those wanting to send questions to the CFPB should bookmark the page for the new web form. Continue Reading New CFPB Online Inquiry Form Offers New Way to Ask Regulatory Questions

Last week, the Federal Reserve issued proposed guidance that could dial back some regulatory expectations for directors of financial institutions. The proposed guidance, applicable to Fed-supervised entities like bank holding companies and state member banks, would clarify the role of boards of directors, and place more responsibilities back onto management instead. This breaks with a trend over the past several years in which regulators have urged more and more active and seemingly granular involvement from bank boards. Continue Reading Outside Bank Directors Take Note: Could Regulators’ Expectations Be Changing (Again)?

On June 15, 2017, the Federal Reserve Board (FRB) published in the Federal Register final amendments to Regulation CC (Availability of Funds and Collection of Checks). The amendments contain a number of changes that will affect financial institutions, such as modifications to check return requirements, additional warranties, and new indemnities, including a new indemnity for remote deposit capture (RDC). (Spoiler Alert: The indemnity for RDC has significant implications for financial institutions that offer RDC services.) The rule will become effective July 1, 2018.

Regulation CC implements the Expedited Funds Availability Act (EFAA) and the Check Clearing for the 21st Century Act (Check 21 Act). The FRB previously published a notice of proposed rulemaking to amend Regulation CC in February 2014. Continue Reading Amendments to Regulation CC Affect Liability Considerations for Financial Institutions

The Consumer Financial Protection Bureau (CFPB) proposed Friday to temporarily relax the scope of upcoming changes to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA), by raising one threshold for HMDA reporting. Under Regulation C amendments previously finalized and scheduled to take effect in 2018, HMDA reporting requirements would apply to any financial institution originating 100 or more open-end home equity lines of credit (HELOCs) per year over the prior two years. Under the new proposal, the HMDA reporting requirements would apply through calendar year 2019 to institutions that originated 500 or more HELOCs per year over the prior two years. In the meantime, the CFPB would conduct further studies to help determine whether to permanently change this threshold. Continue Reading CFPB Offers Smaller HELOC Lenders Temporary Relief from HMDA Coverage; HMDA Changes Still Loom In the Future

The long-awaited  Tenth Circuit Court of Appeals decision in the case of Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City was issued this week. In short: the would-be credit union, formed to serve participants in the state-legal marijuana sector, lives to fight another day—but minus its original purpose for existing.

Background

Fourth Corner Credit Union was originally formed to solve an acute problem for marijuana-related businesses (MRBs) and individuals associated with MRBs: the inability to obtain mainstream banking services. Without access to bank or credit union accounts, MRBs remain chiefly cash-based businesses, left to their own devices to figure out how to store money and move it around, including how to pay employees and vendors, and to keep cash safe from theft.  Continue Reading Fourth Corner Credit Union Obtains Pyrrhic Victory for Marijuana Banking

While the future of health care legislation has been dominating headlines, some quiet but important developments in Washington regarding the future of federal financial regulation have also been taking place. These developments do not significantly clarify the path forward; much of the uncertainty about which we have written here remains. But recent developments do signal issues to monitor in the near and longer term.

Nominations

The Trump Administration has announced nominations for two important federal bank regulatory posts. Continue Reading Federal Financial Reform: Where Does It Stand?

On May 24, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments in the case of PHH vs. CFPB. The case, arising out of a CFPB enforcement action under the Real Estate Settlement Procedures Act (RESPA), also addresses the fundamental issue of whether the CFPB’s leadership structure is permissible under the Constitution.   

The en banc consideration of the case followed the opinion of a three-judge panel of the D.C. Circuit that found the Bureau’s structure unconstitutional because it features a single director who is not removable at will by the President. While other federal agencies are led by a single person—including a fellow financial regulator, the Office of the Comptroller of the Currency (OCC)—the court dismissed the similarity in a footnote, distinguishing the OCC structure in noting that the authorizing statutory language is not identical.  Continue Reading En Banc Oral Argument in PHH vs. CFPB Case Continues the CFPB Saga, Pits Federal Government Against Itself

On May 10, 2017, the Consumer Financial Protection Bureau (CFPB) announced steps toward issuing regulations to impose data reporting requirements on the small business lending industry, a rulemaking required under the Dodd-Frank Act of 2010. To help it draft a proposed rule, the CFPB requested public feedback through a Request for Information (RFI) Regarding the Small Business Lending Market. At the same time, the CFPB released a white paper, Key Dimensions of the Small Business Lending Landscape, discussing the data currently available regarding small business lending. Continue Reading CFPB Asks for Input on Small Business Lending Data Collection; Agency Sees Small Business As Fair Lending Priority

As the battle over the Office of the Comptroller of the Currency (OCC)’s proposed financial technology (“fintech”) charter continues, investors in fintech companies should consider what it would mean for their business strategies if fintech companies actually did become banks. From an investor’s perspective, is there upside or downside to a fintech company becoming a bank?

Potentially, both.

First, there are advantages to status as a bank. In particular, it could liberate fintech companies from certain onerous state-by-state requirements, such as licensing requirements and interest rate limits. Especially for fintech companies whose businesses center on money transmission or consumer lending—activities that are particularly affected by these state laws—this could be a huge advantage.   Continue Reading What Investors in Fintech Companies Need to Know About ‘Fintech Banks’

Does a national bank have to take deposits in order to be a national bank?

That question is at the center of a federal lawsuit filed April 26 against the Office of the Comptroller of the Currency (OCC) by the Conference of State Bank Supervisors (CSBS), the nationwide organization of state financial regulators. The action, filed in U.S. District Court for the District of Columbia, aims to block the OCC’s ability to offer its proposed national bank charter for non-deposit-taking financial technology (“fintech”) companies. CSBS alleges, among other things, that the OCC’s statutory authority allows it to charter only banks that engage in the traditional banking activity of taking deposits, and that any authority to charter non-deposit-taking national banks is limited to such banks specifically authorized by Congress. Continue Reading States’ Lawsuit Over OCC Authority to Create New Charter Creates Bumps in the Road for Fintech Firms