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It has been a tumultuous few days for the Consumer Financial Protection Bureau (CFPB), with dueling acting directors and emergency hearings. But while Office of Management and Budget (OMB) Director Mick Mulvaney is now officially the acting director of the CFPB—at least as of this writing—the story does not end there. Many questions remain to be answered regarding the legal framework governing the CFPB’s leadership structure, the future of the CFPB under a permanent director nominated by President Donald Trump, and the prospects for federal and state regulation of consumer financial matters.
Continue Reading While CFPB Leadership Fight Continues, Broader Questions Remain About Future of Consumer Financial Regulation

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The Consumer Financial Protection Bureau (CFPB)’s long-anticipated rulemaking on small-dollar lending took a surprising turn. The version of the CFPB’s small-dollar regulation proposed in 2016 would have covered a wide array of small consumer loans, and was further accompanied by a request for information on additional small-dollar products and practices not covered by the proposal, all of which implied that the CFPB had a far-reaching agenda for regulating small-dollar consumer credit and, as a first salvo, would fire off a sweepingly broad small-dollar regulation. But that is not what has happened so far. Rather, the final rule, announced on October 5, is narrowly drawn and centers on more limited, specific types of short-term payday loans.
Continue Reading What Does the CFPB’s Payday Rule Mean for the Future of Small-Dollar Lending?

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Vice President Mike Pence cast a tie-breaking vote in the U.S. Senate on the evening of October 24, 2017 to overturn the arbitration rules proposed in July by the Consumer Finance Protection Bureau. The House of Representatives had already voted in late July to repeal the arbitration rule under the Congressional Review Act. President Donald Trump has indicated that he will sign the resolution shortly, applauding Congress for “standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefited the most from the CFPB’s uninformed and ineffective policy.”   Senator Elizabeth Warren, who had led opposition to the repeal resolution, called the move “a giant wet kiss to Wall Street.”
Continue Reading In Case You Missed It: Senate Moves to Overturn CFPB Arbitration Rule

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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

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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)?

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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

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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

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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

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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?

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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