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InfoBytes Blog

Financial Services Law Insights and Observations


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  • Treasury issues final rule supporting the Covid-19 response

    Federal Issues

    On January 6, the U.S. Treasury Department issued the final rule for the State and Local Fiscal Recovery Funds (SLFRF) program, which was established under the American Rescue Plan Act, and has delivered approximately $350 billion to state, local, and Tribal governments for Covid-19 pandemic relief. According to Treasury, the “SLFRF program ensures governments have the resources needed to respond to the pandemic, including providing health and vaccine services, supporting families and businesses struggling with the pandemic’s economic impacts, maintaining vital public services, and building a strong and equitable recovery.” Highlights of the final rule include providing additional clarity and flexibility for recipient governments by, among other things: (i) expanding the list of eligible uses for funds; (ii) increasing support for public sector hiring and capacity; (iii) streamlining options to provide premium pay for essential workers; and (iv) broadening eligible water, sewer, and broadband infrastructure projects. The rule is effective April 1, 2022.

    The same day, the California Department of Financial Protection and Innovation (DFPI) announced that its efforts to spur mortgage servicers’ participation in the California Mortgage Relief Program, which is funded by Treasury under the American Rescue Plan Act, has “helped forge a national model to protect homeowners impacted by the COVID-19 pandemic.” According to the announcement, among other things, DFPI “issued a historic reporting requirement for residential mortgage servicing licensees to report how they would be protecting homeowners through increased mortgage relief staffing, mitigation efforts such as repayment plans, and state and federal mortgage relief funding,” and “encouraged mortgage lenders and servicers to work with affected customers and communities to avoid foreclosures.”

    Federal Issues Department of Treasury DFPI Covid-19 California State Issues

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  • FTC comments on CFPB’s big tech payments inquiry

    Federal Issues

    On December 21, FTC Chair Lina M. Khan submitted a comment in response to the CFPB's Notice and Request for Comment inquiring about the CFPB’s October orders issued to six large U.S. technology companies seeking information and data on their payment system business practices. (Covered by InfoBytes here.) In her comment, Khan noted her three areas of concern that she hopes can help to inform the CFPB’s inquiry, including that big tech companies’ (i) “participation in payments and financial services could enable them to entrench and extend their market positions and privileged access to data and AI techniques in potentially anticompetitive and exploitative ways”; (ii) “use of algorithmic decision-making in financial services amplifies concerns of discrimination, bias, and opacity”; and (iii) “increasingly commingled roles as payment and authentication providers could concentrate risk and create single points of failure.” Khan noted that “[t]he potential risks created by Big Tech’s expansion into payments and financial services are notable and demand close scrutiny,” and stated that she will be monitoring “this inquiry and the findings it produces to help inform the FTC’s work.”

    Federal Issues FTC CFPB Payments Artificial Intelligence Discrimination

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  • VA extends suspension of certain property inspection requirements for Covid-19 forbearance cases

    Federal Issues

    On December 21, the Department of Veterans Affairs (VA) issued Circular 26-21-27 to extend the suspension of certain inspection requirements for properties purchased with loans guaranteed by the VA where the borrower has been negatively impacted by Covid-19. In 2020, the VA temporarily suspended its requirement to conduct a property inspection before the 60th day of delinquency for borrowers whose loans are currently in forbearance and were current or had not reached the 60th day of delinquency when the borrower requested CARES Act forbearance. Circular 26-21-27 sunsets on October 1, 2022.

    Federal Issues Department of Veterans Affairs Covid-19 Consumer Finance CARES Act Mortgages Servicing Forbearance

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  • President Biden signs NDAA into law

    Federal Issues

    On December 27, President Biden signed S. 1605 the “National Defense Authorization Act for Fiscal Year 2022” (NDAA) into law. The NDAA provisions include Section 6107, which requires the Treasury Secretary to conduct a briefing within one year of the law’s enactment before the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee on the delegation of examination authority under the Bank Secrecy Act. Additionally, Section 6207 expands the coverage of the Servicemembers Civil Relief Act protections related to the termination of residential or motor vehicle leases and telephone service contracts. Specifically, Section 6207 makes those protections applicable to members of the Foreign Service who are posted abroad at a Foreign Service post.

    Federal Issues Federal Legislation Bank Secrecy Act SCRA

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  • OCC revises CRA small and intermediate bank asset-size threshold adjustments

    On December 30, the OCC announced revisions to the asset-size thresholds used to define small and intermediate small banks and savings associations under the Community Reinvestment Act (CRA). Effective January 1, a small bank or savings association will mean an institution that, as of December 31 of either of the past two years, had assets of less than $1.384 billion. An intermediate small bank or savings association will mean an institution with assets of at least $346 million as of December 31 of both of the prior two years, and less than $1.384 billion as of December 31 of either of the prior two years. The adjustments follow a final rule issued last month, which rescinded the OCC’s 2020 CRA rule and replaced it with a rule based largely on the prior rules adopted jointly by the federal banking agencies in 1995, as amended. (Covered by InfoBytes here.) Under the 2021 final rule, banks are evaluated under different CRA examination procedures based on their asset-size threshold amounts. As previously covered by InfoBytes, the Federal Reserve Board and the FDIC also announced joint annual adjustments to the CRA asset-size thresholds used to define “small bank” and “intermediate small bank” in December.

    Bank Regulatory Federal Issues OCC FDIC Federal Reserve Agency Rule-Making & Guidance CRA Supervision

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  • Jelena McWilliams to resign as FDIC chairman

    On December 31, Jelena McWilliams announced her resignation as FDIC Chairman effective February 4. McWilliams, who was appointed in 2018, noted in her resignation letter to President Biden that throughout her tenure at the agency the FDIC “has focused on its fundamental mission to maintain and instill confidence in our banking system while at the same time promoting innovation, strengthening financial inclusion, improving transparency, and supporting community banks and minority depository institutions, including through the creation of the Mission Driven Bank Fund.” She also credited FDIC staff for taking swift measures to maintain stability and provide flexibility for banks and consumers impacted by the Covid-19 pandemic.

    McWilliams’ resignation follows a conflict among members of the FDIC Board of Directors related to a joint request for information (RFI) seeking public comment on revisions to the FDIC’s framework for vetting proposed bank mergers. Last month, FDIC Board member Martin J. Gruenberg and Rohit Chopra (who has an automatic board seat as Director of the CFPB) issued a joint statement announcing that the FDIC Board of Directors voted to launch a public comment period on updating the FDIC’s regulatory implementation of the Bank Merger Act. Gruenberg and Chopra indicated at the time that the Board members taking part in this action had approved the RFI. Shortly following the announcement, the FDIC released a statement disputing that any action had been approved. (Covered by InfoBytes here.) Chopra issued a follow-up statement challenging the view that only the FDIC Chairperson has the right to raise matters for discussion in Board meetings, and called for “immediate[]” resolution of the conflict, stating that “[a]bsent a return to legal reality and constructive engagement, board members will need to take further steps to exercise independence from management and to ensure sound governance of the [FDIC].” (Covered by InfoBytes here.)

    Bank Regulatory Federal Issues Agency Rule-Making & Guidance FDIC CFPB

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  • CFPB examines pandemic’s effects on consumer finances

    Federal Issues

    On December 21, the CFPB released a data point report discussing the results of a Making Ends Meet survey, which examined consumers’ financial health during the Covid-19 pandemic. Using the results from the survey as well associated credit bureau data, the Bureau found that while consumers “were much more likely to face income drops during the pandemic,” their “financial well-being scores improved on average through the end of the survey period (February 2021).” The Bureau reported that this may be attributed to pandemic-assistance policies, including unemployment insurance and pandemic-specific loan and rent flexibilities, many of which have ended or will end soon. Among the report’s observations, the Bureau noted a pattern between credit card debt and credit card utilization rates, where “credit card debt increased and decreased as cash assistance policies started and stopped.” Additionally, with the exception of federal student loan borrowers who received an automatic zero-payment-due plan, the Bureau found that roughly “80 percent of consumers who received rent, mortgage, credit card, or other forbearance suffered a significant income drop.” Recognizing that these policies helped protect consumers impacted by pandemic, the Bureau cautioned that “their expiration may lead to increased consumer distress unless the economic recovery is strong and equitable enough to make up for the loss of protections.”

    Federal Issues CFPB Consumer Finance Covid-19

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  • Education Dept. extends student loan moratorium

    Federal Issues

    On December 22, the Department of Education announced a 90-day extended pause on student loan repayment, interest, and collections through May 1, 2022, which will allow the Biden Administration “to assess the impacts of the Omicron variant on student borrowers and provide additional time for borrowers to plan for the resumption of payments and reduce the risk of delinquency and defaults after restart.” As previously covered by InfoBytes, in August 2021, President Biden announced the extension of the moratorium on collecting student loans until January 31, 2022. According to the Department, the extended pause will assist 41 million borrowers in saving $5 billion per month and “[b]orrowers are encouraged to use the additional time to ensure their contact information is up to date and to consider enrolling in electronic debit and income-driven repayment plans to support a smooth transition to repayment.”

    Federal Issues Student Lending Covid-19 Agency Rule-Making & Guidance Department of Education

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  • FDIC announces Alabama disaster relief

    On December 23, the FDIC issued FIL-82-2021 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Alabama affected by severe storms and flooding. The FDIC acknowledged the unusual circumstances faced by institutions and their customers affected by the weather and suggested that institutions work with impacted borrowers to, among other things, (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans to those affected by the severe weather, provided the measures are done “in a manner consistent with sound banking practices.” Additionally, the FDIC noted that institutions “may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.” The FDIC will also consider regulatory relief from certain filing and publishing requirements.

    Bank Regulatory FDIC Disaster Relief CRA Consumer Finance Alabama Federal Issues

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  • FTC settles with mortgage analytics company

    Federal Issues

    On December 22, the FTC announced the final approval of a settlement with a mortgage industry data analytics firm (defendant) for allegedly failing to develop, implement, and maintain a comprehensive information security program and ensure third-party vendors are capable of implementing and maintaining appropriate safeguards for customer information in violation of the Gramm-Leach Bliley Act’s Safeguards Rule. As previously covered by InfoBytes, in December 2020, the FTC alleged that a vendor hired by the defendant stored the unencrypted contents of mortgage documents on a cloud-based server without any protections to block unauthorized access, such as requiring a password. According to the FTC, because the vendor did not implement and maintain appropriate safeguards to protect customer information, the cloud-based server containing the data was improperly accessed approximately 52 times. The FTC claimed, among other things, that the defendant failed to adequately vet its third-party vendors and never took formal steps to evaluate whether the vendors could reasonably protect the sensitive information. Moreover, the defendant’s contracts allegedly did not require vendors to implement appropriate safeguards, nor did the defendant conduct risk assessments of its vendors.

    The settlement requires the defendant to, among other things, implement a comprehensive data security program and undergo biennial assessments conducted by a third party on the effectiveness of its program. Additionally, the defendant must report any future data breaches to the FTC no later than 10 days after it provides notice to any federal, state, or local government entity.

    FTC Commissioner Rebecca Kelly Slaughter provided a lone dissenting statement.

    Federal Issues FTC Enforcement Settlement Mortgages Gramm-Leach-Bliley Safeguards Rule Privacy/Cyber Risk & Data Security Third-Party Vendor Management Data Breach

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