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  • NY proposes amendments of debt collector rules

    State Issues

    On September 30, the New York City Department of Consumer and Worker Protection (Department) published proposed amendments to its rules relating to debt collectors. The proposed amendments to its 2020 rules, which require debt collectors to inform consumers about language access services, come in response to the CFPB’s 2020 updates to the FDCPA, and the Department’s 2022 public hearing, among other things. The proposed rule (i) repeals a section requiring debt collection agencies to give consumers certain disclosures when collecting on time-barred debt; (ii) requires debt collection agencies to maintain an annual report identifying certain actions taken by the agency in any language; (iii) expands the list of required records to cover compliance with relevant laws and rules, as well as a monthly log of all debt collection-related communications by any medium between the agency and the consumer; and (iv) adds definitions relating to communications with consumers, such as “attempted communication,” “clear and conspicuous,” “covered medical entity,” “limited-content message,” “original creditor” and “originating creditor.”

    State Issues Agency Rule-Making & Guidance New York Consumer Finance Consumer Protection Debt Collection CRA

  • FDIC proposes additions to its safety and soundness standards

    On October 5, the FDIC issued a notice of proposed rulemaking that would add a new appendix to the agency’s safety and soundness standards. The new appendix, which would be Appendix C, “is intended to promote strong corporate governance and risk management at FDIC-supervised institutions that have total consolidated assets of $10 billion or more by proposing corporate governance and risk management guidelines.” The proposed guidelines would describe the general obligations of the board of directors, requiring the board to be active and involved in protecting the interests of the institution, adopt a code of ethics for the institution’s operations, and form a Risk Committee within the institution’s committee structure. The proposed guidelines would also require institutions to establish a risk management program that includes a “three-line-of-defense model” for risk monitoring and reporting, as well as require institutions to create and maintain a risk profile and risk appetite statements that are communicated to all employees to encourage compliance.

    Bank Regulatory Agency Rule-Making & Guidance Federal Issues FDIC Risk Management Bank Supervision

  • Fed's Bowman discusses research of regulatory thresholds, deposits

    On October 4, Federal Reserve Governor Michelle Bowman delivered a speech at the Fed’s annual Community Banking Research Conference, calling for more research on regulatory thresholds and the deposit insurance framework. In her remarks, Bowman discussed the importance of evidence-based research around community banks and their role in the U.S. banking system, especially in light of recent bank failures. “Research and evidence-based rulemaking can insulate the banking system from wide swings in policy over time,” she said, adding that before rulemaking, the agency must have a comprehensive understanding of both the root causes of bank failures and the costs and consequences of potential reforms.

    Bowman additionally discussed needed reforms to bank merger policy, particularly  to include nonbank competitors and credit unions in the analysis of the competitive landscape. Bowman argued that the use of a narrower view on competitive concerns has led to increasingly long application and review periods for mergers, which can increase negative outcomes.  

    Regarding community bank thresholds, Bowman noted contradictions and inconsistencies how community banks are defined, and accordingly regulated, across the regulatory system. For example, while the Dodd-Frank Act defined community banks as those institutions with less than $10 billion in total consolidated assets, the Community Reinvestment Act regulation includes asset thresholds well below the “common understanding of what a community bank is.”  “Are these asset size thresholds properly calibrated, and are the impacts, costs, and benefits to institutions and to customers when banks cross these different thresholds rational? Are these thresholds creating the right incentives to promote prudent lending while appropriately balancing risk?” Bowman asked. She suggests leveraging business models in tailoring rules, instead of looking only at asset-size thresholds.

    Another area in need of research in the wake of recent bank failures, Bowman suggested, is bank funding models and deposit infrastructure. Thanks to modern technology, consumers can withdraw funds faster than ever, so deposit insurance parameters are worth revisiting to ensure it can “support banking sector stability in the face of the challenges posed by today's technology,” Bowman said.

     

    Bank Regulatory Federal Issues Federal Reserve Deposit Insurance Agency Rule-Making & Guidance

  • FDIC makes public August enforcement actions

    On September 29, the FDIC released a list of administrative enforcement actions taken against banks and individuals in August. During the month, the FDIC made public nine orders consisting of “three consent orders, three orders terminating consent orders, two orders of prohibition, and one order to pay a civil money penalty.” The list includes an order to pay a civil money penalty imposed against a Utah-based bank related to violations of the Flood Disaster Protection Act. The FDIC claimed that the bank engaged in a pattern practice of violating FDPA by, among other things: (i) issuing loans without adequate flood insurance; (ii) failing to provide notices when increasing or extending loans; and (iii) “failing to provide required force-placed insurance notices when loans were secured by properties and contents located in Special Flood Hazard Areas.” The bank neither admitted nor denied the alleged violations but agreed to, among other things, pay a $4,125 civil money penalty.

    Bank Regulatory Federal Issues FDIC Enforcement Flood Disaster Protection Act Flood Insurance

  • CFPB shares concerns and actions regarding medical debt collection

    Federal Issues

    On October 4, Seth Froman, the CFPB’s General Counsel and senior advisor to Director Chopra, delivered remarks at the New Jersey Citizen Action Education Fund’s Financial Justice Summit. He heralded the work and mission of the CFPB, and focused on the impact of medical debt.  He emphasized the CFPB’s concerns that families are being “saddled with medical bills they should not – or do not – owe,” and mentioned a recent enforcement action ordering a medical debt collector to pay more than a million dollars in penalties and redress “because the collector continued to collect on debts without verifying that they were valid after consumers disputed them.” He further discussed the impact of medical bills on consumer credit, such that consumers have a “strong incentive to pay the medical bill, even when they think it’s not the right amount or don’t owe it at all.” 

    Federal Issues CFPB Medical Debt Consumer Finance Debt Collection Consumer Protection

  • FTC roundtable on generative AI and the creative economy

    Federal Issues

    On October 4, the FTC hosted a virtual roundtable to hear directly from creators on how generative artificial intelligence (AI) is affecting their work and livelihood. FTC Chair Lina Khan noted the Commission’s role enforcing rules of fair competition and its intention to “keep pace” to fully understand how new technology can be used and the negative impacts. Khan reminded the audience that there is no “AI exemption” to the laws regarding unfair methods of competition or collusion, discrimination, or deception. In addition, Commissioner Kelly Slaughter mentioned that the generative AI dynamic of web scraping is often performed without the knowledge of creators whose livelihood depends on displaying a public portfolio.

    Duncan Crabtree-Ireland, chief negotiator for SAG AFTRA, stated that the companies using AI technology must receive informed consent and compensation for the use of individuals’ likenesses. John August, committee member for the Writers Guild of America, explained the union’s position that AI generated content can be considered an unfair method of competition, and that creators deserve protection against the unfair use of their work. Douglas Preston, author and former president of the Writers Guild of America, shared that he is part of a class action lawsuit with 16 other authors against a generative AI platform.

    Overall, participants asked the FTC to initiate rulemaking, and support in federal legislation as necessary to underpin the protection of creators’ livelihood, as technology is outpacing law and regulation. They suggested that moving forward, platforms should request creators to opt-in, rather than opt-out of the use of their works to teach and support generative AI output. Moreover, participants repeatedly mentioned a need for disclosures for consumers, so they know when synthetic AI-generated voices, among other things, are used in content generated for consumers.

    Federal Issues FTC Artificial Intelligence Disclosures Consumer Protection

  • Senator Warren delivers remarks in support of the CFPB

    Federal Issues

    On September 28, Senator Elizabeth Warren delivered a keynote speech at the Center for American Progress, in which she chronicled the history of the CFPB and defended the agency against political attacks. Further, ahead of the oral arguments that took place before the Supreme Court on October 3, Senator Warren criticized the holding of the 5th Circuit, which ruled that the agency’s funding mechanism was unconstitutional. She noted that “none of the federal banking regulators is funded through appropriations,” and that “Congress decided to protect the integrity of these regulators from the chaos and politicking of the annual appropriations process by giving them independent funding structures.”

    Federal Issues CFPB Constitution Funding Structure Elizabeth Warren Fifth Circuit

  • Congressmembers urge SEC’s Gensler to approve spot Bitcoin ETPs

    Federal Issues

    On September 26, a group of bipartisan members from the House Financial Services Committee sent a letter to Gary Gensler, the Chair of the SEC, to promptly approve the listing of spot Bitcoin exchange-traded products (ETPs). They have criticized the SEC's stance on these products, which they deem to be discriminatory, arguing that the commission’s purpose of making compliant products available to investors. In addition, the letter cites the recent D.C. Circuit decision that overruled the SEC’s denial of a company’s application to convert its Bitcoin trust into an ETF (covered by InfoBytes here). The members, including Tom Emmer (R-MN), Mike Flood (R-NE), and Wiley Nickel (D-NC) and Ritchie Torres (D-NY), argue that approving Bitcoin ETPs would enhance investor safety and transparency by providing a regulated framework.

    Federal Issues Securities SEC Digital Assets Bitcoin Congress

  • Treasury issues statement on U.S.-UK Financial Regulatory Working Group biannual meeting

    Federal Issues

    On September 29, the Department of Treasury issued a statement on the U.S.-UK Financial Regulatory Working Group, comprised of officials from both countries, and its meeting to discuss key themes including: (i) economic stability; (ii) banking issues; (iii) non-bank sector developments; (iv) climate-related financial risks; (v) international engagement; and (vi) digital finance.

    In their meeting, participants discussed international banking regulations, specifically Basel III, emphasizing the importance of consistent global implementation. They also acknowledged ongoing work by the Financial Stability Board (FSB) and Basel Committee on Banking Supervision regarding lessons learned from events in March 2023, with a focus on bank resolution. In addition, the group deliberated on the urgency of strengthening resilience within the non-bank financial intermediation (NBFI) sector. Topics included national reforms related to money-market funds, forthcoming work by the FSB to address vulnerabilities linked to leverage in the NBFI sector, and the value of globally implementing reforms in this sector to maintain financial stability. Among other topics, the group also noted progress in climate-related financial risks and sustainable finance mandates.

    The group emphasized the importance of international cooperation and agreed to meet again in 2024 to continue their dialogue. Established in 2018, this biannual dialogue aims to enhance financial stability, investor protection, market efficiency, and capital formation in both countries.

     

    Federal Issues Department of Treasury Basel FSB Risk Management Nonbank Of Interest to Non-US Persons UK

  • Biden signs H.R. 5860 into law, prevents shutdown

    Federal Issues

    On October 1, President Joe Biden signed H.R. 5860, a government spending bill to avert a government shutdown. The President’s remarks note that although a budget agreement was reached months ago, House Republicans made a last-minute push for spending cuts, derailing the original agreement. Among other things, the bill extends (i) government funding through November 17; and (ii) the National Flood Insurance Program through November 17.

    Federal Issues Federal Legislation Biden Flood Insurance Congress

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