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Financial Services Law Insights and Observations


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  • August Beach Read Series: CFPB's Supervision of Student Lending and Servicing Takes Shape

    Consumer Finance

    Over the past year, the CFPB has started to publicly outline its supervisory approach to student lending and servicing. In doing so, it repeatedly has identified similarities between the lending practices that led to the subprime mortgage crisis and the escalating default rate in the burgeoning level of student loan debt. Rather than wait for a student loan crisis, the CFPB is attempting to put in place a program it hopes can help prevent one.

    As part of that program, at the end of 2012, the CFPB released its student loan examination procedures. Also in 2012 the CFPB released two reports (July 2012 and October 2012) aimed at curbing purported violations of law, and it has continued to highlight student loan issues this year, including in a recent update on student loan complaints. In addition, in March of 2013, partly to address the complaints of student loan debtors, the CFPB announced its intention to supervise and examine the larger non-bank education loan servicers. That rule should be finalized next month.

    Student lenders and servicers also should take note of the CFPB’s recently issued debt collection guidance, which, among other things, holds CFPB-supervised creditors accountable for engaging in acts or practices the CFPB considers to be unfair, deceptive, and/or abusive (UDAAP) when collecting their own debts.  Many of the guideposts set forth in the guidance reflect the standards to which third-party debt collectors are held accountable under the FDCPA.

    For more information about the CFPB’s debt collection guidance, please see a recent article by BuckleySandler Partner Valerie Hletko. Over the coming months, look for additional articles from BuckleySandler attorneys about the CFPB’s activities in the area of student loans and other non-mortgage consumer financial products and services.

    CFPB Examination Nonbank Supervision Student Lending Debt Collection Bank Supervision

  • CFPB Plans Study of Bundled Financial Products

    Consumer Finance

    Today, the CFPB published a notice indicating that it will review bundled financial products and services. The CFPB is seeking comments on its plans to survey “low-income, underserved consumers” about their savings, credit score, and size of their debt to income ratio for the purpose of understanding whether such bundled products and services have an impact on asset building and financial capability. The CFPB is accepting comments on the planned survey through September 30, 2013.

    Credit Cards CFPB Responsible Banking Bank Supervision

  • OCC Names Head of Large Bank Supervision

    Consumer Finance

    On July 10, the OCC named Martin Pfinsgraff as Senior Deputy Comptroller for Large Bank Supervision. Mr. Pfinsgraff has been filling that role on an acting basis since Michael Brosnan left the position to become Examiner-in-Charge of an OCC-supervised institution. Mr. Pfinsgraff previously served as Deputy Comptroller for Credit and Market Risk and prior to joining the OCC held senior positions with iJet International, Prudential Insurance Company, and Prudential Investment Corporation.

    OCC Bank Supervision

  • Alabama Clarifies Supervision Authority Over Bank Affiliates, Service Providers

    State Issues

    On May 23, Alabama enacted a bill that clarifies the Alabama Banking Department’s authority to examine subsidiaries and affiliates of state banks and bank holding companies when the Banking Superintendent believes such a company is not operating in compliance with state laws or safe and sound banking practices. The bill, HB 529, also grants the Banking Department authority to examine bank service companies on the same as-needed basis. Finally, the bill clarifies the Superintendent’s right to promulgate regulations and adds bank holding companies in as an entity that may rely on interpretations of banking laws and regulations. The bill took effect immediately.

    Bank Supervision

  • CFPB, State Regulators Announce Supervision Framework

    Consumer Finance

    On May 21, the CFPB and the CSBS released an agreement to coordinate supervision of entities subject to concurrent jurisdiction of the CFPB and one or more state regulators. The Supervisory Coordination Framework is a nonbinding guide that builds off of the parties' 2011 Memorandum of Understanding, which has since been signed by 59 state regulators. The Framework establishes processes for information sharing, consulting on corrective actions, and coordinating exam schedules and supervisory plans. The Framework also includes a general process for resolving disputes between the CFPB and state regulators, and directs the parties to develop additional processes and procedures to ensure standardization and consistency in implementing the Framework.

    CFPB Nonbank Supervision Enforcement CSBS Bank Supervision

  • Banking Agencies Delay Certain Changes to Call Reports

    Consumer Finance

    On May 23, the OCC, the FDIC, and the Federal Reserve Board published a notice to delay certain proposed changes to Call Report data collection pending further consideration of whether and how to proceed with the changes. The notice explains that Call Report revisions related to consumer deposit accounts, including (i) the screening question about an institution's offering of such deposits, (ii) consumer transaction and nontransaction savings deposit account balances for institutions with $1 billion or more in total assets, and (iii) data on certain service charges on consumer deposit accounts, would not take effect before March 31, 2014. Similarly, data collection regarding total liabilities of an institution’s parent depository institution holding company that is not a bank or savings and loan holding company would not take effect before the same date. Certain other changes still will take effect on the proposed June 30, 2013 date, while others will be delayed until the end of 2013.

    FDIC Federal Reserve OCC Bank Supervision

  • CSBS Releases Annual Report

    State Issues

    On May 2, the CSBS released its 2012 annual report, which aggregates and reviews the organization’s activities in the prior year, identifies future goals for the organization, and outlines specific priorities for 2013. The paper also incorporates more focused reports on past and future activities by various CSBS divisions and boards, including a report from the Policy and Supervision Division that reviews bank supervision, consumer protection and non-bank supervision, and legislative and regulatory policy, including the CSBS positions on community bank regulatory relief and federal proposed capital rules.

    CSBS Community Banks Bank Supervision

  • CFPB Releases Student Lending Examination Procedures

    Consumer Finance

    On December 17, the CFPB released its Student Lending Examination Procedures, which are an extension of the CFPB’s General Supervision and Examination Manual and will be used as a field guide by CFPB examiners to review student lender compliance with federal consumer financial laws. The Student Lending Examination Procedures are organized in seven modules: (i) Advertising, Marketing, and Lead Generation, (ii) Application, Qualification, Loan Origination, and Disbursement, (iii) Loan Repayment, Account Maintenance, Payoff Processing, and Payment Plans, (iv) Customer Inquiries and Complaints, (v) Collections, Accounts in Default, and Credit Reporting, (vi) Information Sharing and Privacy, and (vii) Examination Conclusion and Wrap-up. Under the first module, for example, CFPB examiners will assess whether a lender’s advertising and marketing practices are deceptive, misleading, or discriminatory by sampling all of the lender’s marketing and advertising materials, including print, electronic and other media, such as the Internet, email and text messages, telephone solicitation scripts, agreements and disclosures. With regard to borrower complaints, examiners will assess, among other things, the systems, procedures, and policies used by a lender for tracking, handling, investigating, and resolving consumer inquiries, disputes, and complaints. The CFPB has the authority to supervise large bank and nonbank student lenders, and, as with its other procedures, the CFPB will use the same examination procedures across both types of institutions.

    CFPB Nonbank Supervision Student Lending Bank Supervision

  • CFPB Realigns Supervision Team

    Consumer Finance

    On December 17, the CFPB announced a reorganization of part of its Division of Supervision, Enforcement, and Fair Lending. Effective immediately, CFPB staff members responsible for supervision activities are organized in two offices:  Examinations and Policy. Previously, supervision staff were organized into offices for Nonbank Supervision and Large Bank Supervision.  According to the CFPB’s announcement, the Examinations team will (i) recruit, train, and commission examiners, (ii) ensure policies and procedures are followed, and (iii) plan and execute examinations appropriately in light of resources and priorities. The CFPB’s four regional offices will report to the Examinations team, which is being led, on an acting basis, by Paul Sanford. Mr. Sanford had been Acting Assistant Director for Large Bank Supervision. The CFPB explains that its Policy team will ensure that policy decisions for supervision are consistent with both the law and the CFPB’s mission, and that such decisions are consistent across markets, charters, and regions. The Policy team will be further organized by product or service market, rather than by the type of financial institution. Each market team will be responsible for developing supervision strategy and policy across both bank and nonbank markets. Peggy Twohig, formerly the head of the CFPB’s Nonbank Supervision office, will be the Assistant Director of Supervision Policy.

    CFPB Nonbank Supervision Bank Supervision


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