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Financial Services Law Insights and Observations

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  • CFPB issues ANPR on consumer access to financial records

    Agency Rule-Making & Guidance

    On October 22, the CFPB released an advanced notice of proposed rulemaking (ANPR), which seeks comments to assist the Bureau in developing regulations covering consumers’ access to financial records. The Bureau is required to promulgate regulations to implement Section 1033 of the Dodd-Frank Act, which provides, among other things, that consumer financial services providers must make certain product or service information available to consumers. The Bureau’s press release notes that access to this information would allow consumers’ enhanced control of their financial matters. Additionally, should consumers allow third parties to access the information, those parties may “deliver new or improved financial products and services,” such as personal financial management and making or receiving payments. However, the Bureau acknowledges certain risks associated with access to financial records, including risks related to the methods of authorization and risks related to an institution’s collection and use of the records. The ANPR seeks comments on questions grouped into nine categories: (i) costs and benefits of consumer data access; (ii) competitive incentives; (iii) standard-setting; (iv) access scope; (v) consumer control and privacy; (vi) legal requirements outside of Section 1033; (vii) data security; (viii) data accuracy; and (ix) other information. Comments are due 90 days after publication in the Federal Register.

    Agency Rule-Making & Guidance CFPB Dodd-Frank Section 1033 Consumer Finance

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  • FDIC announces hurricane and wildfire relief

    Federal Issues

    On October 23, the FDIC issued FIL-100-2020 and FIL-101-2020 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Louisiana and California. Specifically, FIL-100-2020 outlines relief for areas of Louisiana affected by Hurricane Delta from October 6 through October 10, and FIL-101-2020 provides relief for areas of California affected by wildfires since September 4 .

    The guidance notes that the FDIC will consider the unusual circumstances faced by institutions affected by the hurricane and wildfires. The guidance suggests 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 notes that institutions may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The FDIC states it will also consider relief from certain reporting and publishing requirements.

    Federal Issues FDIC Disaster Relief

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  • Federal agencies will not recommend specific LIBOR replacement rate

    Federal Issues

    On October 21, a group of U.S. financial agencies wrote to the executives of financial institutions that participated in the Credit Sensitivity Group workshops, stating that the agencies do not intend to recommend a specific credit-sensitive rate for use in commercial lending products in place of LIBOR. The letter states that “[t]he transition away from LIBOR is a significant and complex undertaking,” and there are multiple suitable alternative reference rates to replace LIBOR. The letter acknowledges that the use of the Secured Overnight Financial Rate (SOFR), which is recommended by the Alternative Reference Rates Committee is “voluntary.” After participating in the workshops, the agencies concluded that they are “not well positioned to adjudicate the selection of a reference rate between banks and their commercial customers” due to various business needs and terms of commercial loans that are based on the negotiation of banks and borrowing parties. Thus, the letter states, the agencies will continue to convene additional working sessions to highlight innovation in the credit-sensitive rates and explore implementing solutions for commercial loans transitioning away from LIBOR.

    For continuing InfoBytes covering on the LIBOR transition see here.

    Federal Issues LIBOR SOFR ARRC Federal Reserve CFTC OCC FDIC

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  • Senator Brown objects to Bureau’s SEFL reorganization proposal

    Federal Issues

    On October 21, Senator Sherrod Brown (D-OH) asked CFPB Director Kathy Kraninger to delay the implementation of a proposed reorganization of the Bureau’s Division of Supervision, Enforcement, and Fair Lending (SEFL) until after the election and a determination is made as to whether Kraninger will continue as Director. According to Brown, the proposed SEFL reorganization would remove the Office of Enforcement’s (Enforcement) “voice and role in critical SEFL decisionmaking processes,” and “introduces inefficiency and confusion.” Brown addressed several concerns, including that the proposed reorganization would (i) disband Enforcement’s Policy and Strategy Team, whose duties include determining overall priorities and strategies; (ii) strip “Enforcement of its seat at the table and vote to determine whether potential violations of federal consumer financial law should be resolved through supervisory examinations or through an enforcement action”; (iii) strip “Enforcement of its authority to open new research matters (precursors to investigations) or new investigations of potential violations of federal consumer financial laws”; (iv) strip “Enforcement of its E-Litigation Team, which provides specialized technology expertise and manages electronic data discovery from initial Enforcement investigations through trial”; and (v) strip “Enforcement of its representation in the ‘Clearance’ process, which will exclude Enforcement from sharing its views and potential concerns with other Bureau offices regarding proposed rules, regulations, guidance, advisory opinions, or other public Bureau statements.” Brown cautioned that while establishing a “consistent and unified SEFL approach to policy and strategic planning” may have merit, the manner in which this objective is achieved must be addressed.

    Federal Issues CFPB Supervision Enforcement

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  • Texas Office of Consumer Credit updates guidance urging property tax lenders to work with borrowers

    State Issues

    On October 27, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging property tax lenders to work with consumers during the Covid-19 crisis (previously discussed here and here) Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, and review policies for fees, late charges, delinquency practices, and repossessions. The guidance also: (i) reminds licensees of legal requirements for using electronic signatures, and (ii) continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through November 30, 2020, unless withdrawn or revised.

    State Issues Covid-19 Consumer Credit Licensing Repossession ESIGN

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  • Texas Office of Consumer Credit updates guidance urging credit access businesses to work with borrowers

    State Issues

    On October 27, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging credit access businesses to work with consumers during the Covid-19 crisis (previously covered here, here, and here). Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, and review policies for fees, late charges, delinquency practices, and repossessions. The guidance also: (i) reminds licensees of legal requirements for using electronic signatures, and (ii) continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through November 30, 2020, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Credit Licensing Repossession ESIGN

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  • Texas Office of Consumer Credit updates guidance urging motor vehicle sales finance licensees to work with borrowers

    State Issues

    On October 27, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging motor vehicle sales finance licensees to work with consumers during the Covid-19 crisis (previously covered herehere, here, here, and here ). Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, and review policies for fees, late charges, delinquency practices, and repossessions. The guidance also: (i) reminds licensees of legal requirements for using electronic signatures and (ii) continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through November 30, 2020, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Credit Auto Finance Licensing Repossession ESIGN

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  • Texas Office of Consumer Credit updates guidance for regulated lenders

    State Issues

    On October 27, the Texas Office of the Consumer Credit Commissioner issued updated guidance (previously covered here, here, and here) for regulated lenders relating to the Covid-19 crisis. The guidance: (1) encourages lenders to work with consumers, including by working out modifications to assist with payments, and reviewing policies for fees, late charges, delinquency practices, and repossessions, among other things; (2) reminds lenders of legal requirements for using electronic signatures; and (3) permits lenders to conduct regulated lending activity from unlicensed locations, subject to certain conditions.  The guidance is in effect through November 30, 2020, unless withdrawn or revised.

    State Issues Covid-19 Texas Consumer Credit ESIGN

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  • Washington Department of Financial Institutions extends “work from home” guidance

    State Issues

    On October 26, the Washington Department of Financial Institutions issued interim regulatory guidance to licensed mortgage loan originators and companies that sponsor them relating to temporary remote work. The guidance extends earlier interim guidance (previously covered here, here, and here) permitting mortgage loan originators to work from home, provided certain data security obligations are met.  The guidance extends through March 31, 2021.

    State Issues Covid-19 Washington Financial Institutions Mortgage Licensing Mortgage Origination Loan Origination

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  • FinCEN penalizes first bitcoin “mixer” $60 million for violating BSA

    Federal Issues

    On October 19, the Financial Crimes Enforcement Network (FinCEN) announced a civil money penalty against an individual exchanger who founded and operated two convertible virtual currency (CVC) platforms known as “mixers” or “tumblers” for allegedly violating the Bank Secrecy Act’s (BSA) registration, program, and reporting requirements. According to FinCEN, the exchanger, among other things, (i) accepted and transmitted CVC through a variety of means, which “contain[ed] the proceeds of various acts of cybercrime”; (ii) conducted over 1,225,000 transactions for customers; and (iii) “is associated with virtual currency wallet addresses that have sent or received over $311 million.” FinCEN also contends that the exchanger advertised his services to customers on the dark web and circumvented BSA’s requirements by disregarding his obligations and operating the platforms as unregistered money service businesses (MSB).

    Under FinCEN’s 2013 guidance and 2019 clarification, exchangers and administrators of CVC are money transmitters and therefore subject to BSA regulations, with mixers and tumblers subject to the same rules. (Previously covered by InfoBytes here and here.) According to FinCEN, the exchanger’s activities qualified him as a virtual currency exchanger, MSB, and a financial institution under the BSA. As such, the exchanger was required to register as an MSB with FinCEN, establish and implement an effective written anti-money laundering program, detect and file suspicious activity reports, and report currency transactions, which he failed to do. The order requires the exchanger to pay a $60 million civil money penalty.

    Federal Issues FinCEN Enforcement Anti-Money Laundering Virtual Currency Bank Secrecy Act

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