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Louisiana Office of Financial Institutions, Securities Division, issues update on operations
On June 5, the Louisiana Office of Financial Institutions, Securities Division, extended through June 26, 2020 an earlier announcement regarding its operations during the statewide “stay at home” order, which we previously covered here. The announcement provides that: (i) paper copies of registration documents and payment of related fees can be mailed to the LOFI, and certain filings can be submitted electronically; (ii) examinations are being conducted remotely using phone and email correspondence in lieu of traditional on-site examinations; (iii) licensing staff continue to process licensing and registration applications through the CRD/IARD systems; and (iv) enforcement staff are limiting in-person contacts with witnesses and regulatory partners, and are using telecommunications technology to complete tasks remotely.
Louisiana Office of Financial Institutions updates non-depository emergency declarations
On June 5, the Louisiana Office of Financial Institutions updated its non-depository 2020 Covid-19 emergency declarations to extend earlier guidance regarding closure of licensed locations and temporary location changes for residential mortgage lenders, brokers and originators, check cashers, lenders or brokers licensed pursuant to the Louisiana Consumer Credit Law and the Louisiana Deferred Presentment and Small Loan Act, pawnbrokers, and repossession agents and bond for deed escrow agents. The original emergency declarations were previously covered here, here, here, here, here, here, and here. The declarations extend the guidance until June 26, 2020, unless terminated sooner.
Louisiana Office of Financial Institutions issues declaration to state-chartered financial institutions
On June 5, the Louisiana Office of Financial Institutions issued an emergency declaration granting parity to Louisiana state-chartered financial institutions with federally-chartered financial institutions as it relates to loans made under the Small Business Administration’s Paycheck Protection Program. As such, loans made under the program will be excluded from the legal lending limits of Louisiana state-chartered institutions. This guidance follows previous guidance issued by Louisiana on the same topic, which was previously discussed here. Further, the emergency declaration grants state-chartered financial institutions the authority to (i) temporarily close an existing branch office; (ii) establish a temporary location; and (iii) reduce operations, products, and services. Additionally, state-chartered financial institutions unable to comply with Louisiana law regarding annual meetings may, provided certain requirements are met, (i) permit shareholders or members to participate by means of remote communication or (ii) hold the annual meeting without a physical location. The declaration is effective until June 26, 2020, unless terminated sooner.
Minnesota clarifies earlier executive order regarding evictions
On June 5, the Minnesota governor issued Executive Order 20-73, which clarifies an earlier executive order, previously covered here, that suspends evictions and writs of recovery during the Covid-19 outbreak. The executive order adds an exception to the moratorium on evictions where a tenant seriously endangers the safety of others on the premises, or poses a danger to others who are not residents, if the serious endangerment of others who are not residents is a material violation of the lease.
New Mexico issues order prohibiting writs of garnishment or writs of execution of consumer debt
On June 5, the New Mexico Supreme Court issued an order prohibiting writs of garnishment or writs of execution as they pertain to consumer debt collection cases. The order does not affect writs of garnishment and writs of execution issued prior to June 8, 2020. Other rules pertaining to consumer debt collection cases are also unaffected. The order does not apply to domestic support obligations, including support and spousal maintenance obligation. The order will remain in effect until amended or withdrawn by a future order.
SEC issues $50 million, whistleblower award, highest ever to one individual
On June 4, the SEC announced a nearly $50 million award to a whistleblower in an enforcement action, the largest amount ever awarded to one individual under the SEC’s whistleblower program. According to the SEC’s order, in applying the reward criteria, the SEC determined that the whistleblower (i) provided information that was “highly significant” and contained first-hand observations of misconduct that was previously unknown; (ii) laid out “in detail substantial aspects” of the misconduct and provided a roadmap for the SEC’s investigation; and (iii) provided information that helped the SEC return a significant amount of money to those harmed by the misconduct. The agency’s next largest awards were given in 2018 when the SEC awarded $50 million to two joint whistleblowers in March and $39 million to a single whistleblower in September, covered by InfoBytes here and here.
As of June 4, the SEC has awarded 83 individuals a total of over $500 million in whistleblower awards since its first award in 2012.
NYDFS and French regulator sign fintech MOU
On June 3, NYDFS and France’s Autorité de Contrôle Prudentiel et de Résolution (ACPR) signed a Memorandum of Understanding (MOU) to help ease fintech innovators’ entry into the New York and French markets. This is the first fintech cooperation agreement signed by the ACPR with a U.S. regulator. Under the terms of the MOU, the two regulators will (i) refer companies to one another for potential market entry; (ii) “exchange information about regulatory and policy issues”; (iii) ensure innovators in both jurisdictions receive equal levels of support; and (iv) “share regulatory and supervisory expertise and best practices.” According to NYDFS, the regulators aim to encourage and support financial innovation, enhance consumer protections, and encourage “healthy market competition in their respective markets.”
9th Circuit upholds TCPA liability for reassigned number
On June 2, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s judgment in a TCPA action against a bank, concluding that consent from the person intended to call does not exempt the bank from liability under the TCPA. According to the opinion, the bank’s vendors made over 180 automated calls to a child’s cell phone in attempt to collect past-due payments from a customer who used to have the same cell phone number, which had since been reassigned to the child’s mother. The customer of the bank had given consent to be called, but the mother and child had not. After a three-day jury trial, the jury returned a verdict in favor of the plaintiff on the TCPA claim, concluding that the bank could not escape liability under the TCPA because the customer it intended to call had given consent, and awarding $500 in statutory damages for each of the 189 unwanted calls, for a total of $94,500.
On appeal, the 9th Circuit affirmed the district court’s judgment after the jury trial. The appellate court noted it was “agreeing with other circuits,” on liability when it concluded that the district court “properly instructed the jury that consent from the intended recipient of the call was not sufficient.” Moreover, the appellate court held that the district court properly instructed the jury on the definition of “automatic telephone dialing system,” based on the panel’s decision in Marks v. Crunch San Diego, LLC (covered by InfoBytes here). Lastly, the appellate court also issued an opinion affirming the district court’s award of attorneys’ fees to the plaintiff.
CFPB issues LIBOR transition materials
On June 4, the CFPB released three documents to assist in the LIBOR transition before its anticipated cessation at the end of 2021. Highlights of the documents include:
- Notice of Proposed Rulemaking. The Bureau issued a proposed rule to amend Regulation Z to address the sunset of LIBOR, and to facilitate creditors’ transition away from using LIBOR as an index for variable-rate consumer products. For open-end products, among other things, the proposal would (i) require creditors to include in the change-in-terms notice the replacement index and any adjusted margin; (ii) add a LIBOR-specific provision allowing the LIBOR transition to occur on or after March 15, 2021, as opposed to the current rule’s “no longer available” standard; and (iii) allow creditors to elect a replacement index that is newly established and has no history, or is not newly established and has a history, if certain conditions are met. For closed-end credit, among other things, the proposal provides the Secured Overnight Financing Rate (SOFR) recommended by the Alternative Reference Rates Committee (ARRC) as a “comparable index” to LIBOR. In conjunction with the proposal, the Bureau released a “Fast Facts” high-level summary and an unofficial redline.
- FAQ Guidance. The Bureau released FAQ guidance to address other LIBOR transition topics and regulatory questions that do not require amendments to Regulation Z. Among other things, the FAQs cover general regulatory implementation considerations and specific requirements related to adjustable rate mortgage and HELOC disclosures.
- CHARM Booklet. The Bureau released revisions to their Consumer Handbook on Adjustable Rate Mortgages (CHARM) booklet, which aims to help consumers better understand adjustable rate mortgage loan products. The revisions provide updates based on consumer testing and remove LIBOR-based rate examples.
FHFA final rule updates FHLB housing goals
On June 3, the FHFA published a final rule for the housing goals of the Federal Home Loan Banks (FHLBs) to help underserved borrowers. The final rule’s changes include: (i) eliminating the retrospective evaluation using HMDA data and establishing a single prospective mortgage purchase housing goal at 20 percent of the number of each FHLB’s total Acquired Member Assets mortgage purchases; (ii) establishing a separate small member participation housing goal with a target goal of at least 50 percent; (iii) eliminating the existing $2.5 billion volume threshold and allowing banks to propose alternative target levels for housing goals, subject to public comment and FHFA approval; (iv) capping the extent FHLBs can use loans to higher-income borrowers to meet their housing goals; (v) establishing a process through which FHLBs could propose alternative goals to the prospective goals set in the final rule; and (vi) simplifying and clarifying eligibility criteria for housing goals to enable federally backed loans sold by small institutions to FHLBs to count for goal purposes. The final rule takes effect 60 days after publication in the Federal Register. Written requests from FHLBs proposing alternative target levels are due September 15, 2020. Enforcement will be phased in over three years and will apply to the 2021 - 2023 calendar years.