News By Edition

The U.S. Supreme Court issued a unanimous decision in Cantero v. Bank of America, in which petitioners claimed the country’s second-largest bank by asset size violated New York state law by not paying interest on balances held in escrow. Dodd Frank Update reached out to Husch Blackwell Partner Susan Seaman, who has been following the case and provided expert insight.

Recognizing the high cost of lengthy merger cycles involving large banks, the Federal Deposit Insurance Corp. finalized amendments to its resolution planning criteria for banks with $50 billion or more in total assets. A covered insured depository institution would have to demonstrate in its resolution plans how it could be wound down without a merger under the amended final rule.

The Consumer Financial Protection Bureau filed an order to resolve its lawsuit against James and Melissa Carnes for attempting to avoid paying millions of dollars in restitution and penalties from a previous order against James’ online lender company by way of several fraudulent transfers over two years.

In an effort to more precisely and definitively explain why mortgage lending in formerly redlined neighborhoods continues to lag behind predominantly white areas, the National Community Reinvestment Coalition (NCRC) compiled an evidence-based report examining the obstacles to homeownership that still exist for people of color. The NCRC report attempted to reconcile flaws present in existing redlining data, such as inconsistent reporting categories and mismatched demographic designations, and present it with proper context and clear explanations.

The Federal Housing Finance Agency is requesting stakeholder suggestions on how to improve the application process for project sponsors applying for Affordable Housing Program funding through the Federal Home Loan Banks.

Stay on top of some of the most recent statements from industry trade professionals regarding the current state of interest rates, discussions about field-of-membership modernization and other developments affecting various segments of the financial industry.

Newly introduced Senate legislation to force the Federal Reserve to withdraw its rule limiting credit card interchange fees echoes the sentiment of a similar bill introduced in the House earlier this year. The “Secure Payments Act of 2024” would require the Fed to conduct more research on the underlying reasoning behind the rule’s proposed changes to Regulation II before finalizing it.

The Consumer Financial Protection Bureau and Freedom Mortgage filed a stipulated final judgment and order to resolve a complaint the bureau filed in October. The joint proposal includes a $3.95 million penalty against Freedom Mortgage for allegedly violating the Home Mortgage Disclosure Act (HMDA) in violation of a 2019 consent order.

As the comment period closes for regulatory changes under the Bank Merger Act, proposed by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., the financial industry and lawmakers have given regulators plenty to consider in their responses.

The Federal Reserve announced it will maintain the federal funds rate within the target range between 5.25 and 5.5 percent, noting that inflation remains above the Fed’s 2 percent target despite positive job gains and persistently low unemployment. The Federal Open Market Committee recommended rates remain unchanged again based on risk indicators affecting employment and its inflation goals and uncertainty in its economic outlook.

Federal housing regulators have been busy requesting and reviewing feedback from industry stakeholders on a wide array of proposed changes impacting mortgage originators and other institutions. Below are two particularly impactful requests for information for the secondary market and third-party originators, as well as news from two prudential financial regulators.

Coinciding with the Consumer Financial Protection Bureau’s (CFPB) recent semi-annual report to Congress, Republicans on the Senate Banking Committee introduced legislation to overhaul the CFPB’s funding structure by making the agency subject to annual congressional appropriations.

Consumer Financial Protection Bureau Director Rohit Chopra’s semi-annual report to Congress provided an opportunity for the director to defend the bureau’s recent controversial rulemakings and actions against major concerns presented by lawmakers. Chopra testified before the Senate Banking Committee and the House Financial Services Committee on a wide array of activities it has undertaken this year.

Trade organizations and the Consumer Financial Protection Bureau have filed amicus briefs in a case brought against Citibank by the attorney general of New York alleging violations of the Electronic Fund Transfer Act. But what led to this lawsuit, with the bureau claiming banks have a duty to protect consumers from fraudulent wire transfers and the trades arguing this new interpretation is inconsistent with prior agency statements?

The Consumer Financial Protection Bureau proposed a rule to stop credit reporting companies from sharing consumer medical debt information with lenders. The proposal would prohibit credit decisions based on medical information, which the bureau expects could lead to approximately 22,000 additional, safe mortgages annually.

The 2024 National Settlement Services Summit featured an exclusive interview with former Federal Housing Finance Agency (FHFA) Director Dr. Mark Calabria, now a senior advisor at the CATO Institute, who shared his views on the economy, the regulatory environment and the role of the federal government with October Research Chief Knowledge Officer Mary Schuster. The interview is available as the fifth installment of the Keys to Real Estate Podcast – the first to be recorded in front of a live audience.

In the days leading up to and immediately following Consumer Financial Protection Bureau Director Rohit Chopra’s testimony before Congress, multiple financial trade groups submitted statements to lawmakers and offered a snapshot through blog posts of some of the related issues most pertinent to their members.

President Joe Biden nominated a new chair of the Federal Deposit Insurance Corp. to succeed Martin Gruenberg The nomination came the day following the House Financial Services Committee’s hearing regarding allegations of workplace misconduct during Gruenberg’s tenure as chair.

Former president of ICE Mortgage Technology Joe Tyrell was named the CEO of Optimal Blue. He succeeds Scott Smith, who will continue serving as president for Constellation Software’s Andromeda.

The Consumer Financial Protection Bureau raised eyebrows when it submitted an amicus brief in a lawsuit filed by the New York attorney general against Citibank, arguing banks are liable for wire fraud under the Electronic Funds Transfer Act. The amicus has raised eyebrows among banking advocates who view the move as the bureau essentially asking a federal court to rewrite the law.

The Federal Deposit Insurance Corp. charged an Arkansas-based bank and nine former employees at a Michigan-based loan program office for deceiving 900 Veterans Administration loan borrowers.

The banking sector saw a significant increase in aggregate net income in the first quarter, according to the Federal Deposit Insurance Corp.’s quarterly banking profile. The report connected the uptick to a notable drop in noninterest expense coupled with higher noninterest income.

Warning against the use of fine print claiming to limit certain consumer rights and protections, the Consumer Financial Protection Bureau issued a circular advising financial institutions that including such terms and conditions in consumer contracts, including mortgage agreements, may violate the Consumer Financial Protection Act.

Federal regulators have been busy trying to answer questions about inflation and affordability in the mortgage market and the broader economy. Learn about some recent actions and perspectives put forth by top agency officials on these topics and more in this roundup.

The Federal Reserve’s semiannual supervision and regulation report provides the banking industry vital insight based on the agency’s latest assessment data about conditions facing the banking system, as well as its current regulatory and supervisory priorities.

In a move to help accelerate a shift to open banking in the U.S., the Consumer Financial Protection Bureau finalized a rule outlining the qualifications an organization must demonstrate to be recognized as an industry standard-setting body to develop technical standards for protecting consumer data rights.

A recent lawsuit filed by the Consumer Financial Protection Bureau against online lender SoLo Funds is an example of the bureau supplementing state regulators’ efforts in going after nonbank financial entities for unlawful practices. SoLo has been the subject enforcement actions across the country citing the company’s alleged deceptive advertising of its loan costs and its practice of masking fees as “tips” and “donations” for individual lenders, the bureau explained in a complaint filed with the U.S. District Court for the Central District of California.

Results from the Federal Reserve’s latest survey of senior bank financial officers about their reserve balance management strategies and practices provided insight from personnel at banks representing more than three quarters of the banking system’s total reserve balances.

Six of the country’s largest banks participated in a study conducted by the Federal Reserve last year to assess the resiliency of the banks’ business models when faced with climate-related financial risks. The participants were Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.

The financial industry is rarely shy about letting federal agencies know where they stand with respect to regulations impacting businesses. Read about some matters highlighted in recent comments and articles published by trade advocacy groups in this roundup.

Thirty-four lawmakers urged the Federal Housing Finance Agency to reject Freddie Mac’s proposed second mortgage product, arguing it would have adverse economic implications. The single-family, closed-end loans would be intended to provide borrowers a lower-cost alternative to cash-out refinance in high-interest rate environments.

The Consumer Financial Protection Bureau (CFPB) finalized the agency’s first rule invoking its authority to supervise nonbank entities. The rule will establish a public registry to help the CFPB and other law enforcement agencies monitor and track nonbank entities who repeatedly violate consumer protection laws.

A new interpretive rule issued by the Consumer Financial Protection Bureau stipulates “Buy Now, Pay Later” lenders are classified as credit card providers subject to Regulation Z, which implements the Truth in Lending Act. The interpretive rule mandates such lenders provide the same types of rights and protections to their customers that apply to conventional credit cards.

Atlanta Postal Credit Union and its subsidiary, Center Parc CU, announced the purchase of Affinity Bank, making the Georgia-based credit union the 11th to acquire a bank this year. Such acquisitions have caused trade advocates for community banks to call for legislative action to address concerns about the implications of tax-exempt credit unions buying tax-paying banks.

Legislation seeking to limit the Securities and Exchange Commission’s authority over digital assets was vetoed by President Joe Biden after passing in the House and Senate with bipartisan support. Biden said his decision was based on concerns the resolution might constrain regulators’ ability to set guidelines for the cryptocurrency industry.

The Federal Reserve of Cleveland announced a key leadership change that, in turn, also means a change to the Federal Open Market Committee, which is tasked with determining the timing of future interest rate alterations. Read about this and other developments in this regulatory roundup.

The Consumer Financial Protection Bureau has issued a request for information (RFI) on mortgage closing costs, seeking input on how closing costs "may be inflated and constraining" the mortgage lending market. Richard Horn of Garris Horn LLP and Mike G. Silver of Husch Blackwell, both former senior counsels at the bureau, shared their initial reactions with Dodd Frank Update, as did multiple trade groups.

Highlighting the impact on mortgage lenders and homebuyers, Consumer Financial Protection Bureau Director Rohit Chopra told members of the Mortgage Bankers Association the bureau is examining ways to mitigate rising credit report costs and promote competition in the credit reporting space.

The Securities and Exchange Commission reached a $10 million settlement with The Intercontinental Exchange, Inc. for its failure to timely notify legal and compliance officials about a system intrusion. As a result, nine wholly-owned subsidiaries, including the New York Stock Exchange, were unable to fulfill their timely reporting requirements regarding the cyber incident.

Issues of data privacy and concerns about cybersecurity threats remain top-level priorities for financial institutions of all types. Several trade advocates recently voiced their opinions on proposed legislative and regulatory actions aimed at addressing such matters. Read an overview of these comments and more in this roundup.

The Consumer Financial Protection Bureau and the Federal Reserve jointly released new dollar amount thresholds related to customer fund availability requirements, adjusted for inflation.

House Financial Services Committee Chair Patrick McHenry (R-N.C.) is demanding top banking regulatory officials testify regarding allegations of workplace misconduct at the Federal Deposit Insurance Corp.