BankBryanCave.com

Bank Bryan Cave

CFPB

Main Content

Regulators Tackle Board Effectiveness and Overdrafts

August 7, 2017

Authors

Bank Bryan Cave

Regulators Tackle Board Effectiveness and Overdrafts

August 7, 2017

by: Bank Bryan Cave

the-bank-account

On the latest episode of The Bank Account, Jonathan and Ken Achenbach discussed the Federal Reserve’s proposed supervisory expectations for boards of directors.

Before digging into the Federal Reserve’s proposed guidance, Jonathan and Ken first discussed the CFPB’s statistical analysis of frequent overdrafters.  As noted in the CFPB’s analysis, “very frequent overdrafters account for about five percent of all accounts at the study banks but paid over 63 percent of all overdraft and NSF fees.”  They also touched on the CFPB’s prototype model forms for overdrafts.   As might be expected from the CFPB, the sample forms do a good job of highlighting the economic consequences of utilizing overdrafts, but not mention the potentially significant benefits (tangible and psychological) that

Read More

New CFPB Rule Prohibits Class Action Waivers

July 17, 2017

Authors

Jed White, Alfred Shaumyan and Douglas Thompson

New CFPB Rule Prohibits Class Action Waivers

July 17, 2017

by: Jed White, Alfred Shaumyan and Douglas Thompson

On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) released a rule prohibiting class action waivers in certain pre-dispute arbitration agreements. The rule drastically impacts arbitration clauses currently used by many financial products and services providers in their consumer agreements.

The rule has three main components. First, the rule prohibits providers from using a pre-dispute arbitration agreement to prevent consumers from bringing or participating in class actions in federal and state court. Second, the rule requires that arbitration agreements inform consumers that their right to bring a class action is unrestricted. Third, the rule requires providers to supply certain records and data relating to arbitral proceedings to the CFPB.

The rule is effective 60 days after publication in the Federal Register and generally applies to agreements entered

Read More

The CFPB’s Small Business Lending Data Request

May 12, 2017

Authors

Robert Klingler

The CFPB’s Small Business Lending Data Request

May 12, 2017

by: Robert Klingler

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I discuss the CFPB’s request for comments regarding information about the small business lending market.

Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act to require financial institutions to compile, maintain and report information concerning credit applications made by women-owned, minority-owned and small businesses.  In connection with this obligation, the Consumer Financial Protection Bureau is now seeking comments to identify, among other things, how to define small business lending, what business lending data is currently easily available, and what kinds of institutions should be obligated to make such reports.

Jonathan and I discuss the need for the depository industry to provide comments in response to

Read More

Trump May Not be the Only Catalyst for Administrative Reform

March 21, 2017

Authors

Crystal Homa

Trump May Not be the Only Catalyst for Administrative Reform

March 21, 2017

by: Crystal Homa

In the past few months, there has been a lot of speculation regarding the future of many administrative agencies under Trump’s administration. However, two current cases pending in the D.C. Circuit have the potential to have a dramatic impact on administrative agencies and past and present regulatory enforcement actions by such agencies.

In Lucia v. SEC, the SEC brought claims against Lucia for misleading advertising in violation of the Investment Advisers Act of 1940. The enforcement action was initially resolved by an administrative law judge (ALJ); however Luica was later granted a petition for review based on an argument that the administrative hearing was unconstitutional because the ALJ was unconstitutionally appointed. The issue made it up to the U.S. Court of Appeals for the D.C. Circuit who recently held that the ALJ

Read More

CFPB Customer Complaint Data: Seeing What the Plaintiffs’ Bar Sees

February 1, 2017

Authors

Douglas Thompson

CFPB Customer Complaint Data: Seeing What the Plaintiffs’ Bar Sees

February 1, 2017

by: Douglas Thompson

CFPB watchers know that since 2013 customer complaints have been solicited and complaint data has been made available on the CFPB website. January is ubiquitous with New Year’s resolutions (perhaps you’ve already broken all of yours, but hopefully not). It is a great time to review the 2016 customer complaint data and see what the Plaintiffs’ Bar sees about your customers and your institution.

Undoubtedly, in due course, the CFPB has contacted your compliance and legal teams directly about these consumer complaints on an individualized basis. And undoubtedly, you have investigated the issue and provided responsive information to the CFPB and the consumer. Hopefully, each individual customer complaint matter is resolved and closed.

As a class action litigator, however, it is important to highlight that there is more here than

Read More

The OCC Rises, the FSOC Dies, and Other Regulatory Predictions

November 17, 2016

Authors

Dan Wheeler

The OCC Rises, the FSOC Dies, and Other Regulatory Predictions

November 17, 2016

by: Dan Wheeler

Eight bold regulatory predictions on the direction of U.S. Banking and Fintech regulation in light of the election results.

1.   The era of “outside the law” Federal regulation is over. Critics of the CFPB (exclusively Republicans) have criticized and challenged the agency’s structure and tactics.  These challenges include criticism of the agency’s broad jurisdiction and rulemaking power as an unconstitutional delegation by Congress of its legislative power.  Members of Congress and private litigants have assailed the CFPB’s reliance on enforcement actions instead of true rulemaking as undercutting due process and basic fairness.  Republicans have been united in believing that the agency’s existence and actions violated the Constitution, the agency’s grant of power under Dodd-Frank and the Administrative Procedures Act.  Increasingly, the courts have dealt the agency significant setbacks.  This author believes that Director Cordray only persisted in his aggressive pursuit of policy goals because he believed that pursuit was

Read More

Federal Rules Target Student Bank Accounts

October 20, 2016

Authors

Bryan Cave

Federal Rules Target Student Bank Accounts

October 20, 2016

by: Bryan Cave

As previously discussed on BankBryanCave.com, new Department of Education regulations will impact the terms and conditions of bank accounts that institutions of higher education and postsecondary vocational institutions may offer to students to receive disbursements of Title IV Higher Education Act funds. While the regulations apply directly to colleges, many banks and third-party servicers will need to change their products, services and practices if they want to contract with colleges to offer accounts to students.

The DOE rules require covered colleges to ensure that student account terms are in the best financial interest of students, present Title IV fund disbursement and account options to the student in a fact-based and neutral manner, and ensure that students have access to an appropriate number of surcharge-free ATMs. The rules also prohibit many account fees and impose ongoing monitoring obligations on colleges to ensure that student accounts meet all requirements of

Read More

3 Takeaways (a Litigator’s Perspective) from CFPB Supervisory Highlights

June 27, 2016

Authors

Douglas Thompson

3 Takeaways (a Litigator’s Perspective) from CFPB Supervisory Highlights

June 27, 2016

by: Douglas Thompson

The CFPB recently issued its newest edition of Supervisory Highlights Mortgage Serving Special Edition, Issue 11 (June 2016).

From a litigator’s perspective, the Supervisory Highlights do more than summarize recent supervisory findings, they also shine a light on future examination and putative class action risks that are emerging. The CFPB is providing key insights into what it believes should be industry standards. Banks and mortgage servicers should read carefully both the specific findings summarized and slightly more subtle clues to evolving future CFPB requirements.  Here are three takeaways on the Highlights from a financial services class action litigator’s perspective:

  • ECOA & Special Servicing Populations Continue to be a Strong CFPB focus.
  • In section 2, “Our approach to mortgage servicing examinations,” the CFPB uses a fair amount of real estate to highlight ECOA requirements. In fact, the report states clearly “…Supervision will be conducting more comprehensive ECOA Targeted Reviews of

    Read More

    The CFPB Proposes Ambitious Payday Lending Regulations

    June 6, 2016

    Authors

    Bryan Cave

    The CFPB Proposes Ambitious Payday Lending Regulations

    June 6, 2016

    by: Bryan Cave

    On June 2, 2016, the CFPB released its long-awaited proposed regulations for payday loans, vehicle title and certain high-cost installment loans.  Comments on the proposed rules must be received on or before September 14, 2016.

    While most payday lenders would need to make significant changes to their products and practices under the proposed rules, the final rules could well be delayed though legal challenges in court.  The scope of the proposal is extraordinary, even requiring a new credit reporting system, that would need to be built, to facilitate the ability-to-repay requirements of the proposal.  The CFPB is relying on its authority under the Dodd-Frank UDAAP provisions to issue the rules, which is admittedly very broad, but even that might not be enough to support this ambitious proposal.

    Nevertheless, because we cannot predict how courts would ultimately rule on the CFPB’s authority, it’s important to understand the proposed rules, prepare

    Read More

    CFPB Guidance On Recurring Electronic Debits

    November 30, 2015

    Authors

    Bryan Cave

    CFPB Guidance On Recurring Electronic Debits

    November 30, 2015

    by: Bryan Cave

    On November 23, 2015, the CFPB issued a Bulletin alerting companies that they must obtain proper authorization from consumers before automatically debiting their accounts. The Bulletin relates to the Electronic Fund Transfer Act requirements for “preauthorized electronic fund transfers,” which are EFTs scheduled in advance to recur at substantially regular intervals. The preauthorized EFTs in the CFPB’s spotlight are those that debit a consumer’s account.

    Regulation E of the EFTA provides that preauthorized EFTs from a consumer’s account must be authorized by a “writing signed or similarly authenticated by the consumer.” The authorization must be readily identifiable as such and have clear terms, and the person obtaining that authorization must provide a copy to the consumer. It’s important to keep in mind that these are two separate requirements. The Bulletin clarifies how a company can obtain the consumer’s authorization, and describes the critical elements of that authorization, but leaves

    Read More
    The attorneys of Bryan Cave LLP make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.