November 5, as per its update NAL policy, the CFPB granted a letter of no action (NAL) to Bank of America, NA regarding its proposed small dollar credit product, “Balance Assist,” which will allow customers of the Bank’s chequing accounts to access credit in installments of $ 100, up to $ 500, at repay in fixed minimum payments over three months, with an APR of 36% or less plus a “product charge” of $ 5, but no late or prepayment penalty. Balance Assist will also have an optional automatic payment feature from deposit accounts and a number of “guardrails” built into the product to make it more user-friendly. The NAL issued to Bank of America provides increased regulatory certainty that the CFPB will not initiate any supervisory or enforcement action against the Bank or any other company that provides a product or service on the facts and circumstances provided for in Bank of America NAL Application.
On November 5, the CFPB filed a Paperwork Reduction Act (PRA) opinion to the Federal Register, soliciting comment on CFPB’s plan to study how consumers locate, understand and use information in payday loan disclosures. The CFPB intends to use the data it obtains from its study to assess and refine potential options for a CFPB-designed payday loan disclosure that presents key information in a clear and effective manner to consumers.
On November 9, the OCC published its Half-year risk outlook for fall 2020, which summarizes the main issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry. According to the report:
- Banks remain in a strong financial position, but profitability is strained due to low interest rates and increasing levels of provisions for problem loans.
- Credit risk increases as the economic downturn affects the ability of customers to repay their debts.
- Strategic risk is an emerging issue due to the historically low interest rate environment, potential credit strains and their effect on bank profitability.
- Operational risk is elevated as financial institutions respond to changing work environments and a complex and changing operating environment. Cyber security threats contribute as a key driver of the increased operational risk environment.
- The risk of compliance is high due to a combination of changed work environments and the need to quickly implement federal, state and proprietary programs designed to support businesses and consumers.
The report also highlights emerging trends in payment products and services as topics relevant to potential risks.
On November 5, the OCC announced updates to its Director’s Toolkit, which includes a revised publication, the Administrator’s book: Role of administrators of national banks and federal savings banks (Delivered), and a new publication, the Directors’ Reference Guide to Board Reporting and Information (To guide). The revised book, which describes the responsibilities of directors and the fundamentals of safe and sound banking, replaces the 2016 version of the publication. Additionally, the new Guide is intended to help administrators navigate and understand the sources and types of information and reports necessary for their oversight of a national bank or federal savings association. The Guide replaces the following three OCC publications: Detecting Red Flags in Board Reports — A Guide for Directors, Pocket Guide to Detecting Red Flags in Board Reports, and Internal Controls — A Guide for Directors.
On November 6, the Board of Governors of the Federal Reserve System, the OCC and the Federal Deposit Insurance Corporation (collectively, the Agencies) issued a joint statement to reiterate that the Agencies would not approve a specific replacement rate for LIBOR loans. Instead, the Branches encourage each bank to determine the most appropriate replacement rate for its funding model and the needs of its customers. The Federal Financial Institutions Examination Council recently issued a statement stating that new contracts should either use a benchmark rate other than LIBOR or include strong fallback language that provides a clearly defined alternative benchmark rate after LIBOR ceases. . The Agencies are now urging banks to include both the alternative benchmark rate as well as the additional fallback language in case the original alternative benchmark rate is removed. Finally, the Branches encourage banks to determine the appropriate benchmark rates without delay and to begin contacting lender clients to ensure that they are informed and prepared for the LIBOR transition and are ready for upgrades. technical updates required for the systems.
On November 5, FinCEN announced the renewal of its Geo targeting orders (GTO) that require U.S. title insurance companies to identify the natural persons behind shell companies used in cash purchases of residential real estate. The renewed GTOs are identical to the May 2020 GTOs. The purchase amount threshold remains at $ 300,000 for each metropolitan area covered, including Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York, San Antonio, San Diego, San Francisco and Seattle. Frequently asked questions regarding GTOs are available here.
In response to widespread criticism of the lack of diversity on public company boards, California enacted AB-979, which extended California’s Gender Diversity Act and required boards to make progress in other types of diversity, including racial and ethnic minorities. The law comes after several lawsuits have been filed against California companies, particularly in the tech industry, with complaints that characterize companies as “Old Boy’s Club.”[s]Engaging in a “symbol” that does nothing more than “lip service” to create a “veneer” of commitment to diversity.
Last month, the NYSE and corporate governance firm Diligent Corp. published data suggesting that nearly half of public company boards do not have action plans to diversify their ranks in the short term. Today, more and more lawsuits are being brought to push diversity on the board of directors and to penalize companies that have misled shareholders into believing they are taking bold action but failing to do so. does much to meet their stated goals of diversity and inclusion. Read it customer alert to learn more about costumes and how this trend can impact your business.
PayPal has announced that its US customers will be able to buy, sell and hold a selection of cryptocurrencies through its digital wallet in the near future. Read it Digital Currency + Blockchain Perspectives Blog to learn more about this offering and future expansion plans, as well as Future Fintech item covering this news in more detail.
Villanova Engineering School is sending a private Ethereum blockchain into space on a Firefly Aerospace rocket, scheduled to launch on November 20, to test whether distributed Leger technology can help satellites exchange data. Read it Digital Currency + Blockchain Perspectives Blog to learn more about Villanova’s blockchain initiative and the Article by Coindesk covering this news in more detail.
On October 30, the CFPB issued a new final rule the implementation of the Fair Debt Collection Practices Act (FDCPA), highlighted in a previous edition of Gathering, which is designed to strengthen protections for consumers who communicate with debt collectors and clarify the application of the FDCPA to new communication technologies that have developed in the four decades since the adoption of the FDCPA in 1977. Read the LenderLaw Watch Blog for an analysis of the rule as Goodwin monitors how it is enforced and litigated for its clients involved in FDCPA disputes.
ENFORCEMENT & DISPUTES
On November 5, the CFPB announcement that he had filed a complaint against a Florida-based payday lender and its CEO in the South Florida District. The complaint alleges that the company violated the Consumer Financial Protection Act (CFPA) by engaging in deceptive acts and practices in connection with short-term, high-interest loans it was offering to its consumers. Read it Monitoring the application of consumer finance Blog to learn more about the complaint.
On November 5, the CFPB announcement that he had filed a complaint against a California student loan debt settlement company and the company’s CEO in the United States District Court for the Central District of California. The complaint alleges that the company violated the telemarketing rule and the CFPA by charging illegal upfront fees, failing to make required disclosures and engaging in deceptive sales practices. Read it Monitoring the application of consumer finance Blog to learn more about the complaint.