On November 18, OCC published a notice seeking comments on various reporting, recordkeeping, and disclosure requirements associated with its regulations that implemented the Volcker Rule. Among other things, the OCC is seeking comments on: (i) whether the information sought is necessary for the OCC to perform its supervisory functions; (ii) the accuracy of the OCC’s estimate of the information collection burden; (iii) ways to enhance the quality, utility, and clarity of the information to be collected while also minimizing the collection burdens on respondents; and (iv) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide the information. Comments must be submitted on or before January 17, 2017.
On December 2, 2016, the Office of the Comptroller of the Currency (“OCC”) announced its plans to move forward with developing a special purpose national bank charter for financial technology (“fintech”) companies. Accompanying the Comptroller of the Currency, Thomas J. Curry’s announcement, the OCC published a white paper that describes the OCC’s authority to grant national bank charters to fintech companies and outlines minimum supervisory standards for successful fintech bank applicants. These standards would include capital and liquidity standards, risk management requirements, enhanced disclosure requirements, and resolution plans. Over the past several months, the OCC has taken a series of carefully calculated steps to position itself as the preeminent regulator of fintech companies in a hotly-contested race among other federal and state regulators who have similarly expressed interest in formalizing a regulatory framework for fintech companies. This proposal from the OCC reflects the culmination of those efforts.
* * *
BuckleySandler welcomes questions regarding this new approach to fintech and banking, and would be happy to assist companies in determining whether a national bank charter would be beneficial for executing on their corporate strategies. Questions regarding the matters discussed in this Alert may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.
- Andrew L. Sandler, (202) 349-8001
- David Baris, (202) 349-8004
- Jeremiah S. Buckley, (202) 349-8010
- Valerie L. Hletko, (202) 349-8054
- John P. Kromer, (202) 349-8040
- Jeffrey P. Naimon, (202) 349-8030
- Clinton R. Rockwell, (310) 424-3901
- Heather Russell, (212) 600-2350
- Margo H.K. Tank, (202) 349-8050
- Jonice Gray Tucker, (202) 349-8005
- Walter E. Zalenski, (202) 461-2910
- Noel M. Gruber, (202) 349-8043
- Shara M. Chang, (202) 349-8096
On September 15, the FTC will host a workshop titled “Putting Disclosures to the Test” to examine the effectiveness of consumer disclosures. Scheduled to take place in Washington, D.C., the full-day event will include an opening session devoted to how consumers process disclosures, and presentations on the following six topic areas: (i) methods and procedures for evaluating the effectiveness of disclosures; (ii) if and when consumers notice, read, or pay attention to disclosures; (iii) if consumers understand the information in disclosures; (iv) the impact of disclosures on consumers’ decisions and behavior; (v) case studies; and (vi) the future of disclosures, with emphasis on how to make them more efficient and effective. In addition to acknowledging the agency’s commitment to ensuring the use of effective, non-deceptive disclosures for advertisement purposes, the FTC highlighted the significance of effective disclosures in the privacy field and noted that it has “long encouraged the development and testing of shorter, clearer, easier-to-use privacy disclosures and consent mechanisms.”
Recently, the CFPB released a fact sheet that provides a basic outline for applying Know Before You Owe mortgage disclosures to constructions loans. Specifically, the fact sheet notes that (i) most construction loans are covered by the Know Before You Owe mortgage disclosures, with the exception of those that are open-end transactions or for commercial purposes; and (ii) Regulation Z’s existing provisions for disclosures for certain construction loans and construction-to-permanent loans continue to apply. In addition, the fact sheet provides guidance regarding a creditor’s choice to disclose a construction loan with permanent financing as one or two transactions. According to the fact sheet, the CFPB may release additional guidance to facilitate compliance with the Know Before You Owe mortgage disclosure rule, including a possible webinar regarding construction loan disclosures.
On January 5, the Financial Accounting Standards Board (FASB) issued a new accounting standard which “‘is intended to provide users of financial statements with more useful information on the recognition, measurement, presentation, and disclosure of financial instruments.’” The new Accounting Standards Update (ASU) impacts public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance is intended to make targeted improvements to existing GAAP by, among several other things, generally only requiring that changes in the fair value of equity investments be recorded in net income and requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The ASU will take effect for public companies for fiscal years beginning after December 15, 2017 (including interim periods within those fiscal years), and for private companies, not-for-profit organizations, and employee benefit plans for fiscal years beginning after December 15, 2018 (and for interim periods within fiscal years beginning after December 15, 2019). Early adoption of certain provisions is permitted.