CFPB Responds to Senators’ Request to Tailor Regulations to Exempt Smaller Financial Institutions

On August 17, CFPB Director Cordray responded to a request, from a 70 senator coalition spearheaded by Senators Donnelly (D-IN) and Sasse (R-NE), that the CFPB further tailor its regulations that may be “unduly burdensome” for community banks and credit unions. In Cordray’s response, he stated that the CFPB is committed to achieving well-tailored and effective regulations within the provisions of Dodd-Frank. Further, Cordray outlined already-in-place exemptions for small creditors, various actions taken to ensure the CFPB’s “commitment” to maintaining effective regulations, and highlighted the Small Business Regulatory Enforcement Act (SBREFA) panel as “just one part of the Bureau’s broader initiatives to address the unique issues facing small financial institutions.” Cordray did, however, note that one of the CFPB’s objectives is to “enforce Federal consumer financial law ‘consistently, without regard to the status of a person as a depository institution.’”

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Senate Judiciary Committee Holds Hearing to Discuss FCC’s Proposed Privacy Rules

On May 11, the Subcommittee on Privacy, Technology and the Law of the Senate Judiciary Committee held a hearing titled “Examining the Proposed FCC Privacy Rules.” Present at the hearing were witnesses FCC Chairman Thomas Wheeler, FCC Commissioner Ajit Pai, FTC Chairwoman Edith Ramirez, and FTC Commissioner Maureen Ohlhausen. The focal point of the hearing was the FCC’s proposed rule (which comes after its Open Internet Order released in February 2015, designed to preserve net neutrality) on broadband internet services, which is, according to proponents of the proposal, intended to ensure that consumers’ personal information is adequately protected when Internet Service Providers (ISP) collect information on consumers using their products. Read more…

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Democratic Senators Commission GAO to Study Fintech Industry

On April 18, Senators Sherrod Brown (D-OH), Jeffrey Merkley (D-OR), and Jeanne Shaheen (D-NH) sent a letter to the Government Accountability Office (GAO) requesting that it complete a study on the fintech industry. Under the Dodd-Frank Act, the GAO is required to examine the regulatory structure of person-to-person (P2P) lending. While the letter recognizes that the GAO issued a report on P2P lending in 2011, the senators urged the GAO to recognize that the lending platforms of financial technology firms (often called fintech) “has changed dramatically and evolved beyond consumer lending,” and that “P2P lending, now generally called marketplace lending, is not the only form of fintech that has developed over the last several years.” The letter further cautions that, “gaps in understanding and regulation of emerging financial products may result in predatory lending, consumer abuse, or systemic issues.” Finally, Senators Brown, Merkley, and Shaheen urged the GAO to provide responses to questions relating to, among other things, (i) the size and structure of the loan portfolios maintained by privately owned fintech lenders; (ii) how fintech lenders’ relationships with financial institutions impact both the financial system at large and regulatory framework; (ii) whether the risks that may arise from the investor base shifting from individual investor to institutional investor have grown since this issue was first noted in the GAO’s 2011 report; and (iii) the anti-money laundering, data security, and privacy requirements fintech companies are subject to.

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Congress Passes Bill to Extend Foreclosure Protection Element of the SCRA

On March 21, the U.S. House of Representatives passed S.B. 2393, which extends through 2017 the provision of the Servicemembers Civil Relief Act’s (SCRA) that protects servicemembers against foreclosure without a court order or waiver for one year following completion of their service. On January 1, 2016, the foreclosure protection provision reverted back to the period of active duty military service plus 90 days, rather than the period of active duty military service plus one year. Upon the President’s signature, the SCRA’s protection against foreclosure without a court order or waiver will return to the period of active duty military service plus one year through December 31, 2017.       

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Senator Murray Sponsors Bill to Expand and Strengthen the SCRA

On March 17, Senator Patty Murray (D-WA) sponsored the SCRA Enhancement and Improvement Act of 2016 (the Act). The Act focuses especially on student loan servicers, but encompasses all financial institutions covered by the SCRA. Although the text of the Act is not yet available, the recently issued press release on the Act describes its proposed changes to the SCRA. Among other changes, the Act would revise the SCRA by: (i) requiring automatic application of the SCRA’s interest rate cap; (ii) ensuring that student loan servicers have a dedicated SCRA representative; (iii) reducing the SCRA’s interest rate cap from 6% to 3%; (iv) protecting servicemembers when their loans are transferred or sold by requiring “sufficient notice”; (v) forgiving all federal and private student loan debt if a servicemember dies in the line of duty; (vi) expanding the interest rate cap to all debts, no matter when incurred; (vii) clarifying that servicemembers may bring a private right of action under the SCRA; (viii) doubling the fines for violations of the SCRA; and (ix) expanding certain protections on mortgages, leases, and cable and internet contracts.

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