Welcome to Goodwin's Financial Services News Roundup. Our newsletter highlights important legal, regulatory, and business developments related to financial services and banking.
1OCC Issues Guidance and Proposed Rules to Reduce Regulatory Burdens on Depository Institutions
On October 6, the Office of the Comptroller of the Currency (OCC) issued several announcements intended to reduce burdens on community banks and better allocate OCC resources toward higher-risk areas. First, the OCC announced that it will update its policies for community banks to eliminate mandatory examination activities relating to the frequency and scope of examinations set by OCC policy but not required by statute or regulation, shifting instead to a more flexible risk-based supervision model focused on material financial risks. The OCC also announced that it will no longer use the Retail Nondeposit Investment Products (RNDIP) booklet's specialized exam procedures when supervising community banks, instead relying on the core assessment standards in the "Community Bank Supervision" handbook. In addition, the OCC issued guidance to clarify that community banks may tailor their model risk management practices, such as the frequency and nature of validation, to align with their specific risk exposures, business activities, and the complexity of their model usage. The guidance emphasizes that community banks are not required to conduct model validation annually, and the OCC will not penalize reasonable, risk-based decisions about validation frequency or scope.
The OCC also proposed rulemaking to rescind 12 CFR 27 (Fair Housing Home Loan Data System) on the basis that the regulation is now obsolete and largely duplicative of other legal obligations, effectively reducing regulatory burden on national banks without materially impairing the OCC's ability to collect data relevant to fair housing. Comments on the proposed rulemaking must be received within 30 days of publication in the Federal Register.
In a second proposed rulemaking, the OCC proposed regulatory amendments to redefine "covered community bank or covered community savings association" to simplify licensing for national banks and federal savings associations and enable them to use expedited or reduced filing procedures. To qualify as a "covered community bank or savings association," an institution must have under $30 billion in assets, be well capitalized, and not be under certain enforcement orders. Comments on this proposed rulemaking must be received within 60 days of publication in the Federal Register.
2FDIC and OCC Propose Rulemakings to Define "Unsafe or Unsound Practice," Limit Volume of MRAs, and Prohibit Use of Reputation Risk by Regulators and Financial Institutions
On October 7, the FDIC and OCC (together, the Agencies) issued a joint notice of proposed rulemaking to define "unsafe or unsound practice" for purposes of section 8 of the Federal Deposit Insurance Act to narrow its application in supervisory and enforcement activities but not the Agencies' rulemaking activities or authority. The proposed rulemaking would also limit the Agencies' ability to issue matters requiring attention (MRAs) while allowing the Agencies to communicate nonbinding suggestions or recommendations to institutions orally or in writing.
A separate joint notice of proposed rulemaking issued by the Agencies would define "reputation risk" and prohibit the Agencies from criticizing or taking adverse action against an institution on the basis of reputation risk, including requiring, instructing, or encouraging an institution to close customer accounts or take other actions on the basis of a person or entity's political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk. Although this prohibition would not affect requirements intended to prohibit or reject transactions or accounts associated with Office of Foreign Assets Control-sanctioned persons, entities, or jurisdictions, or affect the Agencies' authority to enforce requirements regarding reporting on monetary transactions, the proposed rulemaking would prohibit supervisors from using Bank Secrecy Act, anti-money laundering concerns, or statutory factors required with respect to certain applications as a pretext for reputation risk. Both Agencies would amend their regulations to eliminate certain references to "reputation risk."
Comments on each of the proposed rules must be received within 60 days of publication in the Federal Register.
3CFPB Extends Compliance Dates for Small Business Lending Rule
On October 2, the Consumer Financial Protection Bureau (CFPB) issued a final rule, effective December 1, 2025, amending Regulation B to extend the compliance dates for covered financial institutions to collect and report certain data on credit applications made by small businesses under the small business lending rule. The 2023 small business lending rule implemented Section 1071 of the Dodd-Frank Act, which amended the Equal Credit Opportunity Act to require covered financial institutions to collect certain data regarding credit for women-owned, minority-owned, and small businesses. The 2023 rule was extended in 2024 as part of litigation challenging the rule, and has now been extended again.
Under this new final rule, compliance dates and filing deadlines for covered financial institutions are based on their volume of small business credit transactions in 2022 and 2023, 2023 and 2024, or 2024 and 2025. Tier 1 institutions (those with 2,500 or more covered transactions) must comply by July 1, 2026, with a first filing deadline of June 1, 2027; Tier 2 institutions (with 500 to 2,499 transactions) must comply by January 1, 2027, and file by June 1, 2028; and Tier 3 institutions (with 100 to 499 transactions) have a compliance date of October 1, 2027, and the same June 1, 2028 filing deadline. The rule also maintains a 12-month "early" window during which demographic data may be collected ahead of the mandatory compliance date and preserves a "grace period" policy in which the CFPB will consider good-faith reporting efforts when addressing initial errors. In addition, the CFPB signals its intention to re-open the 1071 rulemaking process to address industry concerns and invites public comment on the updated compliance schedule.
4Federal Banking Agencies Issue Notice on Lending While National Flood Insurance Program is Unavailable
On October 1, the OCC, Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System, National Credit Union Administration, and Farm Credit Administration published a joint press release reminding lenders that they may continue to make loans that are subject to the federal flood insurance statutes when the National Flood Insurance Program is not available, as a result of the government shutdown that commenced on the same day. Lenders are permitted to continue making loans without flood insurance coverage; however, they must continue to make flood determinations, provide timely, complete, and accurate notices to borrowers, and comply with other applicable parts of the flood insurance regulations. Lenders should also continue to manage those risks during the lapse period. The agencies provided Interagency Questions and Answers Regarding Flood Insurance for further guidance.
5FinCEN Postpones Effective Date of Residential Real Estate Reporting Requirements
On September 30, the Financial Crimes Enforcement Network (FinCEN) issued an order delaying the effective date of its Residential Real Estate Rule to March 1, 2026. The rule imposes certain reporting requirements on covered persons, including persons engaged in the provision of real estate and settlement services in the US, relating to non-financed transfers of residential real property to legal entities and trusts. These reporting requirements were intended to go into effect on December 1, 2025 but will now go into effect on March 1, 2026 to allow additional time for covered persons to prepare to comply with the rule's reporting requirements.
6SEC Division of Corporation Finance Announces Limited Operations During Government Shutdown
On October 1, the US Securities and Exchange Commission's (SEC) Division of Corporate Finance announced limited operations during the government shutdown, with only a limited number of staff members available to answer questions on fee calculations and emergency relief. During the shutdown, the staff will not be able to review or respond to other requests for legal or interpretive guidance. This includes no-action, interpretive, and exemptive letters on issues under the federal securities laws. Although EDGAR filing system will continue to accept registration statements, offering statements and other filings during the shutdown, the staff will not be able to declare registration statements effective or qualify Form 1-A offering statements. During the shutdown, registration statements may still become effective after 20 days under Section 8(a) of the Securities Act, but issuers were advised to exercise caution, as no staff review will occur, and the filing must be complete and accurate. Updates on the Division's operating status will be posted on the SEC's website.
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New Client Alert: CFPB Updates Procedures for Determining Nonbank Supervision
On September 25, the CFPB issued a final rule, effective October 27, rescinding most of its prior amendments governing the supervisory designation procedures (Code of Federal Regulations, Title 12, Part 1091) and restoring key features of the pre-2022 framework by reinstating the CFPB's 2013 rule. While the CFPB has exercised its nonbank designation authority over the years on a confidential, consented basis, only a few contested designations are publicly known, including World Acceptance Corporation's in 2023 and Google Payment Corporation's in 2024 (the CFPB withdrew the latter designation in 2025). This alert summarizes the final rule's key features, analyzes their practical implications, and outlines strategic considerations for clients. To read more, click here.
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