In this Issue. The Board of Governors of the Federal Reserve System (Federal Reserve) announced that the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11; the Acting Comptroller of the Currency discussed bank mergers; the Office of the Comptroller of the Currency (OCC) requested comments on proposed rulemaking and policy statement on bank mergers; and the Consumer Financial Protection Bureau (CFPB) released a summary of its 2023 enforcement work. These and other developments are discussed in more detail below.
Regulatory Developments
Federal Reserve Announces the Bank Term Funding Program
will Cease Making New Loans as Scheduled on March 11
On January 24, the Federal Reserve announced that the BTFP, launched in response
to the Silicon Valley Bank and Signature Bank failures of March
2023, will cease making new loans on March 11. While the BTFP will
continue making new loans to participant banks until March 11, the
interest rate applicable to these new loans will be no lower than
the interest rate in effect on reserve balances on the day the loan
is made.
Acting Comptroller of the Currency Discusses Bank
Mergers
On January 29, Acting Comptroller of the Currency Michael J. Hsu discussed improving transparency and trust in
the bank merger process in remarks at the University of Michigan.
In his remarks, Mr. Hsu discussed how developing a view on the
overall structure of the U.S. banking system could help ensure that
it remains diverse, dynamic, and balanced with the economy, as well
as inform bank merger policy and decisions.
In furtherance of that objective, Mr. Hsu announced that the OCC
was inviting comment on a proposal to amend its regulations
governing business combination applications to eliminate automatic
expedited approvals and to clarify the features of merger
applications and indicators that are consistent with and
inconsistent with approval.
"The banking system supports the economy and the businesses,
communities, and individuals that comprise it. This point bears
reemphasizing when thinking about what the banking system should
look like. Put simply, we don't exist to serve banks; banks
exist to serve us. Therefore, in order to have a view on what the
banking system should look like, we need to be clear about what to
measure it against."
‒ Michael Hsu, Acting Comptroller of the Currency
OCC Requests Comments on Proposed Rulemaking and Policy
Statement on Bank Mergers
On January 29, the OCC requested comment on a proposal to update its
rules for business combinations involving national banks and
federal savings associations. The OCC believes that the proposal
will increase transparency about its process when reviewing
transactions under the Bank Merger Act (BMA). The proposal includes
a policy statement to clarify the OCC's review of applications
under the BMA. The proposed policy statement addresses: (1) general
principles for the OCC's review of applications under the BMA,
including indicators for applications that may raise concerns; (2)
the OCC's consideration of financial stability; (3) managerial
and financial resources and future prospects; (4) convenience and
needs statutory factors under the BMA; and (5) the OCC's
decision making process for extending the comment periods or
holding public meetings. Comments from the public are due 60 days
from the date of publication in the Federal Register.
The CFPB's Enforcement Work in 2023 and What Lies
Ahead
On January 29, the CFPB released a summary of its 2023 enforcement actions. The
enforcement team filed 29 new enforcement actions and resolved 6
previously filed lawsuits. These actions resulted in approximately
$3.07 billion in relief for consumers and approximately $498
million in civil penalties. Key enforcement efforts concerned
high-interest loans and false advertising to military families;
junk fees, credit card rewards, and fake accounts; discrimination
against credit card applicants; loan churning; inaccurate rental
background checks; and junk advance fees for credit repair
services. The CFPB noted that it is significantly expanding its
enforcement capacity in 2024.
Check Out Goodwin's Latest Industry Insights
Crypt-D'OH! FINRA says 70% of BD Crypto Asset
Communications Are Deficient
On January 23, the Financial Industry Regulatory Authority (FINRA)
provided an update on its targeted examination
of firms' crypto asset communications. FINRA launched this
targeted examination series in November 2022 to "review the
practices of certain member firms that actively communicate with
retail customers concerning crypto assets and crypto asset-related
services," including for compliance with FINRA Rule 2210
(Communications with the Public). FINRA Rule 2210, among other
requirements, prohibits claims that are false, exaggerated,
promissory, unwarranted, or misleading and prohibits the omission
of any material fact if the omission, in light of the context of
the material presented, would cause a communication to be
misleading.
During the exams, FINRA reviewed over 500 crypto asset communications from its member firms, including those distributed or made available by third parties. Remarkably, FINRA identified substantive rule violations in approximately 70% of the communications it reviewed.
To learn more about the findings, view this recent client alert.
FINRA Publishes 2024 Annual Regulatory Oversight
Report
On January 9, FINRA published its 2024 Annual Regulatory Oversight Report (the
"Report"). FINRA publishes the Report as a way to provide
its broker-dealer members with insight into findings from
FINRA's Member Supervision, Market Regulation, and Enforcement
programs. FINRA also intends for the Report to serve as a roadmap
firms can use to bolster their compliance programs throughout the
year. Read more on this report in our client alert.
Corporate Transparency Act (CTA) Resource
Center
Go-to resource with on-demand webinars and compliance toolkit.
Consumer Finance Insights (CFI)
Blog
The latest on consumer finance regulation, litigation, and
enforcement.
Fintech Flash
The latest news and developments for the rapidly evolving fintech
industry – which often can change in a flash.
Bank Failure Knowledge
Center
Timely updates on important developments following the March 2023
US bank failures.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
