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To keep you informed of recent activities, below are several of the most significant federal events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities:
On October 1, U.S. Representatives Jan Schakowsky (D-IL) and Kathy Castor (D-FL) introduced companion legislation, the FTC Autonomy Act and the 21st Century FTC Act, aimed at strengthening the Federal Trade Commission’s (FTC) authority and independence to respond to unfair and deceptive practices in the modern economy. The FTC Autonomy Act, introduced by Representative Schakowsky, would allow the FTC’s own attorneys to bring cases seeking civil penalties directly, without first needing to enlist the Department of Justice, while the 21st Century FTC Act, introduced by Representative Castor, would give the FTC streamlined rulemaking authority under the Administrative Procedure Act and allow it to seek civil penalties for first-time violations of the FTC Act. Both lawmakers framed the bills as necessary to remove outdated procedural barriers and restore the FTC’s ability to hold companies accountable as new technologies, business practices, and online marketplaces create new opportunities for consumer harm, with Representative Castor specifically citing the need to restore civil penalties for first-time offenses and Representative Schakowsky emphasizing that the FTC needs tools to “keep pace with the modern economy.” For more information, click here.
On September 30, the Federal Reserve Board finalized two rules intended to enhance the transparency and public accountability of its annual stress test and reduce volatility in resulting capital requirements, while also requesting comment on a related proposal to better capture differences in banks’ business models for generating fee income. The first final rule requires the Board to annually invite public input on stress test scenarios and material model changes, updates the framework guiding scenario design, adopts the models for the 2027 stress test, adjusts the stress test calendar, and revises the global market shock component so that banks with large trading books will be tested against two shock scenarios each year, with the larger loss result used to calculate the firm’s stress test outcome. The second final rule requires the Board, when calculating stress capital buffer requirements, to average results from the two most recent annual supervisory stress tests for firms subject to testing in both years, with averaging set to begin in 2028 so that only models incorporating prior public input are used. Separately, the Board proposed revising its noninterest income model to better reflect business model diversity across firms, with comments due 60 days after Federal Register publication. Vice Chair for Supervision Michelle W. Bowman stated that the changes preserve the stress test’s resilience while making it more transparent, granular, and risk-sensitive, and the Board estimates the combined changes will reduce year-over-year volatility in capital requirements by roughly 50% without materially affecting aggregate capital requirements. For more information, click here.
On September 30, the U.S. Department of the Treasury and U.S. Department of Education announced the launch of the Defaulted Loans Support Center, a new online portal at StudentAid.gov that gives borrowers with defaulted federal student loans a streamlined way to understand their options, apply online to rehabilitate or consolidate their loans, make payments, and review repayment or loan-discharge options, replacing the decades-old paper-based process. The launch marks an early milestone of the Treasury-ED Federal Student Assistance Partnership, which Treasury Secretary Scott Bessent and Education Secretary Linda McMahon framed as restoring fiscal responsibility to the $1.7 trillion federal student loan portfolio and addressing what the administration characterized as mismanagement under the Biden administration, including masked default figures and terminated vendor contracts that left more than 5 million borrowers in default for more than six years and another 5 million entering default within a year. The departments reported that in fewer than six months, the partnership has driven a 69% increase in approved loan rehabilitation applications and a 95% increase in consolidations out of default following a technical fix, with early user feedback showing 89% of borrowers found the application easy to complete, 86% understood next steps, and 84% said the process took a reasonable amount of time. The portal also allows borrowers who consolidate out of default to access a temporary 1% interest rate reduction by enrolling in autopay. For more information, click here.
On September 30, the Federal Communications Commission (FCC) voted to adopt new rules giving consumers more control over the robocalls and texts they receive, aiming to modernize the process for revoking consent so consumers can stop unwanted robocalls without inadvertently cutting off important informational messages, such as medical appointment reminders and fraud alerts. The Report and Order establishes a clearly designated method for consumers to revoke consent and streamlines callers’ obligations to process those revocation requests efficiently, while also making it easier for financial institutions to alert customers quickly to suspected fraudulent account activity. Alongside the Report and Order, the Commission issued a Further Notice of Proposed Rulemaking seeking public comment on additional changes proposed jointly by consumer groups and industry stakeholders, including shortening the time callers have to honor revocation requests, requiring callers to offer a method to revoke consent to all robocalls, mandating two-way texting functionality so consumers can revoke consent via reply text, and clarifying how consent revocation applies across affiliated businesses and divisions. The action is part of the FCC’s broader strategy to combat scam calls across the entire call path, including stronger know-your-customer and know-your-upstream-provider requirements, scrutiny of phone number and area code practices, and obligations for voice service providers to identify and block illegal calls before they reach consumers. For more information, click here.
On September 30, Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs), announced a temporary policy exception for Sellers unable to meet the November 2, 2026, Uniform Appraisal Dataset (UAD) 3.6 and Forms Redesign mandate, allowing qualifying Sellers to continue submitting UAD 2.6 appraisal reports to the Uniform Collateral Data Portal (UCDP) from November 2, 2026, through May 19, 2027, with resubmissions permitted through June 27, 2027, though this is a one-time exception that will not be extended. Sellers must request the exception individually from each applicable GSE by completing an online request acknowledging their inability to meet the mandate, committing to a finalized UAD 3.6 implementation plan, and providing details on transition timing, obstacles, and areas where the GSEs can help. Lenders that don’t sell directly to the GSEs aren’t required to request an exception but must align with their investors, while aggregators purchasing loans from third-party originators (TPOs) must ensure all TPOs submit UAD 3.6 appraisals or obtain the exception themselves. Notably, starting March 1, 2027, Sellers still submitting UAD 2.6 reports will face a “Reduced Functionality Period” in which Collateral Underwriter and Loan Collateral Advisor will return a null collateral risk score (999/99) and the underlying loans will lose eligibility for collateral representation and warranty relief for value, creating a strong incentive to fully transition before that date. UAD 3.6 becomes mandatory for all new submissions on May 20, 2027; UAD 2.6 will be usable only for resubmissions through June 27, 2027; and UAD 2.6 will be fully retired on June 28, 2027. For more information, click here.
On September 29, two Federal Reserve officials addressed AI-related risks and opportunities in separate speeches. In Denver, Vice Chair for Supervision Michelle W. Bowman delivered opening remarks at the 2026 Community Bank Cyber Workshop, hosted by the Federal Reserve Banks of Chicago, Kansas City, St. Louis, Minneapolis, and San Francisco, where she flagged a rise in significant cyber events at community banks and emphasized that combating threats like ransomware, business email compromise, and vendor data breaches requires strong cyber hygiene (up-to-date asset inventories, phishing-resistant multifactor authentication, vulnerability management, employee training, and incident response testing), with AI increasingly serving as both a defensive tool and an evolving risk; she also pointed to the Financial Stability Board’s June 2026 report on responsible AI adoption and invited feedback on clarifying supervisory expectations for smaller institutions. The same day, in Miami, Governor Christopher J. Waller spoke at Sibos 2026 on “Payments in the Age of AI Agents,” arguing that AI can improve cross-border payment efficiency and security by reducing false-positive alerts in sanctions and anti-money-laundering screening, strengthening cyber defense (even as it also raises the sophistication of attacks), and optimizing payment routing and currency conversion. He then focused at length on “agentic commerce,” distinguishing agent-assisted from agent-delegated purchasing models, previewing likely early adoption in consumer-to-business and B2B transactions, and identifying authentication, liability, and fraud as the central trust challenges the industry must solve, alongside open questions about interoperable versus platform-specific standards and open versus closed agentic systems. Taken together, the two speeches reflect the Federal Reserve’s parallel focus that week on AI as both a supervisory risk factor for community banks and a structural force reshaping payment systems more broadly. For more information, click here and here.
On September 28, Comptroller of the Currency Jonathan V. Gould delivered remarks at the Association of Military Banks of America’s Military Banking Summit 2026, framing the Office of the Comptroller of the Currency’s (OCC) agenda around what he called a “Community Bank Comeback” aimed at reversing the decline of more than half of community banks since 2008 through embracing responsible innovation, strengthening supervision, and resetting the OCC’s risk tolerance. He emphasized that sound banking supervision must accommodate institutions of vastly different sizes rather than apply uniform standards, pointed to recent OCC actions on capital, examination cycles, third-party risk management, and supervisory standards that have reportedly freed up an estimated $64 billion in capital for community reinvestment, and highlighted the particular importance of military banks in supporting service members and their families through transitions such as permanent changes of station, homeownership, and the shift to civilian life. Gould also flagged a proposed new definition of “military bank” under Community Reinvestment Act reform, noting the comment period remains open and inviting feedback from military banking institutions, and closed by recognizing that nearly one-tenth of the OCC’s workforce consists of veterans or current service members. For more information, click here.
State Activities:
On September 30, California Governor Newsom signed AB 2116, a significant expansion of the California Financing Law (CFL) that brings small-business commercial financing under direct state licensure and consumer-protection-style oversight for the first time. Beginning January 1, 2028, the CFL will regulate “commercial financing,” broadly defined to include accounts receivable purchase transactions (including factoring), asset-based lending, commercial loans, commercial open-end credit plans, and lease financing intended primarily for a business purpose, with the licensing requirement itself taking effect July 1, 2028, and a grace period for entities with pending applications. The law adds detailed definitions, exemptions, and conduct rules tailored to small-business financing (generally recipients with gross receipts up to an inflation-adjusted $16 million receiving offers of $500,000 or less), sharpens who qualifies as a “commercial financing broker” based on activities such as transmitting sensitive recipient data or negotiating deals for compensation, and extends the CFL’s usury-cap exemption to licensed providers regardless of transaction structure. It also imposes substantive conduct requirements, including bans on confessions of judgment and gag clauses, mandatory APR disclosures for brokers, a broad UDAAP prohibition modeled on the federal framework, and new annual reporting obligations to the Department of Financial Protection and Innovation starting in 2029, while carving out federally regulated lenders, real-property-secured transactions, certain vehicle dealer or rental financing, and de minimis providers. For more information, click here.
On September 28, California state Senator Kelly introduced SB 946, a bill that would permanently repeal the January 1, 2027, sunset on existing provisions of California’s Consumer Credit Reporting Agencies Act (CCRAA) extending credit-report-style protections to escrow agent rating services. These protections, originally enacted through AB 1169 in 2013 and extended by AB 2416 (2016) and SB 360 (2021), give escrow professionals the right to access, dispute, and correct information used by third-party “risk manager providers” that lenders rely on to vet and score escrow agents, along with accuracy standards and safeguards for personally identifiable information. The bill responds to ongoing concerns that escrow companies face pressure to turn over highly sensitive data (such as Social Security numbers, bank account details, and identification documents) and can lose business if they don’t comply with vetting demands, often without meaningful recourse if the underlying information is wrong. With no known implementation problems since 2013, SB 946 is intended to make these protections permanent rather than subject to further sunset extensions, preserving lenders’ ability to vet escrow agents while shielding those agents from unfair treatment and misuse of their personal data. For more information, click here.